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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ADVANCED POLYMER SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-2875566
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
3696 HAVEN AVENUE
REDWOOD CITY, CALIFORNIA 94063
(415) 366-2626
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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MICHAEL P.J. O'CONNELL
3696 HAVEN AVENUE
REDWOOD CITY, CALIFORNIA 94063
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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WITH COPIES OF ALL ORDERS, NOTICES AND COMMUNICATIONS TO:
RICHARD A. PEERS WILLIAM E. DORAN
HELLER, EHRMAN, WHITE & MCAULIFFE SACHNOFF & WEAVER, LTD.
525 UNIVERSITY AVENUE 30 SOUTH WACKER DRIVE, 29TH FLOOR
PALO ALTO, CALIFORNIA 94301 CHICAGO, IL 60606
(415) 324-7000 (312) 207-1000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
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Common Stock, $.01 par value....... 200,000 $9.375(1) $1,875,000(1) $647
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Common Stock, $.01 par value....... 28,571(3) $ 7.50(2) $ 214,283(2) $ 74
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Common Stock, $.01 par value....... 28,571(3) $10.00(2) $ 285,710(2) $ 99
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Common Stock, $.01 par value....... 28,571(3) $12.50(2) $ 357,138(2) $123
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TOTAL:................... 285,713(3) $2,732,131 $943
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(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933 based on the average of the
high and low prices of the Common Stock on the Nasdaq National Market on May
17, 1996, as reported in The Wall Street Journal.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(g) under the Securities Act of 1933 based on the exercise price
per share of warrants pursuant to which such shares may be issued by the
Registrant.
(3) In accordance with Rule 416 under the Securities Act of 1933, Common Stock
offered hereby shall also be deemed to cover additional securities to be
offered or issued to prevent dilution resulting from stock splits, stock
dividends or similar transactions.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PROSPECTUS
285,713 SHARES INCLUDING 85,713 SHARES ISSUABLE ON EXERCISE
OF OUTSTANDING WARRANTS TO PURCHASE COMMON STOCK AT AN
AVERAGE EXERCISE PRICE OF $10.00 PER SHARE.
ADVANCED POLYMER SYSTEMS, INC.
Of the 285,713 shares (the "Shares") of Common Stock, $.01 par value, (the
"Common Stock") of Advanced Polymer Systems, Inc. (the "Company" or "APS")
covered by this prospectus (the "Prospectus), 85,713 shares are issuable by the
Company upon exercise of warrants (the "warrants") to purchase Common Stock and
200,000 of the Shares are currently outstanding. All of the shares are being
sold by the selling stockholder named in this Prospectus or by pledgees, donees,
transferees or other successors in interest to such selling stockholder (the
"Selling Stockholders"). See "Selling Stockholders." The Company will not
receive any of the proceeds from the sale of Shares by the Selling Stockholder;
however, the Company could receive up to $857,131 on the exercise of the
warrants.
The Company has not made any underwriting arrangements with respect to the
Shares. The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "APOS". On May 17, 1996, the closing price for the Common Stock, as
reported on the Nasdaq National Market, was $9.25.
Shares covered by this Prospectus may be offered for sale from time to time
by the Selling Stockholders at such prices and on such terms as may then be
obtainable, in negotiated transactions, or otherwise, directly or through
broker-dealers or underwriters who may act solely as agents, or who may acquire
the Shares as principals. Sales of the Shares may take place through the Nasdaq
National Market, including block trades or ordinary broker's transactions, or
through privately negotiated transactions, or through a combination of any such
methods of sale. See "Plan of Distribution." This Prospectus may be used by the
Selling Stockholders or by any broker-dealer who may participate in sales of
securities covered hereby. The Selling Stockholders will pay all commissions,
transfer taxes, and other expenses associated with the sales of securities by
it. The Company has paid the expenses of the preparation of this Prospectus. The
Company has agreed to indemnify the Selling Stockholders against certain
liabilities, including liabilities arising under the Securities Act.
APS has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 under the Securities Act of
1933, as amended (the "Securities Act") with respect to the securities offered
by this Prospectus (the "Registration Statement"). As permitted by the rules and
regulations of the Commission, this Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to APS and the
securities offered hereby, reference is made to the Registration Statement and
the exhibits thereto, which may be examined without charge at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and copies of which may be obtained from
the Commission upon payment of the prescribed fees.
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SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
(SEE "RISK FACTORS" ON PAGE 4)
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is May , 1996
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No dealer, salesman, or any other person has been authorized to give any
information or to make any representations or projections of future performance
other than those contained in this Prospectus, and any such other information,
projections, or representations, if given or made, must not be relied upon as
having been so authorized. The delivery of this Prospectus or any sale hereunder
at any time does not imply that the information herein is correct as of any time
subsequent to its date. This Prospectus does not constitute an offer to sell or
a solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction where, and to any person to whom, it is unlawful to make such offer
or solicitation.
AVAILABLE INFORMATION
This Prospectus omits certain of the information contained in the
Registration Statement covering the Common Stock that is on file with the
Securities and Exchange Commission (the "Commission"), and reference is hereby
made to the Registration Statement and to the exhibits relating thereto for
further information with respect to the Company and the Shares offered hereby.
Statements contained herein concerning the provisions of any document are not
necessarily complete and, in each instance, reference is made to a copy of such
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission. Each such statement is qualified in its entirely by such
reference. The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act") and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such Registration Statement, reports, proxy statements and other
information can be inspected and copied at public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the Commission at such address. Such
reports, proxy statements and other information can also be inspected at the
Commission's regional offices at 7 World Trade Center, Suite 1300, New York, New
York 10048 and 500 West Madison, Suite 1400, Chicago, Illinois 60661, and at the
offices of the Nasdaq Stock Market at 9513 Key West Avenue, Rockville, Maryland
20850-3389.
DOCUMENTS INCORPORATED BY REFERENCE
There are hereby incorporated in this Prospectus by reference the following
documents filed by the Company pursuant to the 1934 Act: (i) the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995; (ii) the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1996; (iii) the Company's Proxy Statement for the Annual Meeting of Shareholders
held on June 5, 1996; and (iv) the description of the Company's securities
contained in its form 8-A Registration Statements filed pursuant to Section 12
of the 1934 Act.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the 1934 Act after the date of this Prospectus and prior to the
termination of the offering of the securities offered hereby shall be deemed to
be incorporated by reference in this Prospectus and to be part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated herein by reference will be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated herein by reference modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon the written or oral request of such person, a copy of any or all
of the documents referred to above which have been or may be incorporated in
this Prospectus by reference, other than exhibits to such documents which are
not specifically incorporated by reference into the information that this
Prospectus incorporates. Requests for such copies should be directed to:
Advanced Polymer Systems, Inc., 3696 Haven Avenue, Redwood City, California
94063, Attention: Investor Relations, Telephone: (415) 366-2626.
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RECENT DEVELOPMENTS
The Company has filed two new drug applications ("NDA") with the U.S. Food
and Drug Administration. The first NDA covers a melanin-based sunscreen product
for the Company's own portfolio and the second NDA covers a prescription acne
preparation licensed to Ortho McNeil Pharmaceuticals (a Johnson & Johnson
subsidiary). The Company is continuing to provide additional information in
response to FDA comments with respect to both NDAs.
During the first two quarters of 1996 through May 3, 1996, the Company
raised $5.0 million before expenses from the private placement of Common Stock
with a strategic partner and an investor, of which $2.0 million represents
shares offered by this Prospectus.
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RISK FACTORS
The Shares of Common Stock offered hereby by the Selling Stockholders
involve a high degree of risk and prospective purchasers should carefully
consider the following factors.
History of Losses. The Company has incurred cumulative losses through
March 31, 1996 of approximately $64 million, of which approximately $2.0 million
was incurred in the three months ended March 31, 1996, and anticipates that
losses will continue for at least the next 12 months as the Company continues
research, development, production and marketing activities. There can be no
assurance that future revenues from product sales will be significant, that the
Company will be able to sell products at a profit or that the Company will
become profitable.
Capital Resources. On March 31, 1996, the Company had $5.5 million in
cash, cash equivalents and short-term marketable securities. In the quarter
ended March 31, 1996, cash of approximately $3.7 million was used by operations.
The Company's existing cash, cash equivalents and short-term marketable
securities, collections of trade accounts receivable, interest income and funds
generated from operations, are expected to be sufficient to meet the Company's
near-term cash requirements assuming no changes to existing business plans.
However, if the Company's costs are higher than expected or revenues do not meet
expectations, the Company may have to pursue other opportunities to generate
additional cash to sustain and develop its business, including joint ventures,
licensing and other debt and equity financings. If such additional funding is
required, but is unavailable on commercially reasonable terms, the Company would
have to significantly reduce operating expenses, by decreasing spending on
advertising and promotion activities, outside clinical programs and a variety of
other discretionary external expenditures, which could adversely affect
operations.
New Technology; No Proof of Market Acceptance. The Company's
Microsponge(R) products are based on relatively new technologies. The Company
has successfully entrapped numerous ingredients and agents (such as sunscreens,
moisturizers, fragrances and oils) and believes its products provide greater
efficacy and increased functionality. However, commercialization of products
utilizing the Company's Microsponge delivery systems is only now beginning, and
there can be no assurance that such products will be successfully commercialized
by the Company or others.
Marketing. The Company is utilizing a combination of collaboration
agreements and independent efforts to market its Microsponge products. The
collaborative arrangements are intended to provide APS with the marketing
expertise and/or financial strength of other companies. There can be no
assurance that such collaborative arrangements will prove successful in
marketing products on behalf of the Company. The Company markets seven of its
own consumer products, as well as several consumer products produced by Johnson
& Johnson Consumer Products, Inc. ("Johnson & Johnson"), through its wholly
owned subsidiary Premier, Inc. ("Premier") which the Company acquired in April
1993. Premier has had a limited history in marketing certain over-the-counter
drug and toiletry products, and there can be no certainty that Premier will be
able to continue to successfully market products produced by the Company or
others.
Seasonality. The business of Premier is highly seasonal. Currently, it
principally markets and distributes two sunscreen product lines and a depilatory
product line, the sales of which are heavily weighted to the first two fiscal
quarters. Consequently, results of operations for these interim periods are not
necessarily indicative of results for the full fiscal year.
Dependence on Key Employees. The Company's developments to date and in the
future depend greatly on the efforts of key management and technical employees.
The loss of any of these key contributors could have an adverse impact on the
progress of the Company's business.
Inventory Build-Up. The Company's exclusive distribution arrangement with
Johnson & Johnson requires Premier to increase inventory levels at the beginning
of each year sufficient to satisfy anticipated demand for sunscreen products
during the selling season. Extended terms are given to the Company on these
products by Johnson & Johnson so that accounts payable are not due until the
fourth fiscal quarter. The Company offers extended terms to retailers, and
anticipates paying amounts owed to Johnson & Johnson from the collection of
retail accounts receivable.
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Government Regulation. Certain of the Company's products are subject to
regulation by numerous national and local governmental authorities in the United
States and by like regulatory authorities in other countries where the Company
intends to test and market pharmaceutical products that it may develop. The
regulatory process, which includes preclinical testing and clinical trials to
establish product safety and efficacy, can take many years and require the
expenditure of substantial resources. There can be no assurance that even after
such time and expenditure, regulatory agency approvals will be obtained.
Moreover, if regulatory agency approval of a product is granted, such approval
may entail limitations on the indicated uses for which the product may be
marketed. Further, even if such regulatory approval is obtained, a marketed
product and its manufacture are subject to continued review by regulatory
authorities.
In addition, although personal care products are not currently subject to
active regulation by the FDA in the same manner as pharmaceutical products, more
extensive regulation could occur in the future. Such regulation could impose
additional costs on the Company or slow the introduction of personal care
products utilizing the Company's delivery systems.
Competition, Markets and Technological Change. Other companies are
developing products based on enhanced delivery technologies for cosmetic,
therapeutic and industrial applications, and technological developments are
expected to occur at a rapid pace. There can be no assurance that other
technologies will not prove superior to the Company's technology. APS is in
competition with other companies that possess greater financial and technical
resources, manufacturing and marketing capabilities, and experience in testing
and obtaining any necessary regulatory approval. The Company also competes with
many companies, most with greater financial resources, in marketing
over-the-counter personal care products.
Manufacturing. Products utilizing the Company's Microsponge delivery
systems must be manufactured at a competitive cost in far greater quantities
than now produced by the Company. The Company has a manufacturing facility in
Lafayette, Louisiana, and research laboratory and pilot plant facilities in
Lafayette, Louisiana and in Redwood City, California. The Company's
manufacturing capacity is currently 750,000 to 1,000,000 pounds a year, but
successful commercialization of certain products may require manufacturing in
quantities exceeding the Company's current capacity. The Company believes it can
increase its manufacturing capacity through installation of additional
equipment, but there can be no assurance that the Company will be able to
achieve the requisite increase in manufacturing capacity within the time and at
a cost commensurate with effective product commercialization.
Patents and Trade Secrets. There can be no assurance that any patents
owned or controlled by APS will provide commercially significant protection of
the Company's technology or ensure that the Company may not be determined to
infringe valid patents of others. The Company's patents have not been tested in
court, and the validity and scope of the Company's proprietary rights could be
challenged. The Company has also received foreign patents, but since the patent
laws of foreign countries differ from those of the United States, the degree of
protection afforded by any foreign patents may be different from that available
under U.S. patent laws.
The Company also relies on trade secrets and proprietary know-how which it
seeks to protect by confidentiality agreements with its collaborators, employees
and consultants. There can be no assurance that these agreements will not be
breached, that the Company will have adequate remedies for any breach or that
the Company's trade secrets and proprietary know-how will not otherwise become
known or be discovered by competitors.
Possible Volatility of Stock Price; Shares Eligible for Future Sale. The
market price of the Company's Common Stock has been and may continue to be
highly volatile. Future events, many of which will be beyond the control of the
Company, as well as expected quarterly fluctuations in revenues and financial
results, may have a significant impact on the market price of the Company's
Common Stock. Future sales of Shares by the Selling Stockholders or by other
current stockholders and by option holders and warrant holders who exercise
Company stock options or warrants could have a depressive effect on the market
price of the Company's Common Stock.
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Reliance on Collaborators. The Company has entered into collaborative
agreements with certain major corporations pursuant to which such companies are
entitled to certain product and marketing rights. The Company also expects to
rely, at least in part, on additional collaborative agreements to develop and
commercialize certain future products. There can be no assurance that the
Company will be able to negotiate acceptable collaborative agreements in the
future, or that the Company's existing collaborative agreements or such future
collaborative agreements will be successful.
Anti-Takeover Provisions. The Company's Board of Directors may authorize
the issuance of up to 2,500,000 shares of Preferred Stock and fix the rights
thereof, without any vote or action by the stockholders. The issuance of
Preferred Stock may have the effect of delaying, deferring or preventing a
change of control of the Company, and the existence of this anti-takeover
provision could make the Company less attractive to any potential acquiror and
could result in stockholders receiving less for their shares than would
otherwise be available to the event of a takeover attempt.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholders. The Company could receive up to $857,131 if
the warrants are exercised in full. No assurance can be given that any of the
warrants will be exercised. The Company expects that any net proceeds from the
exercise of the warrants will be used for working capital and general corporate
purposes, including product development and marketing. Pending utilization, such
funds will be invested in money market and other short-term interest bearing
obligations.
SELLING STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock by the Selling Stockholders as of May 8,
1996 and as adjusted to reflect the sale by the Selling Stockholders of Shares
offered by them by this Prospectus.
COMMOM STOCK COMMON STOCK
BENEFICIALLY OWNED COMMON BENEFICIALLY OWNED
PRIOR TO OFFERING(1) STOCK AFTER OFFERING
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NUMBER PERCENT SOLD(3) NUMBER PERCENT
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MeesPierson Clearing Services B.V............ 296,388(2) 1.7% 285,713 10,675 *
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(1) Applicable percentage of ownership is based on 18,090,839 shares of Common
Stock outstanding as of May 8, 1996.
(2) Includes 85,713 shares of Common Stock issuable on exercise of warrants.
(3) Includes any additional shares of Common Stock that may become issuable in
connection with the Shares by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt
of consideration that results in an increase in the number of outstanding
shares of Common Stock, or pursuant to the antidilution provisions under the
Warrants.
* Less than 1%.
PLAN OF DISTRIBUTION
All or a portion of the Shares of Common Stock offered hereby by the
Selling Stockholders may be delivered and/or sold in one or more transactions
from time to time that may take place through the Nasdaq National Market,
including block trades or ordinary broker's transactions, or through privately
negotiated transactions, or through a combination of such methods of sale, at
prices prevailing at the time, at prices related to such prevailing prices or at
negotiated prices and/or may also be used to cover any short positions
previously established. The Selling Stockholders may effect such transactions by
selling to or through one or more broker-dealers, who may act solely as agents,
or who may acquire shares as principals, and such broker-dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the
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Selling Stockholders. The Selling Stockholders and any broker-dealers that
participate in the distribution may under certain circumstances be deemed to be
"underwriters" within the meaning of the Securities Act, and any commissions
received by such broker-dealers and any profits realized on the resale of Shares
by them may be deemed to be underwriting discounts and commissions under the
Securities Act. The Selling Stockholders may agree to indemnify such
broker-dealers against certain liabilities, including liabilities under the
Securities Act. In addition, the Company has agreed to indemnify the Selling
Stockholders with respect to the Shares offered hereby against certain
liabilities, including, without limitation, certain liabilities under the
Securities Act, or, if such indemnity is unavailable, to contribute toward
amounts required to be paid in respect of such liabilities.
Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Stockholders (and, if they act as agent for the
purchaser of such Shares, from such purchaser). Broker-dealers may agree with
the Selling Stockholders to sell a specified number of Shares at a stipulated
price per share, and, to the extent such a broker-dealer is unable to do so
acting as agent for the Selling Stockholders, to purchase as principal any
unsold Shares at the price required to fulfill the broker-dealer commitment to
the Selling Stockholders. Broker-dealers who acquire Shares as principal may
thereafter resell such Shares from time to time in transactions (which may
involve crosses and block transactions and which may involve sales to and
through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated prices, and in
connection with such resales may pay to or receive from the purchasers of such
Shares commissions computed as described above. To the extent required under the
Securities Act, a supplemental prospectus will be filed, disclosing (a) the name
of any such broker-dealers, (b) the number of Shares involved, (c) the price at
which such Shares are to be sold, (d) the commissions paid or discounts or
concessions allowed to such broker-dealers, where applicable, (e) that such
broker-dealers did not conduct any investigation to verify the information set
out or incorporated by reference in this prospectus, as supplemented, and (f)
other facts material to the transaction.
The Selling Stockholders will pay all commissions, transfer taxes, and
other expenses associated with the sale of securities by it. The Shares offered
hereby are being registered pursuant to contractual obligations of the Company,
and the Company has paid the expenses of the preparation of this Prospectus and
the preparation and filing of the Registration Statement. The Company has not
made any underwriting arrangements with respect to the sale of Shares offered
hereby.
DESCRIPTION OF CAPITAL STOCK
As of the date of this Prospectus, the authorized capital stock of the
Company consists of 50,000,000 shares of $0.01 par value Common Stock ("Common
Stock") and 2,500,000 shares of $0.01 par value Preferred Stock ("Preferred
Stock").
COMMON STOCK
As of May 8, 1996, there were 18,090,839 shares of Common Stock outstanding
held of record by 645 stockholders. The holders of Common Stock are entitled to
one vote for each share held of record on all matters submitted to a vote of the
stockholders. Subject to preferences that may be applicable to any outstanding
Preferred Stock, holders of Common Stock are entitled to receive ratably such
dividends as may be declared by the Board of Directors out of funds legally
available therefor. In the event of a liquidation, dissolution or winding up of
the Company, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities and the liquidation preference of any
outstanding Preferred Stock. Holders of Common Stock have no preemptive rights,
no right to convert their Common Stock into any other securities, and no right
to vote cumulatively for the election of directors. The outstanding shares of
Common Stock are fully paid and nonassessable.
The Company has not paid cash dividends on its Common Stock and does not
plan to pay any such dividends in the foreseeable future. Under certain lending
agreements, the Company is restricted from declaring or paying dividends on its
Common Stock.
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PREFERRED STOCK
The Board of Directors may authorize the issuance of up to 2,500,000 shares
of Preferred Stock in one or more series and fix the rights, preferences,
privileges and restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption, liquidation preferences and the
number of shares constituting any series or the designation of such series,
without any further vote or action by the stockholders. The issuance of
Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of the Company without action by the shareholders and could
adversely affect the rights and powers, including voting rights, of the holders
of Common Stock. In certain circumstances, the issuance of Preferred Stock could
depress the market price of Common Stock. There are no shares of Preferred Stock
outstanding.
WARRANTS
Of the 285,713 shares offered hereby, 85,713 shares are issuable upon
exercise of warrants to purchase Common Stock. The exercise price of the
warrants is $7.50, $10.00 and $12.50 per share for every 28,571 shares,
respectively. The warrants will remain exercisable until May 1, 1999, except
under certain circumstances. The exercise price of each warrant is subject to
adjustment (i) in the event there is a subdivision or combination of the
outstanding shares of the Company's Common Stock, (ii) if the Company declares
dividends on its Common Stock payable in Common Stock or other securities of the
Company, or (iii) if the Company issues shares of its Common Stock below the
exercise price of such warrant.
LEGAL MATTERS
The legality of the issuance of the securities being offered hereby is
being passed upon for the Company by Heller, Ehrman, White & McAuliffe, Palo
Alto, California. Mr. Julian Stern, a member of Heller, Ehrman, White &
McAuliffe, who is also the Secretary of the Company, owns beneficially 179,000
shares of Common Stock (including options and warrants).
EXPERTS
The consolidated financial statements and schedules of Advanced Polymer
Systems, Inc. and subsidiaries as of December 31, 1995 and 1994 and for each of
the years in the three-year period ended December 31, 1995 have been
incorporated by reference herein and in the related Registration Statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. To the extent that KPMG Peat Marwick
LLP audits and reports on consolidated financial statements of Advanced Polymer
Systems, Inc. and subsidiaries issued at future dates, and consents to the use
of their report thereon, such consolidated financial statements also will be
incorporated by reference in the Registration Statement in reliance upon their
report and said authority.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth various expenses in connection with the sale
and distribution of the securities being registered. All of the amounts shown
are estimates except for the Securities and Exchange Commission Registration
Fee.
Securities and Exchange Commission Registration Fee.............. $ 943.00
Accounting Fees.................................................. 5,000.00
Legal Fees and Disbursements..................................... 5,000.00
Miscellaneous.................................................... 257.00
--------
TOTAL.................................................. $11,200.00
========
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The registrant has the power to indemnify its officers and directors
against liability for certain acts pursuant to Section 145 of the General
Corporation Law of the State of Delaware. Section B of Article VI of the
registrant's Certificate of Incorporation provides:
"(1) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or was a director
or officer, of the Corporation or is or was serving at the request of the
Corporation, as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis
of such proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the General
Corporation Law of the State of Delaware, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide
prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred
or suffered by such person in connection therewith and such indemnification
shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, the Corporation
shall indemnify any such person seeking indemnification in connection with
a proceeding (or part thereof) initiated by such person only if such
proceeding (or part thereof) was authorized by the board of directors of
the Corporation. The right to indemnification conferred in this Section B
shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, if the General
Corporation Law of the State of Delaware requires, the payment of such
expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or
is rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that
such director or officer is not entitled to be indemnified under this
Section or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the
Corporation with the same scope and effect as the foregoing indemnification
of directors and officers.
(2) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Section B shall not be
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exclusive of any other rights which any person may have or hereafter
acquire under any statute, provisions of this Certificate of Incorporation,
Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise.
(3) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust
or other enterprise against any such expense, liability or loss, whether or
not the Corporation would have the power to indemnify such person against
such expense, liability or loss under Delaware General Corporation Law."
Registrant maintains directors' and officers' liability insurance in the
amount of $5,000,000 which covers civil liabilities. Such insurance helps the
Registrant to attract qualified officers and directors, by providing a means for
the Company to pay the costs and expenses involved in the event civil litigation
is brought against of one of the Registrant's officers or directors.
ITEM 16. EXHIBITS.
EXHIBIT DESCRIPTION
- ------- -------------------------------------------------------------------------------------
4.2 -- Registration Rights Agreement with MeesPierson Clearing B.V.
4.3 -- Form of Warrant
5 -- Opinion of Heller, Ehrman, White & McAuliffe
23.1 -- Consent of Heller, Ehrman, White & McAuliffe (filed as part of Exhibit 5)
23.2 -- Consent of KPMG Peat Marwick LLP (See Page II-5)
24 -- Power of Attorney (See Page II-4)
ITEM 17. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
Provided, however, that paragraphs (i) and (ii) shall not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
B. That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to section 13(a)
or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of
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the Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offering therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted against the Registrant by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(4) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in Redwood City, State of California, on the 20th day of May, 1996.
ADVANCED POLYMER SYSTEMS, INC.
By:
Michael P.J. O'Connell
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John J. Meakem, Jr., Michael P.J.
O'Connell, or either of them, with the power of substitution, her or his
attorney in fact, to sign any amendments to this Registration Statement
(including post-effective amendments), and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each of said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ---------------------------------------- ------------------------------------ ------------
Chairman of the Board and President May 20, 1996
- ----------------------------------------
John J. Meakem, Jr. (Principal Executive Officer)
Chief Financial Officer May 20, 1996
- ----------------------------------------
Michael P.J. O'Connell (Principal Accounting Officer)
Director May 20, 1996
- ----------------------------------------
Jorge Heller
Director May 20, 1996
- ----------------------------------------
Helen C. Leong
Director May 20, 1996
- ----------------------------------------
Peter Riepenhausen
Director May 20, 1996
- ----------------------------------------
Toby Rosenblatt
Director May 20, 1996
- ----------------------------------------
Gregory H. Turnbull
Director May 20, 1996
- ----------------------------------------
Dennis Winger
Director May 20, 1996
- ----------------------------------------
Carl Ehmann
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EXHIBIT 23.2
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
Advanced Polymer Systems, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
San Francisco, California
May 21, 1996
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ADVANCED POLYMER SYSTEMS, INC.
EXHIBIT INDEX
SEQUENTIALLY
NUMBERED
EXHIBIT DESCRIPTION PAGES
- ------- ----------------------------------------------------------------------- ------------
4.2 -- Registration Rights Agreement with MeesPierson Clearing B.V.
4.3 -- Form of Warrant
5 -- Opinion of Heller, Ehrman, White & McAuliffe
23.1 -- Consent of Heller, Ehrman, White & McAuliffe (included in Exhibit 5)
23.2 -- Consent of KPMG Peat Marwick LLP (See Page II-5)
24 -- Power of Attorney (See Page II-4)
1
REGISTRATION AGREEMENT
This REGISTRATION AGREEMENT (this "AGREEMENT") is made and entered into as
of March 22, 1996, by and among Advanced Polymer Systems, Inc., a Delaware
corporation (the "COMPANY"), and MeesPierson Clearing Services B.V., a
Netherlands corporation (the "INVESTOR").
RECITALS
WHEREAS, the Company and the Investor are parties to an Investment
Agreement of even date herewith (the "INVESTMENT AGREEMENT"), pursuant to which
from time to time the Company shall issue and sell to the Investor, and the
Investor shall purchase from the Company, shares of the Company's common stock,
par value $0.01 per share (the "COMMON STOCK"), together with warrants to
acquire additional shares of Common Stock (the "WARRANTS"), as more particularly
described therein. Capitalized terms used but not otherwise defined in this
Agreement shall have the meanings given to such terms in the Investment
Agreement.
WHEREAS, the Investor desires that the Company register for resale all
shares of Common Stock and Warrants acquired under the Investment Agreement, and
all shares of Common Stock purchasable under such Warrants, upon the terms and
subject to the conditions set forth in this Agreement.
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the Investor's obligations under the Investment Agreement.
NOW, THEREFORE, the parties hereto, intending legally to be bound, hereby
agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the meanings
ascribed to them below:
(a) "Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday
that is not a day on which banking institutions in the City of New York, New
York are required by law, regulation or executive order to close.
(b) "Holder" shall mean the Investor and any other Person who has become a
Permitted Transferee pursuant to Section 9(c).
(c) "Penalty Rate" means a per annum rate of interest equal to sum of the
"Prime Rate" as published by the Wall Street Journal from time to time, plus 500
basis points.
(d) "Registrable Securities" means (x) all shares of Common Stock issued to
Investor pursuant to the Investment Agreement, (y) all shares of Common Stock
issuable upon exercise of all Warrants issued to investor pursuant to the
Investment Agreement and (z) any securities issued or issuable in respect of or
in exchange for any of the shares of Common Stock referred to in clauses (x) and
(y) above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, reclassification, merger,
consolidation, or exchange offer ("DISTRIBUTION SECURITIES"). For purposes of
this Agreement, a Registrable Security ceases to constitute a Registrable
Security hereunder (i) when such Registrable Security shall have been
effectively registered under the Securities Act and disposed of in a public
market transaction pursuant to a Registration Statement, (ii) when such
Registrable Security shall have been sold pursuant to Rule 144 (or any successor
provision) under the Securities Act, (iii) when such Registrable Security shall
have been otherwise transferred and a new certificate for such Registrable
Security not bearing a legend restricting further transfer shall have been
delivered by the Company, (iv) with respect to a particular Holder, at any time
when all of such Holder's remaining Registrable Securities can be sold in a
single transaction in compliance with Rule 144 under the Securities Act, (v) on
the third anniversary of the original issuance date of such Registrable
Security, or (vi) when such Registrable Security shall have ceased to be
outstanding.
(e) "Registration Statement" shall have the meaning set forth in Section 2.
2
(f) "Registration Termination Date" means, with respect to each
Registration Statement, the first date on which no Registrable Securities
covered by such Registration Statement (and any Distribution Securities with
respect thereto) shall constitute Registrable Securities.
(g) "Securities Act" means the Securities Act of 1933, as amended.
(h) "Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "SEC" means the United States Securities Exchange Commission, or any
successor agency thereto.
(j) "Target Warrant Shares" means, with respect to each Pricing Period
under the Investment Agreement, a number of shares of Common Stock equal to the
product of (i) the Target Number of Shares for such Pricing Period, multiplied
by (ii) a fraction, the numerator of which is three (3) and the denominator of
which is seven (7).
Other capitalized terms shall have the meanings ascribed to them in the
other sections of this Agreement or in the Investment Agreement if not defined
herein.
2. SHELF REGISTRATION.
(a) Effective Registration. As soon as practicable (but in any event
within five (5) Business Days) following the Closing Date of each Pricing Period
under the Investment Agreement, the Company shall file with the SEC under the
Securities Act a Registration Statement (each, a "REGISTRATION STATEMENT") on
Form S-3, or on such other registration form under the Securities Act as the
Company and the Investor shall mutually deem appropriate, covering the sale on a
continuous or delayed basis pursuant to Rule 415 thereunder (or any similar rule
that may be adopted by the SEC) of (i) the Target Number of Shares for such
Pricing Period, (ii) Warrants to purchase the Target Warrant Shares for such
Pricing Period, (iii) the Target Warrant Shares purchasable under such Warrants,
and (iv) the Deferred Registrable Securities (as defined in Section 2(c) below)
from the previous Pricing Period, if any. The Company shall use its best efforts
to cause each Registration Statement to be declared effective on or prior to the
thirtieth (30th) day following the Closing Date for the Pricing Period giving
rise to such filing, and shall thereafter keep such Registration Statement
continuously effective until the Registration Termination Date with respect
thereto.
(b) Prior Statement Amendments. Notwithstanding the provisions of Section
2(a), in lieu of filing a new Registration Statement with respect to the current
Pricing Period, the Company may, subject to the Investor's prior written
consent, amend a Registration Statement already on file with the SEC with
respect to a previously completed Pricing Period, if any, in order to add to
such existing Registration Statement the Target Registrable Securities for the
current Pricing Period. The Company shall use its best efforts to cause each
Registration Statement as so amended to be declared effective on or prior to the
thirtieth (30th) day following the Closing Date for the Pricing Period giving
rise to such amendment, and shall thereafter keep such Registration Statement
continuously effective until the Registration Termination Date with respect
thereto.
(c) Determination Date Amendments. If the number of Purchased Shares for
any Pricing Period exceeds the Target Number of Shares for such Pricing Period
(such excess being referred to herein as "EXTRA SHARES"), then the Company
shall, promptly (but in any event within five (5) business days) following the
Determination Date with respect to such Pricing Period, file an amendment to the
Registration Statement relating to such Pricing Period in order to add to such
Registration Statement: (i) the Extra Shares, (ii) the additional Warrants
issued to Investor under the Investment Agreement with respect to such Extra
Shares, and (iii) the Warrant Shares issuable upon exercise of such additional
Warrants (with respect to such Pricing Period, the "ADDITIONAL REGISTRABLE
SECURITIES"). Notwithstanding the foregoing, the Investor may, upon written
notice to the Company (a "DEFERRAL NOTICE"), elect that the Company not amend
the current Registration Statement and defer registration of the Additional
Registrable Securities until the filing of a Registration Statement or amendment
for the subsequent Pricing Period (the "DEFERRED REGISTRABLE SECURITIES");
provided, that if an additional Pricing Period does not close within thirty (30)
days of such Deferral Notice, or sooner at the election of the Investor, then
the Company shall amend the Registration Statement relating to the prior Pricing
Period to add the Deferred Registrable Securities thereto or file a
2
3
separate Registration Statement with respect to the Deferred Registrable
Securities in the manner and within the terms set forth in Section 2(a).
(d) Delay in Effectiveness. In the event any Registration Statement, as
originally filed or as amended pursuant to Sections 2(b) or 2(c) above, is not
declared effective by the SEC within 90 days after the Closing Date of the
Pricing Period giving rise to such filing or amendment (the "EFFECTIVENESS
DEADLINE"), or in the event the effectiveness of any Registration Statement is
suspended or terminated at any time after its Effectiveness Deadline and prior
to its Registration Termination Date, then for each day such Registration
Statement is not so effective, the Company shall pay to each Holder per diem
interest, at the Penalty Rate, on the aggregate Average Share Price of all
Purchased Shares and Warrant Shares covered by such Registration Statement which
are held by such Holder, as certified by such Holder in writing to the Company.
Such payments shall be made on the first Business Day of each month following
any month in which such Registration Statement is not effective, with a final
payment within five (5) Business Days after such Registration Statement becomes
effective.
(e) Inclusion of Other Securities. No securities other than Registrable
Securities and up to three million dollars ($3,000,000) in equity securities
proposed to be offered to Lander, Inc. shall be included in any Registration
Statement hereunder without the Investor's prior consent.
3. REGISTRATION PROCEDURES.
(a) Company Procedures. In connection with the Company's registration
obligations pursuant to Section 2, the Company shall keep each Registration
Statement continuously effective for the period of time provided in Section 2,
to permit the sale of Registrable Securities covered by such Registration
Statement in accordance with the intended method or methods of distribution
thereof specified in such Registration Statement or in the related
prospectus(es), and shall:
(i) comply with such provisions of the Securities Act as may be
necessary to facilitate the disposition of all Registrable Securities
covered by such Registration Statement during the applicable period in
accordance with the intended method or methods of disposition thereof set
forth in such Registration Statement or such prospectus or supplement
thereto;
(ii) notify the Holders, promptly (A) when each Registration
Statement, prospectus or supplement thereto or further post-effective
amendment has been filed, and, with respect to each Registration Statement
or further post-effective amendment, when it has become effective, (B) of
any request by the SEC for amendments or supplements to any Registration
Statement or prospectus or for additional information, (C) of the issuance
by the SEC of any comments with respect to any filing and of any stop order
suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose, (D) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of any Registrable Securities for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose, (E) of
the happening of any event that makes any statement made in any
Registration Statement, prospectus or any other document incorporated
therein by reference untrue or that requires the making of any changes in
such Registration Statement, prospectus or any document incorporated
therein by reference in order that such documents not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and (F) of the Company's determination that a further
post-effective amendment to such Registration Statement would be
appropriate;
(iii) furnish to each Holder, without charge, as many conformed copies
as may reasonably be requested by such Holder, of each Registration
Statement and any further post-effective amendments thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(iv) deliver to each Holder, without charge, as many copies of the
then effective prospectus covering such Registrable Securities and any
amendments or supplements thereto as such Holder may reasonably request;
3
4
(v) register, qualify, obtain an exemption therefrom, or cooperate
with the Holders and their counsel in connection with the registration or
qualification or exemption therefrom of such Registrable Securities for
offer and sale under the securities or blue sky laws of such jurisdictions
as may be reasonably requested in writing by the Holders and do any and all
other acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by the then-
effective Registration Statements; provided, however, that the Company
shall not be required to (A) qualify as a foreign corporation or generally
to transact business in any jurisdiction where it is not then so qualified,
(B) qualify as a dealer (or other similar entity) in securities, (C)
otherwise subject itself to taxation in connection with such activities, or
(D) take any action which would subject it to general service of process in
any jurisdiction where it is not then so subject;
(vi) upon the occurrence of any event contemplated by clauses (E) or
(F) of paragraph (ii) above, promptly prepare and file, if necessary, a
further post-effective amendment to each Registration Statement or a
supplement to the related prospectuses or any document incorporated therein
by reference or file any other required document so that each Registration
Statement and the related prospectuses will not thereafter contain an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading;
(vii) in no event later than five (5) Business Days before filing any
Registration Statement, any further post-effective amendment thereto, any
prospectus or any amendment or supplement thereto (other than any amendment
or supplement made solely as a result of incorporation by reference of
documents), furnish to the Holders copies of all such documents proposed to
be filed;
(viii) not file any Registration Statement or amendment thereto or any
prospectus or any supplement thereto (other than any amendment or
supplement made solely as a result of incorporation by reference of
documents) to which the Holders holding a majority of the Registrable
Securities shall have reasonably objected in writing, within three (3)
Business Days after receipt of such documents, to the effect that such
Registration Statement or amendment thereto or prospectus or supplement
thereto does not comply in all material respects with the requirements of
the Securities Act (including, without limitation, in respect of any
information describing the manner in which the Holders acquired such
Registrable Securities and the intended method or methods of distribution
of such Registrable Securities), (provided that the foregoing shall not
limit the right of any Holder reasonably to object, within three (3)
Business Days after receipt of such documents, to any particular
information relating specifically to such Holder that is to be contained in
any Registration Statement, prospectus or supplement, including, without
limitation, any information describing the manner in which such Holder
acquired such Registrable Securities and the intended method or methods of
distribution of such Registrable Securities), and if the Company is unable
to file any such document due to the objections of the Holders, the Company
shall exert commercially reasonable efforts to cooperate with the Holders
to prepare, as soon as practicable, a document that is responsive in all
material respects to the reasonable objections of the Holders, provided
however, that the Effectiveness Deadline (as defined in Section 2(d) shall
be extended by the period, not to exceed ten (10) days, during which the
Company is prevented from filing a Registration Statement or amendment
thereto by reason of this paragraph 3(a)(viii);
(ix) promptly after the filing of any document that is to be
incorporated by reference into any Registration Statement or prospectus,
provide copies of such document to the Holder;
(x) cause all Registrable Shares covered by each Registration
Statement to be listed on the Nasdaq National Market or, if similar
securities of the Company are not listed thereon, on the primary exchange
or market, if any, on which similar securities issued by the Company are
then listed, within three (3) business days following the Determination
Date of the Pricing Period in which such Registrable Securities were
issued;
(xi) take all actions reasonably required to prevent the entry of any
stop order by the Securities and Exchange Commission or by any state
securities regulators or to remove any such order if entered; and
4
5
(xii) file post-effective amendments to any Registration Statement or
supplement the related prospectus, as required, to permit sales of
Registrable Securities covered thereby to be made by Permitted Transferees
of the Holders.
(b) Holder Procedures.
(i) The Company may require each Holder to furnish to the Company such
information regarding such Holder and the proposed distribution of such
Registrable Securities as the Company may from time to time reasonably
request in writing.
(ii) Each Holder agrees to cooperate with the Company in all
reasonable respects in connection with the preparation and filing of the
Registration Statement, any Amendment, any prospectus and any prospectus
supplement.
(c) Additional Information Available. So long as any Registration
Statement is effective covering the resale of Registrable Securities owned by a
Holder, the Company will furnish to such Holder(s):
(i) as soon as practicable after it becomes available (but in the case
of the Company's Annual Report to Stockholders, within 120 days after the
end of each fiscal year of the Company), one copy of: (A) its Annual Report
to Stockholders (which Annual Report shall contain financial statements
audited in accordance with generally accepted accounting principles by a
national firm of certified public accountants); (B) its Annual Report on
Form 10-K; and (C) its Quarterly Reports on Form 10-Q; and
(ii) upon the reasonable request of a Holder, all exhibits to the
Annual Report on Form 10-K; and the Company, upon the reasonable request of
a Holder, will meet with such Holder or a representative thereof at the
Company's headquarters to discuss all information relevant for disclosure
in any Registration Statement and will otherwise cooperate with any Holder
conducting an investigation for the purpose of reducing or eliminating such
Holder's exposure to liability under the Securities Act, including the
reasonable production of information at the Company's headquarters.
4. REGISTRATION EXPENSES.
All expenses incident to the Company's performance of or compliance with
this Agreement, including without limitation all registration and filing fees,
fees and expenses of compliance with state securities or blue sky laws
(including fees and disbursements of counsel in connection with blue sky
qualifications or registrations (or the obtaining of exemptions therefrom) of
the Registrable Securities), messenger and delivery expenses, internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), fees and disbursements of its
counsel and its independent certified public accountants, securities acts
liability insurance (if the Company elects to obtain such insurance), and
reasonable fees and expenses of any special experts retained by the Company in
connection with any registration hereunder (all of such expenses herein referred
to as "REGISTRATION EXPENSES"), shall be borne by the Company; provided,
however, the Registration Expenses shall not include any sales or underwriting
discounts, commissions or fees attributable to the sale of the Registrable
Securities or the fees and expenses of counsel to the Holders (other than to the
extent provided in the Investment Agreement).
5. INDEMNIFICATION; CONTRIBUTION.
(a) Indemnification by the Company. The Company shall indemnify and hold
harmless, to the full extent permitted by law, each Holder, and such Holder's
respective officers, directors, employees, representatives, agents and
controlling persons (within the meaning of the Securities Act), against all
losses, claims, damages, liabilities and expenses (including, without
limitation, reasonable costs of investigation and legal expenses) resulting from
any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, any prospectus, or any amendment or supplement thereto,
or any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, except in
each case insofar as the same directly arises out of or is directly based upon
an untrue statement or alleged untrue statement of a material fact or an
omission or alleged omission to state a material fact in such Registration
Statement, prospectus, amendment or supplement, as the case may be, made or
5
6
omitted, as the case may be, in reliance upon and in conformity with information
furnished to the Company in writing by such Holder expressly for use therein.
(b) Indemnification by the Holders. Each Holder shall indemnify and hold
harmless, to the full extent permitted by law, the Company, its officers,
directors, employees, representatives, agents and controlling persons (within
the meaning of the Securities Act), against all losses, claims, damages,
liabilities and expenses (including, without limitation, reasonable costs of
investigation and legal expenses) resulting from any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any
prospectus, or any amendment or supplement thereto, and any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, to the extent the same directly arises
out of or is directly based upon any untrue statement or alleged untrue
statement of a material fact or any omission or alleged omission to state a
material fact in such Registration Statement, prospectus, amendment or
supplement, as the case may be, made or omitted, as the case may be, in reliance
upon and in conformity with information furnished to the Company in writing by
such Holder expressly for use therein. The liability of each Holder under the
indemnity and contributions provisions of this Section 5 shall be several and
not joint and shall be limited to an amount equal to the gross price of the
Registrable Securities sold by such Holder pursuant to the Registration
Statement.
(c) Conduct of Indemnification Proceedings. Each party entitled to
indemnification under this Section 5 (the "INDEMNIFIED PARTY") shall give
written notice to the party required to provide indemnification (the
"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 to assume the defense of any such claim or any litigation
resulting therefrom; provided, that counsel for the Indemnifying Party, who will
conduct the defense of such claim or litigation, is approved by the Indemnified
Party (whose approval will not be unreasonably withheld or delayed); and
provided, further, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
except to the extent that its defense of the claim or litigation involved is
prejudiced by such failure. The Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnifying Party
shall pay such expense if representation of such Indemnified Party by the
counsel retained by the Indemnifying Party would be inappropriate due to actual
or potential conflicts of interest between the Indemnified Party and any other
party represented by such counsel in such proceeding. No Indemnifying Party, in
the defense of any such claim or litigation, except with the consent of each
Indemnified Party, shall consent to entry of any judgment or enter into any
settlement that 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 in respect of any claim or litigation, and no Indemnified Party will
consent to entry of any judgment or settle any claim or litigation without the
prior written consent of the Indemnifying Party (not to be unreasonably withheld
or delayed). Each Indemnified Party shall furnish such information regarding
himself, herself or itself and the claim in question as the Indemnifying Party
may reasonably request and as shall be reasonably required in connection with
the defense of such claim and litigation resulting therefrom.
(d) Contribution.
(i) If for any reason the indemnification provided for in this Section
5 from an Indemnifying Party, although otherwise applicable by its terms,
is determined by a court of competent jurisdiction to be unavailable to an
Indemnified Party hereunder, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by the Indemnified Parties as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of such Indemnifying Party and the Indemnified
Parties in connection with the actions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party and
the Indemnified Parties 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, has been made by, or relates to
information supplied by, such Indemnifying Party or the Indemnified
Parties, 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 result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include,
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subject to the limitations set forth in Section 5(c), any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
(ii) The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that 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 Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
6. RULE 144 REQUIREMENTS.
The Company agrees to:
(a) use its best efforts to make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Securities Exchange Act; and
(c) furnish to each Holder upon request a written statement by the Company
as to its compliance with the reporting requirements of said Rule 144 and of the
Securities Act and the Securities Exchange Act.
7. INJUNCTIONS.
Each of the parties hereto acknowledges and agrees that one or more of the
parties would be damaged irreparably in the event the provisions of this
Agreement are not performed in accordance with their specific terms or otherwise
are breached. Accordingly, each of the parties agrees that the other party shall
be entitled to an injunction or injunctions to prevent breaches of the
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the parties in the matter, in
addition to any other remedy to which it may be entitled, at law or in equity.
8. TERMINATION.
This Agreement shall terminate at the last Registration Termination Date to
occur with respect to a Registration Statement filed hereunder; provided,
however, that the provisions of Section 5, 6 and 7 shall survive the termination
of this Agreement.
9. MISCELLANEOUS.
(a) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless the Company shall have obtained the prior written consent of the Holders
holding more than 50% of the Registrable Securities at the time of such
amendment.
(b) Notices. All notices, requests, waivers, releases, consents, and other
communications required or permitted by this Agreement (collectively, "NOTICES")
shall be in writing. Notices shall be deemed sufficiently given for all purposes
under this Agreement (i) when delivered in person, (ii) on the next business day
following the date when dispatched by telegram (upon written confirmation of
receipt), by electronic facsimile transmission (upon written confirmation of
receipt) or by a nationally recognized overnight courier service, or
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(iii) three Business Days after being deposited in the United States certified
or registered mail, return receipt requested, and first class postage prepaid.
All Notices shall be delivered as follows:
(i) if to a Holder, at the address indicated on the Company's
register relating to the Registrable Securities held by such Holder or at
such other address as such Holder may have furnished to the Company in
writing:
(ii) if to the Company, at:
Advanced Polymer Systems, Inc.
3696 Haven Avenue
Redwood City, California 94063
Fax: (415) 365-6490
Attention: President
(iii) if to the Investor, at:
MeesPierson Clearing Services B.V.
P.O. Box 1690
St. Pietershalsteeg, #5
1000 BR Amsterdam
Fax: 011-31-20-527-2020
Attn: Frans Demmenie, Director
with a copy to:
MeesPierson Inc.
445 Park Avenue
New York, New York 10022
Fax: (212) 801-0200
Attention: General Counsel
and a copy to:
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Chicago, Illinois 60606
Fax: 312-207-6400
Attn: William E. Doran, Esq.
(c) Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the Company and each Holder, their respective
successors, heirs, legal representatives and, with respect to the Company, its
assignees. The rights provided by this Agreement are transferable, in the event
Registrable Securities or any of the Warrants issued under the Investment
Agreement are also transferred other than in a public market transaction
pursuant to the Registration Statement, (i) by the Investor to its officers,
directors, employees or Affiliates, (ii) by any Holder to any Person who, in the
reasonable view of the Company, is not a competitor of the Company, or (iii) by
any Holder to by gift or pursuant to the laws of descent and distribution (the
transferees in any of the foregoing clauses are referred to herein as "Permitted
Transferees"), provided, that (x) the Company is given written notice of the
transfer and the name, address, telephone number and facsimile number of the
transferee and (y) the subsequent transferee agrees in writing to be bound by
all of the terms of this Agreement.
(d) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Headings; Construction. The Section numbers and headings in this
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof. Unless the context otherwise requires, all references
to Sections are to sections of this Agreement, "or" is inclusively disjunctive,
and words
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in the singular include the plural and vice versa. In computing any period of
time specified in this Agreement or in any Notices, the date of the act or event
from which such period of time is to be measured shall be included, any such
period shall expire at 5:00 p.m., New York time, on the last day of such period,
and any such period denominated in months shall expire on the date in the last
month of such period that has the same numerical designation as the date of the
act or event from which such period is to be measured; provided, however, that
if there is no date in the last month of such period that has the same numerical
designation as of the date of such act or event, such period shall expire on the
last day of the last month of such period.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of laws thereof.
(g) Severability. If one or more of the provisions hereof, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect, for any reason, the validity, legality and
enforceability of the remaining provisions hereof shall not be in any way
affected or impaired thereby, and the provisions held to be invalid, illegal or
unenforceable shall be reformed to the minimum extent necessary, and in a manner
as consistent with the purposes thereof as is practicable, so as to render it
valid, legal and enforceable.
(h) Entire Agreement. This Agreement is intended by the parties hereto to
be a final expression thereof and is intended to be a complete and exclusive
statement of the agreement and understanding of such parties in respect of the
subject matter contained herein. This Agreement supersedes all prior agreements
and understandings among the Company and any of the Holders with respect to such
subject matter.
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IN WITNESS WHEREOF, the parties hereto have caused this Registration
Agreement to be duly executed as of the day and year first above written.
THE COMPANY:
Advanced Polymer Systems, Inc.
By: /s/ Michael P. J. O'Connell
--------------------------------------
Print Name: Michael O'Connell
--------------------------------------
Title: Chief Financial Officer
--------------------------------------
THE INVESTOR:
MeesPierson Clearing Services B.V.
By: /s/ Frans Demmenie
--------------------------------------
Print Name: Frans Demmenie
--------------------------------------
Title: Mg. Dir.
--------------------------------------
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THESE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SECURITIES MAY NOT BE
TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO
SUCH TRANSFER OR, IN THE OPINION OF COUNSEL FOR THE ISSUER, AN EXEMPTION FROM
REGISTRATION IS THEN AVAILABLE.
WARRANT
VOID AFTER 5:00 P.M., New York Time, on ________, 1999
WARRANT TO PURCHASE COMMON STOCK
OF
ADVANCED POLYMER SYSTEMS, INC.
Date of Issuance: ___________ Certificate No. W-______
For value received, Advanced Polymer Systems, Inc., a Delaware
corporation (the "COMPANY"), hereby grants to MeesPierson Clearing Services
B.V., a Netherlands corporation ("MEESPIERSON"), or its registered assigns (the
"REGISTERED HOLDER") the right to purchase from the Company _______ shares of
Warrant Stock at a price per share of $_______ (as adjusted from time to time
hereunder, the "EXERCISE PRICE"). This Warrant is one of several warrants
(collectively, the "WARRANTS") issued pursuant to the terms of the Investment
Agreement, dated as of __________, by and between the Company and MeesPierson
(the "INVESTMENT AGREEMENT"). Certain capitalized terms used herein are defined
in Section 6 hereof. The amount and kind of securities purchasable pursuant to
the rights granted hereunder and the purchase price for such securities are
subject to adjustment pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
1. Exercise of Warrant.
a. Exercise Period. The Registered Holder may exercise, in whole or
in part (but not as to a fractional share of Warrant Stock), the purchase rights
represented by this Warrant at any time and from time to time after the Date of
Issuance to and including _______, 1999 (the "EXERCISE PERIOD").
b. Exercise Procedure.
(1) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "EXERCISE TIME"):
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(a) a completed Exercise Agreement, in the form set forth in Exhibit
I hereto, executed by the Person exercising all or part of the purchase rights
represented by this Warrant (the "PURCHASER");
(b) this Warrant;
(c) if this Warrant is not registered in the name of the Purchaser,
an Assignment or Assignments in the form set forth in Exhibit II hereto
evidencing the assignment of this Warrant to the Purchaser, in which case the
Registered Holder shall have complied with the provisions set forth in Section 8
hereof; and
(d) either (x) a check payable to the Company in an amount equal to
the product of the Exercise Price multiplied by the number of shares of Warrant
Stock being purchased upon such exercise (the "AGGREGATE EXERCISE PRICE") or (y)
the surrender to the Company of securities of the Company having a Market Price
equal to the Aggregate Exercise Price of the Warrant Stock being purchased upon
such exercise. Alternatively, the Registered Holder may elect to have the
Company deliver to such holder (without payment by the Registered Holder of any
Exercise Price or of any other cash or other consideration) that number of
shares of Warrant Stock equal to the quotient obtained by dividing (A) the value
of this Warrant at the Exercise Time (determined by subtracting the Aggregate
Exercise Price in effect immediately prior to the exercise of the Warrant from
the aggregate Market Price of the Warrant Stock issuable upon exercise of this
Warrant immediately prior to the exercise of the Warrant) by (B) the Market
Price of one share of Warrant Stock immediately prior to the exercise of the
Warrant.
(2) Certificates for shares of Warrant Stock purchased upon exercise of
this Warrant shall be delivered by the Company to the Purchaser within three (3)
business days after the date of the Exercise Time. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such three business day period,
deliver such new Warrant to the Person designated for delivery in the Exercise
Agreement.
(3) The Warrant Stock issuable upon the exercise of this Warrant shall
be deemed to have been issued to the Purchaser at the Exercise Time, and the
Purchaser shall be deemed for all purposes to have become the record holder of
such Warrant Stock at the Exercise Time.
(4) The issuance of certificates for shares of Warrant Stock upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance or stamp tax in respect thereof or other cost
incurred by the Company in connection with such exercise and the related
issuance of shares of Warrant Stock.
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(5) The Company shall not close its books against the transfer of this
Warrant or of any share of Warrant Stock issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant. The Company shall from time to time take all such action as may be
necessary to assure that the par value per share of the unissued Warrant Stock
acquirable upon exercise of this Warrant is at all times equal to or less than
the Exercise Price then in effect.
(6) The Company shall assist and cooperate with any Registered Holder
or Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant (including, without limitation, making any filings required to be made
by the Company).
(7) Notwithstanding any other provision hereof, if an exercise of any
portion of this Warrant is to be made in connection with a public offering, the
exercise of any portion of this Warrant may, at the election of the holder
hereof, be conditioned upon the consummation of the public offering in which
case such exercise shall not be deemed to be effective until the consummation of
the public offering and such exercise may be limited to the number of Warrant
Shares included in such public offering.
(8) The Company shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock solely for the purpose of
issuance upon the exercise of the Warrants, such number of shares of Warrant
Stock issuable upon the exercise of all outstanding Warrants. All shares of
Warrant Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
The Company shall take all such actions as may be necessary to assure that all
such shares of Warrant Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which shares of Warrant Stock may be listed.
c. Exercise Agreement. Upon any exercise of this Warrant, the Exercise
Agreement shall be substantially in the form set forth in Exhibit I hereto,
except that if the shares of Warrant Stock are not to be issued in the name of
the Person in whose name this Warrant is registered, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the shares
of Warrant Stock are to be issued, and if the number of shares of Warrant Stock
to be issued does not include all the shares of Warrant Stock purchasable
hereunder, it shall also state the name of the Person to whom a new Warrant for
the unexercised portion of the rights hereunder is to be delivered. Such
Exercise Agreement shall be dated the actual date of execution thereof.
d. Fractional Shares. If a fractional share of Warrant Stock would, but
for the provisions of Section 1.a., be issuable upon exercise of the rights
represented by this Warrant, the Company shall, within three (3) business days
after the date of the Exercise Time, deliver to the Purchaser a check payable to
the Purchaser in lieu of such fractional share in an amount equal
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to the difference between the Market Price of such fractional share as of the
date of the Exercise Time and the Exercise Price of such fractional share.
2. Adjustment of Exercise Price and Number of Shares. In order to
prevent dilution of the rights granted under this Warrant, the Exercise Price
shall be subject to adjustment from time to time as provided in this Section 2,
and the number of shares of Warrant Stock obtainable upon exercise of this
Warrant shall be subject to adjustment from time to time as provided in this
Section 2; provided, however, there will be no adjustment of the Exercise Price
(or the number of shares obtainable upon exercise of this Warrant) as a result
of issuances or deemed issuances of Common Stock (i) for incentive or
compensatory purposes to directors, officers, employees or consultants of the
Company which are from time to time approved by the Company's Board of
Directors, including, without limitation, grants of stock option and issuance of
Common Stock upon the exercise thereof, (ii) in any transaction or related
series of transactions that in the aggregate do not exceed 2% of the Company's
Common Stock Deemed Outstanding (as defined below) as of the date of such
issuance or (iii) pursuant to options and warrants outstanding as of the date of
issuance of this Warrant.
a. Adjustment of Exercise Price and Number of Shares upon Issuance
of Common Stock. If and whenever on or after the Date of Issuance of this
Warrant, the Company issues or sells, or in accordance with Section 2.b. is
deemed to have issued or sold, any shares of Common Stock for a consideration
per share less than the Exercise Price in effect immediately prior to such time,
then immediately upon such issue or sale the Exercise Price shall be reduced to
the Exercise Price determined by dividing (1) the sum of (x) the product derived
by multiplying the Exercise Price in effect immediately prior to such issue or
sale times the number of shares of Common Stock Deemed Outstanding immediately
prior to such issue or sale, plus (y) the consideration, if any, received by the
Company upon such issue or sale, by (2) the number of shares of Common Stock
Deemed Outstanding immediately after such issue or sale.
Upon each such adjustment of the Exercise Price hereunder, the
number of shares of Warrant Stock acquirable upon exercise of this Warrant shall
be adjusted to the number of shares determined by multiplying the Exercise Price
in effect immediately prior to such adjustment by the number of shares of
Warrant Stock acquirable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
b. Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Section 2.a., the following shall
be applicable:
(1) Issuance of Rights or Options. If the Company in any manner
grants any rights or options to subscribe for or to purchase Common Stock or any
stock or other securities convertible into or exchangeable for Common Stock
(such rights or options being herein called "OPTIONS" and such convertible or
exchangeable stock or securities being herein called "CONVERTIBLE SECURITIES")
and the price per share for which Common Stock is issuable upon the
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exercise of such Options or upon conversion or exchange of such Convertible
Securities is less than the Exercise Price in effect immediately prior to the
time of the granting of such Options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to be outstanding and to have
been issued and sold by the Company for such price per share. For purposes of
this paragraph, the "price per share for which Common Stock is issuable upon
exercise of such Options or upon conversion or exchange of such Convertible
Securities" is determined by dividing (A) the total amount, if any, received or
receivable by the Company as consideration for the granting of such Options,
plus the minimum aggregate amount of additional consideration payable to the
Company upon the exercise of all such Options, plus in the case of such Options
which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the issuance or
sale of such Convertible Securities and the conversion or exchange thereof, by
(B) the total maximum number of shares of Common Stock issuable upon exercise of
such Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. No adjustment of the
Exercise Price shall be made upon the actual issuance of such Common Stock or of
such Convertible Securities upon the exercise of such Options or upon the actual
issuance of such Common Stock upon conversion or exchange of such Convertible
Securities.
(2) Issuance of Convertible Securities. If the Company in any
manner issues or sells any Convertible Securities and the price per share for
which Common Stock is issuable upon such conversion or exchange is less than the
Exercise Price in effect immediately prior to the time of such issue or sale,
then the maximum number of shares of Common Stock issuable upon conversion or
exchange of such Convertible Securities shall be deemed to be outstanding and to
have been issued and sold by the Company for such price per share. For the
purposes of this paragraph, the "price per share for which Common Stock is
issuable upon such conversion or exchange" is determined by dividing (A) the
total amount received or receivable by the Company as consideration for the
issue or sale of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the conversion
or exchange thereof, by (B) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities. No
adjustment of the Exercise Price shall be made upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities, and if
any such issue or sale of such Convertible Securities is made upon exercise of
any Options for which adjustments of the Exercise Price had been or are to be
made pursuant to other provisions of this Section 2.b., no further adjustment of
the Exercise Price shall be made by reason of such issue or sale.
(3) Change in Option Price or Conversion Rate. If the purchase
price provided for in any Options, the additional consideration, if any, payable
upon the issue, conversion or exchange of any Convertible Securities, or the
rate at which any Convertible Securities are convertible into or exchangeable
for Common Stock change at any time, the Exercise Price in effect at the time of
such change shall be readjusted to the Exercise Price which
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would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold and the number of shares of Warrant Stock
shall be correspondingly readjusted; provided that if such adjustment would
result in an increase of the Exercise Price then in effect, no adjustment shall
be made in the Exercise Price.
(4) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any right to
convert or exchange any Convertible Securities without the exercise of such
Option or right, the Exercise Price then in effect and the number of shares of
Warrant Stock acquirable hereunder shall be adjusted to the Exercise Price and
the number of shares which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued; provided that if such expiration or termination would result in an
increase in the Exercise Price then in effect, such increase shall not be
effective until 10 days after written notice thereof has been given to all
holders of the Warrants.
(5) Calculation of Consideration Received. If any Common Stock,
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be deemed to
be the net amount received by the Company therefor. In case any Common Stock,
Options or Convertible Securities are issued or sold for a consideration other
than cash, the amount of the consideration other than cash received by the
Company shall be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration
received by the Company shall be the Market Price thereof as of the date of
receipt. In case any Common Stock, Options or Convertible Securities are issued
to the owners of the non-surviving entity in connection with any merger in which
the Company is the surviving entity the amount of consideration therefor shall
be deemed to be the fair value of such portion of the net assets and business of
the non-surviving entity as is attributable to such Common Stock, Options or
Convertible Securities, as the case may be. The fair value of any consideration
other than cash or securities shall be determined jointly by the Company and the
Registered Holders of Warrants representing a majority of the shares of Warrant
Stock obtainable upon exercise of such Warrants. If such parties are unable to
reach agreement within a reasonable period of time, such fair value shall be
determined by an appraiser jointly selected by the Company and the Registered
Holders of Warrants representing a majority of the shares of Warrant Stock
obtainable upon exercise of such Warrants. The determination of such appraiser
shall be final and binding on the Company and the Registered Holders of the
Warrants, and the fees and expenses of such appraiser shall be paid by the
Company.
(6) Integrated Transactions. In case any Option is issued in
connection with the issue or sale of other securities of the Company, together
comprising one integrated transaction in which no specific consideration is
allocated to such Options by the parties thereto, the Options shall be deemed to
have been issued without consideration.
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(7) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any subsidiary and the disposition of any shares
so owned or held shall be considered an issue or sale of Common Stock.
(8) Record Date. If the Company takes a record of the holders of
Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible Securities
or (B) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
c. Subdivision or Combination of Common Stock. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of shares of Warrant
Stock obtainable upon exercise of this Warrant shall be proportionately
increased. If the Company at any time combines (by reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of shares of
Warrant Stock obtainable upon exercise of this Warrant shall be proportionately
decreased.
d. Reorganization, Reclassification, Consolidation, Merger or Sale.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets to another Person or
other transaction which is effected in such a way that holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as "ORGANIC CHANGE." Prior to the consummation of any Organic Change,
the Company shall make appropriate provision (in form and substance reasonably
satisfactory to the Registered Holders of the Warrants representing a majority
of the Warrant Stock obtainable upon exercise of all Warrants then outstanding)
to insure that each of the Registered Holders of the Warrants shall thereafter
have the right to acquire and receive in lieu of or in addition to (as the case
may be) the shares of Warrant Stock immediately theretofore acquirable and
receivable upon the exercise of such holder's Warrants, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for the number of shares of Warrant Stock immediately therefore acquirable and
receivable upon exercise of such holder's Warrants had such Organic Change not
taken place. In any such case, the Company shall make appropriate provision (in
form and substance satisfactory to the Registered Holders of the Warrants
representing a majority of the Warrant Stock obtainable upon exercise of all
Warrants then outstanding) with respect to such holders' rights and interests to
insure that the provisions of this Section 2 and Sections 3 and 4 hereof shall
thereafter be applicable to the Warrants (including, in the case of any such
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consolidation, merger or sale in which the successor entity or purchasing entity
is other than the Company, an immediate adjustment of the Exercise Price to the
value for the Common Stock reflected by the terms of such consolidation, merger
or sale, and a corresponding immediate adjustment in the number of shares of
Warrant Stock acquirable and receivable upon exercise of the Warrants, if the
value so reflected is less than the Exercise Price in effect immediately prior
to such consolidation, merger or sale). The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor entity (if other than the Company) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument (in
form and substance satisfactory to the Registered Holders of Warrants
representing a majority of the Warrant Stock obtainable upon exercise of all of
the Warrants then outstanding), the obligation to deliver to each such holder
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.
e. Certain Events. If any event occurs of the type contemplated by
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's board of directors shall make an appropriate adjustment in the
Exercise Price and the number of shares of Warrant Stock obtainable upon
exercise of this Warrant so as to protect the rights of the holders of the
Warrants; provided that no such adjustment shall increase the Exercise Price or
decrease the number of shares of Warrant Stock obtainable as otherwise
determined pursuant to this Section 2.
f. Notices.
(1) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(2) The Company shall give written notice to the Registered
Holder at least 20 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(3) The Company shall also give written notice to the Registered
Holders at least 20 days prior to the date on which any Organic Change,
dissolution or liquidation shall take place.
3. Liquidating Dividends. If the Company declares or pays a dividend
upon the Common Stock payable otherwise than in cash out of earnings or earned
surplus (determined in accordance with generally accepted accounting principles,
consistently applied) except for a stock dividend payable in shares of Common
Stock (a "LIQUIDATING DIVIDEND"), then the Company shall pay to the Registered
Holder of this Warrant at the time of payment thereof the Liquidating
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Dividend which would have been paid to such Registered Holder on the Warrant
Stock had this Warrant been fully exercised immediately prior to the date on
which a record is taken for such Liquidating Dividend, or, if no record is
taken, the date as of which the record holders of Common Stock entitled to such
dividends are to be determined.
4. Purchase Rights. If at any time the Company grants, issues or sells
any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "PURCHASE RIGHTS"), then the Registered holder of this Warrant
shall be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Warrant Stock acquirable upon complete
exercise of this Warrant immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record
is taken, the date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
5. Registration Rights. The Warrant Stock and each holder of this
Warrant shall enjoy the benefits of and be subject to the registration rights
provided in the Registration Agreement dated _________, 1996 by and between the
Company and MeesPierson ("REGISTRATION RIGHTS AGREEMENT").
6. Definitions. The following terms have meanings set forth below:
"COMMON STOCK" means the Company's common stock, par value $0.01 per
share.
"COMMON STOCK DEEMED OUTSTANDING" means, at any given time, the
number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Sections
2.b(1) and 2.b(2) hereof regardless of whether the Options or Convertible
Securities are actually exercisable at such time, but excluding any shares of
Common Stock issuable upon exercise of the Warrants].
"MARKET PRICE" means the closing bid price for the Common Stock as
of the end of normal day trading hours of the business day on which the Exercise
Time occurs on the Nasdaq national market quotation system ("NASDAQ NATIONAL
MARKET") as confirmed by Bloomberg Financial Market News or if the Exercise Time
does not occur on a day on which the Common Stock is traded, as of the close of
the most recent day on which the Nasdaq National Market was open for business.
"PERSON" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
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"WARRANT STOCK" means the Company's Common Stock issuable upon
exercise of the Warrants; provided that if there is a change such that the
securities issuable upon exercise of the Warrants are issued by an entity other
than the Company or there is a change in the class of securities so issuable,
then the term "Warrant Stock" shall mean one share of the security issuable upon
exercise of the Warrants if such security is issuable in shares, or shall mean
the smallest unit in which such security is issuable if such security is not
issuable in shares.
7. No Voting Rights; Limitations of Liability. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a stockholder
of the Company. No provision hereof, in the absence of affirmative action by the
Registered Holder to purchase Warrant Stock, and no enumeration herein of the
rights or privileges of the Registered Holder shall give rise to any liability
of such holder for the Exercise Price of Warrant Stock acquirable by exercise
hereof or as a stockholder of the Company.
8. Warrant Transferable. Subject to the transfer conditions referred to
in the legend endorsed hereon, this Warrant and all rights hereunder are
transferable, in whole or in part, without charge to the Registered Holder, upon
surrender of this Warrant with a properly executed Assignment (in the form of
Exhibit II hereto) at the principal office of the Company.
9. Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the Registered Holder at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Registered Holder
at the time of such surrender. The date the Company initially issues this
Warrant shall be deemed to be the "DATE OF ISSUANCE" hereof regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"WARRANTS."
10. Replacement. Upon receipt of evidence reasonably satisfactory to the
Company of the ownership and the loss, theft, destruction or mutilation of any
certificate evidencing this Warrant, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the Company,
or, in the case of any such mutilation upon surrender of such certificate, the
Company shall (at its expense) execute and deliver in lieu of such certificate a
new certificate of like kind representing the same rights represented by such
lost, stolen, destroyed or mutilated certificate and dated the date of such
lost, stolen, destroyed or mutilated certificate.
11. Transfer in Compliance with the Securities Act of 1933;
Indemnification.
a. This Warrant may not be assigned or transferred, except as
provided herein, and in accordance with and subject to the provisions of the
Securities Act of 1933, as amended, and the Rules and Regulations promulgated
thereunder (said Act and such Rules and Regulations
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being hereinafter collectively referred to as the "ACT"). Any purported transfer
or assignment made other than in accordance with this Section 11 shall be null
and void and of no force and effect.
b. This Warrant or the Warrant Stock may not be sold or otherwise
disposed of except in accordance with Section 4(d) of the Investment Agreement.
c. Each certificate for Warrant Stock or for any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face, in form and substance satisfactory to counsel for Company, setting forth
the restrictions on transfer contained in Section 11.a., unless, in the opinion
of counsel reasonably satisfactory to Company, such legend is not required.
d. Each holder of the Warrant, the Warrant Stock and any other
security issued or issuable upon exercise of this Warrant shall indemnify and
hold harmless the Company, its directors and officers, and each other Person, if
any, who controls the Company against any losses, claims, damages or
liabilities, joint or several, to which the Company or any such director,
officer or any such Person may become subject under the Act, any applicable
state securities law or any other statute or at common law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) directly
arise out of or are based upon the disposition by such holder of the Warrant,
Warrant Stock or other such securities in violation of the above representation.
12. Notices. Except as otherwise expressly provided herein, all notices
referred to in this Warrant shall be in writing and shall be delivered
personally, sent by express courier service (charges prepaid) or sent by
registered or certified mail, return receipt requested, postage prepaid and
shall be deemed to have been given when so delivered, sent or deposited in the
U. S. Mail (i) to the Company, at its principal executive offices and (ii) to
the Registered Holder of this Warrant, at such holder's address as it appears in
the records of the Company (unless otherwise indicated by any such holder).
13. Amendment and Waiver. Except as otherwise provided herein, the
provisions of the Warrants may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Registered
Holders of Warrants representing a majority of the shares of Warrant Stock
obtainable upon exercise of the Warrants; provided that no such action may
change the Exercise Price of the Warrants or the number of shares or class of
stock obtainable upon exercise of each Warrant without the written consent of
the Registered Holders of Warrants representing at least 50% of the shares of
Warrant Stock obtainable upon exercise of the Warrants.
14. Descriptive Headings; Governing Law. The descriptive headings of the
several Sections of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The construction, validity and interpretation
of this Warrant shall be governed by the internal law, and not the conflicts
law, of the State of New York.
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* * *
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated the Date of Issuance hereof.
ADVANCED POLYMER SYSTEMS, INC.
By____________________________
Its___________________________
[Corporate Seal]
Attest:
________________________
Secretary
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EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W- ), hereby agrees to subscribe for the purchase of
shares of the Warrant Stock covered by such Warrant having an Aggregate
Exercise Price of ($ ) and makes payment herewith in full therefor as
follows [select appropriate option]:
[by check in the amount of the Aggregate Exercise Price ($ ).]
[by surrender of (amount and description of securities surrendered) of the
Company having a Market Price equal to the Aggregate Exercise Price
($ )].
[by cashless exercise in which event the number of shares of Warrant Stock
deliverable upon exercise of such Warrant shall be determined by dividing (A)
the value of such Warrant at the Exercise Time (determined by subtracting the
Aggregate Exercise Price in effect immediately prior to the exercise of such
Warrant from the aggregate Market Price of the Warrant Stock issuable upon
exercise of such Warrant immediately prior to the Exercise of such Warrant by,
(B) the Market Price of one share of Warrant Stock immediately prior to the
exercise of such Warrant.]
Certificates for the shares of Warrant Stock subscribed for shall be issued to
the parties listed below:
Name of Issuee Address No. of Shares
-------------- ------- -------------
New Warrants for the rights not exercised hereunder shall be issued to the
parties listed below:
Name of Issuee Address No. of Shares
-------------- ------- -------------
Signature
---------------------
Address
---------------------
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EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (Certificate No. W- ) with respect to the number of shares of the
Warrant Stock covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
- ----------------- ------- -------------
Dated: Signature
------------------------------
Witness
------------------------------
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May 21, 1996
10008-0000
Advanced Polymer Systems, Inc.
3696 Haven Avenue
Redwood City, California
94036
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have acted as counsel to Advanced Polymer Systems, Inc., a Delaware
corporation (the "Company"), in connection with the Registration Statement on
Form S-3 filed with the Securities and Exchange Commission (the "Commission") on
May 21, 1996 (the "Registration Statement") for the purpose of registering under
the Securities Act of 1933, as amended, 200,000 currently issued and outstanding
shares of the Company's Common Stock, $.01 par value (the "Shares") and 85,571
shares issuable upon exercise of warrants to purchase shares of the Company s
Common Stock, $.01 par value (the "Warrant Shares"), all of which are to be sold
by a stockholder of the Company.
I.
In connection with this opinion, we have assumed the authenticity of all
records, documents and instruments submitted to us as originals, the genuineness
of all signatures, the legal capacity of natural persons and the conformity to
the originals of all records, documents and instruments submitted to us as
copies. In rendering our opinion, we have examined the following records,
documents, instruments and certificates:
(a) The Certificate of Incorporation of the Company certified by the
Secretary of State of the State of Delaware as of May 1, 1996, and
certified to us by an officer of the Company as being complete and in
full force and effect as of the date of this opinion;
(b) The Bylaws of the Company certified to us by an officer of the Company
as being complete and in full force and effect as of the date of this
opinion;
(c) A Certificate of an officer of the Company: (i) attaching records
certified to us as constituting all records of proceedings and actions
of the Board of Directors of the Company and any committees of the
Board of Directors relating to the Shares and the Warrant Shares and
(ii) certifying as to certain factual matters; and
(d) The Registration Statement;
(e) The Warrants; and
(f) A letter from The First National Bank of Boston, the Company s transfer
agent, dated May 21, 1996, as to the number of shares of the Company s
common stock that were outstanding on May 20, 1996.
This opinion is limited to the federal law of the United States of America
and the General Corporation Law of the State of Delaware and the laws of the
State of California, and we disclaim any opinion as to the laws of any other
jurisdiction. We further disclaim any opinion as to any other statute, rule,
regulation, ordinance, order or other promulgation of any other jurisdiction or
any regional or local governmental body or as to any related judicial or
administrative opinion. Our opinion to the effect that all issued and
outstanding Shares are fully paid and nonassessable is based solely on the
certificate identified in item (c) above that the consideration for the Shares
recited in the Board of Directors resolutions authorizing the sale of the Shares
was received by the Company.
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II.
Based upon the foregoing and our examination of such questions of law as we
have deemed necessary or appropriate for the purpose of this opinion, and
assuming that (i) the Registration Statement becomes and remains effective
during the period when the Shares and the Warrant Shares are offered and issued,
(ii) the full consideration stated in the Warrants is paid for each Warrant
Share and that such consideration in respect of each Warrant Share includes
payment of cash or other lawful consideration at least equal to the par value
thereof, (iii) appropriate certificates evidencing the Shares and the Warrant
Shares are executed and delivered by the Company, and (iv) all applicable
securities laws are complied with, it is our opinion that the Shares and the
Warrant Shares will be legally issued, fully paid and nonassessable.
III.
This opinion is rendered to you in connection with the Registration
Statement and is solely for your benefit. This opinion may not be relied upon by
you for any other purpose, or relied upon by any other person, firm, corporation
or other entity for any purpose, without our prior written consent. We disclaim
any obligation to advise you of any change of law that occurs, or any facts of
which we may become aware, after the date of this opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
HELLER EHRMAN WHITE & MCAULIFFE
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