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EXHIBIT 10.4
PREFERRED AND COMMON STOCK PURCHASE AGREEMENT
ARRAY BIOPHARMA INC.
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TABLE OF CONTENTS PAGE
RECITALS ..................................................................................1
SECTION 1. PURCHASE AND SALE............................................................1
1.1 Authorization of Shares......................................................1
1.2 Sale and Purchase............................................................2
SECTION 2. CLOSING......................................................................2
2.1 First Closing................................................................2
2.2 Final Closing................................................................2
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................3
3.1 Organization, Good Standing and Qualification................................3
3.2 Capitalization...............................................................3
3.3 Authorization................................................................4
3.4 Financial Statements.........................................................4
3.5 Liabilities..................................................................4
3.8 Obligations to Related Parties...............................................6
3.9 Assets.......................................................................7
3.10 Intellectual Property........................................................7
3.11 Compliance with Other Instruments............................................8
3.12 Litigation...................................................................8
3.13 Taxes........................................................................8
3.14 Employees and Consultants....................................................8
3.15 Employee Benefits Matters....................................................9
3.16 Registration Rights..........................................................9
3.17 Governmental Approvals/Third Party Consents..................................9
3.18 Compliance with Laws.........................................................9
3.19 Environmental Matters.......................................................10
3.20 Offering Valid..............................................................10
3.21 Accuracy of Information Furnished...........................................10
3.22 Insurance...................................................................10
3.23 Investment Company Act......................................................10
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASERS................................10
4.1. Requisite Power and Authority...............................................10
4.2. Investment Representations..................................................11
(a) Purchaser Bears Economic Risk......................................11
(b) Acquisition for Own Account........................................11
(c) Purchaser Can Protect Its Interest.................................11
(d) Accredited Investor................................................11
(e) Company Information................................................11
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TABLE OF CONTENTS PAGE
(f) Rule 144..........................................................11
(g) Residence.........................................................12
4.3 Restrictive Legends........................................................12
SECTION 5. REPRESENTATIONS AND WARRANTIES OF FOUNDERS.................................12
5.1. Requisite Power and Authority..............................................13
5.2. Investment Representations.................................................13
(a) Founder Bears Economic Risk.......................................13
(b) Acquisition for Own Account.......................................13
(c) Rule 144..........................................................13
(d) Residence.........................................................13
5.3 Restrictive Legends........................................................13
SECTION 6. CONDITIONS TO CLOSING......................................................14
6.1 Conditions to Purchasers' Obligations at the First Closing.................14
(a) Representations and Warranties True; Performance of Obligations...14
(b) Legal Investment..................................................14
(c) Consents, Permits, and Waivers....................................14
(d) Filing of Amended Certificate.....................................15
(e) Corporate Documents...............................................15
(f) Reservation of Conversion Shares..................................15
(g) ..................................................................15
(h) Investor Rights Agreement.........................................15
(i) Shareholders Agreement............................................15
(j) Legal Opinion. ...................................................15
(k) Proceedings and Documents.........................................16
(l) Other Employees...................................................16
6.2 Conditions to Obligations of the Company at First Closing..................16
(a) Representations and Warranties True...............................16
(b) Performance of Obligations........................................16
(c) Filing of Amended Certificate.....................................16
(d) Investor Rights Agreement. .......................................16
(e) Shareholders Agreement............................................16
(f) Consents, Permits, and Waivers....................................16
(g) Minimum Investment................................................17
6.3 Conditions to Purchasers' Obligations at the Final Closing.................17
(a) Board Approval....................................................17
(b) Legal Investment..................................................17
(c) Consents, Permits, and Waivers....................................17
(d) Corporate Documents...............................................17
(e) Certificates......................................................17
(f) Legal Opinion.....................................................17
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(g) Proceedings and Documents.........................................18
6.4 Conditions to Obligations of the Company at Final Closing..................18
(a) Representations and Warranties True...............................18
(b) Performance of Obligations........................................18
(c) Investor Rights Agreement.........................................18
(d) Shareholders Agreement............................................18
(e) Consents, Permits, and Waivers....................................18
(f) Minimum Investment................................................18
SECTION 7. COVENANTS OF THE COMPANY FOR THE PERIOD FOLLOWING CLOSING..................18
7.1 Use of Proceeds............................................................19
7.2 Maintenance of Corporate Status............................................19
7.3 Compliance with Governing Documents........................................19
7.4 Compliance with Laws, Licenses and Permits; No Infringement................19
7.5 Discharge of Obligations...................................................19
7.6 Maintenance of Properties..................................................19
7.7 Maintenance of Proprietary Information.....................................19
7.8 Significant Transactions...................................................20
7.9 Compensation of Directors..................................................20
7.10 Books and Records..........................................................20
SECTION 8. MISCELLANEOUS..............................................................20
8.1 Governing Law..............................................................20
8.2 Survival...................................................................20
8.3 Successors and Assigns.....................................................21
8.4 Entire Agreement...........................................................21
8.5 Severability...............................................................21
8.6 Amendment and Waiver.......................................................21
8.7 Delays or Omissions........................................................21
8.8 Notices....................................................................21
8.9 Expenses...................................................................22
8.10 Indemnification by the Company.............................................22
8.11 Indemnification by the Purchasers..........................................22
8.12 Titles and Subtitles.......................................................22
8.13 Counterparts...............................................................22
8.14 Broker's Fees..............................................................22
8.15 Arbitration................................................................23
8.16 Exculpation Among Purchasers...............................................23
8.17 Pronouns...................................................................23
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TABLE OF EXHIBITS
Exhibit A - Certificate of Amendment to the Certificate of Incorporation
Exhibit B - Schedule of Purchasers
Exhibit C - Promissory Note and Pledge Agreement
Exhibit D - Disclosure Schedule
Exhibit E - Investor Rights Agreement
Exhibit F - Shareholders Agreement
Exhibit G - Capitalization Table
Exhibit H - First Closing Opinion
Exhibit I - Final Closing Opinion
Exhibit J - Confidentiality Agreement
Exhibit K - Noncompete Agreement
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PREFERRED AND COMMON STOCK
PURCHASE AGREEMENT
This Preferred And Common Stock Purchase Agreement (the "Agreement") is
made and entered into as of the 18th day of May 1998, by and among ARRAY
BIOPHARMA INC., a Delaware corporation (the "Company"), FALCON TECHNOLOGY
PARTNERS, L.P., a Delaware limited partnership ("Falcon"), BOULDER VENTURES II,
L.P. and BOULDER VENTURES II (ANNEX), L.P., both Delaware limited partnerships
(collectively "BV") , THE XXXXXXXXX FAMILY, L.L.C. ("Xxxxxxxxx") (Falcon, BV and
Xxxxxxxxx are hereafter each referred to as a "Purchaser" and together as
"Purchasers"), those Additional Purchasers, as defined below, identified on the
signature pages hereto, and Xxxxx Xxxxxxx, Ph.D., Xxxxx Xxxx, Ph.D., Xxxxxxx X.
Xxxxxxxx, Ph.D. and X. X. Xxxxxxxx, Ph.D. (hereafter each referred to as a
"Founder" and together as "Founders.")
RECITALS
A. The Company has authorized the issuance and sale of a total of
4,500,000 shares (the "Preferred Shares") of Series A Preferred Stock of the
Company, par value $0.001 per share, and the issuance and sale of a total of
2,912,367 shares (the "Common Shares") of Common Stock of the Company, par value
$0.001 per share, (collectively, the Preferred Shares and the Common Shares are
referred to as the "Shares").
B. The Company desires to sell the Shares to Purchasers and Founders,
and Purchasers and Founders desire to purchase the Shares, pursuant to the terms
and conditions contained herein.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants, agreements,
conditions, representations, and warranties contained in this Agreement, the
Company, Purchasers and Founders hereby each agree as follows:
SECTION 1. PURCHASE AND SALE.
1.1 AUTHORIZATION OF SHARES. On or prior to the First Closing (as
defined in Section 2.1 below), the Company shall have authorized (i) the sale
and issuance to Purchasers of the Preferred Shares; (ii) the sale and issuance
to the Purchasers and the Founders of the Common Shares and (iii) such shares of
Common Stock issuable upon conversion of the Preferred Shares (the "Conversion
Shares"). The Preferred Shares, Common Shares and the Conversion Shares shall
have the rights, preferences, privileges and restrictions set forth in the
Certificate of Amendment to the Certificate of Incorporation of the Company, in
the form attached hereto as Exhibit A (the "Amended Certificate").
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1.2 SALE AND PURCHASE. Subject to the terms and conditions hereof, at
the Closings (as described in Section 2 hereof) the Company hereby agrees to
issue and sell to each Purchaser and Founder, severally and not jointly, and
each Purchaser and Founder agrees to purchase from the Company, severally and
not jointly, the number of Preferred Shares and Common Shares set forth opposite
such Purchaser's and Founder's name on Exhibit B hereto, at the purchase price
of $1.00 per share for the Preferred Shares, and $0.235 per share for the Common
Shares.
SECTION 2. CLOSING.
2.1 FIRST CLOSING. The initial closing of the sale and purchase of the
Shares under this Agreement (the "First Closing") shall take place at 11 a.m. on
the date hereof, at the offices of Holme Xxxxxxx & Xxxx, LLP, 0000 Xxxxx Xxxxxx,
Xxxxx 000, Xxxxxxx Xxxxxxxx 00000, or at such other time or place as the
Company, Founders and Purchasers may mutually agree (such date is hereinafter
referred to as the "First Closing Date"). At the First Closing, subject to the
terms and conditions hereof, the Company will deliver to the Purchasers and
Founders certificates representing the number of Shares to be purchased at the
First Closing by each Purchaser and Founder as set forth opposite such
Purchaser's and Founder's name on Exhibit B under the heading First Closing,
against payment of the purchase price therefor by check or wire transfer made
payable to the order of the Company; provided, that the Founders may finance up
to $350,000 of the purchase price of the Shares they purchase at the First
Closing pursuant to a Promissory Note and Pledge Agreement in substantially the
form attached hereto as Exhibit C. The Purchasers shall purchase at least
2,250,000 Preferred Shares and 318,750 Common Shares at the First Closing, and
the Founders shall purchase at least 2,593,617 Common Shares at the First
Closing.
2.2 FINAL CLOSING. The final closing of the sale and purchase of the
Shares under this Agreement (the "Final Closing") shall take place at 11:00
a.m. on September 15, 1998 at the same location as the First Closing, or at
such other time or place as the Company, Founders and Purchasers may mutually
agree (such date is hereinafter referred to as the "Final Closing Date"). At the
Final Closing, subject to the terms and conditions hereof, the Company will
deliver to the Purchasers, and to such additional persons (the "Additional
Purchasers") as may be acceptable to the Board of Directors of the Company,
certificates representing the number of Shares to be purchased at the Final
Closing by each Purchaser, and each Additional Purchaser as set forth opposite
such persons name on Exhibit B under the heading Final Closing, against payment
of the purchase price therefor by check or wire transfer made payable to the
order of the Company. At the Final Closing, each Additional Purchaser shall
execute (i) a signature page hereto whereupon such Additional Purchaser shall
become a "Purchaser" hereunder; (ii) a signature page to the Investor Rights
Agreement (as defined herein) and (iii) a signature page to the Shareholders
Agreement (as defined herein); and the Company shall cause Exhibit B to be
amended to reflect the purchase made by each Additional Purchaser at the Final
Closing. The Purchasers, by themselves or with the Additional Purchasers, may
purchase at least 2,250,000 Preferred Shares at the Final Closing.
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SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on the Disclosure Schedule attached hereto as
Exhibit D, the Company hereby represents and warrants to each Purchaser and
Founder that is purchasing the Shares as follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement, the Investor Rights Agreement in the form attached hereto as
Exhibit E (the "Investor Rights Agreement") and the Shareholders Agreement
attached hereto as Exhibit F (the "Shareholders Agreement") (collectively with
this Agreement and the Amended Certificate, the "Financing Documents"), to issue
and sell the Shares and to carry out the provisions of the Financing Documents,
and to carry on its business as presently conducted and as presently proposed to
be conducted. The Company is duly qualified and is authorized to do business and
is in good standing in each jurisdiction in which the nature of its activities
and of its properties (both owned and leased) makes such qualification
necessary, except for those jurisdictions in which failure to do so would not
have a material adverse effect on the Company or its business. The Company does
not own, directly or indirectly, equity securities of any other corporation,
limited partnership, limited liability company or other similar entity. The
Company is not a participant in any joint venture, partnership or similar
arrangement.
3.2 CAPITALIZATION. The authorized capital stock of the Company,
immediately prior to the First Closing, will consist of (a) 9,100,000 shares of
Common Stock, 1,000 shares of which are issued and outstanding, 1,107,500 shares
of which are reserved for future issuance to key employees and consultants
pursuant to the Company's proposed option plan, and 4,500,000 shares of which
are reserved for issuance upon conversion of the Series A Preferred Stock, and
(b) 4,500,000 shares of Preferred Stock, all of which are designated Series A
Preferred Stock. All issued and outstanding shares of the Company's Common Stock
(i) have been duly authorized and validly issued, (ii) are fully paid and
nonassessable, and (iii) were issued in compliance with all applicable state and
federal laws concerning the issuance of securities. The rights, preferences,
privileges and restrictions of the Shares are as stated in the Amended
Certificate. The Conversion Shares have been duly and validly reserved for
issuance. Except as may be granted pursuant to the Financing Documents, there
are no outstanding options, warrants, rights (including conversion or preemptive
rights and rights of first refusal), proxy or shareholders agreements, or
agreements of any kind for the purchase or acquisition from the Company of any
of its securities. When issued in compliance with the provisions of this
Agreement and the Amended Certificate, the Shares and the Conversion Shares will
be validly issued, fully paid and nonassessable, and will be free of any liens
or encumbrances; provided, however, that the Shares and the Conversion Shares
may be subject to restrictions on transfer under state and/or federal securities
laws. A schedule describing the anticipated capitalization of the Company as of
the First and Final Closings is attached as Exhibit G hereto.
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3.3 AUTHORIZATION. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization of this
Agreement and the Financing Documents, the performance of all obligations of the
Company hereunder and thereunder at the Closings and the authorization, sale,
issuance and delivery of the Shares pursuant hereto and the Conversion Shares
pursuant to the Amended Certificate has been taken or will be taken prior to the
First Closing. The Agreement and the Financing Documents, when executed and
delivered, will be valid and binding obligations of the Company enforceable
against the Company in accordance with their terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights; (ii) general
principles of equity that restrict the availability of equitable remedies; and
(iii) to the extent that the enforceability of the indemnification provisions in
the Investor Rights Agreement may be limited by applicable laws. The sale of the
Shares and the subsequent conversion of the Shares into Conversion Shares are
not and will not be subject to any preemptive rights or rights of first refusal
that have not been properly waived or complied with.
3.4 FINANCIAL STATEMENTS. The Company's unaudited consolidated balance
sheet (the "Latest Balance Sheet") as of 15 days prior to the First and Final
Closing (each, a "Balance Sheet Date"), and unaudited consolidated statements of
operations of the Company for the period from May 1, 1998 through the Balance
Sheet Date, delivered to the Purchasers in connection with the investment
contemplated hereby (the "Financial Statements"), fairly present in all material
respects the financial position and the results of operations of the Company for
the period covered thereby.
3.5 LIABILITIES. The Company has no material liabilities and, to the
best of its knowledge, the Company knows of no material contingent liabilities
not disclosed in the Latest Balance Sheet, except current liabilities incurred
in the ordinary course of business subsequent to the Balance Sheet Date which
have not been, either in any individual case or in the aggregate, materially
adverse.
3.6 CHANGES. Since the Balance Sheet Date, and excluding the
transactions contemplated by the Financing Documents, there has not been:
(a) Any change in the assets, liabilities, financial
condition or operations of the Company or any Subsidiary from that reflected in
the Financial Statements, other than changes in the ordinary course of business,
none of which individually or in the aggregate has had or is expected to have a
material adverse effect on such assets, liabilities, financial condition or
operations of the Company.
(b) Any resignation or termination of any key
officers of the Company; and the Company, to the best of its knowledge, does not
know of the impending resignation or termination of employment of any such
officer;
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(c) Any material change, except in the ordinary
course of business, in the contingent obligations of the Company by way of
guaranty, endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties,
business or prospects or financial condition of the Company;
(e) Any waiver by the Company of a valuable right or
of a material debt owed to it;
(f) Any direct or indirect loans made by the Company
to any stockholder, employee, officer or director of the Company, other than
advances made in the ordinary course of business;
(g) Any material change in any compensation
arrangement or agreement with any employee, officer, director or stockholder of
the Company;
(h) Any declaration or payment of any dividend or
other distribution of the assets of the Company;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred,
assumed or guaranteed by the Company, except those for immaterial amounts and
for current liabilities incurred in the ordinary course of business;
(k) Any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets of the Company;
(l) Any change in any material agreement to which the
Company is a party or by which it is bound which materially and adversely
affects the business, assets, liabilities, financial condition, operations or
prospects of the Company, including compensation agreements with the Company's
employees; or
(m) Any other event or condition of any character
that, either individually or cumulatively, has materially and adversely affected
the business, assets, liabilities, financial condition, operations or prospects
of the Company.
3.7 MATERIAL CONTRACTS.
(a) Except as set forth on Item 3.7 of the Disclosure
Schedule, the Company has no, and is not bound by, any contract, agreement,
lease, commitment, or proposed transaction,
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judgment, order, writ or decree, written or oral, absolute or contingent, other
than (i) contracts for the purchase of supplies and services that were entered
into in the ordinary course of business and that do not involve more than
$10,000, and do not extend for more than one year beyond the date hereof; (ii)
sales contracts entered into in the ordinary course of business; and (iii)
contracts terminable at will by the Company on no more than 30 days' notice
without cost or liability to the Company and that do not involve any employment
or consulting arrangement and are not material to the conduct of the Company's
business. For the purpose of this paragraph, employment and consulting contracts
and contracts with labor unions, and license agreements and any other agreements
relating to the Company's acquisition or disposition of patent, copyright, trade
secret or other proprietary rights or technology (other than standard end-user
license agreements) shall not be considered to be contracts entered into in the
ordinary course of business. Every contract disclosed on Item 3.7 of the
Disclosure Schedule (collectively, the "Material Contracts") is a legal, valid
and binding obligation, enforceable in accordance with its terms with respect to
the Company and any other parties bound thereby, and true and complete copies of
all Material Contracts have been provided to Purchasers. The Company has not
been given notice that any other party is currently in breach of any of the
terms of any Material Contract. There is no default or event that, with notice
or lapse of time, or both, would conflict with or constitute a breach of any
Material Contract or would result in the creation or imposition of any lien or
encumbrance on the Company, or any of the Company's property. The Company has
not received notice that any party to any Material Contract intends to cancel,
amend or terminate any such agreement.
(b) The Company has not engaged in the past three months in any
discussion (i) with any representative of any corporation or corporations
regarding the consolidation or merger of the Company with or into any such
corporation or corporations; (ii) with any corporation, partnership, association
or other business entity or any individual regarding the sale, conveyance or
disposition of all or substantially all of the assets of the Company, or a
transaction or series of related transactions in which more than 50% of the
voting power of the Company is or was to be disposed; or (iii) regarding any
other form of acquisition, liquidation, dissolution or winding up of the
Company.
3.8 OBLIGATIONS TO RELATED PARTIES. There are no obligations of the
Company to officers, directors, stockholders, or employees of the Company other
than (i) for payment of salary for services rendered since the commencement of
the Company's most recent payroll period; (ii) reimbursement for reasonable
expenses incurred on behalf of the Company; and (iii) for other standard
employee benefits made generally available to all employees (including stock
option agreements outstanding under any stock option plan approved by the Board
of Directors of the Company). Except as disclosed on the Disclosure Schedule
hereto, none of the officers, directors or stockholders of the Company, or any
members of their immediate families, are indebted to the Company or have any
direct or indirect ownership interest in any firm or corporation with which the
Company is affiliated or with which the Company has a business relationship, or
any firm or corporation which competes with the Company, except that officers,
directors and/or stockholders of the Company may own stock in publicly traded
companies which may compete with the Company. No officer, director or
stockholder, or any member of
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their immediate families, is, directly or indirectly, interested in any material
contract with the Company (other than such contracts as relate to any such
person's ownership of capital stock or other securities of the Company). Except
as may be disclosed in the Financial Statements, the Company is not a guarantor
or indemnitor of any indebtedness of any other person, firm or corporation.
3.9 ASSETS. The Company has good and, with respect to real property,
marketable, title to all of its real and personal property, including all assets
reflected on the balance sheets included in the Financial Statements or acquired
by the Company since the Balance Sheet Date, all of which are in good operating
condition and free and clear of material restrictions on or conditions to
transfer or assignment, and free and clear of all liens, claims, mortgages,
pledges, charges, equities, easements, rights of way, covenants, conditions,
security interests, encumbrances, or restrictions, except for liens for current
taxes or materialmen not yet due and payable or being contested in good faith.
Set forth on Item 3.9 of the Disclosure Schedule is a correct and complete list
of all real property owned by the Company, and a list (including the amount of
annual rents called for and a summary description of the leased property) of all
leases under which the Company is a lessee. The properties and leases listed on
Item 3.9 of the Disclosure Schedule are sufficient for the conduct of the
Company's business as now being and presently planned to be conducted. The
Company holds a valid leasehold interest in all leases listed on Item 3.9 of the
Disclosure Schedule, free of any liens, claims, or encumbrances granted by the
Company, except for those described in the first sentence of this Section 3.9,
and is not in default under any such lease. The Company enjoys peaceful and
undisturbed possession of all premises owned by them, or leased to them from
others, and does not occupy any real property in material violation of any law,
regulations, or decree.
3.10 INTELLECTUAL PROPERTY.
(a) The Company owns or possesses sufficient legal rights to
all patents, trademarks, service marks, trade names, copyrights, trade secrets,
information and other proprietary rights and processes necessary for its
business as now conducted and as proposed to be conducted, without any known
infringement of the rights of others. There are no outstanding options, licenses
or agreements of any kind relating to the foregoing, nor is the Company bound by
or a party to any options, licenses or agreements of any kind with respect to
the patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information and other proprietary rights and processes of any other
person or entity other than such licenses or agreements arising from the
purchase of "off the shelf" or standard products. The Company has received no
communication alleging that the Company has violated or, by conducting its
business as proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity. The Company is not aware that any of its employees
is obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with their duties to
the Company or that would conflict with the Company's business as proposed to be
conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company's business by the employees
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of the Company, nor the conduct of the Company's business as proposed, will, to
the Company's knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any employee is now obligated.
(b) The Company will not use, nor does the conduct of the
Company's business as proposed require the use of, any proprietary intellectual
property or information of Amgen, Inc.
3.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation
or default of any term of its Amended Certificate or Bylaws, or of any provision
of any mortgage, indenture, contract, agreement, instrument or contract to which
it is party or by which it is bound or of any judgment, decree, order, writ or,
to its knowledge, any statute, rule or regulation applicable to the Company
which would materially and adversely affect the business, assets, liabilities,
financial condition, operations or prospects of the Company. The execution,
delivery, and performance of and compliance with this Agreement, and the
Financing Documents, and the issuance and sale of the Shares pursuant hereto and
of the Conversion Shares pursuant to the Amended Certificate, will not, with or
without the passage of time or giving of notice, result in any such material
violation, or be in conflict with or constitute a default under any such term,
or result in the creation of any mortgage, pledge, lien, encumbrance or charge
upon any of the properties or assets of the Company or the suspension,
revocation, impairment, forfeiture or nonrenewal of any permit license,
authorization or approval applicable to the Company, their business or
operations or any of their assets or properties.
3.12 LITIGATION. There are no actions, suits, or legal, administrative,
or other proceedings or investigations pending or, to the best of the Company's
knowledge, threatened before any court, agency, or other tribunal to which the
Company is a party or against or affecting any of the property, assets,
businesses, or financial condition of the Company. The Company is not in default
with respect to any order, writ, injunction, or decree of any federal, state,
local or foreign court, department, agency, or instrumentality to which it is a
party.
3.13 TAXES. The Company has timely filed all federal, state, county,
local and foreign tax returns and reports within the times and in the manner
prescribed by law and has paid (or made adequate provision in the Financial
Statements for) all taxes shown due on such returns, as well as all other
assessments and penalties which have become due and payable. The Company's
federal income and other tax returns have not been audited by the Internal
Revenue Service or any other taxing authority and no notice of audit has been
received. The Company has received no notice of any disputes, deficiency
assessments, or proposed adjustments to taxes payable by the Company.
3.14 EMPLOYEES AND CONSULTANTS. Except as set forth on Item 3.14 of the
Disclosure Schedule, the Company has not entered into any arrangement with any
present or former employee that will result in any obligation of the Company to
make any payment to such employee upon termination. True and complete copies of
all written employment agreements
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with the key executive officers of the Company listed on Item 3.14 of the
Disclosure Schedule have been delivered to Purchasers prior to the Closing Date.
To the Company's knowledge, no employee of or consultant to the Company is in
material violation of any term of any employment contract or any other contract
or agreement relating to the relationship of any such employee or consultant
with the Company. The Company has not received notice that any executive officer
intends to terminate his employment with the Company, nor does the Company have
any present intention to terminate the employment of any executive officer. To
the Company's knowledge, none of its employees are obligated under any contract
(including licenses, covenants, or commitments of any nature) or other
agreement, or subject to any judgment, decree, or order of any court or
administrative agency, that would interfere with the use of his/her reasonable
diligence to promote the interests of the Company or that would conflict with
the Company's business as proposed to be conducted. Neither the execution nor
delivery of this Agreement, nor the carrying on of the Company's business by the
employees of the Company, nor the conduct of the Company's business as proposed,
will, to the Company's knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any contract,
covenant, or instrument under which any of such employees is obligated, which
conflict, breach, or default would be materially adverse to the Company.
3.15 EMPLOYEE BENEFITS MATTERS. The Company does not maintain or
contribute to any plan or arrangement that constitutes an "employee pension
benefit plan" as defined in Section 3(2) of ERISA, and is not obligated to
contribute to or accrue or pay benefits under any deferred compensation or
retirement funding arrangement.
3.16 REGISTRATION RIGHTS. Except as required pursuant to the Investor
Rights Agreement, the Company is presently not under any obligation, and has not
granted any rights, to register any of the Company's presently outstanding
securities or any of its securities that may hereafter be issued.
3.17 GOVERNMENTAL APPROVALS/THIRD PARTY CONSENTS. All consents,
approvals, or authorizations of, or registrations, qualifications, designations,
declarations, or filings with any federal or state governmental authority, and
all consents, approvals or authorizations of any third party required in
connection with the execution of the Financing Documents and the performance of
the transactions contemplated hereby (including the issuance and sale of the
Shares) have been obtained by the Company. The Company has, or has rights to
acquire, all licenses, permits, and other similar authority necessary for the
conduct of its business as now being conducted by it and as planned to be
conducted, the lack of which could materially and adversely affect the
operations or condition, financial or otherwise, of the Company, and it is not
in default in any material respect under any of such licenses, permits or other
similar authority.
3.18 COMPLIANCE WITH LAWS. (a) The Company has complied with and is in
compliance in all material respects with all foreign, federal, state and local
statutes, laws, ordinances, regulations, rules, judgments, orders and decrees
applicable to it and its assets, business and operations, and (b) the Company
has received no written notice of any claim of
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default under or violation of any statute, law, ordinance, regulation, rule,
judgment, order or decree except for any such noncompliance or claim of default
or violation, if any, which in the aggregate do not and will not have a material
adverse effect the property, operations, financial condition or prospects of the
Company.
3.19 ENVIRONMENTAL MATTERS. The Company is in compliance in all
material respects with all environmental and occupational health and safety laws
and, to its knowledge, no material expenditures are or will be required in order
to comply with any such laws.
3.20 OFFERING VALID. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4 hereof, the offer, sale and
issuance of the Shares and the Conversion Shares will be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act") and will have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws.
3.21 ACCURACY OF INFORMATION FURNISHED. The Financing Documents, as
well as any exhibit, certificate, written statement, material or information
furnished by or on behalf of the Company pursuant thereto or in connection with
the transactions contemplated thereby to the Purchasers, do not contain any
untrue statement of a material fact or omit to state any material fact that is
necessary to make the statements contained herein or therein not misleading.
3.22 INSURANCE. The Company has or will obtain promptly following the
First Closing fire and casualty insurance policies with coverage customary for
companies similarly situated to the Company.
3.23 INVESTMENT COMPANY ACT. The Company is not an "investment
company," or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASERS.
Each Purchaser makes the following representations and warranties to
the Company as to itself that:
4.1. REQUISITE POWER AND AUTHORITY. Purchaser is a corporation, limited
liability company, or limited partnership duly organized, validly existing and
in good standing under the laws of the jurisdiction of its formation, and has
all requisite partnership or corporate power and authority to own its assets and
operate its business. Purchaser has all necessary corporate or partnership power
and authority under all applicable provisions of law to execute and deliver this
Agreement and the Financing Documents and to carry out their provisions. All
action on Purchaser's part required for the lawful execution and delivery of
this Agreement and the Financing Documents have been or will be effectively
taken prior to each Closing Date. Upon their execution and delivery, this
Agreement and the Financing Documents will be valid and
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binding obligations of Purchaser, enforceable in accordance with their terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; (ii) general principles of equity that restrict the
availability of equitable remedies; and (iii) to the extent that the
enforceability of the indemnification provisions of the Investor Rights
Agreement may be limited by applicable laws.
4.2. INVESTMENT REPRESENTATIONS. Purchaser understands that the Shares
have not been registered under the Securities Act. Purchaser also understands
that the Shares are being offered and sold pursuant to an exemption from
registration contained in the Securities Act based in part upon Purchaser's
representations contained in this Agreement. Purchaser hereby represents and
warrants as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Purchaser must bear the economic risk of
this investment indefinitely unless the Shares are registered pursuant to the
Securities Act, or an exemption from registration is available. Purchaser
understands that there is no assurance that any exemption from registration
under the Securities Act will be available and that, even if available, such
exemption may not allow Purchaser to transfer all or any portion of the Shares
under the circumstances, in the amounts or at the times Purchaser might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the
Shares for Purchaser's own account for investment only, and not with a view
towards their distribution.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents
that by reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement and the Financing Documents.
(d) ACCREDITED INVESTOR. Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
(e) COMPANY INFORMATION. Purchaser has received and read the
Financial Statements and has had an opportunity to discuss the Company's
business, management and financial affairs with directors, officers and
management of the Company and has had the opportunity to review the Company's
operations and facilities. Purchaser also has had the opportunity to ask
questions of and receive answers from, the Company and its management regarding
the terms and conditions of this investment.
(f) RULE 144. Purchaser acknowledges and agrees that the
Shares must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available.
Purchaser has been advised or is aware of the provisions of Rule 144 promulgated
under the Securities Act, which permits limited resale of shares purchased
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in a private placement 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 one year after
a party has purchased and paid for the security to be sold, the sale being
through an unsolicited "broker's transaction" or in transactions directly with a
market maker (as said term is defined under the Exchange Act) and the number of
shares being sold during any three-month period not exceeding specified
limitations.
(g) RESIDENCE. The office or offices of the Purchaser in which
its investment decision was made is located at the address or addresses of the
Purchaser as stated on the signature pages of this Agreement.
4.3 RESTRICTIVE LEGENDS. Purchaser agrees to the imprinting, so long as
required by law, of a legend on certificates representing all of the Shares or
the Conversion Stock to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
SHAREHOLDERS AGREEMENT DATED AS OF MAY 18, 1998 AS MAY BE AMENDED FROM
TIME TO TIME, AND SAID SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE
TERMS OF SUCH AGREEMENT. SUCH AGREEMENT MAY BE EXAMINED AT THE
PRINCIPAL PLACE OF BUSINESS OF THE COMPANY AND A COPY THEREOF WILL BE
FURNISHED WITHOUT CHARGE TO THE HOLDER OF THIS CERTIFICATE UPON RECEIPT
BY THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE
OF A WRITTEN REQUEST FROM THE SHAREHOLDER."
SECTION 5. REPRESENTATIONS AND WARRANTIES OF FOUNDERS
Each Founder makes the following representations and warranties to the
Company as to himself that:
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5.1. REQUISITE POWER AND AUTHORITY. Founder is an individual and has
all necessary authority under all applicable provisions of law to execute and
deliver this Agreement and the Financing Documents and to carry out their
provisions. All action on Founder's part required for the lawful execution and
delivery of this Agreement and the Financing Documents have been or will be
effectively taken prior to each Closing Date. Upon their execution and delivery,
this Agreement and the Financing Documents will be valid and binding obligations
of Founder, enforceable in accordance with their terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights; and (ii) general
principles of equity that restrict the availability of equitable remedies.
5.2. INVESTMENT REPRESENTATIONS. Founder understands that the Shares
have not been registered under the Securities Act. Founder also understands that
the Shares are being offered and sold pursuant to an exemption from registration
contained in the Securities Act based in part upon Founder's representations
contained in this Agreement. Founder hereby represents and warrants as follows:
(a) FOUNDER BEARS ECONOMIC RISK. Founder must bear the
economic risk of this investment indefinitely unless the Shares are registered
pursuant to the Securities Act, or an exemption from registration is available.
Founder understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow Founder to transfer all or any portion
of the Shares under the circumstances, in the amounts or at the times Founder
might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Founder is acquiring the
Shares for Founder's own account for investment only, and not with a view
towards their distribution.
(c) RULE 144. Founder acknowledges and agrees that the Shares
must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. Founder has
been advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act, which permits limited resale of shares purchased in a private
placement 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 one year after a party has purchased
and paid for the security to be sold, the sale being through an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Exchange Act) and the number of shares being sold
during any three-month period not exceeding specified limitations.
(d) RESIDENCE. Founder's residence is located at the address
or addresses of the Founder as stated on Exhibit B of this Agreement.
5.3 RESTRICTIVE LEGENDS. Founder agrees to the imprinting, so long as
required by law, of a legend on certificates representing all of the Shares or
the Conversion Stock to the following effect:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
SHAREHOLDERS AGREEMENT DATED AS OF MAY 18, 1998 AS MAY BE AMENDED FROM
TIME TO TIME, AND SAID SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE
TERMS OF SUCH AGREEMENT. SUCH AGREEMENT MAY BE EXAMINED AT THE
PRINCIPAL PLACE OF BUSINESS OF THE COMPANY AND A COPY THEREOF WILL BE
FURNISHED WITHOUT CHARGE TO THE HOLDER OF THIS CERTIFICATE UPON RECEIPT
BY THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE
OF A WRITTEN REQUEST FROM THE SHAREHOLDER."
SECTION 6. CONDITIONS TO CLOSING.
6.1 CONDITIONS TO PURCHASERS' AND FOUNDERS' OBLIGATIONS AT THE FIRST
CLOSING. Purchasers' and Founders' obligations to purchase the Shares at the
First Closing are subject to the satisfaction, at or prior to the First Closing,
of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects as of the First
Closing Date with the same force and effect as if they had been made as of the
First Closing Date, and the Company shall have performed all obligations and
conditions herein required to be performed or observed by it on or prior to the
First Closing.
(b) LEGAL INVESTMENT. On the First Closing Date, the sale and
issuance of the Shares, and the proposed issuance of the Conversion Shares,
shall be legally permitted by all laws and regulations to which Purchasers,
Founders and the Company are subject.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the Financing
Documents (except for such as may be properly obtained subsequent to the First
Closing).
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(d) FILING OF AMENDED CERTIFICATE. The Amended Certificate
shall have been filed with the Secretary of State of the State of Delaware.
(e) CORPORATE DOCUMENTS. The Company shall have delivered to
Purchasers or their counsel, copies of all corporate documents of the Company as
Purchasers shall reasonably request.
(f) RESERVATION OF CONVERSION SHARES. The Conversion Shares
issuable upon conversion of the Shares shall have been duly authorized and
reserved for issuance upon such conversion.
(g) CERTIFICATES. The Company shall have delivered to
Purchasers:
(1) proof of filing of the Amended Certificate, and a
certificate, as of the most recent practical date, of the Secretary of State of
Delaware as to the Company's good standing;
(2) a certificate of the Secretary of the Company
dated as of the Closing Date, certifying as to (i) the incumbency of officers of
the Company executing the Financing Agreements and all other documents executed
and delivered in connection therewith; (ii) a copy of the Amended Certificate,
in effect as of the Closing; (iii) a copy of the Bylaws of the Company, in
effect on the Closing Date; and (iv) a copy of the resolutions or consents of
the Board of Directors and stockholders of the Company authorizing and approving
the Company's execution, delivery and performance of the Financing Agreements;
and
(3) a certificate, executed by the President of the
Company as of the Closing Date, certifying to the fulfillment of all of the
conditions of the Purchasers' obligations under this Agreement, as set forth in
this Section 6.
(h) INVESTOR RIGHTS AGREEMENT. The Investor Rights Agreement
substantially in the form attached hereto as Exhibit E shall have been executed
and delivered by the parties thereto.
(i) SHAREHOLDERS AGREEMENT. The Shareholders Agreement
substantially in the form attached hereto as Exhibit F shall have been executed
and delivered by the parties thereto.
(j) LEGAL OPINION. The Purchasers shall have received from
legal counsel to the Company an opinion addressed to them, dated as of the First
Closing Date, in substantially the form attached hereto as Exhibit H.
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(k) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the First
Closing hereby and all documents and instruments incident to such transactions
shall be reasonably satisfactory in substance and form to the Purchasers and
their special counsel, and the Purchasers and their special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
(l) OTHER EMPLOYEES. The Purchasers shall have approved the
management and professional team proposed by the Founders, and all such persons
shall have executed, at Purchasers' discretion, letters of intent to join the
Company and/or employment agreements, acceptable to Purchasers. In addition, all
employees hired as of the First Closing shall have executed Confidential
Information and Noncompete Agreements with the Company, in substantially the
form attached hereto at Exhibits J and K.
(m) NOTE PURCHASE AGREEMENT. The Purchasers shall have
approved the Note Purchase Agreement, in form attached hereto as Exhibit C.
6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AT FIRST CLOSING. The
Company's obligation to issue and sell the Shares at the First Closing is
subject to the satisfaction, on or prior to the First Closing, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties made by Purchasers in Section 4 and by Founders in Section 5
hereof shall be true and correct in all material respects at the First Closing
Date, with the same force and effect as if they had been made on and as of said
date.
(b) PERFORMANCE OF OBLIGATIONS. Purchasers shall have
performed and complied with all agreements and conditions herein required to be
performed or complied with by Purchasers on or before the First Closing.
(c) FILING OF AMENDED CERTIFICATE. The Amended Certificate
shall have been filed with the Secretary of State of the State of Delaware.
(d) INVESTOR RIGHTS AGREEMENT. The Investor Rights Agreement
substantially in the form attached hereto as Exhibit E shall have been executed
and delivered by the parties thereto.
(e) SHAREHOLDERS AGREEMENT. The Shareholders Agreement
substantially in the form attached hereto as Exhibit F shall have been executed
and delivered by the parties thereto.
(f) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the Financing
Documents (except for such as may be properly obtained subsequent to the First
Closing).
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(g) MINIMUM INVESTMENT. The Purchasers shall purchase at least
2,250,000 Preferred Shares at the First Closing.
6.3 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE FINAL CLOSING.
Purchasers' and Additional Purchasers' obligations to purchase the Shares at the
Final Closing are subject to the satisfaction, at or prior to the Final Closing,
of the following conditions:
(a) BOARD APPROVAL. A majority of the Company's Board of
Directors shall have approved the Final Closing.
(b) LEGAL INVESTMENT. On the Final Closing Date, the sale and
issuance of the Shares, and the proposed issuance of the Conversion Shares,
shall be legally permitted by all laws and regulations to which Purchasers,
Additional Purchasers and the Company are subject.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the Financing
Documents (except for such as may be properly obtained subsequent to the Final
Closing).
(d) CORPORATE DOCUMENTS. The Company shall have delivered to
Purchasers and Additional Purchasers or their counsel, copies of all corporate
documents of the Company as Purchasers or Additional Purchasers shall reasonably
request.
(e) CERTIFICATES. The Company shall have delivered to
Additional Purchasers:
(1) a certified copy of the Amended Certificate, and
a certificate, as of the most recent practical date, of the Secretary of State
of Delaware as to the Company's good standing;
(2) a certificate of the Secretary of the Company
dated as of the Final Closing Date, certifying as to (i) the incumbency of
officers of the Company executing the Financing Agreements and all other
documents executed and delivered in connection therewith; (ii) a copy of the
Bylaws of the Company, in effect on the Final Closing Date; and (iii) a copy of
the resolutions or consents of the Board of Directors and stockholders of the
Company authorizing and approving the Company's execution, delivery and
performance of the Financing Agreements; and
(3) a certificate, executed by the President of the
Company as of the Final Closing Date, certifying to the fulfillment of all of
the conditions of the Purchasers' obligations under this Agreement, as set forth
in this Section 6.
(f) LEGAL OPINION. The Purchasers and Additional Purchasers
shall have received from legal counsel to the Company an opinion addressed to
them, dated as of the Final Closing Date, in substantially the form attached
hereto as Exhibit I.
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(g) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Final
Closing hereby and all documents and instruments incident to such transactions
shall be reasonably satisfactory in substance and form to the Purchasers,
Additional Purchasers and their counsel, and the Purchasers, Additional
Purchasers and their counsel shall have received all such counterpart originals
or certified or other copies of such documents as they may reasonably request.
6.4 CONDITIONS TO OBLIGATIONS OF THE COMPANY AT FINAL CLOSING. The
Company's obligation to issue and sell the Shares at the Final Closing is
subject to the satisfaction, on or prior to the Final Closing, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties made by Purchasers and Additional Purchasers in Section 4 hereof
shall be true and correct in all material respects at the Final Closing Date,
with the same force and effect as if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. Purchasers and Additional
Purchasers shall have performed and complied with all agreements and conditions
herein required to be performed or complied with by Purchasers or Additional
Purchasers on or before the Final Closing.
(c) INVESTOR RIGHTS AGREEMENT. The Investor Rights Agreement
substantially in the form attached hereto as Exhibit E shall have been executed
and delivered by the Additional Purchasers.
(d) SHAREHOLDERS AGREEMENT. The Shareholders Agreement
substantially in the form attached hereto as Exhibit F shall have been executed
and delivered by the Additional Purchasers.
(e) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the Financing
Documents (except for such as may be properly obtained subsequent to the Final
Closing).
(f) Minimum Investment. The Purchasers and Additional
Purchasers shall purchase, in the aggregate, at least 2,250,000 Preferred Shares
at the Final Closing.
SECTION 7. COVENANTS OF THE COMPANY FOR THE PERIOD FOLLOWING CLOSING.
Until the date upon which all Shares held by Purchasers (including any
capital stock of the Company issued upon conversion of the Series A Preferred
Stock) are no longer outstanding, the Company covenants to each Purchaser (and,
as applicable, to each Founder) and agrees as follows:
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7.1 USE OF PROCEEDS. The Company shall use all proceeds from the sale
of the Shares to Purchasers pursuant to this Agreement for financing of
expenditures related start-up of the Company, product development and general
working capital.
7.2 MAINTENANCE OF CORPORATE STATUS. The Company shall maintain, and
shall cause each affiliate to maintain, its corporate or partnership existence
in good standing or effective under the laws of its jurisdiction of organization
and any other states or jurisdictions in which its failure to qualify as a
foreign corporation or entity would have a material adverse effect on its
operations or financial condition.
7.3 COMPLIANCE WITH GOVERNING DOCUMENTS. The Company shall comply, and
shall cause each affiliate to comply, in all material respects with its Amended
Certificate, Bylaws or other governing documents.
7.4 COMPLIANCE WITH LAWS, LICENSES AND PERMITS; NO INFRINGEMENT. The
Company shall comply with all applicable federal, state, local, foreign and
other laws, regulations and ordinances, and with all applicable federal, state,
local and foreign governmental licenses and permits necessary for conducting its
business, except to the extent that any noncompliance would not have a material
adverse effect upon the Company. The Company shall not knowingly engage in any
activities that infringe upon the intellectual property rights of any other
person, corporation, partnership or other entity which could have a material
adverse effect upon the Company.
7.5 DISCHARGE OF OBLIGATIONS. The Company shall pay and discharge all
taxes, assessments, and governmental charges lawfully levied or imposed upon it
(in each case before they become delinquent and before penalties accrue), all
lawful claims for labor, materials, supplies and rents, and all other debts and
liabilities that if unpaid would by law be a lien or charge upon any of the
asserts or properties of the Company or lead to suspension of the business of
the Company (except to the extent contested in good faith by the Company and for
which adequate reserves are established).
7.6 MAINTENANCE OF PROPERTIES. The Company shall maintain all real and
personal property used in the business of the Company in good operating
condition, and shall make all repairs, renewals, replacements, additions and
improvements to those properties as are necessary or appropriate in the ordinary
course of business.
7.7 MAINTENANCE OF PROPRIETARY INFORMATION. The Company shall maintain
all proprietary information, and all applications and registrations therefor
owned or held by the Company, in full force and effect, except as otherwise
determined in the ordinary course of business. The Company shall not encumber or
license others to use its proprietary information owned by it except in the
ordinary course of the Company's business, and shall maintain the
confidentiality and trade secret status of all proprietary information that is
confidential except
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where disclosure is necessary to obtain copyright registrations or patents, or
is necessary or desirable in the ordinary course of the Company's business. The
Company shall enter into and maintain a Confidentiality Agreement, in the form
attached at Exhibit J with each employee and, as appropriately modified, each
consultant to the Company, and shall enter into and maintain a Noncompete
Agreement, in the form attached at Exhibit K with each key management employee
of the Company.
7.8 SIGNIFICANT TRANSACTIONS. In addition to any vote or consent of
shareholders or directors required by law or the Company's Amended Certificate,
so long as any originally issued Series A Preferred Stock remains outstanding,
the consent of the holders of two thirds of the shares of the Series A Preferred
Stock and of the shares of Common Stock held by the Founders, each voting as a
class, either in writing without a meeting or by vote at any meeting called for
the purpose, shall be necessary for effecting, validating or permitting (i) any
consolidation or merger involving the Company (other than a consolidation or
merger in which the Company is the surviving entity and no change in the capital
stock or ownership of the Company occurs), (ii) any transaction or series of
transactions in which an excess of 50% of the Company's voting power is
transferred, (iii) any dissolution, liquidation, or winding up of the Company,
or (iv) any sale of more than 50% of the assets of the Company, or any agreement
to become so obligated.
7.9 COMPENSATION OF DIRECTORS. Each member of the Board of Directors
shall be entitled to (a) customary liability insurance obtained at commercially
reasonable rates, and (b) reimbursement by the Company for all out-of-pocket
expenses, including, without limitation, travel expenses, incurred by such
director in connection with the performance of such directors duties, subject to
approval by the Board of Directors, such approval not to be unreasonably
withheld.
7.10 BOOKS AND RECORDS. The Company shall, and shall cause each
affiliate to, keep proper books of records and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Company and each affiliate, in accordance with generally
accepted accounting principles in effect from time to time. The Company shall
provide Purchasers with access to all such books and records and allow
Purchasers to make copies and abstracts thereof at reasonable times.
SECTION 8 MISCELLANEOUS.
8.1 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Colorado as such laws are applied to agreements between Colorado
residents entered into and performed entirely in Colorado, except that the
Delaware General Corporation Law will govern as to matters of corporate law.
8.2 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Purchaser and the
closing of the transactions
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contemplated hereby. All statements as to factual matters contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant hereto in connection with the transactions contemplated hereby shall be
deemed to be representations and warranties by the Company hereunder solely as
of the date of such certificate or instrument.
8.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares from time to time.
8.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the Financing Documents and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and no party shall be liable or bound
to any other in any manner by any representations, warranties, covenants and
agreements except as specifically set forth herein and therein.
8.5 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
8.6 AMENDMENT AND WAIVER. This Agreement may be amended or modified
only upon the written consent of the Company, the holders of at least sixty-six
percent (66%) of the Preferred Shares (treated as if converted and including any
Conversion Shares into which the Preferred Shares have been converted that have
not been sold), and the holders of at least sixty-six percent (66%) of the
Common Shares.
8.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, the Financing
Documents or the Amended Certificate, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on any Purchaser's
part of any breach, default or noncompliance under this Agreement, the Financing
Documents or under the Amended Certificate or any waiver on such party's part of
any provisions or conditions of the Agreement, the Financing Documents, or the
Amended Certificate must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, the Financing Documents, the Amended Certificate, by law, or
otherwise afforded to any party, shall be cumulative and not alternative.
8.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed facsimile if sent during
normal business hours of the recipient, if not, then on the
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next business day; (iii) three (3) business days after having been sent by
registered or certified mail, return receipt requested, postage prepaid; or (iv)
one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All
communications shall be sent to the Company and to Purchasers at the addresses
set forth on the signature pages attached hereto or at such other address as the
Company or Purchaser may designate by ten (10) days advance written notice to
the other parties hereto.
8.9 EXPENSES. The Company hereby agrees to reimburse each Purchaser
for its out-of-pocket expenses incurred in connection with the transactions
contemplated hereby, including all expenses incurred in connection with its due
diligence examination of the Company, the preparation and negotiation of the
Financing Documents, including the reasonable fees (not to exceed $25,000) and
expenses of special counsel to the Purchasers, and in connection with the
enforcement of rights and remedies of the Purchasers hereunder and under the
Shareholders Agreement and all other documents evidencing the transactions
contemplated herein.
8.10 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold each Purchaser harmless against any loss, liability, damage or expense
(including reasonable legal fees and costs) which such Purchasers may suffer,
sustain or become subject to as a result of or in connection with the breach by
the Company of any representation, warranty, covenant or agreement of the
Company contained in this Agreement or the Financing Documents.
8.11 INDEMNIFICATION BY THE PURCHASERS. Each Purchaser, severally and
not jointly, agrees to indemnify and hold the Company harmless against any loss,
liability, damage or expense (including reasonable legal fees and costs) which
the Company may suffer, sustain or become subject to as a result of or in
connection with the breach by such Purchaser of any representation, warranty,
covenant or agreement of such Purchaser contained in this Agreement or the
Financing Documents.
8.12 TITLES AND SUBTITLES. The titles of the sections and subsections
of the Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
8.13 COUNTERPARTS. This Agreement may be delivered via facsimile and
may be executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one instrument.
8.14 BROKER'S FEES. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 8.14 being untrue.
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8.15 ARBITRATION. The parties hereby covenant and agree that any legal
suit, dispute, claim, demand, controversy or cause of action of every kind and
nature whatsoever, known or unknown, fixed or contingent, that any party may now
have or at any time in the future claim to have based in whole or in part, or
arising from or out of or that in any way is related to the negotiations,
execution, interpretation or enforcement of this Agreement (collectively, the
"Disputes") shall be completely and finally settled by submission of any such
Disputes to arbitration under the rules of the American Arbitration Association
("AAA") then in effect. There shall be one arbitrator, and such arbitrator shall
be chosen by mutual agreement of the parties in accordance with AAA rules.
Unless the parties agree otherwise, the arbitration proceedings shall take place
in Denver, Colorado. The arbitrator shall apply Colorado law to all issues in
dispute, in accordance with Section 8.1 above. Notice of demand for arbitration
shall be filed in writing with the other party to this Agreement and with the
AAA. In no event shall the demand for arbitration be made after the date when
institution of legal or equitable proceedings based on such Dispute would be
barred by the applicable statute of limitations. The findings of the arbitrator
shall be final and binding on the parties. Judgment on such award may be entered
in any court of competent jurisdiction, or application may be made to that court
for a judicial acceptance of the award and an order or enforcement, as the party
seeking to enforce that award may elect. The prevailing party in any such action
shall be entitled to receive from the losing party all reasonable costs and
expenses, including the reasonable fees of attorneys, accountants, and other
experts, incurred by the prevailing party in investigating and prosecuting (or
defending) such action, together with any such fees which may be incurred in
enforcing any award of judgment.
8.16 EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges that it
is not relying upon any person, firm, or corporation, other than the Company and
its officers and directors, in making its investment or decision to invest in
the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the Shares and Conversion
Shares.
8.17 PRONOUNS. All pronouns contained herein, and any variations
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as the identity of the parties hereto may require.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed the PREFERRED AND
COMMON STOCK PURCHASE AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY:
ARRAY BIOPHARMA INC., a Delaware corporation
By: /s/ XXXXX XXXX
----------------------------
Xxxxx Xxxx, Ph.D., President
PURCHASERS:
FALCON TECHNOLOGY PARTNERS, L.P., a
Delaware limited partnership
By: /s/ XXXXX X. XXXXXXXX
--------------------------------------
Xxxxx X. Xxxxxxxx, General Partner
BOULDER VENTURES II, L.P., a Delaware
limited partnership
By: /s/ XXXX XXXXXXX
--------------------------------------
Xxxx Xxxxxxx, General Partner
BOULDER VENTURES II (ANNEX), L.P., a
Delaware limited partnership
By: /s/ XXXX XXXXXXX
--------------------------------------
Xxxx Xxxxxxx, General Partner
THE XXXXXXXXX FAMILY, L.L.C.
By: /s/ XXXXXX X. XXXXXXXXX
--------------------------------------
Xxxxxx X. Xxxxxxxxx, Ph.D., Manager
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FOUNDERS:
/s/ XXXXX XXXXXXX
------------------------------------
XXXXX XXXXXXX, PH.D.
/s/ XXXXX XXXX
------------------------------------
XXXXX XXXX, PH.D.
/s/ XXXXXXX X. XXXXXXXX
------------------------------------
XXXXXXX X. XXXXXXXX, PH.D.
/s/ X.X. XXXXXXXX
-----------------------------------
X.X. XXXXXXXX, PH.D.
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31
Exhibit A
[Certificate of Amendment to the Certificate of Incorporation]
32
Exhibit B
[Schedule of Purchasers]
33
Exhibit C
[Promissory Note and Pledge Agreement]
34
Exhibit D
[Disclosure Schedule]
35
Exhibit E
[Investor Rights Agreement]
36
Exhibit F
[Shareholders Agreement]
37
Exhibit G
[Capitalization Table]
38
Exhibit H
[First Closing Opinion]
39
Exhibit I
[Final Closing Opinion]
40
Exhibit J
[Confidentiality Agreement]
41
Exhibit K
[Noncompete Agreement]
