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EXHIBIT 2
AGREEMENT AND PLAN
OF REORGANIZATION AND MERGER
BETWEEN
OXIS INTERNATIONAL, INC.,
OXIS ACQUISITION CORPORATION
AND
THEROX PHARMACEUTICALS, INC.
JULY 18, 1995
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EXECUTION COPY
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AGREEMENT AND PLAN
OF REORGANIZATION AND MERGER
BETWEEN
OXIS INTERNATIONAL, INC.,
OXIS ACQUISITION CORPORATION
AND
THEROX PHARMACEUTICALS, INC.
THIS AGREEMENT AND PLAN OF REORGANIZATION AND MERGER ("Agreement") is
made as of July 18, 1995 by and between OXIS INTERNATIONAL, INC., a
Delaware corporation ("OXIS"), OXIS Acquisition Corporation, a Delaware
corporation ("OXISub"), and THEROX PHARMACEUTICALS, INC., a Delaware
corporation ("Therox") and certain holders of Therox capital stock
executing the signature pages of this Agreement.
BACKGROUND
A. The parties hereto desire that Therox shall be merged with and
into OXISub (the "Merger"), that OXISub shall be the surviving corporation
and shall continue to be a wholly-owned subsidiary of OXIS and that each
share of the Common Stock, par value $.001, and Preferred Stock, par value
$0.001, of Therox which is outstanding immediately prior to the effective
time of the merger be converted as set forth in this Agreement into shares
of the Common Stock, $0.50 par value, of OXIS.
B. The parties intend that the Merger constitute a "reorganization"
under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended.
In consideration of these premises and the mutual agreements set forth
herein, THE PARTIES AGREE AS FOLLOWS:
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1
DEFINITIONS
The terms defined in this Article 1 shall, for purposes of this Agreement,
have the meanings specified in this Article 1 unless the context expressly, or
by necessary implication, requires another meaning:
1.1 Closing. "Closing" shall mean the delivery by the parties of the
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various documents contemplated by this Agreement and the satisfaction or waiver
of the other conditions set forth in this Agreement required in order to
consummate the Merger.
1.2 Closing Date. "Closing Date" shall have the meaning set forth in
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Section 2.2 of this Agreement.
1.3 Code. "Code" shall mean the United States Internal Revenue Code of
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1986, as amended.
1.4 Effective Time. "Effective Time" shall mean the time when the
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Merger Agreement is filed with the Secretary of State of the State of Delaware
and the Merger becomes effective.
1.5 Escrow Agreement. "Escrow Agreement" shall mean the Agreement
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relating to an escrow of certain shares of OXIS Common pursuant to Section 2.6
of this Agreement, in the form attached to this Agreement as Exhibit B.
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1.6 Escrow Holder. "Escrow Holder" shall mean Bank of Boston.
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1.7 Exchange Act. "Exchange Act" shall mean the United States
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Securities Exchange Act of 1934, as amended.
1.8 Exchange Agent. "Exchange Agent" shall have the meaning set forth
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in Section 2.7.1 of this Agreement.
1.9 Investment Representation Letter. "Investment Representation
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Letter" shall mean the Letter, relating to the restrictions on the
transferability of the shares of OXIS Common issued by OXIS in the Merger and
other matters, to which each Therox Holder shall be bound, in the form attached
as Exhibit D.
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1.10 Merger. "Merger" shall mean the merger of Therox with and into
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OXISub in accordance with this Agreement, the
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Merger Agreement and applicable law, resulting in OXISub continuing as a wholly-
owned subsidiary of OXIS.
1.11 Merger Agreement. "Merger Agreement" shall mean the certificate of
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merger between OXISub, OXIS, and Therox together with the related officer's
certificates as required by Delaware General Corporation Law, in the form
attached to this Agreement as Exhibit C.
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1.12 1933 Act. "1933 Act" shall mean the United States Securities Act of
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1933, as amended, and the rules, regulations and forms thereunder.
1.13 Officer-Certified Disclosure Statement. "Officer-Certified
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Disclosure Statement" shall have the meaning set forth in the first paragraph of
Article 3 of this Agreement.
1.14 OXIS Common. "OXIS Common" shall mean the Common Stock, $0.50 par
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value, of OXIS.
1.15 Percentage of OXIS Shares. "Percentage of OXIS Shares" shall mean
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the percentages set forth on the List of Therox Holders attached at Exhibit A
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hereto.
1.16 Registration Rights Agreement. "Registration Rights Agreement"
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shall mean the agreement executed by OXIS relating to the registration of the
shares of OXIS Common issued by OXIS in the Merger and in connection with the
Series B Financing in the form attached as Exhibit E.
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1.17 SEC. "SEC" shall mean the Securities and Exchange Commission.
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1.18 Series B Financing. "Series B Financing" shall mean the sale of
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shares of OXIS Series B Preferred Stock as contemplated by the Series B
Preferred Stock Purchase Agreement entered into as of the date hereof.
1.19 Series B Investors. "Series B Investors" shall mean those investors
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participating in the Series B Financing.
1.20 Subsidiary. "Subsidiary" shall mean, with respect to a particular
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party hereto, any corporation or other organization, whether incorporated or
unincorporated, of which at least a majority of the securities or interests
having by the terms thereof ordinary voting power to elect a majority of the
board of
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directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned by such party
or by one or more Subsidiaries, or by such party and one or more Subsidiaries.
1.21 Therox Common "THEROX COMMON" shall mean the Common Stock, $0.001
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par value, of Therox.
1.22 Therox Preferred. "Therox Preferred" shall mean the Preferred Stock
$0.001 par value, of Therox.
1.23 Therox Holders. "Therox Holders" shall mean the holders of THEROX
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COMMON and Therox Preferred immediately prior to the Effective Time.
1.24 Therox Option. "Therox Option" shall have the meaning set forth in
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Section 2.5 of this Agreement.
1.25 Therox Plans. "Therox Plans" shall have the meaning set forth in
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Section 2.5 of this Agreement.
1.26 Therox Stockholder Representative. "Therox Stockholder
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Representative" shall mean the person selected by the Board of Directors of
Therox and authorized by this Agreement to act as the representative of the
stockholders of Therox under the Escrow Agreement, and any substitute
representatives selected in accordance with the Escrow Agreement.
1.27 Total Number of OXIS Shares to be Issued in the Merger. "Total
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Number of OXIS Shares to be Issued in the Merger" shall have the meaning set
forth in Section 2.3 of this Agreement.
2
MERGER, CLOSING AND CONVERSION OF SHARES
2.1 Merger. Subject to and in accordance with the terms and conditions
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of this Agreement and the Merger Agreement, OXIS, OXISub and Therox shall
execute and file the Merger Agreement with the Secretary of the State of
Delaware, whereupon Therox shall be merged with OXISub, with OXISub being the
surviving corporation of such merger, pursuant to Sections 252 et seq. of the
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Delaware General Corporation Law.
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2.2 Closing. The Closing shall take place at the offices of OXIS, on
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July 18, 1995 at 10:00 a.m., or at such other location, day or time as OXIS,
OXISub and Therox shall agree (the "Closing Date") after all of the conditions
to the parties' obligations to consummate the Merger set forth in Articles 6 and
7 of this Agreement have been satisfied or waived.
2.3 Conversion of Shares. In accordance with the Merger Agreement, the
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shares of Therox Common and Therox Preferred outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof be converted, at and as of the Effective Time, into
such shares of OXIS Common as equal the Total Number of OXIS Shares to be Issued
in the Merger multiplied by each such Therox Holder"s Percentage of OXIS Shares
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as set forth on the List of Therox Holders attached as Exhibit A hereto. The
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"Total Number of OXIS Shares to be Issued in the Merger" shall equal 1,440,736.
Holders of Therox Common or Therox Preferred shall receive only whole shares of
OXIS Common; in lieu of any fractional share of OXIS Common, holders shall
receive in cash the fair market value of such fractional share valuing OXIS
Common equal to the average closing price of OXIS Common on the Nasdaq National
Market for the last ten trading days immediately preceding the Closing Date as
reported in the West Coast Edition of the Wall Street Journal.
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2.4 Additional Consideration. In addition to the OXIS Common to be
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received by the Therox Holders pursuant to Section 2.3 above, additional
consideration in an amount up to $2,000,000 may be payable to the Therox
Stockholder Representative on behalf of the Therox Holders pursuant to the terms
of this Section 2.4. Set forth on Schedule 2.4 is a list of patents and other
technology owned and being developed by Therox for commercial exploitation (the
"Therox Technology"). OXIS shall pay to the Therox Stockholder Representative
on behalf of the Therox Holders (i) an amount equal to twenty-five percent (25%)
of any licensing fees or milestone payments made by any third party licensors of
Therox Technology, and (ii) a royalty of ten percent (10%) of net sales of
products incorporating any of the Therox Technology. The aggregate of such
payments to the Therox Representatives on behalf of the Therox Holders arising
from such fees or milestone payments and such royalties shall not exceed
$2,000,000. At the election of OXIS, such payments may be made in cash or
through the issuance of shares of OXIS Common equal to such payments (which
shall be determined by valuing the OXIS Common equal to the average closing
price of the
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OXIS Common on the Nasdaq National Market for the last ten trading days
immediately preceding the date payment is made, as reported in the West Coast
Edition of the Wall Street Journal. "Net sales of products incorporating any of
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the Therox Technology" and "licensing fees or milestone payments" shall mean the
actual cash received by OXIS (or any Subsidiary of OXIS) from the sale or
license of any product or technology incorporating any of the Therox Technology,
less the value of any returns. The "value of any returns" shall equal the cash
paid by OXIS (or any Subsidiary of OXIS) to third parties with respect to
products returned to OXIS (or any Subsidiary of OXIS). Amounts owed by OXIS
under this Section 2.4 shall be calculated at the end of each of OXIS" fiscal
years and payment shall be made to the Therox Stockholder Representative on
behalf of the Therox Holders within ninety (90) days of the end of each fiscal
year. OXIS shall include with each payment a report of net sales of products
incorporating any of the Therox Technology, licensing fees or milestone payments
occurring during such year and a calculation of royalties being paid. OXIS shall
also deliver to the Therox Stockholder Representative a written summary and
review of the status of the development of the Therox Technology within one
hundred twenty (120) days of the end of each fiscal year. If at any time on or
before July 13, 2000, OXIS determines to cease to develop, or attempt to license
or sell to a third party, any of the Therox Technology, OXIS shall notify (the
"OXIS Notice") the Therox Stockholder Representative on behalf of the Therox
Holders of his decision and the Therox Stockholder Representative on behalf of
the Therox Holders shall have the right to have the ownership of such Therox
Technology that OXIS has determined not to develop, or attempt to license or
sell to a third party, assigned to the Therox Holders at no cost to the Therox
Holders. The Therox Stockholder Representative shall notify OXIS of his intent
to have the ownership transferred to them on behalf of the Therox Holders within
sixty (60) days of receipt of the OXIS Notice, or lose the right to have such
ownership transferred.
In the event any of the Therox Technology is assigned to the Therox
Stockholder Representative on behalf of the Therox Holders, OXIS shall be
entitled to (i) an amount equal to twenty-five percent (25%) of any licensing
fees or milestone payments made by any third party licensors of Therox
Technology, and (ii) a royalty of ten percent (10%) of net sales of products
incorporating any of the Therox Technology relating to sales or licenses entered
into by the Therox Holders, provided that OXIS (or an OXIS subsidiary) has
expended $100,000 on any such
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product's development. The aggregate of such payments shall not exceed
$2,000,000. The terms and definitions set forth in the preceding paragraph shall
apply to such payments by the Therox Stockholder Representative or the Therox
Holders and other obligations mutatis mutandis, given that the Therox Holders
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will be paying, and OXIS will be receiving, such payments.
OXIS' or the Therox Holders' obligation to make payments pursuant to this
Section 2.4 with respect to any specific patent or technology constituting
Therox Technology shall terminate upon the expiration of any such patent or
third party license agreement for Therox Technology, as appropriate.
2.5 Therox Options.
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2.5.1 At the Effective Time, each of the outstanding options or
warrants to purchase Therox Common (a "Therox Option") issued under Therox's
stock option plan or otherwise shall be exercised or otherwise terminated, and
OXIS shall not assume any Therox Option outstanding under the Therox Plans or
otherwise.
2.5.2 [This subsection is intentionally left blank.]
2.6 Escrow. In order to provide indemnification in accordance with
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Article 10 of this Agreement and with the Escrow Agreement, at the Effective
Time or as soon thereafter as possible, a stock certificate representing 216,110
shares of OXIS Common (fifteen percent (15%) of the shares of OXIS Common into
which the Therox Holders' shares of Therox Common or Therox Preferred were
converted pursuant to Section 2.3 of this Agreement) shall be delivered to the
Escrow Holder (which shares shall be withheld from each Therox Holder ratably
based on each such Therox Holder's Percentage of OXIS Shares as set forth on the
List of Therox Holders attached as Exhibit A hereto). The Therox Stockholder
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Representative has been selected by the Board of Directors of Therox and, in the
event of inability or unwillingness prior to the execution of the Escrow
Agreement of such person to act as a Therox Stockholder Representative, a
substitute Therox Stockholder Representative shall be similarly selected. The
Therox Stockholder Representative is authorized by this Agreement, as a specific
term and condition of the Merger to act hereunder and under the Escrow Agreement
with the powers and authority provided for herein and therein, as representative
of the Therox Holders and their successors. Approval of this Agreement and the
Merger at a special stockholders meeting of
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Therox (or action by written consent of stockholders) relating to this Agreement
and the Merger shall constitute approval of the terms and conditions of the
Escrow Agreement and ratification of the selection of the Therox Stockholder
Representative and of his authority to act hereunder and under the Escrow
Agreement on behalf of the Therox Holders and their successors. Any rights of
the Therox Holders to receive any shares placed in such escrow shall in no
circumstances be sold, assigned or otherwise transferred by them other than by
will or pursuant to the laws of descent and distribution. All certificates
representing securities delivered to the Escrow Holder shall be accompanied by
separate stock powers endorsed in blank by a Therox Stockholder Representative
on behalf of the Therox Holders. Subject to the Escrow Agreement, holders of
OXIS Common shall retain their voting and dividend rights with respect to
securities deposited with the Escrow Holder in accordance with this Section 2.6.
2.7 Exchange of Certificates
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2.7.1 Prior to the Closing Date, OXIS shall appoint Bank of Boston,
or such other bank or trust company selected by OXIS to act as exchange agent
(the "Exchange Agent") in the Merger.
2.7.2 Promptly after the Closing Date, but in no event later than
three business days thereafter, the Exchange Agent shall make available for
exchange in accordance with this Section 2.7, the shares of OXIS Common issuable
pursuant to Section 2.3 hereof, subject to the issuance of 15% of the shares
issuable to the Therox Holders into escrow pursuant to Section 2.6 hereof.
2.7.3 As soon as practicable after the Closing Date, the Exchange
Agent shall mail to each holder of record of a stock certificate that
immediately prior to the Closing Date repre sented outstanding shares of Therox
Common or Preferred (a "Certificate") whose shares are being converted into OXIS
Common pursuant to Section 2.3, (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as OXIS may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates evidencing OXIS Common. Upon surrender
of a Certificate for cancellation to the Exchange
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Agent or to such other agent or agents as may be appointed by OXIS, together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor (subject to the escrow
described in Section 2.6) the number of shares of OXIS Common to which the
holder of Therox Common or Preferred is entitled pursuant to Section 2.3 hereof
and is represented by the Certificate so surrendered. The Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Therox Common or Preferred that is not registered in the transfer records of
OXIS, or its transfer agent, OXIS Common may be delivered to a transferee if the
Certificate representing such Therox Common or Preferred is presented to the
Exchange Agent and accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.7.3, each Certificate
shall be deemed at any time after the Closing Date to represent the right to
receive upon such surrender such whole number of shares of OXIS Common as
provided in Section 2.3 and applicable law.
2.7.4 No dividends or distributions payable to holders of record of
OXIS Common after the Effective Time, or cash payable in lieu of fractional
shares, shall be paid to the holder of any unsurrendered Certificate until the
holder of the Certificate shall surrender such Certificate.
2.7.5 All OXIS Common delivered upon the surrender for exchange of
shares of Therox Common or Preferred in accordance with the terms hereof shall
be deemed to have been delivered in full satisfaction of all rights pertaining
to such shares of Therox Common or Preferred. There shall be no further
registration of transfers on the stock transfer books of Therox or its transfer
agent of the shares of Therox Common or Preferred that were outstanding
immediately prior to the Effective Time. If, after the Closing Date,
Certificates are presented for any reason, they shall be canceled and exchanged
as provided in this Section 2.7.
2.8 Securities Filings. As promptly as practicable after the date
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hereof, OXIS, with the cooperation of Therox, shall finalize and file with the
SEC any documents required by the 1933 Act or Exchange Act in connection with
the Merger and OXIS shall prepare and file with the SEC any documents required
by the United States federal securities laws in connection with the
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Merger (including, without limitation the filing of Forms 8-K and 10-C by OXIS
when appropriate). OXIS shall also take any action required to be taken under
any applicable state securities or "blue sky" laws in connection with the
issuance of the OXIS Common in the Merger. The OXIS Common to be issued in the
Merger shall not be registered under the 1933 Act and shall be issued to the
Therox Holders pursuant to an exemption from registration under the 1933 Act.
Therox shall furnish to OXIS all information concerning Therox and the Therox
Holders as may be reasonably requested in connection with any action
contemplated by this Section 2.9.
2.9 Tax Free Reorganization. The parties intend to adopt this Agreement
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as a tax free plan of reorganization and to consummate the Merger in accordance
with the provisions of Section 368(a) of the Code.
3
MUTUAL REPRESENTATIONS AND WARRANTIES
Each of OXIS (together with its Subsidiaries for purposes of Sections 3.3
through 3.25 of this Agreement) and Therox (together with its Subsidiaries for
purposes of Sections 3.3 through 3.25 of this Agreement) is a "Company" for the
purposes of this Article 3, and OXISub is a "Company" for purposes of Sections
3.1 and 3.2. Therox and the Therox Holders are collectively referred to in
Article 3 and in Article 4 as "Sellers". Any disclosure delivered by one Company
to another party pursuant to this Article shall have been delivered on or prior
to the date hereof and certified by an officer of the delivering Company as
true, accurate and complete, shall specifically refer to this Agreement and
shall identify the Section of this Agreement requiring the delivery of such
disclosure (each such disclosure being referred to herein as an "Officer-
Certified Disclosure Statement"). Except as set forth in an Officer-Certified
Disclosure Statement of such Company, (i) OXIS (and, for purposes of Sections
3.1 and 3.2, OXISub) hereby represents and warrants to Therox and (ii) Therox
and each Therox Holder (by either signing this Agreement or voting for the
Merger at the special meeting of stockholders of Therox, or executing an action
by written consent of stockholders authorizing the Merger) hereby represents to
OXIS, that:
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3.1 Organization and Authority. The Company: (i) is a corporation duly
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organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (ii) has all necessary corporate power to own
and lease its properties, to carry on its business as now being conducted and to
enter into and perform this Agreement and all agreements to which the Company is
or will be a party that are exhibits to this Agreement, and (iii) is qualified
to do business in all jurisdictions in which the failure to so qualify would
have a material adverse effect on its business or financial condition. The
Company has made available to the other party for inspection complete and
correct copies of its certificate of incorporation, as amended, and bylaws as in
effect on the date hereof and a record of any and all proceedings and actions at
all meetings of, or taken by written consent by, its Board of Directors and
stockholders, since inception, in each case, certified as true, complete and
correct copies by the Company's Secretary.
3.2 Authority Relating to this Agreement; No Violation of Other
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Instruments.
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3.2.1 The execution and delivery of this Agreement and all
agreements to which the Company is or will be a party that are exhibits to this
Agreement and the performance hereunder and thereunder by the Company have been
duly authorized by all necessary corporate action on the part of the Company,
and, assuming execution of this Agreement and such other agreements by each of
the other parties thereto, this Agreement and such other agreements will
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, subject as to enforcement:
(i) to bankruptcy, insolvency, reorganization, arrangement, moratorium and other
laws of general applicability relating to or affecting creditors' rights; and
(ii) to general principles of equity, whether such enforcement is considered in
a proceeding in equity or at law.
3.2.2 Neither the execution of this Agreement or any other agreement
to which the Company is or will be a party that is an exhibit to this Agreement
nor the performance of any of them by the Company will: (i) conflict with or
result in any breach or violation of the terms of any decree, judgment, order,
law or regulation of any court or other governmental body now in effect
applicable to the Company; (ii) conflict with, or result in, with or without the
passage of time or the giving of notice, any breach of any of the terms,
conditions and provisions of, or
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constitute a default under or otherwise give another party the right to
terminate, or result in the creation of any lien, charge, or encumbrance upon
any of the assets or properties of the Company pursuant to any indenture,
mortgage or lease, by which it or any of its assets or properties are bound,
including all Contracts (as defined in Section 3.15); (iii) permit the
acceleration of the maturity of any material indebtedness of the Company or of
any other person secured by the assets or property of the Company; or (iv)
violate or conflict with any provision of the Company's certificate of
incorporation, bylaws, or similar organizational instruments.
3.2.3 Except as contemplated in Sections 2.1, 2.8, and 7.7 of this
Agreement, no consent from any third party and no consent, approval or
authorization of, or declaration, filing or registration with, any governmental
or regulatory authority is required to be made or obtained by the Company in
order to permit the execution, delivery or performance of this Agreement or any
other agreement to which the Company is or will be a party that is an exhibit to
this Agreement by the Company, or the consummation of the transactions
contemplated by this Agreement and such other agreements.
3.3 Compliance with Law. The Company holds, all material licenses,
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permits and authorizations necessary for the lawful conduct of the Company's
business wherever conducted pursuant to all applicable statutes, laws,
ordinances, rules and regulations of all governmental bodies, agencies and
subdivisions having, asserting or claiming jurisdiction over the Company or over
any part of the Company's operations, and OXIS (with respect to OXIS) and the
Sellers (with respect to Therox) know of no violation thereof. The Company is
not in violation of any decree, judgment, order, law or regulation of any court
or other governmental body (including without limitation, applicable
environmental protection legislation and regulations, equal employment and civil
rights regulations, wages and hours regulations, the payment of social security
and other employment related taxes and occupational health and safety
legislation), which violation could have a material adverse effect on the
condition, financial or otherwise, assets, liabilities, business or results of
operations of the Company.
3.4 Investment in Others. Section 3.4 of the Officer-Certified
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Disclosure Statement of the Company contains a list of each corporation,
association, partnership, joint venture or
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other entity in which the Company, directly or indirectly, owns an equity
interest and sets forth the Company's percentage interest by voting rights and
by profits, in each such entity. Except for the entities identified in such
list, the Company does not conduct any part of its business operations through
any Subsidiaries or through any other entity in which the Company has an equity
investment.
3.5 Tax Returns and Payments. All tax returns and reports with respect
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to the Company required by law to be filed under the laws of any jurisdiction,
domestic or foreign, have been duly and timely filed and all taxes, fees or
other governmental charges of any nature which were required to have been paid
have been paid or provided for, and OXIS (with respect to OXIS) and the Sellers
(with respect to Therox) have no knowledge of any actual or threatened
assessment of deficiency or additional tax or other governmental charge or a
basis for such a claim against the Company. OXIS (with respect to OXIS) and the
Sellers (with respect to Therox) have no knowledge of any tax audit of the
Company by any taxing or other authority in connection with any of its fiscal
years; OXIS (with respect to OXIS) and the Sellers (with respect to Therox) have
no knowledge of any such audit currently pending or threatened, and there are no
tax liens on any of the properties of the Company.
3.6 Absence of Certain Changes or Events. Since the date (the "Balance
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Sheet Date") of the most recent balance sheet delivered by the Company pursuant
to Section 4.2 or Section 5.2, as the case may be (the "Balance Sheet"), except
as contemplated by this Agreement, there have been no material changes in the
condition, financial or otherwise, assets, liabilities, business or the results
of operations of the Company, other than changes in the ordinary course of
business which in the aggregate have not been materially adverse. Without
limiting the foregoing, including the materiality standard, since the Balance
Sheet Date, except as contemplated by this Agreement:
(i) the Company has not entered into any transaction other
than in the ordinary course of business;
(ii) there have been no material losses or damage to any of
the assets or properties of the Company due to fire or other casualty, whether
or not insured;
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(iii) there has been no increase or decrease in the rates of
direct compensation payable or to become payable by the Company to any employee,
agent or consultant (other than routine increases made in the ordinary course of
business), or any bonus, percentage compensation, service award or other like
benefit, granted, made or accrued to or to the credit of any such employee,
agent or consultant, or any material welfare, pension, retirement or similar
payment or arrangement made or agreed to be made by the Company (other than such
events occurring pursuant to any previously existing benefit plan);
(iv) the Company has not executed, created, amended or
terminated any contract except in the ordinary course of business;
(v) the Company has not declared or paid any dividend or
made any distribution on its capital stock, nor redeemed, purchased or otherwise
acquired any of its capital stock or issued any capital stock, other than under
its stock incentive plans identified in Section 4.1 or 5.1, as the case may be;
(vi) the Company has not received notice that there has been
a cancellation of an order for its products or a loss of a customer of the
Company, the cancellation or loss of which would materially adversely affect the
condition, financial or otherwise, assets, liabilities, business or results of
operations of the Company;
(vii) there has been no resignation or termination of
employment of any officer or key employee of the Company and the Company does
not know of the impending resignation or termination of employment of any
officer or key employee of the Company;
(viii) there has been no material change in the contingent
obligations of the Company by way of guaranty, endorsement, indemnity, warranty
or otherwise;
(ix) there have been no loans made by the Company to its
employees, officers or directors, other than travel advances and other advances
made in the ordinary course of business;
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(x) to the best of the Company's knowledge there has been no
waiver or compromise by the Company of a material right or of a material debt
owed to it;
(xi) the Company has not made or agreed to make any
disbursements or payments of any kind to any member or members of its Board of
Directors, other than travel advances or reimbursements made in the ordinary
course of business or fees or expenses for services rendered;
(xii) there have been no capital expenditures by the Company
exceeding Fifty Thousand Dollars ($50,000.00) individually;
(xiii) there has been no change in accounting methods or
practices (including without limitation, any change in depreciation or
amortization policies or rates) by the Company;
(xiv) there has been no revaluation by the Company of any of
the assets or properties of the Company;
(xv) there has been no sale or transfer of any of the assets
or properties of the Company, except in the ordinary course of business;
(xvi) there has been no loan by the Company to any person or
entity;
(xvii) there has been no commencement or notice or threat of
commencement of any governmental proceeding against or investigation of the
Company or its affairs;
(xviii) there has been no revocation of license or right to do
business granted to the Company;
(xix) the Company has not paid any obligation or liability
(fixed, contingent or otherwise) or discharged or satisfied any lien, or settled
any liability, claim, dispute, proceeding, suit or appeal pending or threatened
against it, except for current liabilities incurred in the ordinary course of
business; and
(xx) there has been no agreement or commitment by the Company
to do or perform any of the acts described in this Section 3.6.
-21-
3.7 Personal Property. The Company has good title, free and clear of
-----------------
all title defects, objections and liens, including without limitation, leases,
chattel mortgages, conditional sales contracts, collateral security arrangements
and other title or interest-retaining arrangements, to all of its machinery,
equipment, furniture, inventory and other personal property which it owns. All
such personal property as used in the business of the Company is in good
operating condition. All of the leases to personal property utilized in the
business of the Company are valid and enforceable and are not in default by the
Company, or, to the knowledge of OXIS (with respect to OXIS) and the Sellers
(with respect to Therox), are any of the other parties thereto in default
thereof.
3.8 Real Property. The Company does not own any real property. Section
-------------
3.8 of the Officer-Certified Disclosure Statement of the Company contains a list
of all leases for real property to which the Company is a party, the square
footage leased with respect to each lease and the expiration date of each lease.
All such leases are valid and enforceable and are not in default. To the best
knowledge of OXIS (with respect to OXIS) and the Sellers (with respect to
Therox), the improvements located thereon, and the furniture, fixtures and
equipment relating thereto (including plumbing, heating, air conditioning and
electrical systems), conform to any and all applicable health, fire, safety,
zoning, land use and building laws, ordinances and regulations. There are no
outstanding contracts made by the Company for any improvements made to the real
property owned, leased or occupied by the Company that have not been paid for.
3.9 Patents, Trademarks, Trade Names and Copyrights. All patents,
-----------------------------------------------
patent applications, trademarks, trade names, copyrights, processes, designs,
formulas, inventions, trade secrets, know-how, technology or other proprietary
rights which are necessary to the conduct of the Company's business are owned or
are useable by the Company. To the best knowledge of OXIS (with respect to OXIS)
and the Sellers (with respect to Therox), the conduct of any business conducted
by the Company does not infringe any patent, trademark, trade name, copyright,
trade secret, or other proprietary right of any other person. No litigation is
pending or, to the knowledge of OXIS (with respect to OXIS) and the Sellers
(with respect to Therox), has been threatened against the Company or any
officer, director, stockholder, employee or agent of the Company, for the
-22-
infringement of any patents, trademarks or trade names of any other party or
for the misuse or misappropriation of any trade secret, know-how or other
proprietary right owned by any other party nor, to the best knowledge of OXIS
(with respect to OXIS) and the Sellers (with respect to Therox), does any basis
exist for such litigation. To the best knowledge of OXIS (with respect to OXIS)
and the Sellers (with respect to Therox), there has been no infringement or
unauthorized use by any other party of any patent, trademark, trade name,
copyright, process, design, formula, invention, trade secret, know-how,
technology or other proprietary right belonging to the Company.
3.10 Litigation. Neither the Company nor any officer or director of the
----------
Company is a party to any pending or, to the best knowledge of OXIS (with
respect to OXIS) and the Sellers (with respect to Therox), threatened, action,
suit, proceeding or investigation, at law or in equity or otherwise in, for or
by any court or any governmental body which could have a material adverse effect
on: (i) the condition, financial or otherwise, assets or properties of the
Company; or (ii) the transactions contemplated by this Agreement; nor, to the
best knowledge of OXIS (with respect to OXIS) and the Sellers (with respect to
Therox), does any basis exist for any such action, suit, proceeding or
investigation. The Company is not and has not been subject to any pending or,
to OXIS' knowledge (with respect to OXIS) and the Sellers' knowledge (with
respect to Therox), threatened product liability claim; nor, to OXIS' knowledge
(with respect to OXIS) and the Sellers' knowledge (with respect to Therox), does
any basis exist for any such claim. The Company is not subject to any decree,
judgment, order, law or regulation of any court or other governmental body which
could have a material adverse effect on the condition, financial or otherwise,
assets, liabilities, business or results of operations of the Company or which
could prevent the transactions contemplated by this Agreement.
3.11 Protection of Intangible Property. To the knowledge of OXIS (with
---------------------------------
respect to OXIS) and the Sellers (with respect to Therox), each employee and
consultant who has worked on or contributed to the development of the Company's
technology, trade secrets and other proprietary rights, has executed a
proprietary rights and information agreement in the form attached to the
Officer-Certified Disclosure Statement. The Company has taken reasonable
precautions to protect its trade secrets. To OXIS' knowledge (with respect to
OXIS) and the Sellers' knowledge (with
-23-
respect to Therox), the Company's trade secrets have not been used, distributed
or otherwise exploited under circumstances which have caused, or with the
passage of time could cause, the loss of trade secret status.
3.12 Personnel. Section 3.12 of the Officer-Certified Disclosure
---------
Statement of the Company contains a list of: (i) all employment, bonus, profit
sharing, percentage compensation, employee benefit plans, incentive plans,
pension or retirement plans, stock purchase and stock option plans, oral or
written contracts or agreements with directors, officers, employees or unions,
or consulting agreements, to which the Company is a party or is subject as of
the date of this Agreement; and (ii) all group insurance programs in effect for
employees of the Company. The Company is not in default with respect to any of
the obligations so listed. The Company has delivered complete and correct
copies of all such obligations (to the extent they are in writing or written
descriptions to the extent they are oral) to the other Company. The Company
does not have and never has had any union contracts or collective bargaining
agreements with, or any other obligations to, employee organizations or groups
relating to the Company's business. All plans described in Section 3.12 of the
Officer-Certified Disclosure Statement are in full compliance with all
applicable provisions of the Code and the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and regulations issued under ERISA, and to
the knowledge of OXIS (with respect to OXIS) and the Sellers (with respect to
Therox), there are no pending, threatened or anticipated claims (other than
routine claims) for benefits by, on behalf of, or against any of such plans.
Neither the Company nor any of the plans subject to ERISA, nor any fiduciary
thereof has engaged in a transaction subject to either a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section
4975 or 4976 of the Code in connection with which the Company has directly or
indirectly incurred or may incur material liability. The Company has never
sponsored or contributed to a defined benefit pension plan as defined in Section
414(j) of the Code. Section 3.12 of the Officer-Certified Disclosure Statement
also lists the amount payable to employees of the Company under other fringe
benefit plans.
3.13 Certain Payments. To the knowledge of OXIS (with respect to OXIS)
----------------
and the Sellers (with respect to Therox), neither the Company, nor any
stockholder, director, officer,
-24-
employee or agent of the Company, has made or caused to be made, directly or
indirectly, the payment of any consideration whatsoever to any public official,
candidate for public office, political party, or other third person in
connection with the business or operations of the Company, or pertaining to the
Company's relations with any customer, supplier, or creditor, in contravention
of the law of the applicable jurisdiction.
3.14 Brokers and Finders. Neither the Company nor any stockholder,
-------------------
director, officer, employee or agent of the Company has retained any broker,
finder or investment banker in connection with the transactions contemplated by
this Agreement, except as set forth in Section 10.1. OXIS (with respect to OXIS)
and the Sellers (with respect to Therox), will indemnify and hold each other
harmless against all claims for brokers', finders' or investment bankers' fees
made or asserted by any party claiming to have been employed by the Company or
any stockholder, director, officer, employee or agent of the Company and all
costs and expenses (including the reasonable fees of counsel) of investigating
and defending such claims.
3.15 Contracts. Section 3.15 of the Officer-Certified Disclosure
---------
Statement lists all oral or written agreements, notes, instruments, or contracts
to which the Company is a party or by which its assets or properties may be
bound which involve the payment or receipt of more than Fifty Thousand Dollars
($50,000.00) (on an annual basis), or which have a term of more than one year,
or which involve intellectual property or research and development or clinical
testing, or which are employment or consulting agreements (the "Contracts").
The Company is not in default in performance of its obligations under any
material provision of such Contracts. OXIS (with respect to OXIS) and the
Sellers (with respect to Therox) have no knowledge of any violation of any
Contract by any other party thereto and OXIS with respect to OXIS) and the
Sellers (with respect to Therox), have no knowledge of any intent by any other
party to a Contract not to perform its obligations under such Contract.
3.16 Stockholders and Employees. None of the stockholders, directors or
--------------------------
management personnel of the Company is presently a party to any transaction with
the Company, including without limitation, any contract, agreement or other
arrangement: (i) providing for the furnishing of services to or by (other than
as employee); (ii) providing for rental of real or personal property to or from;
or (iii) otherwise requiring payments to or
-25-
from, any stockholder, director or management personnel, or any member of the
family of any stockholder, director or management personnel or any corporation,
trust or other entity in which any stockholder, director or management personnel
has a substantial interest or is an officer, director, investor or partner.
3.17 Absence of Environmental Liabilities. To the knowledge of OXIS
------------------------------------
(with respect to OXIS) and the Sellers (with respect to Therox), neither the
Company nor the real property owned, leased or occupied by the Company is in
violation of any applicable federal, state or local law, ordinance, regulation
or order relating to industrial hygiene, worker safety, public health and
safety, environmental protection, or Hazardous Material (as defined below) on,
under or about such real property, including the soil and ground water
underlying such real property. To the knowledge of OXIS (with respect to OXIS)
and the Sellers (with respect to Therox), no current use of or condition at the
real property owned, leased or occupied by the Company constitutes a public or
private nuisance. To the knowledge of OXIS (with respect to OXIS) and the
Sellers (with respect to Therox), any handling, transportation, storage,
treatment or use of Hazardous Material (as defined below) by the Company that
has occurred on the real property owned, leased or occupied by the Company
during the Company's ownership, tenancy or occupancy and prior to the Closing
Date has been and will be as of the Closing Date in compliance with all
applicable laws, ordinances, regulations and orders relating to Hazardous
Material. As used herein, the term "Hazardous Material" means any substance,
material or waste which is or becomes regulated as "hazardous" or "toxic" by any
local governmental authority, the State of Oregon, the State of California or
France (with respect to OXIS) or the State of Pennsylvania (with respect to
Therox), or any other state or the United States Government, including without
limitation, any material or substance which is: (1) petroleum; (2) asbestos; or
(3) defined as a "hazardous substance" under Section 101 or Section 102 of the
Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., as amended ("CERCLA"), and any regulations applicable
thereunder. To the knowledge of OXIS (with respect to OXIS) and the Sellers'
knowledge (with respect to Therox), the real property owned, leased or occupied
by the Company, including without limitation, the soil and groundwater on or
under such real property, is free of any significant release of any Hazardous
Material. No notification of release of Hazardous Material pursuant to CERCLA or
the federal Clean Water Act or any
-26-
state or local environmental law or regulatory requirement has been received by
the Company as to any of such real property. To the knowledge of OXIS (with
respect to OXIS) and the Sellers (with respect to Therox), no hazardous wastes
generated by the Company or any of its affiliates in operating the Company's
business have ever been sent directly or indirectly to any site listed or
formally proposed for listing on the National Priority List promulgated pursuant
to CERCLA or to any site listed on any state list of hazardous substances sites
requiring investigation or clean-up, nor has the Company arranged for the
transportation, treatment or disposal at any site of any Hazardous Material,
except in accordance with all applicable laws and regulations. The Company has
not received from any governmental authority or third party any requests for
information, notices of claim, demand letters, or other notification that, in
connection with the conduct of its business, it is or may be potentially
responsible with respect to any investigation or clean-up of Hazardous Material
at any time.
3.18 Power of Attorney; Suretyships. The Company has no power of
------------------------------
attorney outstanding, nor has any obligation or liability, either actual,
accrued, accruing or contingent, as guarantor, surety, cosigner, endorser, co-
maker, indemnitor or otherwise in respect of the obligation of any other person,
corporation, partnership, joint venture, association, organization or other
entity.
3.19 Business Practices. The Company has not paid, offered or agreed to
------------------
offer anything of value to any government official, political party or candidate
for government office nor has it taken any action which would cause it to be in
violation of the Foreign Corrupt Practices Act of 1977.
3.20 Accuracy of Documents and Information. The copies of all
-------------------------------------
instruments, agreements, other documents and written information set forth as,
or referenced in, Schedules or Exhibits to this Agreement or specifically
required to be furnished pursuant to this Agreement by the Company to the other
Company, including, without limitation, the Officer-Certified Disclosure
Statement of the Company, are and will be complete and correct in all material
respects. All information in the Officer-Certified Disclosure Statement of the
Company is accurate as of the date hereof or such earlier date as is specified
therein, which in no case is before March 31, 1995, and there have been no
material changes in the information set forth therein between the date so
-27-
specified and the date of this Agreement. No representations or warranties made
by the Company in this Agreement, nor any document, written information,
statement, financial statement, certificate, Schedule or Exhibit furnished
directly to the other Company pursuant to this Agreement or in the Officer-
Certified Disclosure Statement of the Company contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements or facts contained herein and therein taken as a whole not
misleading. There is no undisclosed fact which materially and adversely affects
the Company.
4
REPRESENTATIONS AND WARRANTIES OF THEROX
Therox and each of the Therox Holders (by either signing this Agreement or
voting for the Merger at the special stockholders meeting of Therox, or
executing the action by written consent of stockholders approving the Merger)
hereby represents and warrants to OXIS that except as set forth in the Officer-
Certified Disclosure Statement of Therox:
4.1 Capitalization. The authorized capital stock of Therox is Two
-------------
Million (2,000,000) shares of Common, of which 517,344 shares were issued and
outstanding as of the date hereof and One Million (1,000,000) shares of
Preferred Stock, 1,000,000 of which were issued and outstanding as of the date
hereof. Since March 31, 1995, Therox has not issued any shares of Therox Common
or Preferred other than upon exercise of outstanding options. A list of all of
the stockholders of Therox, with the number of shares owned by each as of the
date hereof, is set forth at Exhibit A hereto. All such issued and outstanding
---------
shares have been duly authorized and validly issued, and are fully paid and non-
assessable. Prior to the Effective Time, all Therox Options shall be exercised,
redeemed, lapsed or otherwise terminated. Since March 31, 1995, Therox has not
issued any additional Therox Options under the Therox Plans or otherwise.
Except as set forth in the preceding sentences, there are no outstanding
warrants, options, agreements, convertible or exchangeable securities or other
commitments pursuant to which Therox is or may become obligated to issue, sell,
purchase, retire or redeem any shares of capital stock or other securities.
-28-
4.2 Financial Statements. Therox has delivered the following financial
--------------------
statements of Therox (the "Therox Financial Statements") to OXIS: audited
Balance Sheets of Therox dated as of December 31, 1993 and 1994, together with
audited Statements of Operations, Stockholders' Equity and Cash Flow for the two
years ended December 31, 1993, and 1994 and unaudited Balance Sheet and
Statements of Operations, Stockholders' Equity and Cash Flow, dated March 31,
1995. Each Therox Financial Statement, together with the notes thereto is in
accordance with the books and records of Therox, fairly presents the financial
position of Therox and the results of operations of Therox for the period
indicated, and has been prepared in accordance with generally accepted
accounting principles consistently applied, subject to normal year-end audit
adjustments with respect to the March 31, 1995 financial statements.
4.3 Absence of Undisclosed Liabilities. As of March 31, 1995, Therox
----------------------------------
has no indebtedness or liability (absolute or contingent) which is not shown or
provided for in full on the Balance Sheet dated March 31, 1995 included in the
Therox Financial Statements. Except as set forth in the Balance Sheet dated
March 31, 1995 included in the Therox Financial Statements, Therox does not have
outstanding on the date hereof, nor will it have outstanding on the Closing
Date, any indebtedness or liability (absolute or contingent) other than those
incurred since March 31, 1995 in the ordinary course of business.
4.4 Patents, Trademarks and Trade Names. Section 4.4 of the Officer-
-----------------------------------
Certified Disclosure Statement of Therox sets forth a list of all patents,
patent applications, trademarks (registered and unregistered), and trade names
(registered and unregistered), of Therox all of which are held by Therox free
and clear of all title defects, objections, liens, and other interests of third
parties (subject to any licenses disclosed in the Officer-Certified Disclosure
Statement).
4.5 Employees. Section 4.5 of the Officer-Certified Disclosure
---------
Statement of Therox contains a list of the names, current salary rates, bonuses
paid during the last fiscal year, and accrued vacation and sick leave for all
the employees of Therox.
4.6 Insurance. Section 4.6 of the Officer-Certified Disclosure
---------
Statement of Therox contains a list of all insurance policies and bonds in force
with respect to Therox showing for
-29-
each such policy or bond: (i) the owner; (ii) the coverage of such policy or
bond; (iii) the amount of premium properly allocable to such policy or bond;
(iv) the name of the insurer; and (v) the termination date of the policy or
bond. Copies of all such insurance policies and bonds have been furnished to
OXIS. All such insurance policies and bonds are in full force and effect.
4.7 Bank Accounts. Section 4.7 of the Officer-Certified Disclosure
-------------
Statement of Therox contains a list of all bank accounts of Therox, identifying
the name of the bank, the account number, and the authorized signatories to the
account.
4.8 Therox Holders. Each Therox Holder is an "accredited investor" as
--------------
defined in Rule 501(a) as promulgated by the SEC under the 1933 Act except as
set forth on Section 4.8 of the Officer-Certified Disclosure Statement.
4.9 Notwithstanding anything in this Agreement to the contrary, Therox
and the Therox Holders expressly acknowledge and agree that OXIS shall bear no
liability to Therox or the Therox Holders or any other party, arising under the
Code or otherwise with respect to the allocation or distribution by the Therox
Stockholder Representative of the additional consideration payable pursuant to
Section 2.4 of this Agreement.
ARTICLE 4.A
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
Each Therox Holder by either signing this Agreement or voting for the
Merger at the special meeting of stockholders of Therox, or executing the action
by written consent of stockholders authorizing the Merger, hereby represents and
warrants to OXIS that, except as set forth in the Officer-Certified Disclosure
Statement of Therox, all of the Therox Common or Preferred held by such Therox
Holder is owned beneficially and of record by such Therox Holder, free and clear
of any and all liens, encumbrances and similar obligations or any voting or
pooling trusts, agreements or similar arrangements, any redemption and cross
purchase (buy/sell agreement), preemptive purchase rights, or any restrictions
on the right to transfer.
-30-
5
REPRESENTATIONS AND WARRANTIES OF OXIS
OXIS hereby represents and warrants to Therox that, except as set forth in
the Officer-Certified Disclosure Statement of OXIS:
5.1 Capitalization. The authorized capital stock of OXIS is Five
--------------
Million (5,000,000) shares of Preferred Stock, of which no shares of Series A
Preferred Stock are issued and outstanding and no shares of Series B Preferred
Stock are issued and outstanding as of the date hereof (provided, however, upon
the closing of the Series B Financing, a substantial number of shares of OXIS
Series B Preferred Stock will be issued), and Twenty-Five Million (25,000,000)
shares of OXIS Common, of which Ten Million Six Hundred Eighty-Three Thousand
Six Hundred Eighty-Seven (10,683,687) shares were issued and outstanding as of
the date hereof. All such issued and outstanding shares have been duly
authorized and validly issued, and are fully paid and non-assessable. Since
March 31, 1995, OXIS has not issued any shares of OXIS Common. As of the date
hereof, OXIS had outstanding options or warrants to purchase one million seven
hundred ten thousand seven hundred sixty-three (1,710,763) shares of OXIS Common
pursuant to the warrants or options it has issued. Since March 31, 1995, OXIS
has not issued any additional options or warrants to purchase OXIS Common.
Except as set forth in this paragraph, there are no outstanding warrants,
options, agreements, convertible or exchangeable securities or other commitments
pursuant to which OXIS is or may become obligated to issue, sell, purchase,
retire or redeem any shares of capital stock or other securities.
5.2 Financial Statements. OXIS has delivered the following consolidated
--------------------
financial statements of OXIS (the "OXIS Financial Statements") to Therox:
audited Balance Sheets of OXIS dated as of December 31, 1993 and 1994, together
with audited Statements of Operations, Stockholders' Equity and Cash Flows for
the three years ended December 31, 1993 and 1994 and unaudited Balance Sheet and
Statements of Operations, Stockholders' Equity and Cash Flow, dated March 31,
1995. Each OXIS Financial Statement together with the notes thereto is in
accordance with the books and records of OXIS and the results of operations of
OXIS for the period indicated, and has been prepared in accordance with
-31-
generally accepted accounting principles consistently applied, subject to
normal year end adjustments with respect to the March 31, 1995 financial
statements.
5.3 Absence of Undisclosed Liabilities. As of March 31, 1995, OXIS and
----------------------------------
its Subsidiaries have no indebtedness or liability (absolute or contingent)
which is not shown or provided for in full on the Balance Sheet dated March 31,
1995 included in the OXIS Financial Statements. Except as set forth in the
Balance Sheet dated March 31, 1995 included in the OXIS Financial Statements,
OXIS and its Subsidiaries do not have outstanding on the date hereof, nor will
it have outstanding on the Closing Date, any indebtedness or liability (absolute
or contingent) other than those incurred since March 31, 1995 in the ordinary
course of business or in connection with the transactions contemplated hereunder
and pursuant to the Series B Financing.
5.4 Shares Issued in Connection With the Merger. The shares of OXIS
-------------------------------------------
Common to be issued to the Therox Holders pursuant to the Merger, when issued in
accordance with this Agreement and the Merger Agreement, will be duly
authorized, validly issued, fully paid and non-assessable
5.5 Patents, Trademarks and Trade Names. Section 5.5 of the Officer-
-----------------------------------
Certified Disclosure Statement of OXIS sets forth a list of all patents, patent
applications, trademarks, registered and unregistered, and trade names,
registered and unregistered of OXIS or its Subsidiaries, all of which are held
by OXIS or its Subsidiaries free and clear of all title defects, objections,
liens and other interests of third parties (subject to any licenses disclosed in
the Officer-Certified Disclosure Statement).
6
CONDITIONS TO THE OBLIGATIONS OF OXIS AND OXISUB
The obligations of OXIS and OXISub to consummate the Merger is subject to
the fulfillment, at or before the Closing, of all the following conditions, any
one or more of which may be waived by OXIS.
6.1 Representations and Warranties True at Closing. The representations
----------------------------------------------
and warranties of Therox and the Therox Holders contained in this Agreement
shall be deemed to have been made
-32-
again at and as of the Closing with respect to the stated facts then existing
and shall be true in all material respects. The update of the Officer-Certified
Disclosure Statement shall not disclose any representation or warranty that was
true on the date of this Agreement and which is no longer true.
6.2 Covenants Performed. All of the obligations of Therox to be
-------------------
performed at or before the Closing pursuant to the terms of this Agreement shall
have been duly performed.
6.3 Certificate. At the Closing, OXIS shall have received a certificate
-----------
from Therox signed by the President of Therox to the effect that the conditions
set forth in Sections 6.1 and 6.2 have been satisfied.
6.4 Therox Stockholder Approval; Series B Financing. This Agreement and
-----------------------------------------------
the Merger shall have been duly approved by the stockholders of Therox. The
Series B Preferred Stock Purchase Agreement, among OXIS and certain stockholders
of Therox (the "Series B Purchase Agreement") shall have been fully executed and
the Series B Financing consummated simultaneously with the transactions
contemplated hereunder.
6.5 Opinion of Counsel to Therox. Counsel to Therox shall have issued an
----------------------------
opinion in favor of OXIS in the form of Exhibit F.
---------
6.6 Merger Agreement. The Merger Agreement shall have been filed with
----------------
the Secretary of State of the State of Delaware.
6.7 Material Changes in the Business Between the Date of this Agreement
-------------------------------------------------------------------
and the Closing. There shall have been no material adverse change in the
- ---------------
financial position, results of operations, assets, liabilities or business of
Therox between the date of this Agreement and the Closing.
6.8 No Action to Prevent Completion. No preliminary or permanent
-------------------------------
injunction or other order issued by any court or governmental or regulatory
authority, nor any other proceeding, which declares this agreement invalid in
any material respect or prevents the consummation of the transactions
contemplated herein, or which materially and adversely affects the financial
position, results of operations, assets, liabilities or business of Therox,
shall have been issued, instituted or in effect, and no other litigation or
proceedings (setting forth claims on which the claimant has a reasonable
likelihood of succeeding) have been
-33-
instituted or threatened which if successful would result in any of the
foregoing.
6.9 Consents. Each of OXIS and Therox shall have received in writing
--------
all consents, approvals, and waivers required in connection with the Merger (a)
from parties to the agreements, indentures, mortgages, franchises, licenses,
permits, leases, and other instruments set forth in Section 6.9 of the Officer-
Certified Disclosure Statement of OXIS and Therox and (b) from all governmental
authorities.
6.10 Escrow Agreement. The Escrow Agreement shall have been executed by
----------------
the Therox Stockholder Representative and the Escrow Holder.
6.11 Investment Representation Letter. OXIS shall have received an
--------------------------------
executed copy of the Investment Representation Letter from each Therox Holder.
6.12 Documentation. All actions, proceedings, instruments, resolutions,
-------------
certificates, and documents reasonably requested by OXIS to be executed and
delivered to OXIS in order to carry out this Agreement and to consummate the
Merger, and all of the relevant legal matters, shall be reasonably satisfactory
to OXIS and its counsel.
7
CONDITIONS TO THE OBLIGATIONS OF THEROX
The obligations of Therox to consummate the Merger are subject to the
fulfillment, at or before the Closing, of all of the following conditions, any
one or more of which may be waived by Therox:
7.1 Representations and Warranties True at Closing. The representations
----------------------------------------------
and warranties of OXIS and OXISub contained in this Agreement shall be deemed to
have been made again at and as of the Closing with respect to the stated facts
then existing and shall be true in all material respects. The update of the
Officer-Certified Disclosure Statement shall not disclose any representation or
warranty that was true on the date of this Agreement which is no longer true.
-34-
7.2 Covenants Performed. All of the obligations of OXIS and OXISub to
-------------------
be performed at or before the Closing pursuant to the terms of this Agreement
shall have been duly performed.
7.3 Certificate. At the Closing, Therox shall have received a
-----------
certificate signed by an executive officer of OXIS to the effect that the
conditions set forth in Sections 7.1 and 7.2 have been satisfied.
7.4 Stockholder Approval. This Agreement and the Merger shall have been
--------------------
duly approved by the stockholders of Therox.
7.5 Series B Financing. The Series B Financing contemplated by the
------------------
Series B Purchase Agreement shall close simultaneously with the transactions
contemplated hereunder.
7.6 Opinion of Counsel to OXIS. Jackson, Tufts, Cole & Black, counsel
--------------------------
to OXIS, shall have issued an opinion in favor of Therox in the form of Exhibit
-------
G.
- -
7.7 Merger Agreement. The Merger Agreement shall have been filed with
----------------
the Secretary of State of the State of Delaware.
7.8 Material Changes in the Business between the Date of this Agreement
-------------------------------------------------------------------
and the Closing. There shall have been no material adverse change in the
- ---------------
financial position, results of operations, assets, liabilities or business of
OXIS between the date of this Agreement and the Closing.
7.9 No Action to Prevent Completion. No preliminary or permanent
-------------------------------
injunction or other order issued by any court or governmental or regulatory
authority, nor any other proceeding, which declares this agreement invalid in
any material respect or prevents the consummation of the transactions
contemplated herein, or which materially and adversely affects the financial
position, results of operations, assets, liabilities or business of Therox or
OXIS, shall have been instituted or in effect, and no other litigation or
proceedings (setting forth claims on which the claimant has a reasonable
likelihood of succeeding) have been instituted or threatened which if successful
would result in any of the foregoing.
7.10 Consents. Each of OXIS and Therox shall have received in writing
--------
all consents, approvals, and waivers required in connection with the Merger (a)
from parties to the agreements, indentures, mortgages, franchises, licenses,
permits, leases, and
-35-
other instruments set forth in Section 6.9 of the Officer-Certified Disclosure
Statement of OXIS and Therox, and (b) from all governmental authorities.
7.11 Registration Rights Agreement. Each Therox Holder shall have
-----------------------------
received a copy of the Registration Rights Agreement signed by OXIS.
7.12 Documentation. All actions, proceedings, instruments, resolutions,
-------------
certificates, and documents reasonably requested by Therox to be executed and
delivered to Therox in order to carry out this Agreement and to consummate the
Merger, and all of the relevant legal matters, shall be reasonably satisfactory
to Therox and its counsel.
8
CONFIDENTIALITY COVENANT AND ANNOUNCEMENTS
8.1 Confidentiality. No party to this Agreement shall use or disclose
---------------
any non-public information obtained from another party for any purpose unrelated
to the Merger, and, if this Agreement is terminated prior to Closing for any
reason whatsoever, each party shall return to the other all originals and copies
(and any notes relating thereto) of all documents and papers containing
technical, financial, and other information furnished to such party pursuant to
this Agreement or during the negotiations which preceded this Agreement, and
shall neither use nor disclose any such information except to the extent that
such information is available to the public, is rightfully obtained from third
parties or is independently developed.
8.2 Announcements. No party to this Agreement shall issue a press
-------------
release or other public communication relating to this Agreement, the Merger
Agreement, the Merger, the Series B Purchase Agreement or the transactions
contemplated by the Series B Purchase Agreement, without the prior approval of
the other party. Notwithstanding the foregoing, OXIS may make such
announcements regarding the Merger or the Series B Purchase Agreement as, in the
judgment of its management after consultation with legal counsel, are necessary
to comply with securities laws or Nasdaq regulations; provided, that OXIS shall
-36-
use all reasonable efforts to allow Therox to review such announcements prior to
issuance.
9
INDEMNIFICATION
9.1 Indemnification by Therox and Therox Holders Relating to Agreement.
-------------------------------------------------------------------
Therox, and by approval of this Agreement and the Merger at the special
stockholders' meeting of Therox, or execution of the action by consent of
stockholders authorizing the Merger, each of the Therox Holders who votes for
the Merger or signs this Agreement, agrees that the amounts deposited in escrow
pursuant to Section 2.6 of this Agreement (in addition to the amounts set forth
in Section 9.3 hereof) shall be used to defend, indemnify and hold OXIS and its
attorneys and agents and each person who controls OXIS within the meaning of the
1933 Act (collectively, for Section 9.1 hereof, "OXIS") harmless from and
against, and to reimburse OXIS with respect to, any and all losses, damages,
liabilities, claims, judgments, settlements, costs and expenses (including
reasonable attorneys' fees) of every nature incurred by OXIS by reason of or
arising out of or in connection with (i) any breach by Therox or any of the
Therox Holders of any representation or warranty of Therox or any of the Therox
Holders contained in this Agreement or in any certificate or other document
delivered to OXIS pursuant to the provisions of this Agreement, including,
without limitation, the Officer-Certified Disclosure Statement of Therox, or
(ii) the failure, partial or total of Therox or any of the Therox Holders to
perform any agreement or covenant required by this Agreement to be performed by
it. Such indemnification is an after-tax indemnity for after-tax losses, taking
into account whether or not any item indemnified against is deductible for tax
purposes when paid or accrued by OXIS or Therox or the Therox Holders and
whether or not any receipt of indemnity payments hereunder is taxable to OXIS.
It is expressly agreed that a diminution in the value of the business of Therox
by reason of any of the foregoing shall be deemed a "loss" for purposes of this
Article 9.
9.2 Indemnification by OXIS Relating to Agreement. OXIS agrees to
---------------------------------------------
defend, indemnify and hold harmless Therox and the Therox Holders from and
against, and to reimburse Therox and the Therox Holders with respect to, any and
all losses, damages,
-37-
liabilities, claims, judgments, settlement, costs and expenses (including
reasonable attorneys' fees) of every nature incurred by Therox or the Therox
Holders by reason of or arising out of or in connection with (i) any breach by
OXIS of any representation or warranty of OXIS contained in this Agreement or in
any certificate or other document delivered to Therox pursuant to the provisions
of this Agreement, including, without limitation, the Officer-Certified
Disclosure Statement of OXIS, or (ii) the failure, partial or total, of OXIS to
perform any agreement or covenant required to be performed by it. Such
indemnification is an after tax indemnity for after tax losses taking into
account whether or not any item indemnification against is deductible for tax
purposes when paid or accrued by Therox or OXIS and whether or not any receipt
of indemnity payments hereunder is taxable to Therox or the Therox Holders.
9.3 Maximum Liability.
-----------------
9.3.1 Therox Maximum Liability. Following the Closing, the shares
------------------------
of OXIS Common to be issued in this transaction to the Therox Holders who vote
for or approve the Merger or sign this Agreement (in addition to the shares of
OXIS Common to be deposited in escrow in accordance with Section 2.6 of this
Agreement) and any proceeds from the sale of any such shares of OXIS Common
shall constitute an absolute limit on the obligation of Therox and the Therox
Holders to indemnify and hold OXIS harmless under this Article 9. The shares of
OXIS Common for purposes of this Section 9.3.1 shall be deemed to have the value
of the average closing price of OXIS Common on the Nasdaq National Market for
the ten trading days immediately preceding the Effective Time as reported in the
West Coast Edition of the Wall Street Journal. At the option of the Therox
-------------------
Holders, post-closing claims made by OXIS under this Article 9 may be settled by
a return of OXIS Common shares issued hereunder or in cash. The liability of
the Therox Holders under this Agreement shall be several and not joint.
9.3.2 OXIS Maximum Liability. The liability of OXIS for its
----------------------
indemnification obligations pursuant to this Article 9 shall be satisfied by the
issuance of OXIS Common in the maximum aggregate amount of 1,440,736 shares (as
adjusted for any future stock splits or reverse splits), which shares shall
constitute an absolute limit on the obligation of OXIS to indemnify and hold
Therox and the Therox Holders harmless under this Article 9. The shares of OXIS
Common for purposes of this Section 9.3.2 shall
-38-
have the value of the average closing price of OXIS Common on the Nasdaq
National Market for the ten trading days immediately preceding the Effective
Time as reported in the West Coast Edition of the Wall Street Journal. At the
-------------------
option of OXIS, any claims made by Therox or the Therox Holders under this
Article 9 may be settled by payment of cash in lieu of shares of OXIS Common.
9.4 Limitation on Indemnification. No party shall be liable for
-----------------------------
indemnification under this Agreement unless a claim is in excess of $10,000 and
the aggregate amount of all such claims exceeds $75,000, in which case the
liability for indemnification under this Agreement shall include such amounts in
excess of $10,000.
10
MISCELLANEOUS
10.1 Expenses. Each of OXIS and Therox shall pay its own costs and
--------
expenses, including legal, accounting and investment banking fees and expenses,
relating to this Agreement, the negotiations leading up to this Agreement and
the transactions contemplated by this Agreement (it being agreed that at the
Closing no such costs or expenses shall be owed by, and exist as a liability of,
Therox). Therox represents and warrants that it has not used any broker or
finder in connection with the Merger. OXIS has entered into an agreement with
Wasserstein Perella & Co., Inc. pursuant to which Wasserstein Perella & Co.,
Inc. may be entitled to a fee in connection with the closing of certain of the
transactions described herein and OXIS agrees to indemnify and hold harmless the
Therox Holders from any claims made by Wasserstein Perella & Co., Inc. arising
from such agreement.
10.2 Amendment. This Agreement shall not be amended except by a writing
---------
duly executed by all parties.
10.3 Entire Agreement. This Agreement, including the Exhibit, Schedules,
----------------
and other documents delivered pursuant to this Agreement, contains all the terms
and conditions agreed upon by the parties relating to the subject matter of this
Agreement and supersedes all prior agreements, negotiations, correspondence,
undertakings, and communications of the parties, whether oral or written,
respecting that subject matter, including the letter of intent dated May 17,
1995, as amended.
-39-
10.4 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Delaware.
10.5 Headings. The headings contained in this Agreement are intended for
--------
convenience and shall not be used to determine the rights of the parties.
10.6 Mutual Contribution. The parties to this Agreement and their
-------------------
counsel have mutually contributed to its drafting.
10.7 Notices. All notices, requests, demands, and other communications
-------
made in connection with this Agreement shall be in writing and shall be deemed
to have been duly given on the date of delivery if delivered by hand delivery or
by facsimile to the persons identified below or five days after mailing if
mailed by certified or registered mail postage prepaid return receipt requested
addressed as follows:
If to OXIS:
OXIS International, Inc.
6040 N. Cutter Circle, Suite 317
Portland, Oregon 97217-3935
Attention: President
Facsimile: (503) 283-4058
Confirmation Number: (503) 283-3911
with a copy to:
Jackson, Tufts, Cole & Black
60 S. Market Street, 10th Floor
San Jose, California 95113
Attention: Richard Scudellari, Esq.
Facsimile: (408) 998-4889
Confirmation Number: (408) 998-1952
If to Therox:
Therox Pharmaceuticals, Inc.
20600 Chagrin Blvd., Suite 1150
Shaker Heights, OH 44122-5334
Attention: Timothy G. Biro, President
Facsimile: ________________________
Confirmation Number: ______________
-40-
with a copy to:
Terri N. Gelberg
Gelberg & Associates, P.C.
3700 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103-2793
Facsimile: (215) 994-2222
Confirmation Number: (215) 994-5321
Such addresses may be changed, from time to time by means of a notice given
in the matter provided in this section.
10.8 Severability. If any provision of this Agreement is held to be
------------
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the full extent.
10.9 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties contained in this Agreement, including the Exhibits, Schedules and
other documents delivered pursuant to this Agreement shall survive the Effective
Time until the date eighteen (18) months following the Effective Time.
10.10 Waiver. Waiver of any term or condition of this Agreement by any
------
party shall not be construed as a waiver of a subsequent breach or failure of
the same term or condition, or a waiver of any other term or condition in this
Agreement.
10.11 Assignment. Neither party may assign, by operation of law or
----------
otherwise, all or any portion of its rights or duties under this Agreement
without the prior written consent of the other party, which consent may be
withheld in the absolute discretion of the party asked to give consent.
10.12 Counterparts. This Agreement may be signed in counterparts with the
------------
same effect as if the signatures to each party were upon a single instrument.
All counterparts shall be deemed an original of this Agreement.
-41-
IN WITNESS WHEREOF, OXIS, OXISub, and Therox have executed this Agreement as of
the date first above written.
THEROX PHARMACEUTICALS, INC. OXIS INTERNATIONAL, INC.
By: ____________________________ By: _______________________________
Name: Ray R. Rogers
Title: Chairman of the Board
OXIS ACQUISITION CORPORATION
By: _______________________________
Ray R. Rogers
Chairman of the Board
-42-
EXHIBIT A
---------
OXIS COMMON SHARE DISTRIBUTION
------------------------------
Therox Shareholder Therox Shares OXIS Distribute Escrow
- ------------------ ------------- ---- ---------- ------
Common
------
BVP II, L.P. 500,000 Preferred 532,547 452,665 79,882
S.R. One,. Limited 500,000 Preferred 532,547 452,665 79,882
OSURF 120,000 Common 87,131 74,062 13,069
W. Weglicki 100,000 Common 72,610 61,718 10,892
D. Witiek 73,000 Common 53,005 45,054 7,951
B. Freeman 30,000 Common 21,783 18,515 3,268
P. Triozzi 6,000 Common 4,357 3,703 654
D. Feller 4,000 Common 2,904 2,469 435
C. Brogan 3,000 Common 2,179 1,852 327
S.R. One, Limited (Bridge 23,344 Common 16,950 14,408 2,542
Loan)
BVP II, L.P. (Options) 25,000 Common 18,152 15,430 2,722
J. Ziemniak (Options) 100,000 Common 72,610 61,718 10,892
R. Johnson (Options) 20,000 Common 14,522 12,344 2,178
R. Borchardt (Options) 8,000 Common 5,809 4,937 872
A. Hopper (Options 5,000 Common 3,630 3,086 544
----------------- --------- --------- -------
TOTAL 1,517,344 Shares 1,440,736 1,224,626 216,110
-43-
ESCROW AGREEMENT
----------------
(Therox Pharmaceuticals, Inc.)
THIS ESCROW AGREEMENT ("Escrow Agreement") is made as of July 18, 1995
among OXIS International, Inc., a Delaware corporation ("OXIS"), and Timothy G.
Biro (the "Representative"), and The First National Bank of Boston ("Escrow
Holder").
BACKGROUND
A. Pursuant to an Agreement and Plan of Reorganization and Merger (the
"Merger Agreement") dated as of July 18, 1995, among OXIS, OXIS Acquisition
Corporation, a Delaware corporation ("OXISub"), and Therox Pharmaceuticals,
Inc., a Delaware corporation ("Therox"), Therox will be merged with and into
OXISub and OXISub will continue to be the surviving corporation and a wholly-
owned subsidiary of OXIS (the "Merger").
B. This Escrow Agreement is being entered into pursuant to Section 2.6
and Article 9 of the Merger Agreement. Execution and delivery of this Escrow
Agreement is a condition to the obligations of the parties to the Merger
Agreement to consummate the Merger.
C. As set forth in Section 2.6 of the Merger Agreement, by their approval
of the Merger Agreement and the Merger, the holders of shares of the common and
preferred stock of Therox have authorized the Representative to act as the
representative of those persons who, immediately prior to the effective time of
the Merger, are holders (the "Former Shareholders") of shares of the common or
preferred stock of Therox under this Escrow Agreement with the powers and
authority provided herein.
D. Pursuant to the Merger Agreement, the shares of the common and
preferred stock of Therox that are outstanding immediately prior to the
effective time of the Merger, other than dissenting shares, will be converted
into shares of the common stock, par value $0.50 per share, of OXIS ("OXIS
Common").
E. Section 2.6 of the Merger Agreement provides that at the effective
time of the Merger, certain of the shares of the common stock of OXIS issued in
the Merger shall be delivered on
- 44 -
behalf of the Former Shareholders to the Escrow Holder in order to secure the
indemnification obligations of Therox and the Former Shareholders set forth in
Article 9 of the Merger Agreement.
NOW, THEREFORE, in consideration of the entering into of the Merger
Agreement, the parties agree as follows:
ARTICLE 1
DEFINITIONS
-----------
Unless otherwise defined herein, capitalized terms used herein shall have
the meanings set forth in the Merger Agreement. In addition, for the purposes of
this Escrow Agreement, the following terms shall have the following meanings:
1.1 Claim Certificate. "Claim Certificate" shall mean a certificate
-----------------
signed by an officer of OXIS stating (i) that an Indemnified Person has incurred
or reasonably believes in good faith it may in the future incur the amount of
Damages specified in such Claim Certificate, (ii) in reasonable detail, the
facts alleged as the basis for such claim and the section or sections of the
Merger Agreement alleged to have been violated, and (iii) the number of Escrowed
Shares to which OXIS believes the Indemnified Person would be entitled with
respect to such Damages (if the Representative determines to pay such Damages
with Escrowed Shares rather than cash).
1.2 Damages. "Damages" shall mean any and all losses, damages,
-------
liabilities, claims, judgments, settlements, costs and expenses (including
reasonable attorneys' fees) of the type referred to in Article 9 of the Merger
Agreement.
1.3 Escrow Fund. "Escrow Fund" shall mean the Escrowed Shares then held
-----------
by the Escrow Holder.
1.4 Escrowed Share. An "Escrowed Share" shall mean a share of OXIS Common
--------------
delivered to the Escrow Holder by the Exchange Agent on behalf of the Former
Shareholders in accordance with Section 2.6 of the Merger Agreement, together
with any and all other shares of OXIS Common, other securities of OXIS or any
other issuer, other property or cash received or receivable in respect of such
share of OXIS Common, including, without limitation, any and all securities,
property or cash to be issued
- 45 -
or distributed in connection with any recapitalization, reclassification, split-
up, merger, consolidation, exchange, stock dividend, stock split or similar
event declared or effected with respect to shares of OXIS Common.
1.5 Indemnified Person. "Indemnified Person" shall mean OXIS and any
------------------
other entity or person who is a beneficiary of the indemnification obligations
of Therox contained in Article 9 of the Merger Agreement.
1.6 Value. "Value" when used with respect to an Escrowed Share, shall
-----
mean the average closing bid price of the OXIS common stock on the Nasdaq
National Market for the ten trading days immediately preceding the Effective
Time as defined in the Merger Agreement as reported in The Wall Street Journal,
-----------------------
as adjusted for stock splits, stock dividends, recapitalizations and the like.
ARTICLE 2
CREATION OF ESCROW
------------------
2.1 Purpose. This Escrow Agreement is being executed and delivered, and
-------
the deposit of the Escrow Fund hereunder is being made, for the purpose of
securing the indemnification obligations of Therox and the Former Shareholders
set forth in Article 9 of the Merger Agreement.
2.2 Creation of Escrow Fund. At or promptly after the Effective Time, the
-----------------------
Representative shall instruct the Exchange Agent to deposit with the Escrow
Holder certificates representing those shares of OXIS Common required to be so
deposited under Section 2.6 of the Merger Agreement registered in the names of
the Former Shareholders. OXIS and the Former Shareholders agree that any other
securities, property or cash which thereafter are to become part of the Escrow
Fund as provided in Section 1.4 of this Escrow Agreement, shall be promptly
deposited with the Escrow Holder upon receipt by or on behalf of the Former
Shareholders, and receipt by the Escrow Holder on behalf of the Former
Shareholders shall be deemed receipt by the Former Shareholders. Certificates
representing securities deposited in the Escrow Fund shall be accompanied by
separate stock powers endorsed in blank by the Representative on behalf of the
Former Shareholders.
- 46 -
2.3 Voting Rights. The Former Shareholders shall retain their voting
-------------
rights with respect to securities held by the Escrow Holder unless and until
such securities are delivered by the Escrow Holder to OXIS in accordance with
this Escrow Agreement.
2.4 Dividends. The Former Shareholders shall retain their rights to
---------
receive any cash dividends or other monetary distributions with respect to
securities held by the Escrow Holder unless and until such securities are
delivered by the Escrow Holder to OXIS in accordance with this Escrow Agreement.
ARTICLE 3
CLAIMS
------
3.1 Payment After Delivery of Claim Certificate. If OXIS gives the Escrow
-------------------------------------------
Holder and the Representative a Claim Certificate, then, as soon as practicable
but not earlier than 60 days after the giving of such Claim Certificate, the
Escrow Holder, subject to the requirements of Section 3.2 hereof, shall deliver
to OXIS, from the Escrow Fund, on behalf of the Indemnified Person that number
of Escrowed Shares having a Value (to the extent the Escrow Fund is sufficient
for such purpose) equal to the Damages specified in such Claim Certificate
unless the Representative shall have notified the Escrow Holder and OXIS that
they elect to pay all or part of such Damages in cash, in which case such
payment shall be made by certified or bank check delivered to the Escrow Holder
for re-delivery to OXIS prior to the end of such 60 day period.
3.2 Disputes Respecting Claims. Unless, within 60 days after the giving
--------------------------
of any Claim Certificate by OXIS, OXIS and the Escrow Holder receive a written
notice from the Representative stating that the Representative questions the
accuracy of a matter asserted in such Claim Certificate, such Claim Certificate
shall constitute full authority to the Escrow Holder to take the action provided
for in Section 3.1 and shall be conclusive and binding on all parties hereto and
on the Former Shareholders. If, however, the Representative timely gives such a
notice, the Escrow Holder shall not make any distribution to OXIS of that
portion of the Escrow Fund which the Representative asserts in his notice should
not be so distributed until (i) the Escrow Holder receives the written consent
of the Representative and OXIS to such distribution or (ii) there is a final
decision of an arbitrator in an action between OXIS and the Representative with
- 47 -
respect to the disputed amount pursuant to Section 7.7 hereof. The reasonable
expenses, including attorneys' fees, of all of the parties to any such
arbitration, or any lawsuit or other proceeding arising hereunder, shall be
reasonably apportioned among them, taking into consideration the outcome of the
arbitration, lawsuit or other proceeding and the reasonableness of the conduct
of each such party in connection with the dispute over the disposition of that
portion of the Escrow Fund which was in controversy, in light of the facts known
to such party at the time such party engaged in such conduct. Any and all
amounts payable to OXIS or any other Indemnified Person pursuant to the
preceding sentence shall be paid out of the Escrow Fund as though it were an
item of Damages.
3.3 Notice and Defense of Third Party Claims. No later than 15 days after
----------------------------------------
receipt by OXIS of a written notice of any action, suit or proceeding commenced
against OXIS or the Company which might be a basis for indemnification under
Article 9 of the Merger Agreement, OXIS will give the Representative written
notice thereof and will afford them an opportunity to defend such action, suit
or proceeding on behalf of the Former Shareholders, at the expense of the
Representative or the Former Shareholders; provided however, that OXIS may
participate in the control of such defense if the Representative and Former
Shareholders do not diligently defend such action, suit or proceeding.
ARTICLE 4
DISTRIBUTION OF ESCROW FUND
---------------------------
4.1 Distribution of Undisputed Amounts.
----------------------------------
A. Provided that there are no outstanding claims pursuant to Article
3 hereof, on the date twelve months after the date of this Escrow Agreement, the
Escrow Holder shall promptly distribute one-third (1/3) of the Escrow Fund to
the Representative for the benefit of the Former Shareholders, or to the Former
Shareholders, as the Representative shall direct in writing, such written
direction to include the calculation of the pro rata distribution according to
the number of shares of Therox Common and Therox Preferred held by the Former
Shareholders at the Effective Time.
B. Subject to Section 4.2 hereof, on the date eighteen months after
the date of this Escrow Agreement (the
- 48 -
"Escrow Termination Date") the Escrow Holder shall promptly distribute the
entire remaining Escrow Fund to the Representative for the benefit of the Former
Shareholders, or to the Former Shareholders, as the Representative shall direct
in writing, such written direction to include the calculation of the pro rata
distribution according to the number of shares of Therox Common and Therox
Preferred held by the Former Shareholders at the Effective Time.
4.2 Distribution of Disputed Amounts. Notwithstanding the provisions of
--------------------------------
Section 4.1 hereof, if, prior to the Escrow Termination Date, OXIS shall have
given a Claim Certificate to the Representative and the Escrow Holder and a
dispute, in accordance with Section 3.2 hereof, respecting that Claim
Certificate or the subject matter of such Claim Certificate has not yet been
resolved in accordance with Section 3.2, then the Escrow Holder shall continue
to hold that portion of the Escrow Fund which is the subject of such dispute.
Any portion of the Escrow Fund so withheld shall continue to be held by the
Escrow Holder until it receives authorization to distribute the portion of the
Escrow Fund so withheld in accordance with the second sentence of Section 3.2.
ARTICLE 5
ESCROW HOLDER
-------------
5.1 Limitation of Liability. It is agreed that the duties of the Escrow
-----------------------
Holder are limited to those herein specifically provided and are ministerial in
nature. It is further agreed that the Escrow Holder shall incur no liability
whatever except by reason of its willful misconduct or gross negligence. The
Escrow Holder shall be under no obligation in respect of the Escrow Fund other
than faithfully to follow the instructions herein contained or delivered to the
Escrow Holder in accordance with this Escrow Agreement, and Escrow Holder is not
charged with knowledge of or any duties or responsibilities in connection with
any other document or agreement. The Escrow Holder may consult with counsel and
shall be fully protected in any action taken or omitted in good faith in
accordance with the advice or opinion of such counsel. It shall not be required
to institute legal proceedings of any kind. It shall have no responsibility for
the genuineness or validity of any document or other item deposited with it, and
it shall be fully protected in acting in accordance
- 49 -
with this Escrow Agreement upon any written instructions given to it and
believed by it to have been duly executed by OXIS and/or by the Representative,
as the case may be, in accordance herewith.
5.2 Compensation. OXIS agrees to pay the reasonable fees of the Escrow
------------
Holder for its services hereunder for so long as the Escrow Holder holds all or
any portion of the Escrow Fund.
5.3 Resignation. The Escrow Holder, or any successor to it hereafter
-----------
appointed, may resign at any time by giving 30 days notice in writing to OXIS
and the Representative and, upon the appointment of a successor Escrow Holder as
hereinafter provided, shall be discharged from any further duties hereunder. In
the event of such resignation, a successor Escrow Holder, which shall be a bank
or trust company organized under the laws of the United States of America, or
any state thereof, shall be appointed by OXIS, subject to the approval of the
Representative, which approval shall not be unreasonably withheld. Any such
successor Escrow Holder shall deliver to OXIS and the Representative a written
instrument accepting such appointment hereunder, and thereupon it shall succeed
to all of the unaccrued rights and duties of the Escrow Holder hereunder and
shall be entitled to receive all of the then remaining Escrow Fund. If no
successor is appointed, the Escrow Holder may apply to a court of competent
jurisdiction for such appointment.
5.4 Indemnification. In consideration of its acceptance of the
---------------
appointment as Escrow Holder hereunder, OXIS agrees to indemnify and hold the
Escrow Holder harmless as to any liability incurred by it to any person, firm or
corporation by reason of its having accepted the same or in carrying out any of
the terms hereof, and to reimburse Escrow Holder for all its reasonable costs
and expenses, including, among other things, counsel fees and expenses, incurred
by reason of any matter as to which an indemnity is paid; provided, however,
that no indemnity shall be payable in the case of the Escrow Holder's gross
negligence or willful misconduct.
ARTICLE 6
REPRESENTATIVE
--------------
6.1 Action by Representative. The Representative shall have full power
------------------------
and authority to represent all Former
- 50 -
Shareholders with respect to all matters arising under this Escrow Agreement and
with respect to the obligations set forth in Article 9 of the Merger Agreement.
All action taken by the Representative hereunder shall be binding upon the
Former Shareholders as if expressly confirmed and ratified in writing by each of
them. Without limiting the generality of the foregoing, the Representative shall
have full power and authority on behalf of all of the Former Shareholders to
interpret all the terms and provisions of this Escrow Agreement, to give all
approvals and take any other actions with respect to the Former Shareholders in
connection with the subject matter of this Escrow Agreement and to consent to
any amendment hereof. All action taken by the Representative hereunder shall be
conclusive and binding upon all of the Former Shareholders. OXIS may deal solely
with and rely solely upon the Representative as the representative of all the
Former Shareholders. The expenses of the Representative shall be payable out of
any Escrowed Shares remaining upon the termination of the Escrow Fund; provided,
however, in no event shall OXIS be obligated with respect to such expenses.
6.2 Successor Representative. In case of the resignation, death or
------------------------
inability to act of the Representative, a successor or successors shall be named
from among the Former Shareholders by the Former Shareholders. Each such
successor Representative shall have all of the power, authority, rights and
privileges hereby conferred upon an original Representative, and the term
"Representative" as used herein shall be deemed to include each such successor
Representative.
6.3 Limitation of Liability. The Representative shall incur no liability
-----------------------
to the Former Shareholders except by reason of his willful misconduct or gross
negligence.
ARTICLE 7
MISCELLANEOUS
-------------
7.1 Notices. Except as expressly provided in this Escrow Agreement, all
-------
notices (including any Claim Certificate) given in connection with this Escrow
Agreement shall be deemed to have been duly given on the date of delivery if
personally delivered, or three days after mailing if mailed by certified or
registered mail, return receipt requested, addressed as follows:
- 51 -
If to OXIS:
----------
OXIS International, Inc.
6040 N. Cutter Circle, Ste. 317
Portland, Oregon 97217-3935
Attention: President
With a copy to:
--------------
Jackson, Tufts, Cole & Black
60 South Market Street
San Jose, California 95113
Attention: Richard Scudellari, Esq.
If to the Representative:
------------------------
Brantley Venture Partners II, L.P.
20600 Chagrin Blvd.
Suite 1150
Cleveland, OH 44122
Attn: Timothy G. Biro
With a copy to:
---------------
Gelberg & Associates, P.C.
3700 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attn: Terri Gelberg, Esq.
If to the Escrow Holder
-----------------------
The First National Bank of Boston
150 Royall Street; M/S 45-02-15
Canton, MA 02021
Attention: Corporate Trust Administration
Such addresses may be changed from time to time by means of a notice given in
the manner provided in this Section 7.1.
7.2 Successors and Assigns. Except as otherwise provided herein, neither
----------------------
the Escrow Holder nor the Representative may assign, by operation of law or
otherwise, all or any portion of its or their rights, obligations or liabilities
under this Escrow Agreement without the prior written consent of OXIS, which
- 52 -
consent may be withheld in the absolute discretion of OXIS. Any attempted
assignment in violation of this Section 7.2 shall be voidable. This Escrow
Agreement and all action taken hereunder in accordance with its terms shall be
binding upon and inure to the benefit of OXIS and the other Indemnified Persons
and their respective successors, assigns, heirs, executors, administrators and
legal representatives, the Former Shareholders and their respective successors,
assigns, heirs, executors, administrators and legal representative, the Escrow
Holder and its successors and the Representative and his successors, assigns,
heirs, executors, administrators and legal representatives.
7.3 Headings. The headings contained in this Escrow Agreement are
--------
intended principally for convenience and shall not, by themselves, determine the
rights of the parties to this Escrow Agreement.
7.4 Waiver. Waiver of any term or condition of this Escrow Agreement by
------
any party shall not be construed as a waiver of a subsequent breach or failure
of the same term or condition, or a waiver of any other term or condition of
this Escrow Agreement.
7.5 Amendment. This Escrow Agreement may be amended only with the written
---------
consent of OXIS, the Representative and the Escrow Holder.
7.6 Governing Law. This Escrow Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware as applied to
agreements entered into and entirely to be performed within the state.
7.7 Arbitration. The parties hereto agree that if any Claim for Damages
-----------
is made under this Escrow Agreement and such Claim does not involve any party
other than the parties to this Escrow Agreement, then such Claim shall be
submitted to binding arbitration in accordance with the Commercial Rules of the
American Arbitration Association with such arbitration to be held in Wilmington,
Delaware. The results, determination, finding, judgment or award rendered
through such arbitration, shall be final and binding on each of the parties
hereto and not subject to appeal.
- 53 -
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
signed the day and year first above written.
OXIS: OXIS INTERNATIONAL, INC.
By: ____________________________
Name:
Title:
REPRESENTATIVE: _________________________________
Timothy G. Biro
ESCROW HOLDER: THE FIRST NATIONAL BANK OF BOSTON
By: ____________________________
Name:
Title:
- 54 -
PLAN AND AGREEMENT
OF MERGER OF
THEROX PHARMACEUTICALS, INC.
INTO
OXIS ACQUISITION CORPORATION
THIS PLAN AND AGREEMENT OF MERGER, dated as of July 18, 1995, among Therox
Pharmaceuticals, Inc., a Delaware corporation ("Therox"), OXIS Acquisition
Corporation, a Delaware corporation ("OXISub" or the "Surviving Corporation"),
said two corporations being herein sometimes collectively called the
"Constituent Corporations," and OXIS International, Inc., a Delaware corporation
("OXIS"), as third party hereto.
WITNESSETH:
WHEREAS, OXISub is a corporation duly organized and existing under the laws
of the State of Delaware, having been incorporated on June 29, 1995, by a
Certificate of Incorporation filed with the Secretary of State and recorded in
the Office of the Recorder of Deeds in the County of New Castle, Delaware, on
that date; the registered office of OXISub in the State of Delaware is located
at Corporation Service Company, 1013 Centre Road, in the City of Wilmington,
County of New Castle; and the name of its registered agent at such office is
Corporation Service Company; and
WHEREAS, Therox is a corporation duly organized and existing under the laws
of the State of Delaware, having been incorporated on June 30, 1993, by a
Certificate of Incorporation filed with the Secretary of State and recorded in
the Office of the Recorder of Deeds of the County of New Castle, Delaware, on
that date, said Certificate of Incorporation having been amended and restated
from time to time thereafter; the registered office of Therox in the State of
Delaware is located at 1209 Orange Street, in the City of Wilmington, County of
New Castle, and the name of its registered agent at such office is Corporation
Trust Company; and
WHEREAS, OXIS is a corporation duly organized and existing under the laws
of the State of Delaware, having been incorporated on October 15, 1973, by a
Certificate of Incorporation filed with the Secretary of State and recorded in
the Office of the Recorder of Deeds in the County of New Castle, Delaware, on
that date, said Certificate of Incorporation having been amended and restated
from time to time thereafter; the registered office of OXIS in the State of
Delaware is located at Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle; and the name of its registered agent at
such office is Corporation Trust Center; and
WHEREAS, OXISub has an authorized capitalization consisting of 100 shares
of Common Stock, no par value per share ("OXISub Common Stock"), all of which
have been validly issued and are outstanding and owned by OXIS; and
WHEREAS, Therox has an authorized capitalization consisting of: (1)
2,000,000 shares of Common Stock, par value $0.001 per share ("Therox Common
Stock"), of which 517,344 shares were issued and outstanding on July 18, 1995;
and (2) 1,000,000 shares of Series A Convertible Preferred Stock, par value
$0.001 per share ("Therox Preferred Stock"), of which 1,000,000 shares were
issued and outstanding on July 18, 1995; and
-55-
WHEREAS, OXIS has an authorized capitalization consisting of: (1)
25,000,000 shares of Common Stock, par value $0.50 per share ("OXIS Common
Stock"), of which 10,683,687 shares were issued and outstanding on July 18,
1995; and (2) 5,000,000 shares of Preferred Stock, par value $0.01 per share
("OXIS Preferred Stock"), of which no shares were outstanding on July 18, 1995;
and
WHEREAS, the Boards of Directors of the parties hereto deem it desirable,
upon the terms and subject to the conditions herein stated, that Therox be
merged with and into OXISub and that OXISub be the surviving corporation, with
the outstanding shares of Therox Common Stock and Preferred Stock converted into
shares of OXIS Common Stock and the outstanding shares of OXISub Common Stock
continuing to be owned by OXIS (the "Merger"):
NOW, THEREFORE, it is agreed as follows:
1
Terms
-----
1.1 On the Effective Date of the Merger, Therox shall be merged with and
into OXISub, with OXISub continuing as the surviving corporation.
1.2 Upon the Effective Date of the Merger, each then outstanding share of
Therox Preferred Stock shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into 1.065094 shares of OXIS Common
Stock and each then outstanding share of Therox Common Stock shall, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into 0.726097 shares of OXIS Common Stock.
1.3 Each holder of a stock certificate or certificates representing
outstanding shares of Therox Common Stock or Therox Preferred Stock immediately
prior to the Effective Date of the Merger, upon surrender of such certificate or
certificates to OXIS after the Effective Date of the Merger, shall be entitled
to receive a stock certificate or certificates representing the appropriate
number of shares of OXIS Common Stock. Until so surrendered, each such stock
certificate shall, by virtue of the Merger, be deemed for all purposes to
evidence ownership of the appropriate number of shares of OXIS Common Stock.
1.4 If any certificate representing OXIS Common Stock is to be issued in a
name other than that in which the certificate theretofore representing Therox
Common Stock or Preferred Stock surrendered is registered, it shall be a
condition of such issuance that the certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person requesting
such issuance shall either pay to OXIS or its transfer agents any transfer or
other taxes required by reason of the issuance of certificates representing OXIS
Common Stock in a name other than that of the registered holder of the
certificate surrendered, or establish to the satisfaction of OXIS or its
transfer agents that such tax has been paid or is not applicable.
-56-
2
Effective Date
--------------
2.1 This Agreement has been submitted to the stockholders entitled to the
vote thereon of each of the Constituent Corporations as provided by the
applicable laws of the State of Delaware and has been duly adopted by the
requisite votes of such stockholders.
The Merger shall become effective upon the filing of this Agreement with
the Secretary of State of the State of Delaware, herein sometimes referred to as
the "Effective Date of the Merger."
3
Certificate of Incorporation and By-Laws
----------------------------------------
3.1 The Certificate of Incorporation of OXISub in effect on the Effective
Date of the Merger, as set forth in Exhibit A annexed hereto, and all the terms
and provisions thereof are hereby incorporated in this Agreement and made a part
hereof with the same force and effect as if herein set forth in full; and, from
and after the Effective Date of the Merger and, until amended as provided by
law, said Exhibit A, separate and apart from this Agreement, shall be, and may
be separately certified as, the Certificate of Incorporation of the Surviving
Corporation.
3.2 The By-Laws of OXISub, in effect on the effective date of the Merger
shall be the By-Laws of the Surviving Corporation, to remain unchanged until
amended in accordance with the provisions thereof and of applicable law.
3.3 The Certificate of Incorporation of OXIS shall not be affected by the
Merger.
4
Amendment and Termination
-------------------------
4.1 At any time prior to the filing of this Agreement with the Secretary
of State of the State of Delaware, this Agreement may be amended by the Boards
of Directors of Therox and OXISub to the extent permitted by Delaware law
notwithstanding favorable action on the Merger by the stockholders of either or
both of the Constituent Corporations.
4.2 At any time prior to the filing of this Agreement with the Secretary
of State of the State of Delaware, this Agreement may be terminated and
abandoned by the Board of Directors of either Therox or OXISub, notwithstanding
favorable action on the Merger by the stockholders of either or both of the
Constituent Corporations.
-57-
5
Miscellaneous
-------------
5.1 To the extent permitted by law, this Agreement may be amended by an
agreement in writing, before or after the meeting of stockholders of Therox and
the vote of OXIS as sole stockholder of OXISub, at any time prior to the
Effective Date of the Merger, with respect to any of the terms contained herein
except the terms of the conversion provided for in Section 1.2.
[SIGNATURE PAGE FOLLOWS]
-58-
IN WITNESS WHEREOF, Therox, OXISub and OXIS have each caused this Agreement
to be executed by its Chairman of the Board of Directors or President and
attested by its Secretary or an Assistant Secretary, and its corporate seal
affixed, all as of the date first above written.
ATTEST: THEROX PHARMACEUTICALS, INC.
____________________________ By: _____________________________
Name:__________________________ Timothy G. Biro
Title: Secretary President
ATTEST: OXIS ACQUISITION CORPORATION
_____________________________ By: _____________________________
Name: Anna D. Barker Ray R. Rogers, Chairman of the Board
Title: Secretary of Directors
ATTEST: OXIS INTERNATIONAL, INC.
_____________________________ By: _____________________________
Name: Lawrance A. Brown, Jr. Ray R. Rogers, Chairman of the Board
Title: Secretary of Directors
-59-
CERTIFICATE OF THE SECRETARY
OF
THEROX PHARMACEUTICALS, INC.
I, _____________, the Secretary of Therox Pharmaceuticals, Inc., a Delaware
corporation ("Therox"), hereby certify that the Plan and Agreement of Merger to
which this certificate is attached, after having first been duly signed on
behalf of the corporation by the President and Secretary under the corporate
seal of said corporation, was duly approved and adopted by written consent of
the stockholders of Therox dated as of July ____, 1995 by the holders of a
majority of the outstanding stock entitled to vote thereon.
WITNESS my hand and seal of said corporation this _____ day of July, 1995.
_____________________________________
Secretary
(SEAL)
-60-
CERTIFICATE OF THE SECRETARY
OF
OXIS ACQUISITION CORPORATION
I, Anna D. Barker, the Secretary and President of OXIS Acquisition
Corporation., a Delaware corporation ("OXISub"), hereby certify that the Plan
and Agreement of Merger to which this certificate is attached, after having
first been duly signed on behalf of the corporation by the Chairman of the Board
of Directors and Secretary under the corporate seal of said corporation, was
duly approved by OXIS International, Inc. as sole stockholder of OXISub on July
____, 1995.
WITNESS my hand and seal of said corporation this _____ day of July, 1995.
___________________________________________
Anna D.Barker
Secretary and President
(SEAL)
-61-
EXHIBIT D
---------
INVESTMENT REPRESENTATION LETTER
COMPANY: OXIS International, Inc.
PURCHASER: ________________
SECURITY: Common Stock
AMOUNT: Shares
DATE: July ___, 1995
In connection with the acquisition of the above-listed Securities, the
undersigned (the "Investor") represents to the OXIS International, Inc., a
Delaware corporation (the "Company") the following:
1. Qualification for Federal Securities Law Exemption. Investor
--------------------------------------------------
understands that, in making a determination as to what federal securities law
exemption from registration applies to the sale of Securities hereunder, the
Company is relying upon Investor's representation, hereby made, that Investor is
or is not an "accredited investor" as defined in Rule 501 of Regulation D as
promulgated by the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Act"). Accordingly, Investor hereby
represents and warrants that Investor is or is not an "accredited investor" and,
if Investor is an "accredited investor," Investor falls within the category it
has initialed below at the time of Investor's acquisition of the Securities
hereunder (initial the applicable category):
______ (i) Investor is not an "accredited investor," or
______ (ii) Investor is an "accredited investor" because Investor is
(initial the applicable category):
______ (A) a director or executive officer of the Company;
-62-
______ (B) a natural person whose individual net worth, or joint net
worth with his or her spouse, at the time of purchase
exceeds $1,000,000;
______ (C) a natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint
income with his or her spouse in excess of $300,000 in
each of those years and reasonably expects to reach the
same income level in the current year;
______ (D) a private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
______ (E) either (1) a bank as defined in Section 3(a)(2) of the
Act, or a savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Act
whether acting in its individual or fiduciary capacity;
(2) a broker or dealer registered pursuant to Section 15
of the Securities Exchange Act of 1934; (3) an insurance
company as defined in Section 2(13) of the Act; (4) an
investment company registered under the Investment Company
Act of 1940 or a business development company as defined
in Section 2(a)(48) of that Act; (5) a Small Business
Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958; (6) any plan established
and maintained by a state, its political subdivisions, or
an agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such
plan has total assets in excess of $5,000,000; or (7) an
employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974 if the investment
decision is made by a plan fiduciary, as defined in
Section 3(21) of that Act, which is either a bank, savings
and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has
total assets in excess of $5,000,000 or, if a self-
directed plan, with investment decisions made solely by
persons that meet one or more of the standards set forth
in subsections (A) through (G) of this Section 1(ii)(E);
_____ (F) any organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended, corporation,
Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the
Securities, with total assets in excess of $5,000,000;
-63-
_____ (G) any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the
Securities, whose purchase is directed by a sophisticated
person, as described in Rule 506(b)(2)(ii) of Regulation D
promulgated under the Act, who has such knowledge and
experience in financial and business matters that he is
capable of evaluating the merits and risk of the
investment in Securities; or
(H) an entity in which all of its equity owners meet one or
more of the standards set forth in subsections (A) through
(G) of this Section 1(ii).
Investor further acknowledges and understands that the Company may require
Investor to provide the Company with additional information to verify Investor's
"accredited investor" status.
2. Investment Purposes.
-------------------
(i) Purchase by Principal Without View To Distribution. By its
--------------------------------------------------
execution of this Investment Representation Letter investor hereby represents
and confirms that the Securities acquired by Investor are acquired for
investment for its own account, not as nominee or agent, and not with a view to,
and not in connection with, the distribution of any part thereof, and that
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Investment Representation
Letter, Investor further represents that Investor does not have any agreement or
arrangement with any person to sell or transfer the Securities to such person or
any third person and that no person other than Investor will have any beneficial
interest in the Securities (except that Investor's spouse may have a beneficial
interest in the Securities).
(ii) Non-Registration. Investor acknowledges and understands that the
----------------
Securities have not been registered under the Act, or registered or qualified
under the laws of any state, on the grounds that the offering and sale of
Securities contemplated by this Investment Representation Letter are exempt from
registration and qualification pursuant to Section 4(2) of the Act and/or
Regulation D promulgated under the Act and comparable state laws, and that the
Company's reliance upon such exemptions is predicated upon the representations
of Investor set forth in this Investment Representation Letter. Investor further
acknowledges and understands that the Securities must be held indefinitely
unless the Securities are subsequently registered under the Act and registered
or qualified under any applicable state law or an exemption from such
registration and qualification is available. Investor further acknowledges and
understands that the Company is under no obligation to register or qualify the
Securities other than as set forth in the Registration Rights Agreement between
the Company and Investor, dated as of the date hereof.
-64-
3. Transfer Restrictions Under Securities Laws. Investor hereby
-------------------------------------------
acknowledges that no transfer of the Securities may be made except as permitted
by applicable federal and state Securities laws. The Investor is aware of the
adoption of Rule 144 by the SEC, which permits limited public resale of
securities acquired in a nonpublic offering subject to the satisfaction of
certain conditions, including among other things, the availability of certain
current public information about the Company, the resale occurring not less than
two years after the party has purchased and paid for the securities to be sold,
the sale being through a broker in an unsolicited "broker's transaction" and the
amount of securities being sold during any three-month period not exceeding
specified limitations (generally one percent (1%) of the total amount
outstanding or the average weekly trading volume of the securities during the
four calendar weeks preceding the sale). The Investor further acknowledges and
understands that the Company may not be satisfying the current public
information requirement of Rule 144 (notwithstanding any contractual commitment
of the Company to do so) at the time the undersigned wishes to sell the
Securities. If such requirement is not satisfied, the Investor would be
precluded from selling the Securities under Rule 144 even if the two-year
minimum holding period has been satisfied, unless at the time the Investor
wishes to sell the Securities, the Investor has held the Securities for not less
than three years and the Investor is not an affiliate of the Company (as defined
in Rule 144) and has not been an affiliate for the preceding three months. The
Investor further acknowledges that in the event all of the requirements of Rule
144 are not met, compliance with Regulation A or some other registration
exemption will be required; and that although Rule 144 is not exclusive, the
staff of the SEC has expressed its opinion that shareholders proposing to sell
private placement securities other than in a registered offering and other than
pursuant to Rule 144 will have a substantial burden of proof in establishing
that an exemption from registration is available for such offers or sales, and
that such shareholders and the brokers who participate in the transactions do so
at their own risk.
4. Capacity to Sign. Investor covenants that it possesses all necessary
----------------
capacity and authority to sign and make the representations contained in this
Investment Representation Letter. Each individual signing this Investment
Representation Letter in the capacity of trustee, guardian, conservator, or in
any other legal capacity, covenants that he has the necessary capacity and
authority to act for, sign, and bind the respective entity or principal on whose
behalf he is signing.
5. Receipt of Disclosure Information. Investor acknowledges that it has
---------------------------------
received, read, understands, and is familiar with Company's Annual Report on
Form 10-K for the period ending December 31, 1994, Quarterly Report on Form 10-Q
for the period ending March 31, 1995 and Report on Form 8-K dated May 17, 1995
(collectively, the "'34 Act Reports"). Investor further acknowledges that,
except as set forth in this Investment Representation Letter and the Agreement
and Plan of Reorganization and Merger ("Reorganization Agreement") between the
Company, OXIS Acquisition Corporation, a Delaware corporation and the wholly-
owned subsidiary of the Company, and Therox Pharmaceuticals, Inc., a Delaware
corporation dated as
-65-
of July 18, 1995, no representations and warranties have been made to it, or to
its advisors, by the Company, or by any person acting on behalf of the Company,
and that it has not relied upon any information concerning the Company, written
or oral, other than that contained in this Investment Representation Letter, the
Reorganization Agreement, the '34 Act Reports or otherwise conveyed in writing
by the Company to the Investor. Investor understands that an investment in the
Company presents a high degree of risk and Investor represents that it is able
to bear the entire loss of its investment in the Company.
6. Miscellaneous. Investor further represents and warrants to the
-------------
Company as follows:
(i) Investor has been furnished with, or has been given reasonable
access to, disclosure of such information as it has considered necessary to make
a determination as to the purchase of the Securities, including all material
contracts and documents relating to the proposed transaction and information
with respect to the character, business acumen and general business and
financial circumstances of the Company, together with such additional
information as is necessary to verify the accuracy of the information supplied;
(ii) the Company has made available to Investor at a reasonable time
prior to the purchase of the Securities the opportunity to ask questions to and
receive answers from the Company concerning the terms and conditions of the
offering of the Securities and Investor has had all questions which have been
asked by it satisfactorily answered by the Company;
(iii) Investor has not been offered Securities by any form of general
solicitation or general advertising, including but not limited to any
advertisement, article, notice or other communication published by any
newspaper, magazine or similar media or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising;
(iv) Investor is capable of evaluating the risks and merits of an
investment in the Company and can bear the economic risk (and possible loss) of
its investment in the Company; and
(v) Investor certifies under penalty of perjury that it is not
subject to backup withholding either because it has not been notified that it is
subject to backup withholding as a result of a failure to report all interest or
dividends, or the Internal Revenue Service has notified Investor that it is no
longer subject to backup withholding (if Investor has been notified that it is
currently subject to backup withholding, Investor has stricken the language
under Section 6(iv) above before signing).
7. Legends on Securities. The Securities shall be endorsed with the
---------------------
following legend:
-66-
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO OR IN CONNECTION WITH THE
DISTRIBUTION THEREOF. NO SUCH DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933."
and any other legend required by Federal law or applicable blue sky laws of any
state.
8. The Investor represents and warrants to Company that the address set
forth below the undersigned Investor's signature is the principal residence
address and domicile of the Investor.
INVESTOR
Name: _________________________________
By: _________________________________
Title: _________________________________
________________________________________
Address
________________________________________
________________________________________
-67-
EXECUTION COPY
--------------
================================================================================
OXIS INTERNATIONAL, INC.
REGISTRATION RIGHTS AGREEMENT
================================================================================
-68-
OXIS INTERNATIONAL, INC.
------------------------
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of the 18th
day of July 1995 by and among OXIS International, Inc., a Delaware corporation
(the "Company"), and each of the parties who are the owners of Registrable
Securities (as defined hereafter), each of whom is herein referred to as a
"Shareholder." Attached hereto as Schedule A is a complete list of the
----------
Shareholders and the Registrable Securities held by each such Shareholder.
RECITALS:
--------
WHEREAS, in connection with (i) the merger of its wholly-owned subsidiary
with Therox Pharmaceuticals, Inc., a Delaware corporation ("Therox") and (ii)
the simultaneous offering of the Company's Series B Preferred Stock to certain
investors, the Company has issued shares of its Common Stock and Series B
Preferred Stock to such former Therox shareholders and such investors and
pursuant to the terms of this Agreement is agreeing to register the resale of
such shares of Company Common Stock and Common Stock issuable upon conversion of
such Series B Preferred Stock with the Securities and Exchange Commission (the
"SEC");
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Registration Rights. The Company covenants and agrees as follows:
-------------------
1.1 Definitions. For purposes of this Section 1:
-----------
(a) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and the declaration or ordering of effectiveness
of such registration statement or document.
(b) The term "Registrable Securities" means (i) any Common
Stock of the Company ("Common Stock") currently outstanding issued to former
shareholders of Therox pursuant to the Agreement and Plan of Reorganization and
Merger (the "Merger
-69-
Agreement"), dated as of July 18, 1995 between the Company, the Company's
subsidiary, and Therox, (ii) any Common Stock issuable upon conversion of the
Series B Preferred Stock of the Company issued to certain investors pursuant to
a Series B Preferred Stock Purchase Agreement dated July 18, 1995 between the
Company and such investors (the "Stock Purchase Agreement") (the Merger
Agreement and the Stock Purchase Agreement are hereafter sometimes collectively
referred to as the "Acquisition Agreements"), and (iii) any Common Stock issued
or issuable as a dividend or other distribution with respect to, or in exchange
for or in replacement of, such Registrable Securities, excluding in all cases,
however, any Registrable Securities sold by a person in a transaction in which
his or her registration rights are not assigned.
(c) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 1.8 hereof.
1.2 Registration.
------------
(a) The Company shall file, and use its best efforts to cause
the SEC to declare effective, on or before July 18, 1996, a registration
statement under the Securities Act covering the resale of the Registrable
Securities by the Holders. In the event that the Company grants new registration
rights in connection with an issuance and sale of capital stock taking place
after the date of this Agreement which results in the Company filing prior to
July 18, 1996 a registration statement covering the resale of such capital
stock, the Holders of Registrable Securities hereunder shall be entitled to have
their Registrable Securities registered on such registration statement upon the
terms and conditions set forth herein. In such event, the Company shall have no
obligation to file the registration statement contemplated by the first sentence
of this Section 1.2(a).
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action to effect any such registration pursuant to this
Section 1.2 in any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting such
registration, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act.
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1.3 Obligations of the Company. The Company shall:
--------------------------
(a) Keep the registration statement with respect to the
Registrable Securities filed pursuant to Section 1.2 of this Agreement
("Registration Statement") effective for the period from the date of declaration
of effectiveness of such Registration Statement through July 18, 1997.
(b) Prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in connection
with such Registration Statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the period of its
effectiveness.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such Registration Statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) Notify each Holder of Registrable Securities covered by
such Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
1.4 Limitations on Resales.
----------------------
(a) Each Holder shall not sell during (i) any three month
period while the Registration Statement is in effect, a number of shares of
Registrable Securities that is greater than one percent (1%) of the number of
issued and outstanding Common
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Stock at such time and (ii) any single month while the Registration Statement
is in effect, a number of shares of Registrable Securities that is more than
one-third (1/3) of one percent (1%) of the number of issued and outstanding
Common Stock at such time. The parties acknowledge that the one percent (1%)
limitation set forth in the immediately preceding sentence is consistent with
the limitation set forth in SEC Rule 144(e)(1)(i). If at any time the Company's
securities trading volume as calculated pursuant to SEC Rule 144 (e)(1)(ii) (the
"Company's Trading Volume Calculation") exceeds the one percent (1%)
calculation, then the Holders shall be limited to an amount equal to the
Company's Trading Volume Calculation instead of the one percent (1%)
calculation. Within ten (10) days following the last day of any month in which a
Holder sells Registrable Securities, the Holder shall notify the Company of the
number of shares of Registrable Securities sold by such Holder.
(b) If the Company proposes to register any of its stock or
other securities under the Securities Act in connection with an underwritten
public offering of such securities solely for cash, the Company shall, at such
time, promptly give each Holder written notice of such registration, and in
connection with such public offering, the Holders shall agree not to sell any
of the Registrable Securities during such customary lock-up period requested by
the Company's underwriters who are underwriting such public offering. The
Holders shall have no right to participate in any such public offering. The
Company's obligation to keep a registration statement effective for the time
period set forth in Section 1.3(a) hereof shall be extended by an amount of time
equal to any lock-up period applicable to the Holders.
Notwithstanding the immediately preceding paragraph, S.R. One, Limited
("S.R. One") shall agree to a lock-up period in excess of ninety (90) days only
if Ray R. Rogers, Anna D. Barker and Alta-Berkeley L.P. II ("Other
Stockholders") have agreed not to sell during such lock-up period in excess of
ninety (90) days; provided, however, S.R. One may request that the Company
consent to relieving S.R. One of its obligation to abide by a lock-up period
longer than ninety (90) days if S.R. One would suffer a hardship that is
materially adversely different from that suffered by the Other Stockholders and
relief from such obligation shall not materially impair the Company's ability to
complete its underwritten offering. The Company shall not
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unreasonably withhold the consent referred to in the immediately preceding
sentence.
1.5 Furnish Information. It shall be a condition precedent to the
-------------------
obligations of the Company to take any action pursuant to this Section 1 that
the selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect the registration
of the Registrable Securities.
1.6 Indemnification. In the event any Registrable Securities are
---------------
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the officers, directors, partners and legal
counsel of each Holder, any under writer (as defined in the Securities Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), against any losses, claims, damages or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, rule or
regulation insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively, a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law; and the Company will
reimburse each such Holder, officer, director, partner, legal counsel,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this subsection 1.6(a) shall not apply to amounts paid
in settlement of
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any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Company, nor shall the Company be liable in
any such case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any such Holder, officer, partner,
director, underwriter, legal counsel or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, officers, its
legal counsel, each person, if any, who controls the Company within the meaning
of the Securities Act, any underwriter and any other Holder selling securities
in such Registration Statement or any of such other Holder's directors, legal
counsel or officers or any person who controls such Holder, against any losses,
claims, damages or liabilities (joint or several) to which the Company or any
such director, officer, legal counsel, controlling person, or underwriter or
controlling person, or other such Holder or director, officer, legal counsel or
controlling person of such other Holder may become subject, under the Securities
Act, the Exchange Act or other federal or state law, to the extent that such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer, legal
counsel, controlling person, underwriter or controlling person, other Holder, or
officer, director, legal counsel, or controlling person of such other Holder in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.6(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the indemnifying Holder; provided, that, in no event
shall any indemnity under this subjection 1.6(b) exceed the gross proceeds
received by such Holder from the sale of Registrable Securities sold pursuant to
a Registration Statement.
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(c) Promptly after receipt by an indemnified party under this
Section 1.6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.6, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential materially conflicting interests between such indemnifying party
and any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.6, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnifying party other than under this Section 1.6.
(d) If the indemnification provided for in this Section 1.6 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party, then each indemnifying party, in lieu of indemnifying such indemnified
party thereunder, hereby agrees to contribute to the amount paid or payable by
such indemnifying party in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other. Notwithstanding the foregoing, the amount any Holder of
Registrable Securities shall be obligated to contribute pursuant to this Section
1.6(d) shall be limited to an amount equal to the offering price of the shares
sold by such Holder pursuant to a Registration provided hereunder.
(e) The obligations of the Company and Holders under this
Section 1.6 shall survive the completion of any offering or sale of Registrable
Securities in a Registration Statement under this Section 1, and otherwise.
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1.7 Reports Under Securities Exchange Act of 1934. With a view to
---------------------------------------------
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration following the expiration of the effectiveness of the Registration
Statement provided for hereunder, the Company agrees to use its best efforts for
as long as Holders own Registrable Securities.
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144,
the Securities Act and the Exchange Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company and (iii) such other information as may be reasonably requested
in availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
The above commitments of the Company in this Section 1.7 will continue
notwithstanding a de-listing of the Company's securities from the Nasdaq
National Market System.
1.8 Assignment of Registration Rights. The registration rights
---------------------------------
pursuant to this Section 1 may be assigned by a Holder to a transferee or
assignee who is not a competitor of the Company and acquires at least one
hundred thousand (100,000) shares (as adjusted for stock splits, combinations,
etc.) of Registrable Securities; provided, in each case, the Company is, within
a reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; and provided, further, that
such assignment shall be effective only if immediately following such transfer
the further disposition of such
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securities by the transferee or assignee is restricted under the Securities Act.
If the Holder is a partnership and transfers or assigns its rights hereunder to
any of its partners, such partners may aggregate the number of Registrable
Securities held by them for purposes of meeting the 100,000 share threshold set
forth in this Section 1.8.
1.9 Amendment of Registration Rights. Any provision of this Section
--------------------------------
1 may be amended and the observance thereof may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the holders of at least a majority of the
Registrable Securities. Any amendment or waiver effected in accordance with this
Section shall be binding upon each Holder of Registrable Securities, each
transferee or future holder of all such securities, and the Company.
2. Miscellaneous.
-------------
2.1 Successors and Assigns. The terms and conditions of this
----------------------
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
2.2 Governing Law. This Agreement shall be governed by and
-------------
construed under the laws of the State of Delaware.
2.3 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.4 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
2.5 Notices. Except as otherwise expressly provided herein, any
-------
notice required or permitted hereunder shall be given in writing and it or any
certificates or other documents delivered hereunder shall be deemed effectively
given or delivered (as the case may be) upon personal delivery (professional
courier permissible) or when mailed by receipted United
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States certified mail delivery, five (5) business days after deposit in the
United States mail. Such certificates, documents or notices may be personally
delivered or sent to the following address: (a) if to a Shareholder, to the
address set forth with respect to such Shareholder on such Shareholder's
counterpart signature page attached hereto, or to such other address of which
such Shareholder shall have given notice pursuant hereto to the Company or, (b)
if to the Company, OXIS International, Inc., 6040 N. Cutter Circle, Suite 317,
Portland, Oregon 97217-3935, Attention: President, or to such other address of
which the Company shall have given notice pursuant hereto.
2.6 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
2.7 Number and Gender. Whenever used herein, the singular number
-----------------
shall include the plural and the plural the singular, and the use of any gender
shall be applicable to all genders.
2.8 Entire Agreement. This Agreement constitutes the full and
----------------
entire understanding and agreement among the parties with regard to the subject
matter hereof and supersedes any prior agreements (including any memorandum of
understanding or letters of intent) between the parties regarding the subject
matter hereof.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
OXIS INTERNATIONAL, INC.
By: _________________________
Ray R. Rogers
Chairman of the Board
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OXIS INTERNATIONAL, INC.
------------------------
REGISTRATION RIGHTS AGREEMENT
-----------------------------
Counterpart Signature Page
Shareholder:
____________________________________
(Print Name)
____________________________________
(Signature and Title, if applicable)
____________________________________
____________________________________
(Address)
____________________________________
____________________________________
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SCHEDULE A
LIST OF SHAREHOLDERS AND REGISTRABLE SECURITIES
-----------------------------------------------
Therox Shareholder OXIS Common
------------------ -----------
Brantley Venture 550,699
Partners II, L.P.
S.R. One, Limited 549,497
Ohio State University 87,131
Research Foundation
W. Weglicki 72,610
D. Witiek 53,005
B. Freeman 21,783
P. Triozzi 4,357
D. Feller 2,904
C. Brogan 2,179
J. Ziemniak 72,610
R. Johnson 14,522
R. Borchardt 5,809
A. Hopper 3,630
-----
TOTAL: 1,440,736
S.R. One, Limited OXIS Common Stock to be
issued upon conversion of
428,389 shares of the
Series B Preferred Stock
of OXIS International,Inc.
Brantley Venture Partners II, L.P. OXIS Common Stock to be
issued upon conversion of
214,194 shares of Series
B Preferred Stock of OXIS
International, Inc.
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EXHIBIT F
---------
FORM OF LEGAL OPINION TO BE DELIVERED
BY COUNSEL TO THEROX PHARMACEUTICALS, INC.
The opinion to be delivered to OXIS International, Inc. by Gelberg &
Associates, P.C., counsel to Therox Pharmaceuticals, Inc., shall address the
matters set forth below in the form substantially as follows, subject to
appropriate assumptions and qualifications to be set forth in such opinion. Any
term used herein as a defined term and not otherwise defined shall have the
meaning set forth in the Agreement and Plan of Reorganization and Merger between
OXIS International, Inc., OXIS Acquisition Corporation and Therox
Pharmaceuticals, Inc. dated as of July 18, 1995 (the "Agreement").
1. Therox Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
has been duly incorporated, is validly existing and is in good standing, under
the laws of the State of Delaware.
2. The Company has all requisite corporate power and corporate authority
to enter into and perform the Agreement and Merger Agreement.
3. The Agreement and the Merger Agreement have been duly authorized by
all necessary corporate action on the part of the Company and its stockholders
and have been duly executed and delivered on behalf of the Company.
4. The Agreement and the Merger Agreement are valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms.
5. No federal or Pennsylvania governmental consents, approvals,
authorizations, registrations, declarations or filings on behalf of the Company
are required for the execution and delivery of the Agreement or the Merger
Agreement and consummation of the Merger (other than the filing of the Merger
Agreement with the Delaware Secretary of State or as otherwise required pursuant
to any requirements of federal or state securities laws).
6. Neither the execution and delivery of the Agreement or the Merger
Agreement on behalf of the Company nor the consummation by the Company of the
Merger as provided in the Agreement (i) conflicts with any provision of the
Certificate of Incorporation or By-Laws of the Company or (ii) violates any
federal or Pennsylvania law applicable to the Merger.
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7. Immediately prior to the Effective Time, the authorized capital stock
of the Company consisted of ___________ shares of Common Stock and ____ shares
of Preferred Stock. Immediately prior to the Effective Time, there were issued
and outstanding ___________ shares of Company Common Stock and _____ shares of
Preferred Stock. All of such outstanding shares of Company Common Stock and
Preferred Stock are duly authorized, validly issued, fully paid and
nonassessable. To the best of our knowledge, there are no options, warrants,
conversion privileges, preemptive rights or other rights presently outstanding
to purchase any of the capital stock of the Company, except as disclosed in the
Agreement or the Officer-Certified Disclosure Statements of the Company.
8. Based upon our review of the recorded proceedings with respect to the
[Special Meeting of the Company Stockholders], the number of shares which did
not vote in favor of the Merger was ________ shares.
9. Upon the filing of the Merger Agreement with the Secretary of State of
Delaware, the Merger will be effective in accordance with the laws of the State
of Delaware.
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EXHIBIT G
---------
FORM OF LEGAL OPINION TO BE DELIVERED
BY COUNSEL TO OXIS INTERNATIONAL, INC.
The opinion to be delivered to Therox Pharmaceuticals, Inc. by Jackson,
Tufts, Cole & Black, counsel to OXIS International, Inc., shall address the
matters set forth below, subject to appropriate assumptions and qualifications
to be set forth in such opinion. Any term used herein as a defined term and not
otherwise defined shall have the meaning set forth in the Agreement and Plan of
Reorganization and Merger between OXIS International, Inc., OXIS Acquisition
Corporation and Therox Pharmaceuticals, Inc. dated as of July 18, 1995 (the
"Agreement").
1. OXIS International, Inc., a Delaware corporation (the "Company"), has
been duly incorporated, is validly existing, and is in good standing under the
laws of the State of Delaware.
2. The Company has all requisite corporate power and corporate authority
to enter into and perform the Agreement and Merger Agreement.
3. The Agreement and the Merger Agreement have been duly authorized by
all necessary corporate action on the part of the Company and have been duly
executed and delivered on behalf of the Company.
4. The Agreement and the Merger Agreement are valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms.
5. No federal or California governmental consents, approvals,
authorizations, registrations, declarations or filings on behalf of the Company
are required for the execution and delivery of the Agreement or the Merger
Agreement and consummation of the Merger (other than the filing of the Merger
Agreement with the Delaware Secretary of State and the filing of a Form 8-K and
Form 10-C following the consummation of the Merger, or as otherwise required
pursuant to any requirements of federal or state securities laws).
6. Neither the execution and delivery of the Agreement or the Merger
Agreement on behalf of the Company nor the consummation by the Company of the
Merger as provided in the Agreement and Merger Agreement (i) conflicts with any
provision of the Certificate of Incorporation or By-Laws of the Company or (ii)
violates any federal or California law applicable to the Merger.
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7. The authorized capital stock of the Company consists of 25,000,000
shares of Common Stock and 5,000,000 shares of Preferred Stock. Following the
consummation of the Merger in accordance with the Agreement and the Merger
Agreement, the shares of the Company Common Stock to be issued to the Therox
Holders will be duly authorized, validly issued, fully paid and nonassessable.
8. Upon the filing of the Merger Agreement with the Secretary of State of
Delaware, the Merger will be effective in accordance with the laws of the State
of Delaware.
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Exhibit 2.4
THEROX TECHNOLOGY
PATENT NUMBER
-------------
5,028.720 6,7-Nonsubstituted and 6,7-Disubstituted-3, 4-Dihydroxy
Benzopyran-2h-One Compounds Having Antiaggregatory
Properties and Processes for their Preparation
5,095,126 Efficient Synthesis for Optically Pure Stereogenically
Labile 4-Substituted-2-Hydroxytetronic Acids
5,185,366 Method for Treatment and Prevention of Disease Caused
by Enveloped Viruses, Including Herpes Simplex Virus
Types 1 and 2 Diseases, Using3,4-Dihydroxy-2H-
Benzopyran-2HOne
5,071,872 Method for Improving Interleukin-2 Activity Using Aci-
Reductions Compunds
4,845,121 Aci-Reductone Compounds Belonging to the 6,7-
Disubstituted-3,4-Dihydro Benzopyan-2H-One Class Having
Antiaggregatory Properties
5,298,526 Optically Pure Stereogenically Labile 4-Substituted-2-
Dydrocytetronic Acids and Pharmaceuticals
5,399,721 Synthesis of Optically Pure
4-Aryl-2-Hydroxytertronic Acids
Application Synthesis of Optically Pure 4-Alkenyl or 4-Alkenyl-2
Number: Hydroxytetronic Acids
081245615
Programs: IGI Collaboration
ALCON Testing Program
Xanthine Oxidase
Lipoic Acid
CAM-R Analogs of Pharmaceuticals and Enzyme Substrates
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