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EXHIBIT 10.52
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
This Convertible Preferred Stock Purchase Agreement (the "Agreement")
dated as of December 11, 1996 is entered into by and between ILEX Oncology,
Inc., a Delaware corporation (the "Company"), and MPI Enterprises, L.L.C. (the
"Purchaser"), whose mailing address and principal office is set forth on
Exhibit A.
W I T N E S S E T H:
WHEREAS, the Company desires to sell 833,333 shares of Series E
Convertible Preferred Stock, $.01 par value per share, having the rights,
preferences, privileges and restrictions described herein and in the Exhibits
and Schedules hereto (the "Series E Preferred"); the purchase price for such
shares of Series E Preferred shall be $6.00 per share.
WHEREAS, the Purchaser desires to enter into this Agreement pursuant to
which the Purchaser will purchase shares of Series E Preferred on the terms set
forth herein and in the amount and for the aggregate consideration set forth in
Exhibit A.
NOW, THEREFORE, the Company and the Purchaser agree as follows:
1. Purchase and Sale. Subject to the provisions of this Agreement
(including the last sentence of this SECTION 1) and on the basis of the
representations and warranties contained herein, on the Closing Date (as
hereinafter defined), the Company will sell to the Purchaser and the Purchaser
will purchase from the Company that number of shares of the Series E Preferred
set forth adjacent to the Purchaser's name on Exhibit A. The purchase price to
be paid by the Purchaser for such shares of Series E Preferred shall be equal
to the product of $6.00 per share times the number of shares of Series E
Preferred purchased at the Closing by the Purchaser (the "Purchase Price").
2. Closing of Purchase and Sale.
2.1 Closing; Closing Date. The purchase and sale of the Series E
Preferred (the "Closing") shall occur at the offices of Fulbright & Xxxxxxxx
L.L.P., 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxx 00000, and shall
occur at 9:00 a.m. local time on December 11, 1996 or such other time and date
as may be agreed upon by the Company and the Purchaser (the "Closing Date").
2.2 Transactions at Closing. The Closing of the purchase and sale of
shares of Series E Preferred to be made to the Purchaser shall be effected on
the Closing Date. On the Closing Date (a) the Company and the Purchaser shall
execute and deliver each agreement included as an exhibit hereto to which they
are a party, (b) the Company shall deliver to the Purchaser a stock certificate
for the Series E Preferred to be issued and sold to the Purchaser, duly
registered in the Purchaser's name, and (c) the Purchaser shall deposit by wire
transfer of immediately available funds or bank certified or cashier's check
the aggregate Purchase Price called for in SECTION 1 of this Agreement into one
or more bank accounts of the Company as shall be designated by the Company
prior to the Closing.
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3. Representations and Warranties of Company. The Company
represents and warrants to the Purchaser as follows:
3.1 Organization, Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has full power and authority to own, lease
and operate its properties and assets and to conduct its business as presently
conducted and as proposed to be conducted, and to enter into this Agreement and
the Registration Rights Agreement (as defined in SECTION 5.7) and to carry out
the transactions contemplated by such agreements. The Company is duly
qualified to do business as a foreign corporation and is in good standing in
the State of Texas and in every other jurisdiction in which the failure to so
qualify would have a material adverse effect on the business, assets,
operations or financial condition of the Company.
3.2 Capitalization. The authorized capital stock of the Company
consists of (a) 20,000,000 shares of preferred stock, $.01 par value per share
("Preferred Stock"), of which (i) 5,239,900 shares have been designated as
Series A Convertible Preferred Stock, $.01 par value per share (the "Series A
Preferred"), all of which are issued and outstanding, (ii) 5,432,500 shares
have been designated as Series B Convertible Preferred Stock, $.01 par value
per share (the "Series B Preferred"), all of which are issued and outstanding,
(iii) 2,293,578 shares have been designated as Series C Convertible Preferred
Stock, $.01 par value per shared (the "Series C Preferred"), all of which are
issued and outstanding, (iv) 199,601 shares have been designated as Series D
Convertible Preferred Stock, $.01 par value per share (the "Series D
Preferred"), all of which are issued and outstanding, (v) 833,333 shares have
been designated the Series E Preferred, to be issued pursuant to the terms of
this Agreement and (b) 40,000,000 shares of Common Stock, $.01 par value per
share ("Common Stock") of which (i) 2,080,100 shares are issued and
outstanding, (ii) 5,239,900 shares are reserved for issuance on conversion of
the Series A Preferred, (iii) 5,432,500 shares are reserved for issuance on
conversion of the Series B Preferred, (iv) 2,293,578 shares are reserved for
issuance on conversion of the Series C Preferred, (v) 199,601 shares are
reserved for issuance on conversion of the Series D Preferred, (vi) 833,333
shares are reserved for issuance on conversion of the Series E Preferred, (vii)
2,300,000 shares are reserved for issuance on exercise of options issued or to
be issued to employees, advisors, officers, directors and consultants of, and
other persons performing services for, the Company pursuant to stock option
plans approved by the Board of Directors of the Company, (viii) 170,000 shares
are reserved for issuance on exercise of outstanding warrants issued to Vector
Securities International, Inc., (ix) 50,000 shares are reserved for issuance on
exercise of warrants to be issued to Chestnut Partners, Inc. and (x) 573,395
shares are reserved for issuance on exercise of warrants issued to the holders
of the Series C Preferred (the "Investor Warrants") (the reserved shares
referred to in (ii) through (x) are collectively referred to as the "Reserved
Shares"). The record owners of the Company's issued and outstanding Common
Stock and the holders of all options and warrants to purchase Common Stock are
set forth on Schedule 3.2 hereto. The issued and outstanding shares of the
Company's capital stock have been duly authorized and validly issued and are
fully paid and non-assessable. Holders of shares of the Company's capital
stock have no preemptive rights and, except as set forth in SECTION 7.6 of this
Agreement, SECTION 7.6 of the Series B Convertible Preferred Stock Purchase
Agreement dated September 29, 1995 (the "Series B Purchase Agreement"), among
the Company and the persons identified on Exhibit A thereto, SECTION 7.6 of the
Series C Convertible Preferred Stock Purchase Agreement dated July 22, 1996
(the "Series C Purchase Agreement"), among the Company and the persons
identified on Exhibit A thereto, and SECTION 7.6 of the Series D Convertible
Preferred Stock Purchase Agreement dated November 11, 1996 (the "Series D
Purchase Agreement"), among the Company
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and Xxxxxxx & Xxxxxxx Development Corporation, no holder of shares of the
Company's capital stock has any right of first refusal to purchase securities
sold by the Company. Except for the shares of Common Stock to be issued upon
the conversion of the Series A Preferred, the Series B Preferred, the Series C
Preferred, the Series D Preferred and the transactions contemplated by this
Agreement (including the exhibits hereto) and except for the Reserved Shares,
there are no outstanding warrants, options, convertible securities or rights
(contingent or otherwise) to subscribe for or purchase any capital stock or
other securities from the Company. The Company is not required to register any
of its equity securities under Section 12(a) or 12(g) of the Securities
Exchange Act of 1934. The designations, powers, preferences, rights,
qualifications, limitations and restrictions in respect of each class and
series of authorized capital stock of the Company are as set forth in the
Certificate of Incorporation (as defined in SECTION 3.3), and of the Series E
Preferred will be set forth in the Certificate of Incorporation prior to the
Closing, and, all such designations, powers, preferences, rights,
qualifications, limitations and restrictions are valid, binding and enforceable
and in accordance with all applicable laws. Except as contemplated by this
Agreement, SECTION 7.6 of the Series B Purchase Agreement, SECTION 7.6 of the
Series C Purchase Agreement, SECTION 7.6 of the Series D Purchase Agreement,
the Third Amended and Restated Preferred Stockholders' Sales Agreement among
the Company, CTRC Research Foundation, and the holders of the Series B
Preferred, the holders of the Series C Preferred, the holders of the Series D
Preferred and the holders of the Series E Preferred executed herewith, (as
amended the "Preferred Stockholders' Sales Agreement"), the Third Amended and
Restated Founders' Sales Agreement among Xxxxxxx X. Love, Xxxxxx X. Xxx Xxxx,
Xxxxxxxxx X. Xxxx, Xxxxxxx X. Xxxxxxx, Xx., the holders of the Series B
Preferred, the holders of the Series C Preferred, the holdes of the Series D
Preferred and the holders of the Series E Preferred executed herewith (as
amended, the "Founders' Sales Agreement"), or set forth in Schedule 3.2, (x)
there are no restrictions on the transfer of shares of capital stock of the
Company other than those imposed by relevant state and federal securities laws,
(y) there are no agreements, understandings, proxies, trusts or other
collaborative arrangements concerning the voting, pledge or purchase and sale
of the capital stock of the Company to which the Company is a party or, to the
Company's knowledge, to which any other Person is a party and (z) no holder of
any security of the Company is entitled to preemptive, first refusal or similar
statutory or contractual rights, either arising pursuant to any agreement or
instrument to which the Company is a party, or which are otherwise binding upon
the Company, or, to the Company's knowledge, to which any other Person is a
party. Except as provided for in the Certificate of Incorporation, the Company
has no obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire any of its equity securities or any interest therein or to pay any
dividend or make any other distribution in respect thereof. Other than
pursuant to the terms of the Registration Rights Agreement (as defined in
SECTION 5.7), no Person has demand or other rights to cause the Company to file
any registration statement under the Securities Act of 1933, as amended,
relating to any securities of the Company or any right to participate in any
such registration.
3.3 Validity of Stock. Prior to the Closing, the Certificate of
Designation, Preferences and Rights of Series E Convertible Preferred Stock in
the form attached hereto as Exhibit 3.3(A) will have been duly filed with the
Delaware Secretary of State. On the Closing Date, the Series E Preferred will
be duly authorized and, when issued and sold in accordance with the terms of
this Agreement, will be duly and validly issued, and fully paid and non-
assessable and will be free and clear of all liens, charges, encumbrances or
restrictions imposed by or through the Company except as set forth in this
Agreement, the Registration Rights Agreement or applicable securities laws. On
the Closing Date, the Common Stock issuable upon conversion of the Series E
Preferred will be duly authorized and reserved for issuance
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by all necessary action and when issued and sold upon such conversion in
accordance with the terms of this Agreement and the Company's Certificate of
Incorporation, as amended (including the Certificate of Designation,
Preferences and Rights of Series E Convertible Preferred Stock), in the form of
Exhibit 3.3(B) (the "Certificate of Incorporation") will be duly and validly
issued, fully paid and non-assessable.
3.4 Subsidiaries. The Company has no subsidiaries and does not own
or control, directly or indirectly, any other corporation, partnership,
association, joint venture or entity.
3.5 Financial Statements. The Company has furnished the Purchaser
with the Company's (a) consolidated audited balance sheet (the "Audited Balance
Sheet") as of December 31, 1995 (the "Audited Balance Sheet Date") and
consolidated audited statements of operations for the year ended December 31,
1995 ("Audited Income Statement") and (b) consolidated unaudited balance sheet
(the "Unaudited Balance Sheet") as of September 30, 1996 (the "Unaudited
Balance Sheet Date") and consolidated unaudited statements of operations for
the six months ended September 30, 1996 ("Unaudited Income Statement") (each of
which in (a) and (b) above are collectively referred to as the "Financial
Statements" and are attached hereto as Schedule 3.5). The Financial Statements
are true and correct in all material respects, are in accordance with the books
and records of the Company, have been prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied, and fairly and
accurately present in all material respects the financial position of the
Company as of such dates and the results of its operations for the periods then
ended, provided that the Unaudited Financial Statements may not contain all
footnotes required by GAAP and the Unaudited Balance Sheet and the Unaudited
Income Statement are subject to normal year-end audit adjustments, none of
which will be material. Since the Unaudited Balance Sheet Date, the Company
has not incurred or otherwise become subject to any liabilities, debts or
obligations other than in the ordinary course of business consistent with past
practice, except for those listed on Schedule 3.5 attached hereto and those
that would not individually or in the aggregate have a material adverse effect
on the financial condition of the Company.
3.6 Insurance. Schedule 3.6 contains a list of all insurance
policies (specifying (a) the insurer, (b) the amount of coverage and (c) the
type of insurance) maintained by or on behalf of the Company on the properties,
assets, business or personnel of the Company, all of which are (and pending
Closing will continue to be) in full force and effect.
3.7 Authorization; Approvals. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and the
Registration Rights Agreement, to perform its obligations hereunder and
thereunder and to engage in the transactions contemplated hereby and thereby.
The execution, delivery and performance by the Company of this Agreement and
the Registration Rights Agreement, have been duly authorized by all necessary
corporate action, and this Agreement has been, and at the Closing the
Registration Rights Agreement will have been, duly executed and delivered by
the Company. This Agreement constitutes, and at the Closing the Registration
Rights Agreement will constitute, the legal, valid and binding obligation of
the Company legally enforceable against the Company in accordance with their
respective terms. The Company has obtained all material consents,
authorizations and approvals of, and has made or will make all material
declarations and filings with, all federal and state governmental authorities
required on the part of the Company in connection with the consummation of the
transactions contemplated by this Agreement, except to the extent any failure
by the Company to comply with the foregoing is due to misrepresentations or
nondisclosure of the Purchaser.
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3.8 No Conflict with Other Instruments and Laws. Except as set forth
on Schedule 3.8 or any other Schedules hereto, the execution of and performance
by the Company of its obligations under this Agreement and the Registration
Rights Agreement will not violate any provision of law or governmental rule or
regulation and will not conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute a default (with notice, lapse
of time or both) under (a) the Certificate of Incorporation, (b) the Company's
by-laws as currently in effect which are attached hereto as Exhibit 3.8 (the
"By-laws"), (c) any statute, law, rule, regulation, judgment, decree or order
to which the Company is bound or applicable to the Company or its assets or (d)
any agreement, contract, lease, indenture or other instrument to which the
Company is a party.
3.9 Absence of Undisclosed Liabilities; Changes. Except as otherwise
described in Schedule 3.9 or any other Schedule hereto, the Company does not
have any liability or obligation (whether accrued, contingent or otherwise),
which individually or in the aggregate exceeds $100,000 (including, without
limiting the generality of the foregoing, any tax liabilities due or to become
due to the extent they relate to the conduct of the business of the Company
through the date hereof) not reflected in the Financial Statements, except (a)
obligations and liabilities incurred after the Unaudited Balance Sheet Date in
the ordinary course of business consistent with past practice; (b) obligations
under contracts made in the ordinary course of business consistent with past
practice that would not be required to be reflected or disclosed in financial
statements prepared in accordance with GAAP; and (c) obligations under or
contemplated by this Agreement. The Company has not become directly or
contingently liable on any indebtedness, liability or obligations of any other
Person.
Since the Unaudited Balance Sheet Date there has been no occurrence or
development that has had or is reasonably likely to have a material adverse
effect on the Company's business, assets, operations or financial condition or
prospects, and there has been no material adverse change in the business,
assets, operations or financial condition or prospects of the Company.
3.10 Labor Agreement and Actions. The Company is not bound by or
subject to any contract with any labor union and, to the knowledge of the
Company, no labor union has requested or has sought to organize or represent
any of the employees of the Company. There is no strike or other labor dispute
involving the Company pending, or to the knowledge of the Company threatened,
which could reasonably be expected to have a material adverse effect on the
business, assets, operations or financial condition of the Company, nor is the
Company aware of any labor organization activity involving its employees.
3.11 Compliance with Law and Other Instruments. The Company has
complied with and is not in violation of (with due notice or lapse of time or
both) any agreement, instrument, statute or governmental rule or regulation
(including, without limitation, its Certificate of Incorporation and By-laws)
or any governmental order, judgment, decree, writ, injunction or award of any
arbitration, court or governmental authority applicable to it or its business,
operations, assets or services, applicable to it or its assets that has or
could reasonably be expected to have a material adverse effect on the business,
assets, operations or financial condition of the Company. To the knowledge of
the Company, no employee of the Company is in violation of any term of any
employment contract or any other contract or agreement relating to the
employment of such employee with the Company, as applicable, the violation of
which could reasonably be expected to have a material adverse effect on the
business, assets, operations or financial condition of the Company. Except for
governmental licenses, permits,
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approvals and consents, the failure to obtain any of which alone or in the
aggregate could not reasonably be expected to have a material adverse effect on
the business, assets, operations or financial condition of the Company,
Schedule 3.11 hereto lists all governmental licenses, permits, franchises,
approvals and consents required to be received or obtained by the Company to
conduct its business as presently conducted, all of which the Company currently
possesses.
3.12 Proprietary Rights. Schedule 3.12 contains a list of all
patents, trademarks, trade names and service marks (and all applications
therefor), whether or not registered ("Proprietary Rights"), used by the
Company in the conduct of its business. The Company owns or has the right to
use without the payment of royalties or fees or other consideration (except as
disclosed on Schedule 3.12 or any other Schedules hereto), all Proprietary
Rights (as defined below) and Intellectual Property Rights necessary for or
used by it in the conduct of its business as now conducted, and with respect to
Mitoguazone, Crisnatol Mesylate, Dihydro-5-Azacytide, piritrexim, oxypurinol
and difluoromethylornithine as proposed to be conducted. Except as set forth
on Schedule 3.12 or any other Schedules hereto, none of the Proprietary Rights
or Intellectual Property Rights has been declared invalid, been limited by
order of any court or by agreement, or is the subject of any infringement,
interference or similar proceeding or challenge. The Company has not
infringed, and is not infringing, on the Proprietary Rights or Intellectual
Property Rights of others which could have a material adverse effect on the
business, assets, operations or financial condition of the Company. The
conduct of the Company's business as proposed to be operated is not expected to
conflict with or infringe upon the Proprietary Rights and Intellectual Property
Rights of others. Except as set forth on Schedule 3.12 or any other Schedules
hereto, the Company has no obligation to compensate any Person for the use of
any such Proprietary Rights or other Intellectual Property Rights and the
Company has not granted to or assigned to any Person any license or other right
to use any of the Proprietary Rights or other Intellectual Property Rights of
the Company. The consummation of the transactions contemplated by this
Agreement will not terminate or alter the ability of the Company to utilize the
Proprietary Rights or the terms of such use. Listed on Schedule 3.12 are all
corporate, trade and fictitious names under which the Company or its business
is operated. The Company has taken all reasonable measures to protect and
preserve the security, confidentiality and value of its Proprietary Rights or
other Intellectual Property Rights. All key employees and consultants of the
Company have executed Employment Provision Agreements in the form attached
hereto as Exhibit 3.12(a) and all members of the Company's Scientific Advisory
Board who have not entered into Consulting Agreements with the Company have
executed Non-Disclosure Confidentiality Agreements in the form attached hereto
as Exhibit 3.12(b). To the Company's knowledge, all trade secrets and other
confidential information of the Company are presently protectable and are not
part of the public domain or knowledge, nor, to the Company's knowledge, have
they been used, divulged or appropriated for the benefit of any Person other
than the Company or otherwise to the detriment of the Company. The Company is
the exclusive owner of all rights, titles and interests in its Proprietary
Rights and other Intellectual Property Rights as purported to be exclusively
owned by the Company and insofar as such Proprietary Rights and other
Intellectual Property Rights involve patents, copyrights, licenses, permits,
license rights, contract rights, tradenames or trademarks, such Proprietary
Rights and other Intellectual Property Rights are valid and in full force and
effect. Neither the Company nor, to the Company's knowledge, any of its
officers, employees or consultants, has received notice of, and to the
Company's knowledge there are no claims pending or threatened that the
Proprietary Rights or other Intellectual Property Rights owned or licensed by
the Company or the use or ownership thereof by the Company infringes, violates
or conflicts with any such right of any third party or, with respect to
Proprietary Rights or other Intellectual Property Rights which
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involved patents, copyrights, licenses, permits, license rights, contract
rights, tradenames or trademarks, that such Proprietary Rights or other
Intellectual Property Rights are invalid or unenforceable.
"Intellectual Property Rights" shall mean, in addition to Proprietary
Rights, any and all intellectual property rights relating to trade secrets,
confidential business information, formula, biological or chemical processes,
compounds, cell lines, fungi, yeast, laboratory notebooks, algorithms,
copyrights, claims of infringement against third parties, licenses, permits,
license rights to or of technologies, contract rights with employees,
consultants or third parties, inventions and discoveries, and other such rights
generally classified as intangible, intellectual property assets in accordance
with GAAP.
To the Company's knowledge, no third party has claimed or has reason to
claim that any Person employed by or affiliated with the Company has in the
course of such Person's employment by or affiliation with the Company (a)
violated or may be violating any of the terms or conditions of his or her
employment, non-competition, non-disclosure or inventions agreement with such
third party, (b) disclosed or may be disclosing or utilized or may be utilizing
any trade secret or proprietary information or documentation of such third
party or (c) interfered or may be interfering in the employment relationship
between such third party and any of its present or former employees. To the
Company's knowledge, no third party has requested information from the Company
which suggests that such a claim might be contemplated. To the Company's
knowledge, no Person employed by or affiliated with the Company has employed or
proposes to employ any trade secret or any information or documentation
proprietary to any former employer, and to the Company's knowledge, no Person
employed by or affiliated with the Company has violated any confidential
relationship which such Person may have had with any third party, in connection
with the development, manufacture or sale of any product or proposed product or
the development or sale of any service or proposed service of the Company, and
the Company has no reason to believe there will be any such employment or
violation. To the Company's knowledge, none of the execution or delivery of
this Agreement or the Registration Rights Agreement, or the carrying on of the
business of the Company as officers, employees or agents by any officer,
director or key employee of the Company, or the conduct or proposed conduct of
the business of the Company, will 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 such Person is obligated.
3.13 Taxes. Except where the failure to do so would not have a
material adverse effect on the Company's business, the Company has accurately
prepared and timely filed all federal income tax returns and all state and
municipal tax returns that are required to be filed by it and has paid or made
provision for the payment of all amounts due pursuant to such returns, which
are not reflected nor reserved for on the Financial Statements and of all other
taxes, assessments and other governmental charges imposed upon it or upon any
of its assets, income, other than any such charges that are currently payable
without penalty or interest, including, without limitation, all taxes which the
Company is obligated to withhold from amounts owing to employees, creditors and
third parties. There is no tax lien outstanding against the assets of the
Company, except for liens for taxes not yet due and payable. The federal
income tax returns of the Company have not been audited by the Internal Revenue
Service, and there are no waivers in effect of the applicable statute of
limitations for any period. No deficiency, assessment or proposed adjustment
of federal income taxes or state or
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local taxes of the Company is pending, and the Company has no knowledge of any
proposed liability for any tax to be imposed.
3.14 Contracts. Except as set forth in Schedule 3.14 or any other
Schedule hereto, the Company is not a party to any contract and has no
obligation or commitment (a) involving aggregate future payments by the Company
of more than $25,000, which is not cancelable on 60 days' notice by the Company
or (b) that is otherwise material to the business of the Company (collectively,
the "Material Agreements"). Except as set forth on Schedule 3.14 or any other
Schedule hereto, the Company has no employment contracts, deferred compensation
agreements or bonus, incentive, profit-sharing, or pension plans currently in
force and effect, or any understanding with respect to any of the foregoing.
Except as set forth on Schedule 3.14 or any other Schedules hereto, no default
or defaults (without regard to notice or lapse of time or both) exist by the
Company (including without limitation the Company's predecessor in interest) in
the due performance by it, or to the knowledge of the Company by the other
party or parties thereto, of any term, covenant or condition of any contract to
which the Company is a party that individually or in the aggregate would have a
materially adverse effect on the business, assets, operations or financial
condition of the Company. All of the Material Agreements are in full force and
effect.
3.15 Litigation. Except as provided in Schedule 3.15 or any other
Schedule hereto, no action, proceeding or governmental inquiry or investigation
(a "Proceeding") before any court, arbitrator or tribunal or administrative or
other governmental agency is (a) pending, or to the knowledge of the Company,
threatened against the Company or any of its officers, directors or employees
(in their capacity as such) or affecting any of its owned or leased assets, or
(b) to the knowledge of the Company, pending or threatened against any
consultant or shareholder of the Company (in their capacity as such) or
affecting any of its other assets, nor is the Company aware of any such
threatened or contemplated action, proceeding, inquiry or investigation nor, to
the knowledge of the Company, has there occurred any event or does there exist
any condition on the basis of which it is reasonably likely that any such
Proceeding might properly be instituted. There is no Proceeding by the Company
pending or threatened against others.
3.16 Fees and Commissions. Except as described in Schedule 3.16, the
Company has not retained any finder, broker, agent, financial advisor or other
intermediary (collectively, "Intermediary") in connection with the transactions
contemplated by this Agreement. Notwithstanding any disclosure on Schedule
3.16, the Company agrees to indemnify and hold harmless the Purchaser from
liability for any compensation to any Intermediary retained by the Company and
the fees and expenses of defending against such liability or any such alleged
liability.
3.17 ERISA. Except as disclosed on Schedule 3.17, the Company does
not maintain, sponsor, or contribute (and has not during the last five years
been obligated to maintain, sponsor or contribute or maintained, sponsored or
contributed) to any program or arrangement that is an "employee pension benefit
plan," an "employee welfare benefit plan," a "multiple employer welfare
arrangement," or a "multi-employer plan," as those terms are defined in
Sections 3(1), 3(2), 3(4) or 3(37) of the Employee Retirement Income Security
Act of 1974, as amended, bonus or incentive award or compensation plan or
arrangement, severance pay policy or agreement, deferred compensation agreement
or arrangement, supplemental executive retirement program, vacation plan,
cafeteria plan, educational assistance plan, and any other employee benefit
plans, agreements, or arrangements (collectively, "Employee Programs"). The
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Company has complied with all applicable legal requirements, including, without
limitation, ERISA and the Code, with respect to all Employee Programs.
3.18 Title to Properties; Encumbrances. Except as set forth in
Schedule 3.18 or any other schedule attached hereto, the Company has good and
marketable title to all of the assets owned by it and used in its business,
including, without limitation, all the material properties and assets reflected
in the Financial Statements, subject to no encumbrance, lien, charge or other
restriction of any kind or character, except for (a) liens reflected in the
Financial Statements or on Schedule 3.18 or any other Schedules hereto, (b)
liens consisting of zoning or planning restrictions, easements, permits and
other restrictions or limitations on the use of real property or irregularities
in title thereto which do not materially detract from the value of, or impair
the use of, such property by the Company, as applicable, (c) liens for current
taxes, assessments or governmental charges or levies on property not yet due
and delinquent and (d) liens which do not materially affect the operation of
the business of the Company, as applicable (liens of the type described in
clauses (a) through (d) above, inclusive, are hereinafter sometimes referred to
as "Permitted Liens"). Except as set forth in Schedule 3.18, the assets of the
Company are in good working order and condition, ordinary wear and tear
excepted.
3.19 Environmental Compliance. Except as disclosed in Schedule 3.19
and to the best of their knowledge:
(a) The Company has not released, emitted, discharged, dumped
or disposed of any hazardous substances onto or into the assets of the
Company, or any part thereof, or onto or into the air, surface or
groundwater, land or soil in violation of Environmental Laws. For
purposes of this Agreement, "Hazardous Substances" has the meaning set
forth in Section 101(14) of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and shall also
expressly include (i) petroleum, crude oil and any fraction thereof or
radioactive material; (ii) any other chemical, material or substance
defined as or included in the definition of "medical waste," "infectious
waste," "hazardous substance," "hazardous waste," "hazardous material,"
"toxic substance," "special waste," "contaminant" or "pollutant," or
word or term of similar import, under any applicable Environmental Law;
and (iii) any other chemical, material or substance, exposure to which
is regulated by any governmental authority having jurisdiction over the
Company or is reasonably likely to give rise to any liability of the
Company, in either case under any Environmental Law. The term
"Environmental Laws" means all applicable foreign, federal, state,
county and local statutes, regulations or ordinances (including common
law duties established by courts or any published judicial or
administrative interpretation thereof) relating to human health and the
environment or the generation, treatment, storage, recycling,
transportation, release or disposal of Hazardous Substances.
(b) No Hazardous Substances resulting from the Company's
operations have been or are currently located at, in, under or about
either the assets of the Company or any other property currently or
previously owned or operated by the Company in a manner which: (i)
violates in any material respect applicable Environmental Laws or (ii)
requires any material response, remedial, corrective action or cleanup
of any kind under any applicable Environmental Laws.
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(c) With respect to the assets or other property owned or
leased by the Company, whether previously or currently owned or operated
or used by the Company for the treatment, storage or disposal of
Hazardous Substances, no litigation, investigation, administrative or
other proceeding of any kind is pending or threatened by any federal,
foreign, state or local governmental entity or private party arising
from: (i) any applicable Environmental Laws; (ii) any response, remedial
or cleanup activities or (iii) any release or threatened release of
Hazardous Substances. In addition, the Company is not now aware of any
facts on which such litigation, investigation, administrative or other
proceeding of any kind might reasonably be based.
(d) With respect to the assets or other property owned or
leased by the Company, whether previously or currently owned or operated
or used by the Company for the treatment, storage or disposal of
Hazardous Substances, the Company is not subject to any judgment,
injunction, writ, order or agreement arising from: (i) any applicable
Environmental Laws; (ii) any remedial, response or cleanup activities or
(iii) any liabilities, damages, costs, fees or expenses related to the
release or threatened release of Hazardous Substances. In addition, the
Company is not aware of any facts on which such a judgment, injunction,
writ, order or agreement might reasonably be based.
(e) The assets of the Company do not contain any asbestos or
PCB containing materials in material violation of any applicable
Environmental Laws.
(f) The Company has not caused or allowed, and the Company has
not contracted with any party for, the manufacture, processing,
handling, distribution, use, transportation, treatment or storage of any
Hazardous Substances, except in compliance in all material respects with
applicable Environmental Laws. The Company does not own any real
property.
(g) The Company has obtained and is maintaining in full force
and effect all Environmental Permits and is in compliance in all
material respects therewith "Environmental Permit" shall mean any
necessary permit, license, approval or other authorization or filing
required by the Environmental Laws applicable to the premises leased by
the Company and the business operations currently conducted thereon and
as currently proposed to be conducted.
(h) The Company and the operations of its business are being
conducted in compliance in all material respects with all applicable
Environmental Laws and orders or directives of any governmental
authority having jurisdiction under such Environmental Laws. To the
Company's knowledge, the premises leased by the Company are in
compliance in all material respects with all applicable Environmental
Laws and orders or directives of any governmental authorities having
jurisdiction under such Environmental Laws.
3.20 Affiliate Transactions. Schedule 3.20 describes all material
contracts, arrangements or transactions between the Company and to the
Company's knowledge, between any customer, licensor, licensee or supplier of
the Company, and any of the Company's Affiliates.
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3.21 Exemption from Registration. In sole reliance, as to factual
matters concerning the Purchaser, upon representations and warranties by the
Purchaser in SECTION 4 hereof and without independent investigation, the offer
and sale of the Series E Preferred, and the Common Stock issuable upon
conversion of the Series E Preferred, in the manner contemplated by the
Agreement are, and upon conversion will be, (a) exempt from the registration
requirements of Section 5 of the Securities Act of 1933, as amended, and (b)
either exempt from, or registered or qualified in compliance with, the
registration requirements of all applicable state "blue sky" securities laws.
3.22 Prior Exemptions from Registration. All offers and sales of the
Company's capital stock prior to the date hereof (a) were exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as
amended, and (b) were made in compliance with all applicable federal and state
securities laws.
3.23 Disclosure. Neither this Agreement, nor any other agreement,
document or certificate furnished to any Purchaser or its counsel by the
Company or on behalf of the Company by any of its officers or counsel in
connection with the transactions contemplated hereby, including, without
limitation, the Financial Statements, when taken as a whole, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein and therein, in light of the
circumstances under which they were made, not misleading. There is no
currently existing fact which materially and adversely affects, or which in the
future may (so far as the Company can reasonably foresee) materially and
adversely affect, the business, properties, operations or condition, financial
or otherwise, of the Company (except for industry and general economic
conditions and climate which are beyond the control of the Company), which has
not been set forth in this Agreement, including the Schedules and Exhibits
hereto. Without limiting the foregoing, the Company does not have knowledge
that there exists, or that there is pending or planned, any patent, invention,
device or application of a technology or any statute, rule, law, regulation,
standard or code which will, based solely on information currently known by the
Company, materially adversely affect the business, prospects, operations,
Proprietary Rights, Intellectual Property Rights, affairs or financial
condition of the Company.
3.24 Additional Representations.
(a) Since the Unaudited Balance Sheet Date, (i) the Company
has not entered into any material transaction, made any distribution on
its capital stock, or redeemed or repurchased any of its capital stock;
(ii) paid or cancelled any obligations or liability, other than current
liabilities paid in the ordinary course of the business consistent with
past practice; (iii) suffered any substantial losses or waived any
rights of material value, whether or not in the ordinary course of
business or covered by insurance; or (iv) purchased any properties or
assets, except in the ordinary course of business in immaterial amounts.
(b) No officer or key employee of the Company has advised the
Company (orally or in writing) that he intends to terminate employment
with the Company.
(c) Each of the Material Agreements is in full force and
effect. There is no anticipated or threatened default of the Material
Agreements and none of the parties nor the Company has provided any
notice of default or of its intention to terminate any Material
Agreement. The Company is not bound by any agreement or instrument or
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subject to any charge or other corporate restriction which materially
and adversely affects the business, properties, operations, condition or
prospects, financial or otherwise, of the Company.
(d) The Company is not now and has never been a "United States
real property holding corporation," as defined in Section 897(c)(2) of
the Code and Section 1.897-2(b) of the Regulations promulgated by the
Internal Revenue Service.
(e) To the extent reasonably within its control, the Company
shall endeavor to meet the active business requirements of Section
1202(e) of the Code, provided that (i) the Company does not represent
that it is or will be a "qualified small business" within the meaning of
Section 1202(d) of the Code or that the Series E Preferred Stock is or
will be qualified small business stock as defined in Section 1202(c) of
the Code, (ii) the Company shall not be required to cause any of its
stockholders to reduce its holdings of Company capital stock, and (iii)
the Company shall not be required to change its core business as
currently conducted. The value of the assets owned directly by the
Company does not exceed Fifty Million Dollars ($50,000,000) as of the
date hereof.
4. Representations, Warranties and Covenants of the Purchaser. The
Purchaser represents and warrants to the Company as follows:
4.1 Authorization. It has full power and authority to enter into and
to perform this Agreement and the Registration Rights Agreement in accordance
with their respective terms. This Agreement has been, and at the Closing the
Registration Rights Agreement will have been, duly executed and delivered by
it, and constitute valid and legally binding obligations of the Purchaser,
legally enforceable against the Purchaser in accordance with their respective
terms, subject to laws of general application from time to time in effect
affecting creditors' rights and the exercise of judicial discretion in
accordance with general equitable principles.
4.2 Investment Representations. It is acquiring the Series E
Preferred purchased by it (and any Common Stock into which Series E Preferred
may be converted) for its own account, for investment, and not with a view to,
or for sale in connection with, any distribution of such Series E Preferred (or
related Common Stock) or any part thereof in violation of federal or state
securities laws. The Purchaser has no present or contemplated agreement,
arrangement or commitment to dispose of Series E Preferred (or any Common Stock
into which the Series E Preferred may be converted) in violation of federal or
state securities laws.
4.3 Investment Experience; Access to Information. It (a) is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D as
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), (b) alone or together with its advisors is an investor experienced in
the evaluation of businesses similar to the Company's business, and has such
knowledge and experience in financial, business and other relevant matters as
to be competent and fully capable of examining all the merits, risks and other
aspects of the investment contemplated by this Agreement on its own and to make
an informed decision with respect thereto, (c) has the ability to bear the
economic risks of this investment which could include the loss of some or all
of its investment and has sufficient other assets such that the loss of all its
investment in the Company would not have a material adverse effect on its
financial condition or adversely affect its ability to maintain its present
operations, (d) has been afforded prior to the date hereof the opportunity to
ask questions of, and to receive answers from, the
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Company and its representatives and has received from the Company all other
information concerning the investment contemplated by this Agreement that it
has requested, and (e) acknowledges that no assurances, representations or
guaranties of any nature whatsoever (including those relating to capital
appreciation, dividends or tax aspects) have been made by the Company or anyone
else to it with regard to the performance of the investment contemplated by
this Agreement. The Purchaser agrees that it will indemnify and hold harmless
the Company and its directors, officers, controlling persons and affiliates
(the "indemnities") from any liability or damage (including reasonable
attorney's fees and expenses) to any third party suffered or incurred by any of
the indemnities solely as a result of the inaccuracy of any of the foregoing
representations and warranties made by the Purchaser, including any liability
or damage arising from or under federal or state securities laws. No
investigation pursuant to this SECTION 4.3 shall affect any representation or
warranty given by the Company in this Agreement.
4.4 Absence of Registration. The Purchaser understands that:
The Series E Preferred to be sold and issued hereunder (and the Common
Stock into which the Series E Preferred may be converted) have not been
registered under the Securities Act or any applicable state securities or "Blue
Sky" laws, and may be required to be held indefinitely, unless subsequently
registered under the Securities Act and such applicable Blue Sky laws, or an
exemption from such registration is available.
Except as may be required by the Registration Rights Agreement, the
Company is under no obligation to the Purchaser to file a registration
statement with the Securities and Exchange Commission (the "Commission") or any
state securities commission with respect to the Series E Preferred (or the
Common Stock into which the Series E Preferred may be converted).
4.5 Economic Risk. The Purchaser understands that it must bear the
economic risk of the investment represented by the purchase of Series E
Preferred (and any Common Stock into which the Series E Preferred may be
converted) for an indefinite period.
4.6 Fees and Commissions. Except as described in Schedule 4.6, the
Purchaser represents and warrants that it has retained no Intermediary in
connection with the transactions contemplated by this Agreement.
Notwithstanding any disclosure on Schedule 4.6, the Purchaser agrees to
indemnify and hold harmless the Company from liability for any compensation to
any Intermediary retained by the Purchaser and the fees and expenses of
defending against such liability or any such alleged liability.
5. Conditions to Closing of the Purchaser. The obligation of the
Purchaser on the Closing Date to pay the Purchase Price required by SECTION 2
hereof shall be subject to each of the following conditions precedent, any one
or more of which may be waived by the Purchaser:
5.1 Representations and Warranties. The representations and
warranties made by the Company herein shall be true and accurate on and as of
the Closing Date.
5.2 Performance. The Company shall have performed and complied with
all agreements and conditions contained herein required to be performed or
complied with by it prior to or at the Closing.
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5.3 Consents, Amendments, etc. The Company shall have secured all
permits, consents and authorizations that shall be necessary or lawfully
required to consummate the transactions contemplated by this Agreement
(including consents or approvals required under federal or state securities
laws and from the holders of the Company's outstanding shares of Common Stock,
Series A Preferred, Series B Preferred, Series C Preferred and Series D
Preferred), to issue the Series E Preferred to be purchased by the Purchaser,
and to issue the Common Stock into which the Series E Preferred may be
converted. The Company shall have filed with the Secretary of State of the
State of Delaware the Certificate of Designation, Preferences and Rights of
Series A Convertible Preferred Stock, the Certificate of Designation,
Preferences and Rights of Series B Convertible Stock, the Certificate of
Designation, Preferences and Rights of Series C Convertible Preferred Stock,
the Certificate of Designation, Preferences and Rights of Series D Convertible
Preferred Stock and the Certificate of Designation, Preferences and Rights of
Series E Convertible Preferred Stock in the form set forth on Exhibit 5.5.
5.4 Compliance Certificates. The Company shall have delivered to the
Purchaser or its representative at the Closing a certificate signed by the
President and by the Secretary of the Company to the effect that the
representations and warranties of the Company contained in this Agreement
continue to be true and accurate on the Closing Date, and that all conditions
specified in Sections 5.2, 5.3, 5.7, 5.8 AND 5.9 have been fulfilled, including
a list of any permits, consents or authorizations required thereby.
5.5 Proceedings and Documents. All corporate and other proceedings,
and all documentation relating thereto, necessary to consummate the
transactions contemplated by this Agreement (including but not limited to the
filing by the Company with the Delaware Secretary of State of the Certificate
of Designation, Preferences and Rights of Series E Convertible Preferred Stock)
shall be reasonably satisfactory in substance and form to the Purchaser and the
Purchaser's counsel, and the Purchaser and the Purchaser's counsel shall have
received all such counterpart originals or certified or other copies of the
documents as the Purchaser or the Purchaser's counsel may reasonably request,
including, without limitation, a certificate of the Secretary of the Company
attesting to the accuracy of each of the following documents which shall be
attached hereto as Exhibit 5.5: (a) the Certificate of Incorporation of the
Company, including all amendments thereto, the Certificate of Designation,
Preferences and Rights of Series A Convertible Preferred Stock, the Certificate
of Designation, Preferences and Rights of Series B Convertible Stock, the
Certificate of Designation, Preferences and Rights of Series C Convertible
Preferred Stock, the Certificate of Designation, Preferences and Rights of
Series D Convertible Preferred Stock and the Certificate of Designation,
Preferences and Rights of Series E Convertible Preferred Stock, each certified
as of a recent date by the Delaware Secretary of State, (b) the By-laws of the
Company, and (c) the authorizations of the Board of Directors and stockholders
of the Company relating to the Company's execution, delivery and performance of
its respective obligations, if any, under this Agreement and the Registration
Rights Agreement and all other agreements and transactions contemplated hereby.
5.6 Opinion of Company's Counsel. The Purchaser or its
representative shall have received an opinion from counsel for the Company,
dated the Closing Date and addressed to the Purchaser in substantially the form
attached hereto as Exhibit 5.6.
5.7 Registration Rights Agreement. The holders of the Series B
Preferred, the holders of the Series C Preferred, the holders of the Series D
Preferred, CTRC Research Foundation and the Company shall have executed and
delivered amendments to the Amended
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& Restated Registration Rights Agreement in compliance with the requirements of
SECTION 16.1 therein, substantially in the form attached hereto as Exhibit 5.7
(the "Registration Rights Agreement"), and the Purchaser shall have executed
and delivered the Registration Rights Agreement.
5.8 Founders' Sales Agreement. Xxxxxxx X. Love, Xxxxxxxxx X. Xxxx,
Xxxxxx X. Xxx Xxxx and Xxxxxxx X. Xxxxxxx, Xx. (the "Founders"), the holders of
the Series B Preferred, the holders of the Series C Preferred, the holders of
the Series D Preferred and CTRC Research Foundation shall have executed and
delivered amendments to the Second Amended and Restated Founders' Sales
Agreement in compliance with the requirements of SECTION 15 therein
substantially in the form attached hereto as Exhibit 5.8, and the Purchaser
shall have executed and delivered the Founders' Sales Agreement.
5.9 Preferred Stockholders' Sales Agreement. The holders of the
Series B Preferred, the holders of the Series C Preferred and CTRC Research
Foundation shall have executed and delivered amendments to the Second Amended
and Restated Preferred Stockholders' Sales Agreement in compliance with the
requirements of SECTION 15 therein, substantially in the form attached hereto
as Exhibit 5.9, and the Purchaser shall have executed and delivered the
Preferred Stockholders' Sales Agreement.
5.10 Designation as Director. The Board of Directors of the Company
shall include Dr. Xxxxx Xxxxxxxx as a member of the Board of Directors.
6. Conditions to Closing of Company. The obligation of the Company
on the Closing Date to issue and sell the Series E Preferred to be purchased
under this Agreement shall be subject to each of the following conditions
precedent, any one or more of which may be waived by the Company:
6.1 Representations and Warranties. The representations and
warranties made herein by the Purchaser shall be true and accurate in all
material respects on and as of the Closing Date and the Purchaser shall be
deemed to have restated and confirmed such representations and warranties as of
the Closing Date by authorizing or permitting the Closing to be effected
without delivering in writing to the Company a notice of change prior to the
Closing.
6.2 Consents, etc. The Company shall have secured all material
permits, consents and authorizations that shall be necessary or lawfully
required to consummate the transactions contemplated by this Agreement
(including, but not limited to, consents or approvals required under federal or
state securities laws.)
7. Affirmative Covenants.
The Company covenants and agrees that it will perform and observe the
following covenants and provisions, and will cause each Subsidiary, if and when
such Subsidiary exists, to perform and observe the following covenants and
provisions, as if they applied to it in the same manner as they apply to the
Company.
7.1 Inspection. For so long as the Purchaser (or a Permitted Holder,
as defined in SECTION 14) holds at least 100,000 shares of the Series E
Preferred (or Common Stock into which it has been converted), as adjusted for
Recapitalization Events, the Company will permit
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an authorized representative of the Purchaser (or such Permitted Holder)
reasonable access during the normal business hours of the Company and upon
reasonable notice (which notice in no event shall be provided less than three
business days in advance) to the books, records, personnel and properties of
the Company, for any reasonable purpose whatsoever related to the Purchaser's
(or such Permitted Holder's) investment in the Company. The Company will
furnish to Permitted Holder such other information as it from time to time may
reasonably request. For purposes of this SECTION 7.1, "Recapitalization
Events" means stock splits, stock dividends, recapitalizations,
reclassifications and similar events.
7.2 Accounting. The Company will maintain a system of accounting
established and administered in accordance with GAAP consistently applied, and
will set aside on its books such proper reserves as shall be required by GAAP.
In the event the services of the independent public accountants, so selected,
or any firm of independent public accountants hereafter employed by the Company
are terminated, the Company will promptly thereafter notify the Permitted
Holder and will request the firm of independent public accountants whose
services are terminated to deliver to the Permitted Holder a letter of such
firm setting forth the reasons for the termination of their services.
7.3 Monthly and Annual Financial Statements. For so long as any
Series E Preferred remains outstanding, the Company will deliver to the
Purchaser for so long as the Purchaser continues as a stockholder of the
Company:
(a) upon the written request of the Purchaser to the Company
(but in any event only so long as Purchaser owns greater than 100,000
shares of Series E Preferred), within 30 days after the end of each
month and each fiscal quarter an unaudited balance sheet of the Company
as at the end of each such month or fiscal quarter and unaudited
consolidated statements of income and of cash flow of the Company for
each such month or fiscal quarter compared to budget;
(b) within 90 days after the end of each fiscal year of the
Company, a balance sheet of the Company as at the end of such year and
statements of income and of cash flow of the Company for such year,
audited by such firm of independent public accountants of national
recognition that is appointed by the Company's Board of Directors or an
authorized committee thereof, and a report summarizing the Company's
development activities during the period, and a certificate executed by
the President confirming that during such period the Company has been in
compliance with the terms of this Agreement;
(c) promptly upon receipt thereof, any written report
submitted to the Company by independent public accountants in connection
with an annual or interim audit of the books of the Company and its
Subsidiaries made by such accountants; and
(d) prior to the commencement of each fiscal year, a
reasonably detailed business plan for such fiscal year including monthly
operating expenses and profit and loss projections and a capital
expenditure budget for the fiscal year as approved by the Board of
Directors, and promptly after any revisions to such budget approved by
the Board of Directors, a copy of such revisions.
None of the foregoing provisions of this SECTION 7 nor any other
provision of this Agreement shall be in limitation of any rights which a holder
of Series E Preferred may have
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with respect to the books and records of the Company, or to inspect its
properties or discuss its affairs, finances and accounts, under the laws of the
jurisdiction of its incorporation.
7.4 Use of Proceeds. The Company shall use the proceeds from the
sale of Series E Preferred for purposes of expanding the development of the
Company's cancer pharmaceutical and research business and to fulfill general
corporate working capital purposes consistent therewith.
7.5 Confidentiality and Restrictions on Trading. Any confidential or
proprietary information concerning the Company provided to the Purchaser or a
representative thereof pursuant to this Agreement or otherwise, including
SECTIONS 7.1 and 7.3 hereof, shall be used by the Purchaser or any
representative or affiliate thereof solely in furtherance of its interests as
an investor in the Company, and the Purchaser or representative or affiliate
thereof shall (except as otherwise required by law to which the Purchaser or
representative or affiliate thereof may be subject) maintain the
confidentiality of all non-public information of the Company, provided that,
notwithstanding any other term of this Agreement to the contrary, (a) the
Company shall not be obligated to disclose any information, the disclosure of
which its Board of Directors or President believes in good faith could have a
material adverse effect on the Company or its stockholders, or both and (b) the
Purchaser shall be entitled to disclose such non-public information (i) as is
reasonably necessary to enforce their rights under this Agreement, (ii) on a
confidential basis to their attorneys and other professionals to the extent
reasonably necessary in connection with the Purchaser's investment in the
Company, and (iii) to any prospective purchaser of the Series E Preferred, or
any affiliate or partner of the Purchaser, provided that such third party
agrees to be bound by the confidentiality provisions hereof, and such third
party is not a competitor of the Company. No Purchaser or representative,
affiliate or transferee thereof shall purchase, sell or take any other action
relating to any capital stock or other securities issued by the Company if any
such purchase, sale or other action would be in violation of any federal or
state "xxxxxxx xxxxxxx" or other securities laws.
7.6 Right of First Refusal. So long as there are any shares of
Series E Preferred outstanding, the Company hereby grants to the Purchaser the
right of first refusal to purchase such amount of New Securities (as defined in
paragraph (a) below) that the Company may, from time to time, propose to sell
and issue that will enable the Purchaser, to maintain its percentage equity
interest in the Company. This right of first refusal shall be subject to the
following provisions:
(a) "New Securities" shall mean any Common Stock, preferred
stock or other security which is convertible into or exchangeable for
shares of Common Stock of the Company or any option, warrant or other
right to acquire such security or Common Stock of the Company; provided,
however, that "New Securities" shall not include (i) Common Stock
issuable upon conversion of or with respect to the Series E Preferred or
upon conversion of any other convertible security of the Company
(including the Series A Preferred, the Series B Preferred, the Series C
Preferred and the Series D Preferred) that is outstanding from time to
time, (ii) securities issued upon the exercise of any warrants or
options issued or granted by the Company that are referred to in or
contemplated by SECTION 3.2 of this Agreement, (iii) 637,625 shares of
Common Stock to be issued by the Company at fair market value, (iv)
securities offered to the public in an underwritten offering pursuant to
a registration statement filed under the Securities Act, (v) securities
issued by the Company as consideration for an acquisition
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of a portion or all of the equity or other interests in another
corporation, partnership, business entity or line of business of another
business entity by the Company by merger, reorganization, stock-for-
equity or stock-for-assets exchange or any other similar transaction and
(vi) any option issued pursuant to a stock option plan approved by the
Board of Directors of the Company.
(b) If the Company proposes to issue New Securities, it shall
give the Purchaser written notice (the "Rights Notice") of its
intention, describing the New Securities, the price, and the general
terms upon which the Company proposes to issue them. The Purchaser
shall have 15 days from the date of mailing of the Rights Notice to
agree to purchase (i) all or any part of its Pro-Rata Share (as defined
in subsection (d) below) of such New Securities and (ii) all or any part
of the Pro-Rata Share of such New Securities of all other Purchasers to
the extent that such other Purchasers do not elect to purchase their
respective full Pro-Rata Share, in each case for the price and upon the
general terms specified in the Rights Notice by giving written notice to
the Company setting forth the quantity of New Securities it elects to
purchase. If the Purchasers who elect to purchase their full Pro-Rata
Share also elect to purchase all or a portion of the Pro-Rata Share of
such New Securities of other Purchasers who do not elect to purchase
100% of their respective Pro-Rata Share (such other Purchasers referred
to as "Non-Participating Purchasers"), then such Purchasers shall be
entitled to purchase, in addition to their Pro-Rata Share, a percentage
of the Pro-Rata Shares of the Non-Participating Purchasers determined by
the fraction the numerator of which is the number of shares of Common
Stock then held, together with the number of shares of Common Stock
issuable upon conversion of the Series E Preferred then held by such
Purchaser as of the date of the Rights Notice, and the denominator of
which is the sum of the number of shares of Common Stock then held, plus
the number of shares of Common Stock issuable upon the conversion of
Series E Preferred then held, by all Purchasers electing to purchase
more than their Pro-Rata Share. The Purchaser who agrees to purchase
New Securities shall deliver the purchase price for the New Securities
and otherwise comply with the general terms of sale set forth in the
Rights Notice on the thirtieth (30th) day after the date of mailing of
the Rights Notice (or such other date as agreed to by the Company and
such Purchaser) and the Company shall deliver duly registered share
certificates for the New Securities in exchange therefor.
(c) If the Purchaser fails to exercise in full the right of
first refusal within the period or periods specified in paragraph (b)
hereof, the Company shall have 90 days after the date of mailing of the
Rights Notice to sell the unsold New Securities and the balance of the
New Securities not subject to the Right of First Refusal provided for
herein at a price and upon general terms no more favorable to the
purchaser thereof than specified in the Rights Notice. If the Company
has not sold the New Securities within said 90 day period the Company
shall not thereafter issue or sell any New Securities without first
offering such securities to the Purchaser in the manner provided above.
(d) A Purchaser's "Pro-Rata Share" shall be the percentage
determined by a fraction the numerator of which is the number of shares
of Common Stock then held, together with the number of shares of Common
Stock issuable upon conversion of the Series E Preferred then held, by
such Purchaser as of the date of the Rights Notice (as defined in
paragraph (b) above) and the denominator of which is the sum of the
total number of shares of Common Stock then outstanding, together with
the number of
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shares of Common Stock issuable upon conversion of convertible
securities of the Company then outstanding, all as of such date.
7.7 Restrictions on Transfer. The Purchaser (and each transferee,
successor or assign of a Purchaser) further agrees that (a) it will not offer,
sell or otherwise dispose of the Series E Preferred (or the Common Stock in to
which the Series E Preferred may be converted), unless such offer, sale or
other disposition is effected in accordance with the terms of this Agreement
and the Registration Rights Agreement and such offer, sale or other disposition
is (i) registered under the Securities Act and applicable state securities
laws, (ii) pursuant to Rule 144 of the Securities Act of 1933, or (iii) in
compliance with an opinion of counsel to such Purchaser delivered to the
Company and reasonably acceptable to the Company and its counsel to the effect
that such offer, sale or other disposition thereof does not violate the
Securities Act or applicable state securities laws, and (b) the certificate(s)
representing the Series E Preferred (and any Common Stock into which the Series
E Preferred maybe converted) shall bear legends in substantially the following
form:
THE TRANSFER AND VOTING OF THESE SHARES IS SUBJECT TO THE TERMS OF A
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT DATED AS OF DECEMBER 11, 1996
AND A PREFERRED STOCKHOLDERS' SALES AGREEMENT DATED AS OF DECEMBER 11, 1996,
COPIES OF WHICH ARE AVAILABLE FOR INSPECTION AT THE OFFICES OF THE COMPANY.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND SUCH APPLICABLE STATE LAW OR, IN THE OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
TRANSFER, DOES NOT VIOLATE THE PROVISIONS THEREOF OR UNLESS SOLD PURSUANT TO
RULE 144 OF THE SECURITIES ACT OF 1933.
Upon request of the Purchaser or other person who in accordance with the
provisions of this SECTION 7.7 becomes a holder of Series E Preferred (or the
Common Stock into which the Series E Preferred has been converted), the Company
shall remove the legend set forth in the second paragraph above from the
certificates evidencing such Series E Preferred or Common Stock or issue to
such holder new certificates evidencing such Series E Preferred or Common Stock
free of such legend, if such request is accompanied by an opinion of counsel,
reasonably satisfactory to the Company and its counsel, to the effect that such
Series E Preferred or Common Stock, as applicable, is not required by the
Securities Act or other applicable law to continue to bear the legend or a
legend similar thereto.
7.8 Transfer Instructions. The Purchaser agrees that the Company may
provide for appropriate transfer instructions to implement the provisions of
SECTION 7.7 hereof.
7.9 Operation of Business. For so long as any shares of the Series E
Preferred remain outstanding, the Company shall comply with each of the
following covenants, and will cause each Subsidiary, if and when such
Subsidiary exists, to comply with each of the following covenants, as if they
applied to it in the same manner as they apply to the Company.
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(a) Compliance with Laws, Etc. The Company shall comply with
all laws, rules, regulations, judgments, orders and decrees of any
governmental or regulatory authority, the violation of which could have
a material adverse effect on the business, assets or properties of the
Company and with all material contracts and agreements to which it is a
party or shall become a party and shall perform all material obligations
which it has or shall incur.
(b) Preservation of Corporate Existence and Property. The
Company shall preserve, protect and maintain: (i) its corporate
existence and good standing in its jurisdiction of incorporation, (ii)
its rights, franchises and privileges, and (iii) all of its properties
necessary or useful in the proper conduct of its business in good
working order and condition, with the exception of (y) ordinary wear and
tear and (z) casualty losses covered by insurance, allowing for
reasonable deductibles.
(c) Insurance. The Company shall maintain or cause to be
maintained, with financially sound and reputable insurers, insurance
with respect to the properties and business of the Company, against loss
or damage of the kinds customarily insured against by corporations of
established reputation and similar size engaged in the same or similar
business, in adequate amounts.
(d) Payment of Indebtedness. The Company shall pay or cause
to be paid the principal of, and the interest and premium, if any, on
all indebtedness heretofore or hereafter incurred or assumed by the
Company when and as the same shall become due and payable, unless such
indebtedness shall be renewed or extended, in which case such payments
shall be made in accordance with the terms of such renewal or extension.
(e) Further Assurance. The Company shall cooperate with the
Purchaser and shall execute and deliver all such further instruments and
documents and do all such further acts and things as the Company may be
reasonably requested to do from time to time by the Purchaser in order
to satisfy the conditions and carry out the provisions and purposes of
this Agreement and the Registration Rights Agreement.
(f) Section 305. The Company shall not enter into any
transaction which would result in the dividend on the Purchaser's shares
under Section 305 of the Code (or any successor provision) other than
dividends accruing pursuant to the Certificate of Incorporation, as
amended from time to time.
(g) U.S. Real Property Holding Corporation. The Company will
not be a "United States real property holding corporation," as defined
in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service and upon written
request, will provide to any holder of Preferred Stock a statement to
the effect informing such holder whether its interest in the Company
constitutes a U.S. real property interest.
7.10 Reservation of Common Stock. For so long as any shares of the
Series E Preferred remain outstanding, the Company shall increase the
authorized amount and maintain in reserve that number of shares of Common Stock
necessary to accommodate the conversion into Common Stock of all issued and
outstanding shares of the Series E Preferred.
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7.11 Public Announcements. The Company shall not make any public
announcement or disclosure relating to any Purchaser's participation in the
transactions contemplated by this Agreement or the relationship established
hereby with any Purchaser unless such announcement or disclosure is (i) in the
judgment of the Company after consultation with its legal counsel, required by
applicable law or regulation or (ii) approved by the Purchaser, which approval
shall not be unreasonably withheld.
7.12 New Developments. Subject to the other contractual obligations
of such consultants, the Company will cause all technological developments,
patentable or unpatentable inventions, discoveries or improvements by its
officers, employees or consultants to be documented in accordance with
appropriate professional standards, cause all officers, employees and
consultants to execute appropriate patent and copyright assignment agreements
to the Company, as the case may be, and, where possible and appropriate, cause
all officers, employees and consultants to file and execute United States and
foreign patent or copyright applications relating to and protecting such
developments on behalf of the Company. The Company will cause each officer,
key employee and key consultant now or hereafter employed to execute and
deliver an Employment Provision Agreement in the form and substance of Exhibit
3.12(a) attached hereto, or as otherwise approved by the Board of Directors of
the Company.
7.13 Rule 144A Information. The Company covenants and agrees that, at
all times during which the Company is neither subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, nor exempt from
reporting pursuant to Rule 12(g)3-2(b) under the Exchange Act, it will provide
in written form (as promptly as practicable and in any event within 15 business
days), upon the written request of any holder of the Series E Preferred or a
prospective buyer of such shares or the Conversion Shares, all information
required by Rule 144A(d)(4)(i) of the General Regulations promulgated by the
Commission under the Securities Act ("Rule 144A Information"). The Company
further covenants, upon written request, to cooperate with and assist any
holder of the Series E Preferred or any member of the National Association of
Securities Dealers, Inc. system for Private Offerings Resales and Trading
through Automated Linkage ("PORTAL") in applying to designate and thereafter
maintain the eligibility of such shares or the Conversion Shares for trading
through PORTAL. The Company's obligations under this SECTION 7.14 shall at all
times be contingent upon the relevant holder of the Series E Preferred
obtaining from a prospective purchaser an agreement to take all reasonable
precautions to safeguard the Rule 144A Information from disclosure to anyone
other than a Person who will assist such purchaser in evaluating the purchase
of such securities.
7.14 Founders' Sales Agreement. Except as otherwise prohibited by
law, the Company agrees that it shall not permit any transfer of shares of
capital stock in violation of the Founders' Sales Agreement.
7.15 Preferred Stockholders' Sales Agreement. Except as otherwise
prohibited by law, the Company agrees that it shall not permit any transfer of
shares of capital stock in violation of the Preferred Stockholders' Sales
Agreement.
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7.16 Nomination of Purchaser Director. So long as the Purchaser owns
at least __________ shares of Series E Preferred, the Company will cause one
person designated by the Purchaser to be nominated for election as a director
of the Company at each annual meeting of the stockholders of the Company.
8. Additional Covenants of the Company.
8.1 Conduct of Business in the Ordinary Course. From the date of
this Agreement until the Closing, except with the prior approval of the
Purchaser, the Company will operate the business of the Company in the ordinary
course.
8.2 Reasonable Efforts. From the date of this Agreement until the
Closing, the Company shall use all reasonable efforts to obtain all necessary
consents and take all actions necessary for the consummation of the
transactions contemplated hereby.
9. Termination of Agreement and Survival of Representations,
Warranties and Covenants.
(a) Termination. This Agreement may be terminated prior to
Closing by the Company or the Purchaser upon written notice to the other
party:
(i) At any time by mutual written agreement of all the
parties hereto;
(ii) At any time after December 6, 1996, by any party if
the Closing shall not have occurred on or prior to such date;
(iii) By the Company if any representation or warranty of
the Purchaser contained in this Agreement or in any certificate
or other document executed and delivered by the Purchaser to the
Company pursuant to this Agreement is or becomes untrue or
breached in any material respect or if the Purchaser fails to
comply in any material respect with any covenant or agreement
contained herein, and any such misrepresentation, breach or
noncompliance is not cured, waived, or eliminated before Closing;
(iv) By the Purchaser if any representation or warranty
of the Company contained in this Agreement or in any certificate
or other document executed and delivered by the Company pursuant
to this Agreement is or becomes untrue or breached in any
material respect or if the Company fails to comply in any
material respect with any covenant or agreement contained herein,
and any such misrepresentation, breach or noncompliance is not
cured, waived, or eliminated before Closing;
(v) On the Closing Date by the Purchaser if the
conditions set forth in SECTION 5 have not been satisfied; or
(vi) On the Closing Date by the Company if the
conditions stated in SECTION 6 have not been satisfied.
In the event this Agreement is terminated pursuant to
subparagraph (iii) or (iv) above, the Purchaser and the Company shall be
entitled to pursue, exercise and enforce
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any and all remedies, rights, powers and privileges available at law or
in equity and under this Agreement.
(b) Survival of Representations, Warranties and Covenants.
Except as otherwise provided in this Agreement, all covenants made
hereunder or pursuant hereto or in connection with the transactions
contemplated hereby shall survive the Closing and shall continue in full
force and effect thereafter. Any representation or warranty the breach
or inaccuracy of which involves fraud on the part of the Company or the
Purchaser shall survive the Closing and shall continue in full force and
effect thereafter. All other representations and warranties, as
certified to by the Company pursuant to the certificate required to be
delivered under SECTION 5.4 and by the Purchaser pursuant to SECTION 6.1
of this Agreement, made hereunder or pursuant hereto or in connection
with the transactions contemplated hereby shall survive the Closing
until the expiration of the applicable statute of limitations and notice
of any claim based on a breach of any such representation or warranty
must be given prior to the expiration of such statute of limitations.
10. Indemnification. The Company shall indemnify and hold harmless
the Purchaser against and from any losses, claims, damages or liabilities,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (a) the falsity or incorrectness as of
the Closing Date of any representation or warranty of the Company contained in
or made pursuant to SECTION 3 hereof, or (b) the existence of any condition,
event or fact constituting, or which with notice or passage of time, or both,
would constitute a default in the observance of any of the Company's
undertakings or covenants hereunder or under any of the documents executed in
connection herewith. The Company shall also pay all reasonable attorney's fees
and costs and court costs incurred by the Purchaser in enforcing the
indemnification provided for in this SECTION 10.
11. Notices. All notices, requests, consents and other
communications provided for herein (except as stated in the last sentence of
this SECTION 11) shall be in writing, and shall be mailed by certified mail,
postage prepaid, delivered by Federal Express or similar overnight courier, or
personally delivered, as follows:
(a) If to the Company:
ILEX Oncology, Inc.
00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Love
with a copy to:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
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(b) If to the Purchaser to the person
and address set forth on Exhibit A
or such other addresses as each of the parties hereto may provide from time to
time in writing to the other parties. For purposes of computing the time
periods set forth in SECTION 7, the date of mailing shall be deemed to be the
date of delivery. The financial statements and other reports required by
SECTION 7 may be mailed by first-class regular mail.
12. Modifications; Waiver. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated (a) prior to the
Closing Date unless effected by a writing executed and delivered by the parties
hereto and (b) after the Closing Date unless effected by a writing executed and
delivered by the Company and by holders representing not less than 66-2/3% of
the aggregate number of issued and outstanding shares of Series E Preferred and
shares of Common Stock issued upon the conversion of Series E Preferred,
provided that this SECTION 12 may not be modified or amended without the
written consent of all the holders of Series E Preferred and the Company, and
provided further that in any event, no amendment or change may be made to the
terms hereof that imposes additional obligations or restrictions upon a party
without its written consent.
13. Entire Agreement. This Agreement, including the Schedules and
Exhibits hereto, including the Registration Rights Agreement, the Founders'
Sales Agreement and the Preferred Stockholders' Sales Agreement, contains the
entire agreements between the parties with respect to the transactions
contemplated hereby, and supersedes all negotiations, agreements,
representations, warranties, commitments, whether in writing or oral, prior to
the date hereof and shall, except as otherwise expressly provided herein and
therein, not affect the rights of the parties under the Series B Purchase
Agreement, the Series C Purchase Agreement or the Series D Purchase Agreement.
14. Application to Successor Holders. The rights of the Purchaser
set forth in SECTIONS 7.1, 7.3 AND 7.6 shall inure to the benefit of any person
who becomes a holder of Series E Preferred sold pursuant to this Agreement (or
of Common Stock issued upon conversion of such Series E Preferred) in a
transfer made in accordance with the provisions of SECTION 7.6 (a "Permitted
Holder") hereof as though such holder were a Purchaser, and the obligations of
the Purchaser set forth in SECTION 7.5 shall be binding on any person who after
the date hereof becomes a holder of shares of Series E Preferred sold pursuant
to this Agreement as though such holder were a Purchaser.
15. Execution and Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed an original, and such counterparts together shall constitute one
instrument.
16. Governing Law and Severability. This Agreement shall be governed
by the laws of the State of Texas as applied to agreements entered into and to
be performed entirely within the State of Texas. In the event any provision of
this Agreement or the application of such provision to any party shall be held
by a court of competent jurisdiction to be contrary to law, the remaining
provisions of this Agreement shall remain in full force and effect.
17. Headings. The descriptive headings of the Sections hereof and
the Schedules and Exhibits hereto are inserted for convenience only and do not
constitute a part of this Agreement.
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18. Waivers And Consents. Any waiver or consent hereunder shall be
effective only in the specific instance and for the purpose for which it was
given and shall not constitute a continuing waiver or consent. Notwithstanding
this Agreement, any term or condition hereof, or the consummation of the
transactions contemplated hereby, the Purchaser does not waive or relinquish
any right it may have or may acquire against the Company or any of its
Affiliates or agents in connection with the acquisition of the Series E
Preferred by such Purchaser, or the ownership thereof. All such rights shall
remain unimpaired by the execution of this Agreement and the consummation of
the transactions contemplated hereby.
19. Severability. In the event that any court of competent
jurisdiction shall determine that any provision, or any portion thereof,
contained in this Agreement shall be unenforceable in any respect, then such
provision shall be deemed limited to the extent that such court deems it
enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall deem any such provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Agreement shall nevertheless
remain in full force and effect.
20. No Waiver Of Rights, Powers and Remedies. Except as expressly
provided in this Agreement, no failure or delay by a party hereto in exercising
any right, power or remedy under this Agreement, and no course of dealing
between the parties hereto, shall operate as a waiver of any such right, power
or remedy of the party. No single or partial exercise of any right, power or
remedy under this Agreement by a party hereto, nor any abandonment or
discontinuance of steps to enforce any such right, power or remedy, shall
preclude such party from any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. The election of any remedy by a
party hereto shall not constitute a waiver of the right of such party to pursue
other available remedies. No notice to or demand on a party not expressly
required under this Agreement shall entitle the party receiving such notice or
demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.
21. Reliance. The parties hereto agree that, notwithstanding any
access to information by any party or any right of a party to this Agreement to
investigate the affairs of any other party to this Agreement, the party having
such access and right to investigate shall have the right to rely fully upon
the representations and warranties of the other party expressly contained in
this Agreement and on the accuracy of any Schedule, Exhibit or other document
attached hereto or referred to herein or delivered by such other party or
pursuant to this Agreement. The Purchaser acknowledges that, based on
information provided by the Company, it has made its own analysis and decision
regarding the transactions contemplated hereby, including the execution of this
Agreement.
22. Costs, Expenses and Taxes. Each of the parties hereto shall
bear such party's own costs and expenses in connection with this Agreement and
the transactions contemplated hereby.
23. Definitions. The following terms shall have the respective
meanings set forth below whenever used in this Agreement:
"Affiliate" has the meaning ascribed to that term in Rule 12b-2 under
the Exchange Act or any successor rule, and in any event with respect to the
Company shall mean any Director, officer or stockholder thereof.
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"Knowledge" or "known" shall mean or refer to the actual knowledge of
the Company, its officers, directors and key employees after reasonable
diligence.
"Subsidiary" or "Subsidiaries" shall mean any corporation, partnership,
trust or other entity of which the Company and/or any of its other Subsidiaries
directly or indirectly owns at the time a majority of the outstanding shares of
any class of equity security of such corporation, partnership, trust or other
entity.
[signatures on next page]
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This Convertible Preferred Stock Purchase Agreement is hereby executed
as of the date first above written.
ILEX ONCOLOGY, INC.
By:
------------------------------------------
Xxxxxxx X. Love, President
PURCHASER:
MPI ENTERPRISES, L.L.C.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
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