EXHIBIT 10.3
MYOGEN, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This Series A Preferred Stock Purchase Agreement (the "AGREEMENT") is
entered into as of this 21st day of May, 1998, by and among MYOGEN, INC., a
Delaware corporation (the "COMPANY") and each of those persons and entities,
severally and not jointly, whose names are set forth on the Schedule of
Purchasers attached hereto as EXHIBIT A (which persons and entities are
hereinafter collectively referred to as "PURCHASERS" and each individually as a
"PURCHASER").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of up to an
aggregate of Six Million (6,000,000) shares of its Series A Preferred Stock (the
"SERIES A STOCK");
WHEREAS, Purchasers desire to purchase the Series A Stock on the terms
and conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares to Purchasers
on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE
1.1 AUTHORIZATION OF SHARES. On or prior to the Closing (as
defined in Section 2 below), the Company shall have authorized (i) the sale and
issuance to Purchasers of the Shares having the rights, preferences, privileges
and restrictions set forth in the Certificate of Incorporation of the Company,
as amended, in the form attached hereto as EXHIBIT B (the "CERTIFICATE") and
(ii) the issuance of such shares of Common Stock to be issued upon the
conversion of the Shares (the "CONVERSION SHARES").
1.2 SALE AND PURCHASE. Subject to the terms and conditions hereof,
the Company hereby agrees to issue and sell to each Purchaser and each Purchaser
agrees to purchase from the Company, the number of Shares set forth opposite
such Purchaser's name on EXHIBIT A at a purchase price of One Dollar ($1.00) per
share (the "SHARES").
1.3 The Purchasers and any other purchaser acceptable to all of
the then existing Purchasers may purchase up to the balance of the authorized
shares of Series A Stock upon the terms and conditions set forth in this
Agreement at any time on or before the one hundred eightieth (180th) day
following the first Closing (the "PURCHASE EXPIRATION DATE"). Any shares of
Series A Stock sold pursuant to this Section 1.3 shall be deemed to be "Shares"
for all purposes under this Agreement and any purchaser thereof shall be deemed
to be "Purchasers" for all purposes under this Agreement. Exhibit A shall be
revised to reflect the number of Shares purchased by each Purchaser at each
Closing.
2. CLOSING, DELIVERY AND PAYMENT
2.1 FIRST CLOSING. The closing of the sale and purchase of the
Shares under this Agreement (the "CLOSING") shall take place at 10:00 a.m. local
time on May 21, 1998 at the offices of Xxxxx Xxxxxx & Xxxxxx, LLP, 0000 Xxxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 or at such other time or place as the
Company and Purchasers may mutually agree (such date is hereinafter referred to
as the "CLOSING DATE").
2.2 SUBSEQUENT CLOSING. The closing of the sale and purchase of
any additional Shares pursuant to Section 1.3 of this Agreement shall occur upon
the date and time as mutually agreed upon by the Purchasers and the Company at
the offices of Xxxxx Xxxxxx & Xxxxxx, LLP, 0000 Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxx 00000 or at such other place as the Company and the Purchasers
may mutually agree. Any subsequent closing shall be referred to herein as a
"CLOSING" and any subsequent closing date shall be referred to herein as a
"CLOSING DATE."
2.3 DELIVERY. At each Closing, subject to the terms and conditions
hereof, the Company will deliver to the Purchasers certificates representing the
number of Shares to be purchased at the Closing by each Purchaser, against
payment of the purchase price therefor by check, wire transfer made payable to
the order of the Company, or cancellation of indebtedness.
3. REDEMPTION RIGHT
3.1 In the event the Purchasers do not purchase Shares with an
aggregate purchase price equal to or greater than Three Million Dollars
($3,000,000) on or before the Purchase Expiration Date, (i) each Purchaser shall
have the right to require the Company to redeem all, but not less than all,
Shares held by such Purchaser and (ii) the Company shall have the right, at its
option to redeem all issued and outstanding Shares upon the terms and conditions
set forth in this Section 3. The parties agree that stockholders holding a
majority of the Common Stock outstanding as of the date of this Agreement may
authorize the exercise of the Company's right to redeem as set forth in this
Section 3.1.
3.2 In the event a Purchaser or the Company desires to exercise
its right as set forth in Section 3.1 hereof, such exercising party shall
deliver a written notice (i) to the Company and all other Purchasers if such
exercising party is a Purchaser, or (ii) to all Purchasers if such exercising
party is the Company, notifying such parties of the redemption to be effected,
specifying the number of Shares to be redeemed, the date on which the redemption
shall occur (which date shall be no later than ten (10) business days after the
date of such written notice), the manner and place at which payment will be made
and at which certificates will be surrendered.
3.3 Any Shares the Company redeems pursuant to this Section 3
shall be redeemed at a price of One Dollar ($1.00) per share (as adjusted for
any stock dividends and stock splits) by delivery, at the Company's option, of
either: (1) cash or (2) a promissory note in the form attached hereto as EXHIBIT
C in the amount of the aggregate redemption price.
3.4 On the designated redemption date, each Purchaser holding
Shares to be redeemed shall surrender to the Company the certificate or
certificates representing such Shares, in the manner and at the place designed
in the redemption notice, and thereupon the redemption
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price of such Shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be canceled.
3.5 If the funds of the Company legally available for redemption
of the Shares are insufficient to redeem the total number of Shares issued and
outstanding on the redemption date, those funds which are legally available will
be used to redeem the maximum possible number of such shares ratably among the
holders of the Shares to be redeemed based upon their holdings of Shares. The
Shares not redeemed shall remain outstanding and entitled to all rights and
preferences provided herein. At any time thereafter, when additional funds of
the Company are legally available for the redemption of the Shares, such funds
will immediately be used to redeem the balance of the Shares which the Company
has become obligated to redeem but which it has not redeemed.
3.6 The rights in this Section 3 shall expire upon the ninetieth
(90th) day after the Purchase Expiration Date.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Schedule of Exceptions, the Company hereby
represents and warrants to each Purchaser as of each Closing Date as follows:
4.1 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 D (the "INVESTOR RIGHTS AGREEMENT") and the Shareholders Agreement
attached hereto as EXHIBIT E (the "SHAREHOLDERS AGREEMENT"), to issue and sell
the Shares, the Conversion Shares, upon conversion thereof, and to carry out the
provisions of this Agreement, the Investor Rights Agreement, the Shareholders
Agreement and the Certificate 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 as a foreign
corporation in Colorado and in all jurisdictions 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 have any subsidiaries and is not a participant in any joint
venture, partnership or similar arrangement.
4.2 CAPITALIZATION; VOTING RIGHTS. The authorized capital stock of
the Company, immediately prior to the Closing, will consist of Twenty Million
(20,000,000) shares of Common Stock, Three Million Four Hundred Thousand
(3,400,000) shares of which are issued and outstanding and Two Million Two
Hundred Eighty Thousand (2,280,000) shares of which are reserved for future
issuance to employees and Ten Million (10,000,000) shares of Preferred Stock,
Six Million (6,000,000) of which are designated Series A Preferred Stock, none
of which are issued and outstanding. All issued and outstanding shares of the
Company's Common Stock (i) have been duly authorized and validly issued to the
persons listed on EXHIBIT F hereto, (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
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restrictions of the Shares are as stated in the Certificate. The Conversion
Shares have been duly and validly reserved for issuance. Other than as set forth
on EXHIBIT F, and except as may be granted pursuant to the Investor Rights
Agreement and the Shareholders Agreement, there are no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of first
refusal), proxy or shareholder 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 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 as set forth herein or as
otherwise required by such laws at the time a transfer is proposed.
4.3 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on
the part of the Company, its officers, directors and shareholders necessary for
the authorization of this Agreement, the Investor Rights Agreement and the
Shareholders Agreement, the performance of all obligations of the Company
hereunder and thereunder at the Closing and the authorization, sale, issuance
and delivery of the Shares pursuant hereto and the Conversion Shares pursuant to
the Certificate has been taken or will be taken prior to the Closing. The
Agreement, the Investor Rights Agreement and the Shareholders Agreement, when
executed and delivered, will be valid and binding obligations of the Company
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 in Section 2.9
of the Investor Rights Agreement may be limited by applicable laws. The sale of
the Shares and the subsequent conversion of 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.
4.4 FINANCIAL STATEMENTS. The Company has delivered to each
Purchaser its (i) unaudited balance sheet as at May 7, 1998 (the "FINANCIAL
STATEMENTS"), copies of which are attached hereto as EXHIBIT G. The Financial
Statements are complete and correct in all material respects, and present fairly
the financial condition and position of the Company as of May 7, 1998.
4.5 LIABILITIES. The Company has no material liabilities and, to
the best of its knowledge, knows of no material contingent liabilities not
disclosed in the Financial Statements, except current liabilities incurred in
the ordinary course of business subsequent to May 7, 1998, which have not been,
either in any individual case or in the aggregate, materially adverse to the
financial condition or operating results of the Company.
4.6 AGREEMENTS; ACTION.
(a) Except for agreements explicitly contemplated hereby
and agreements between the Company and its employees with respect to the sale of
the Company's Common Stock and except as set forth on the Schedule of
Exceptions, there are no agreements, understandings or proposed transactions
between the Company and any of its officers, directors, affiliates or any
affiliate thereof.
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(b) Except as set forth on the Schedule of Exceptions,
there are no agreements, understandings, instruments, contracts, proposed
transactions, judgments, orders, writs or decrees to which the Company is a
party or to its knowledge by which it is bound which may involve (i) obligations
(contingent or otherwise) of, or payments to, the Company in excess of $10,000
or (ii) the license of any patent, copyright, trade secret or other proprietary
right to or from the Company (other than licenses arising from the purchase of
"off the shelf" or other standard products), or (iii) provisions restricting or
affecting the development, manufacture or distribution of the Company's products
or services, or (iv) indemnification by the Company with respect to
infringements of proprietary rights (other than indemnification obligations
arising from purchase or sale agreements entered into in the ordinary course of
business).
(c) The Company has not (i) declared or paid any
dividends, or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (ii) incurred any indebtedness for money
borrowed or any other liabilities (other than with respect to dividend
obligations, distributions, indebtedness and other obligations incurred in the
ordinary course of business or as disclosed in the Balance Sheet) individually
in excess of $10,000 or, in the case of indebtedness and/or liabilities
individually less than $10,000, in excess of $25,000 in the aggregate, (iii)
made any loans or advances to any person, other than ordinary advances for
travel and business expenses, or (iv) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
ordinary course of business.
(d) For the purposes of subsections (b) and (c) above,
all indebtedness, liabilities, agreements, understandings, instruments,
contracts and proposed transactions involving the same person or entity
(including persons or entities the Company has reason to believe are affiliated
therewith) shall be aggregated for the purpose of meeting the individual minimum
dollar amounts of such subsections.
(e) Except as set forth on the Schedule of Exceptions,
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 fifty percent (50%) of the
voting power of the Company is disposed of, or (iii) regarding any other form of
acquisition, liquidation, dissolution or winding up of the Company.
4.7 OBLIGATIONS TO RELATED PARTIES. Except as set forth on the
Schedule of Exceptions, there are no obligations of the Company to owners,
directors, shareholders, or employees of the Company other than (a) for payment
of salary for services rendered, (b) reimbursement for reasonable expenses
incurred on behalf of the Company and (c) 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). None of the officers, directors or shareholders 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 as a holder of
securities of a publicly traded company to the extent of not more
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than two percent (2%) of the issued and outstanding securities of such
corporation). No officer, director or stockholder or any member of their
immediate families is, directly or indirectly, interested in any material
contract with 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.
4.8 CHANGES. Since May 7, 1998 there has not been to the Company's
knowledge:
(a) Any change in the assets, liabilities, financial
condition or operations of the Company 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;
(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 shareholder.
(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 for those 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;
6.
(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.
4.9 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has
good and marketable title to its properties and assets, including the properties
and assets reflected in the Financial Statements and good title to its leasehold
estates, to the Company's knowledge, in each case subject to no mortgage,
pledge, lien, lease, encumbrance or charge, other than (i) those resulting from
taxes which have not yet become delinquent (ii) minor liens and encumbrances
which do not materially detract from the value of the property subject thereto
or materially impair the operations of the Company, and (iii) those that have
otherwise arisen in the ordinary course of business. All facilities, machinery,
equipment, fixtures, vehicles and other properties owned, leased or used by the
Company are in good operating condition and repair and are reasonably fit and
usable for the purposes for which they are being used.
4.10 PATENTS AND TRADEMARKS. 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 ("INTELLECTUAL PROPERTY") necessary for its business as now conducted
and as proposed to be conducted, without any known infringement of the rights of
others. Except as set forth on the Schedule of Exceptions, 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. Except as set forth on the Schedule of Exceptions, at no time during
the conception or reduction to practice of any of the Company's Intellectual
Property was any developer, inventor or other contributor to such Intellectual
Property operating under any grants from any governmental entity or agency or
private source, performing research sponsored by any governmental entity or
agency or private source or subject to any employment agreement or invention
assignment or nondisclosure agreement or other obligation with any third party
that could adversely affect the Company's rights in such Intellectual Property.
Except as set forth on the Schedule of Exceptions, the Company is not obligated
to make any payments by the way of royalties, fees or otherwise to any owner or
licensor of any patent, trademark, trade name, copyright or other intangible
asset, with respect to the use thereof or in connection with the conduct of its
business, or otherwise. Except as set forth on the Schedule of Exceptions, the
Company has not granted to any third party any option, license or other right of
any kind to its Intellectual Property. Except as set forth on the Schedule of
Exceptions, the Company does not license any technology from any third party
other than for internal use. The Company has not received any communications
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 of any violation by a
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third party of any of the Company's patents, trademarks, service marks, trade
names, copyrights, trade secrets, information or other proprietary rights and
processes. Except as set forth on the Schedule of Exceptions, the Company is not
aware that any of its officers, employees, consultants, contractors or
shareholders 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 or that would prevent such officers, employees,
consultants or contractors from assigning inventions to the Company. Neither the
execution nor delivery of this Agreement, nor the carrying on of the Company's
business by the employees or consultants 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 or
consultant is now obligated. The Company does not believe it is or will be
necessary to utilize any inventions, trade secrets or proprietary information of
any of its employees made prior to their employment by the Company, except for
inventions, trade secrets or proprietary information that have been assigned or
licensed to the Company.
4.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of any term of its Certificate or Bylaws, or of any
provision of any mortgage, indenture, contact, 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, the
Investor Rights Agreement and the Shareholders Agreement, and the issuance and
sale of the Shares pursuant hereto and of the Conversion Shares pursuant to the
Certificate, will not 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, its business or operations or any of its assets or properties.
4.12 LITIGATION. There is no action, suit, proceeding or
investigation pending or to the Company's knowledge currently threatened against
the Company that questions the validity of this Agreement, the Investor Rights
Agreement or the Shareholders Agreement or the right of the Company to enter
into any of such agreements, or to consummate the transactions contemplated
hereby or thereby, or which might result, either individually or in the
aggregate, in any material adverse change in the assets, condition, affairs or
prospects of the Company, financially or otherwise, or any change in the current
equity ownership of the Company, nor is the Company aware that there is any
basis for the foregoing. The foregoing includes, without limitation, actions
pending or threatened (or any basis therefor known to the Company) involving the
prior employment of any of the Company's employees, their use in connection with
the Company's business of any information or techniques allegedly proprietary to
any of their former employers, or their obligations under any agreements with
prior employers. The Company is not a party or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
8.
4.13 TAX RETURNS AND PAYMENTS. The Company has filed all tax
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and to the
Company's knowledge all other taxes due and payable by the Company on or before
the Closing have been paid or will be paid prior to the time they become
delinquent. The Company has not been advised (i) that any of its returns,
federal, state or other, have been or are being audited as of the date hereof,
or (ii) of any deficiency in assessment or proposed judgment to its federal,
state or other taxes. The Company has no knowledge of any liability of any tax
to be imposed upon its properties or assets of the date of this Agreement that
is not adequately provided for.
4.14 EMPLOYEES. The Company has no collective bargaining agreements
with any of its employees. There is no labor union organizing activity pending
or, to the Company's knowledge, threatened with respect to the Company. No
employee has any agreement or contract, written or verbal, regarding his
employment. To the Company's knowledge, no employee of the Company, nor any
consultant with whom the Company has contracted, is in violation of any term of
any employment contract, patent disclosure agreement or any other agreement
relating to the right of any such individual to be employed by, or to contract
with, the Company because of the nature of the business to be conducted by the
Company; and to the Company's knowledge the continued employment by the Company
of its present employees, and the performance of the Company's contracts with
its independent contractors, will not result in any such violation. The Company
has not received any notice alleging that any such violation has occurred. No
employee of the Company has been granted the right to continued employment by
the Company or to any material compensation following termination of employment
with the Company. The Company is not aware that any officer or key employee, or
that any group of key employees, intends to terminate their employment with the
Company, nor does the Company have a present intention to terminate the
employment of any officer, key employee or group of key employees.
4.15 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each
employee, officer, consultant and contractor of the Company has executed either
a Proprietary Information and Inventions Agreement or a Consulting Agreement
substantially in the forms of EXHIBIT H-1 and EXHIBIT H-2 attached hereto.
4.16 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 (as defined in Section 1.1 of the
Investor Rights Agreement) any of the Company's presently outstanding securities
or any of its securities that may hereafter be issued.
4.17 COMPLIANCE WITH LAWS; PERMITS. To its knowledge, the Company
is not in violation of any applicable statute, rule, regulation, order or
restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties which violation would materially and adversely affect the business,
assets, liabilities, financial condition, operations or prospects of the
Company. No governmental orders, permissions, consents, approvals or
authorizations are required to be obtained and no registrations or declarations
are required to be filed in connection with the execution and delivery of this
Agreement and the issuance of the Shares or the Conversion Shares, except such
as has been duly and validly obtained or filed, or with respect to any filings
9.
that must be made after the Closing, as will be filed in a timely manner. The
Company has all franchises, permits, licenses and any similar authority
necessary for the conduct of its business as now being conducted by it, the lack
of which could materially and adversely affect the business, properties,
prospects or financial condition of the Company and believes it can obtain,
without undue burden or expense, any similar authority for the conduct of its
business as planned to be conducted.
4.18 ENVIRONMENTAL AND SAFETY LAWS. To its knowledge, the Company
is not in violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and to its knowledge, no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation.
4.19 OFFERING VALID. Assuming the accuracy of the representations
and warranties of the Purchasers contained in Section 5.2 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. Neither the Company nor
any agent on its behalf has solicited or will solicit any offers to sell or has
offered to sell or will offer to sell all or any part of the Shares to any
person or persons so as to bring the sale of such Shares by the Company within
the registration provisions of the Securities Act.
4.20 FULL DISCLOSURE. The Company has provided each Purchaser with
all information which such Purchaser has requested for deciding whether to
purchase the Shares and all information which the Company believes is reasonably
necessary to enable the Purchasers to make such decision. This Agreement, the
Exhibits hereto, the Investor Rights Agreement the Shareholders Agreement and
all other documents delivered by the Company to Purchasers or their attorneys or
agents in connection herewith or therewith or with the transactions contemplated
hereby or thereby, do not contain any untrue statement of a material fact nor,
to the Company's knowledge, omit to state a material fact necessary in order to
make the statements contained herein or therein not misleading. To the Company's
knowledge, there are no facts which (individually or in the aggregate)
materially adversely affect the business, assets, liabilities, financial
condition, prospects or operations of the Company that have not been set forth
in the Agreement, the Exhibits hereto, or in other documents delivered to
Purchasers or their attorneys or agents in connection herewith.
4.21 CORPORATE DOCUMENTS; MINUTE BOOKS. The Certificate and Bylaws
of the Company are in the form previously provided to special counsel to the
Purchasers. The minute books of the Company provided to the Purchaser's legal
counsel contain a complete minutes of all meetings of and records of all actions
taken by directors and shareholders since the time of incorporation.
4.22 REAL PROPERTY HOLDING CORPORATION. The Company is not a real
property holding corporation within the meaning of Internal Revenue Code Section
897(c)(2) and any regulations promulgated thereunder.
10.
4.23 MANUFACTURING AND MARKETING RIGHTS. The Company has not
granted rights to manufacture, produce, assemble, license, market or sell its
products to any third party, and is not bound by any agreement that affects the
Company's exclusive right to develop, manufacture, assemble, distribute, market
or sell its products.
4.24 VOTING AGREEMENTS. Except as set forth herein, the Company has
no agreement, obligation or commitment with respect to the election of any
individual or individuals to the Board of Directors, and to the best of the
Company's knowledge, there is no voting agreement or other arrangement among its
stockholders with respect to the election of any individual or individuals to
the Board of Directors.
4.25 EMPLOYEE BENEFIT PLANS. The Company does not have any
"employee benefit plan" as defined in the Employee Retirement Income Security
Act of 1974, as amended.
4.26 INSURANCE. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, and insurance against other
hazards, risks and liabilities to persons and property to the extent and in the
manner customary for companies in similar businesses similarly situated.
4.27 SMALL BUSINESS STOCK. As of the date hereof, (i) the Company
is a qualified small business within the meaning of Section 1202(d) of the
Internal Revenue Code of 1986, as amended (the "CODE") and (ii) the Shares are
qualified small business stock within the meaning of Section 1202(c) of the Code
as to taxpayer in whose hands such stock would be eligible to qualify as small
business stock.
4.28 DISTRIBUTIONS. There has been no declaration or payment by the
Company of any dividend, nor any distribution by the Company of any assets of
any kind, to any class or series of its capital stock.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants to the Company as follows
(such representations and warranties do not lessen or obviate the
representations and warranties of the Company set forth in this Agreement):
5.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary
power and authority under all applicable provisions of law to execute and
deliver this Agreement, the Investor Rights Agreement and the Shareholders
Agreement and to carry out their provisions. All action on Purchaser's part
required for the lawful execution and delivery of this Agreement, the Investor
Rights Agreement and the Shareholders Agreement have been or will be effectively
taken prior to the Closing. Upon their execution and delivery, this Agreement,
the Investor Rights Agreement and the Shareholders Agreement will be valid and
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 Section 2.9 of the Investor
Rights Agreement may be limited by applicable laws.
11.
5.2 INVESTMENT REPRESENTATIONS. Purchaser understands that neither
the Shares nor the Conversion Shares have 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 the 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 (or the Conversion
Shares) are registered pursuant to the Securities Act, or an exemption from
registration is available. Purchaser understands that the Company has no present
intention of registering the Shares, the Conversion Shares or any shares of its
Common Stock. Purchaser also 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 or the Conversion Shares under the circumstances, in the
amounts or at the times Purchaser might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring
the Shares and the Conversion Shares for Purchaser's own 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, the Investor
Rights Agreement and the Shareholders Agreement. Further, Purchaser is aware of
no publication of any advertisement in connection with the transactions
contemplated in the Agreement.
(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 has also 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, and, if issued, the Conversion 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 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 brokers
12.
transaction or in transactions directly with a market maker (as defined under
the Securities Exchange Act of 1934, as amended) and the number of shares being
sold during any three-month period not exceeding specified limitations.
5.3 TRANSFER RESTRICTIONS. Each Purchaser acknowledges and agrees
that the Shares and, if issued, the Conversion Shares, are subject to
restrictions on transfer as set forth in the Investor Rights Agreement.
6. CONDITIONS TO CLOSING
6.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING.
Purchasers' obligations to purchase the Shares at the Closing are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in Section 4
hereof shall be true and correct in all material respects as of the Closing Date
with the same force and effect as if they had been made as of each such 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 Closing.
(b) LEGAL INVESTMENT. On the 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 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, the Investor
Rights Agreement and the Shareholders Agreement (except for such as may be
properly obtained subsequent to each Closing).
(d) 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. The Company shall submit revised,
detailed milestones and budgets acceptable to Purchasers for the twelve-month
period following the First Closing.
(e) COMPLIANCE CERTIFICATE. The Company shall have
delivered to Purchasers a Compliance Certificate, executed by the President and
the Chief Financial Officer of the Company, dated the date of the Closing Date,
to the effect that the conditions specified in subsections (a) through (1) of
this Section 5.1 have been satisfied. The Company shall have delivered to
Purchasers a Secretary's Certificate, executed by the Secretary of the Company,
dated the Closing Date, in form and substance reasonably satisfactory to
Purchasers.
(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.
13.
(g) INVESTOR RIGHTS AGREEMENT. An Investor Rights
Agreement substantially in the form attached hereto as EXHIBIT D shall have been
executed and delivered by the parties thereto.
(h) SHAREHOLDERS AGREEMENT. The Shareholders Agreement
substantially in the form attached hereto as EXHIBIT E shall have been executed
and delivered by the parties thereto.
(i) BOARD OF DIRECTORS. Upon the First Closing, the
authorized size of the Board of Directors of the Company shall be four members
and Xxxxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxx Xxxxxx and Xxx Xxxxxxxx will be appointed
as members of the Board. Upon the Second Closing, the authorized size of the
Board of Directors of the Company shall be seven members shall consist of
Xxxxxxx Xxxxxxx, Xxx Xxxxxx, Xxx Xxxxxxxx, the Company's chief executive
officer, a person to be designated by the Purchasers and two independent
directors to be agreed upon by a majority of the existing directors.
(j) CERTIFICATE. The Company shall have filed with the
Secretary of State of the State of Delaware the Certificate substantially in the
form of EXHIBIT B attached hereto.
(k) LEGAL OPINION. The Purchasers shall have received
from legal counsel to the Company an opinion addressed to them, dated as of the
Closing Date, in substantially the form attached hereto as EXHIBIT I.
(l) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the 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.
(m) KEY PERSON LIFE INSURANCE. Within sixty (60) days of
the date hereof, the Company agrees to obtain from financially sound and
reputable insurers term life insurance on the lives of Xxxxxxx Xxxxxxx and
Xxxxxx Xxxxxxxx in the amounts of $2,000,000 and $1,000,000 respectively. The
Company will cause to be maintained the term life insurance required by this
Section 6.1(m). Such insurance policies shall name the Company as loss payee and
shall not be cancelable by the Company without the prior approval of the Board
of Directors.
(n) DUE DILIGENCE. The Purchasers shall (i) have
completed their due diligence of the Company, and (ii) be satisfied, in their
sole discretion, with the results of such due diligence review.
(o) EMPLOYEE STOCK OPTIONS. The Purchasers shall be
satisfied with the Company's employee stock arrangements.
(p) COMPANY COUNSEL. The Company shall have engaged
corporate counsel to the Company which counsel shall be satisfactory to the
Investors.
14.
(q) ACCOUNTING FIRM. Within a reasonable period of time
after the date hereof, the Company agrees to engage a "Big Five" national
accounting firm to perform annual audits of the Company's financial statements.
6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to issue and sell the Shares at each Closing is subject to the
satisfaction, on or prior to the Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties made by Purchasers in Section 5 hereof shall be
true and correct in all material respects at the date of the First Closing and
the Second Closing, 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 each such Closing.
(c) INVESTOR RIGHTS AGREEMENT. An Investor Rights
Agreement substantially in the form attached hereto as EXHIBIT E shall have been
executed and delivered by the Purchasers.
(d) 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, the Investor
Rights Agreement and the Shareholders Agreement (except for such as may be
property obtained subsequent to the Closing).
7. MISCELLANEOUS
7.1 GOVERNING LAW. This Agreement shall be governed in all
respects 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.
7.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by any Purchaser and
the closing of the transactions 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.
7.3 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.
7.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the Investor Rights Agreement and the Shareholders Agreement and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties
15.
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.
7.5 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.
7.6 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon
the written consent of the Company and holders of more than a majority of the
Shares (treated as if converted and including any Conversion Shares into which
the Shares have been converted that have not been sold to the public).
(b) The obligations of the Company and the rights of the
holders of the Shares and the Conversion Shares under the Agreement may be
waived only with the written consent of the holders of more than a majority of
the Shares (treated as if converted and including any Conversion Shares into
which the Shares have been converted that have not been sold to the public).
7.7 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 Investor
Rights Agreement and the Shareholders Agreement or the 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 or under the Certificate or any waiver on such party's part of any
provisions or conditions of the Agreement 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 Certificate, by-law, or otherwise
afforded to any party, shall be cumulative and not alternative.
7.8 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, or if not, then on the next business
day; (iii) five (5) 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 at the address as set forth on the signature page hereof and to
Purchaser at the address set forth on EXHIBIT A 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.
7.9 EXPENSES. The Company shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
the Agreement. The Company
16.
shall, at the Closing, reimburse the reasonable fees and expenses of Xxxxx,
Xxxxxx & Xxxxxx LLP, special counsel for the Purchasers, incurred in connection
with the negotiation, execution, delivery and performance of this Agreement.
7.10 ATTORNEYS' FEES. In the event that any dispute among the
parties to this Agreement should result in litigation, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
7.11 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.
7.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.13 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 claim, losses or expenses incurred by such
other party as a result of the representation in this Section 7.13 being untrue.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
17.
IN WITNESS WHEREOF, the parties hereto have executed this SERIES A
PREFERRED STOCK PURCHASE AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: INVESTORS:
MYOGEN, INC. SEQUEL LIMITED PARTNERSHIP
By: Sequel Venture Partners, LLC
its General Partner
By: /s/ Xxxxxxx Xxxxxxx By: /s/ Xxx Xxxxxxxx
--------------------------- ---------------------------------
Xxxxxxx Xxxxxxx Manager
President
SEQUEL EURO LIMITED PARTNERSHIP
By: Sequel Venture Partners, LLC
its General Partner
By: /s/ Xxx Xxxxxxxx
---------------------------------
Manager
CROSSPOINT VENTURE PARTNERS 1997
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
its General Partner
By: _________________________________
18.
IN WITNESS WHEREOF, the parties hereto have executed this SERIES A
PREFERRED STOCK PURCHASE AGREEMENT as of the 23rd day of September 1998.
INVESTORS:
INTERWEST PARTNERS VI, LIMITED
PARTNERSHIP
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
its General Partner
INTERWEST INVESTORS VI, LIMITED
PARTNERSHIP
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
its General Partner
19.
SCHEDULE A
AGGREGATE
NO. OF PURCHASE
NAME AND ADDRESS SHARES PRICE
------------------------------- ------------ ----------
Sequel Limited Partnership 1,321,834 $1,321,834
0000 Xxxxxxxx Xxxxxx, Xxxxx 000 (1,071,834)*
Xxxxxxx, XX 00000
Sequel Euro Limited Partnership 578,166 $ 578,166
0000 Xxxxxxxx Xxxxxx, Xxxxx 000 (468,817)
Xxxxxxx, XX 00000
Crosspoint Venture Partners 1997 2,100,000 $2,100,000
00000 XxxXxxxxx Xxxx., Xxxxx 000 (1,850,000)
Xxxxxx, XX 00000
InterWest Partners VI, L.P. 1,939,200 $1,939,200
0000 Xxxx Xxxx Xxxx (1,696,800)
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
InterWest Investors VI, L.P. 60,800 $ 60,800
0000 Xxxx Xxxx Xxxx (53,200)
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
* Numbers in parentheses indicate shares acquired through the second traunch
investment.
20.
