1
EXHIBIT 10.7
SUPPLEMENTAL PURCHASE AGREEMENT
THIS SUPPLEMENTAL PURCHASE AGREEMENT ("Agreement") is made as of April
8, 1996 by and among CombiChem, Inc., a California corporation (the "Company")
and the investors listed on the Schedule of Investors attached as Schedule A
hereto (the "Schedule of Investors"), each of which is herein referred to as a
"Investor." Capitalized terms used herein which are not defined herein shall
have the same meaning ascribed to them in the First Closing Agreement (as
defined herein below) and all references to any section number used herein
shall be deemed to be references to sections of this Agreement, unless
otherwise stated.
RECITAL
A. The Company entered into a certain Series C Preferred Stock
Purchase Agreement (the "First Closing Agreement") on August 17, 1995, by and
among the Company and the investors listed on Schedule A thereto.
B. Pursuant to the First Closing Agreement, each Investor has an
obligation to purchase the number of shares set forth opposite such Investors
name on the Schedule of Investors upon the achievement by the Company of the
Milestones on or before March 31, 1996.
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Achievement of Milestones. By their signatures herein, the
Investors indicate their intent to proceed with the Second Closing pursuant to
Section 1.2.2(b) of the the First Closing Agreement on or about April 8, 1996.
2. Sale and Issuance of Series C Preferred Stock. Each Investor
agrees, severally and not jointly, to purchase at the Second Closing (as
defined herein below) and the Company agrees to sell and issue to each
Investor, severally and not jointly, at the Second Closing (as defined herein
below), that number of shares of the Company's Series C Preferred Stock set
forth opposite each Investor's name on the Schedule of Investors at a price of
$0.62 per share.
3. Second Closing. Such purchase and sale shall take place on
April 8, 1996 at 11:00 A.M. (the "Second Closing Date"), at the offices of
Xxxxxxx, Xxxxxxx & Xxxxxxxx, 000 Xxxx X Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx, or at
such time and place as the Company and the Investors agree (the "Second
Closing"). At the Second Closing, the Company will deliver to each Investor a
certificate representing the Series C Preferred Stock which such Investor is
purchasing as specified in the Schedule of Investors against payment of the
purchase price therefor, by check or wire transfer payable to the Company.
2
4. Representations and Warranties of the Company. The Company
hereby represents and warrants to each Investor that, except as set forth on
the Supplemental Schedule of Exceptions, dated as of April 8, 1996, attached
hereto as Exhibit A, the representations and warranties of the Company
contained in Section 2 of the First Closing Agreement are true and accurate as
of the Second Closing; provided, however, that (i) the term "Financial
Statements" as used in Section 2 of the First Closing Agreement, for the
purposes of the Second Closing, shall mean with respect to the representations
and warranties made hereunder the Company's audited financial statements
(balance sheet and profit and loss statement, statement of stockholders' equity
and statement of changes in financial position including notes thereto) at
December 31, 1995 and for the fiscal year then ended and its unaudited
financial statements (balance sheet and profit and loss statement including
notes thereto) as at and for the two-month period ended February 29, 1996 and
(ii) all references to the date June 30, 1995 contained in Section 2 of the
First Closing Agreement, for purposes of the Second Closing, shall be deemed to
be references to February 29, 1996.
5. Covenants of the Company. So long as any shares of Preferred
Stock are outstanding, the Company shall not, without first obtaining the
approval (by vote or written consent, as provided by law) of the holders of a
majority of the shares of Preferred Stock then outstanding:
5.1.1 change the authorized number of directors to be
other than between five (5) and nine (9); or
5.1.2 put into place or effect any acceleration of vesting of
stock options or waiver of repurchase rights with respect to stock beneficially
held by an employee or consultant of the Company, each in the event of a sale
of all or substantially all of the assets of the Company, a merger of the
Company with or into another entity or a liquidation of the Company.
6. Representations and Warranties of the Investor. As of the
Second Closing, each Investor makes the representations and warranties to the
Company set forth in Section 3 of the First Closing Agreement.
7. Corporate Securities Law. THE SALE OF THE SECURITIES WHICH
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES
OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS
EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
-2-
3
8. Conditions of Investor's Obligations at Second Closing. The
obligations of the Investors under Section 2 of this Agreement are subject to
the fulfillment on or before the Second Closing of each of the following
conditions:
a. Representations and Warranties. The representations
and warranties of the Company contained in Section 4 hereof and in Section 2 of
the First Closing Agreement shall be true on and as of the Second Closing with
the same effect as though such representations and warranties had been made on
and as of the Second Closing.
b. Performance. The Company shall have performed and
complied with all agreements, obligations, covenants and conditions contained
in this Agreement that are required to be performed or complied with by it on
or before the Second Closing.
c. Compliance Certificate. The President of the Company
shall deliver to each Investor at the Second Closing a certificate certifying
that the conditions specified in Sections 8(a), 8(b) and 8(d) hereof have been
fulfilled.
d. Qualifications. All authorizations, approvals or
permits, if any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the lawful issuance
and sale of the Series C Preferred Stock pursuant to this Agreement shall be
duly obtained and effective as of the Second Closing.
e. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Second
Closing and all documents incident thereto shall be reasonably satisfactory in
form and substance to the Investors' special counsel, which shall have received
all such counterpart original and certified or other copies of such documents
as it may reasonably request.
f. Opinion of Company Counsel. Each Investor shall have
received from Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel for the Company, an
opinion, dated the date of the Second Closing, in form and substance
satisfactory to special counsel to the Investors.
9. Conditions of the Company's Obligations at Second Closing.
The obligations of the Company to each Investor under this Agreement are
subject to the fulfillment on or before the Second Closing of each of the
following conditions by that Investor:
a. Representations and Warranties. The representations
and warranties of the Investor contained in Section 6 hereof and in Section 3
of the First Closing Agreement shall be true on and as of the Second Closing
with the same effect as though such representations and warranties had been
made on and as of the Second Closing.
b. Qualifications. All authorizations, approvals, or
permits, if any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the lawful issuance
and sale of the Series C Preferred Stock pursuant to this Agreement shall be
duly obtained and effective as of the Second Closing.
10. Miscellaneous.
-3-
4
a. Rights of Shares. Except as otherwise set forth in
this Agreement, this Second Closing shall be deemed to have been made under the
First Closing Agreement, and the shares of Series C Preferred Stock purchased
hereunder shall receive the same rights and be subject to the same obligations
under the First Closing Agreement, that certain Investors' Rights Agreement
dated August 17, 1995 and the Co- Sale Agreement dated August 17, 1995, as the
shares of the Series C Preferred Stock purchased pursuant to the First Closing
Agreement, except as otherwise expressly set forth in such agreements.
b. Survival of Warranties. The warranties,
representations and covenants of the Company and Investors contained in or made
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Second Closing.
c. Successors and Assigns. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties
(including transferees of any shares of Series C Preferred Stock sold hereunder
or any Common Stock issued upon conversion thereof). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
d. Governing Law. This Agreement shall be governed by
and construed under the laws of the State of California as applied to
agreements among California residents entered into and to be performed entirely
within California.
e. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
f. Titles and Subtitles. The titles and subtitles used
in this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
g. Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in writing and shall
be deemed effectively given upon personal delivery to the party to be notified
by hand or professional courier service or five days after deposit with the
United States Post Office, by registered or certified mail, postage prepaid and
addressed to the party to be notified at the address indicated for such party
on the signature page hereof, or at such other address as such party may
designate by ten (10) days' advance written notice to the other parties.
h. Finder's Fee. Each party represents that it neither
is nor will be obligated for any finders' fee or commission in connection with
this transaction.
Each Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and
-4-
5
expenses of defending against such liability or asserted liability) for which
the Investor or any of its officers, partners, employees, or representatives is
responsible.
The Company agrees to indemnify and hold harmless each Investor from
any liability for any commission or compensation in the nature of a finders'
fee (and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
i. Expenses. Irrespective of whether the Second Closing
is effected, the Company shall pay all costs and expenses that it incurs with
respect to the negotiation, execution, delivery and performance of this
Agreement. If the Second Closing is effected, the Company shall, at the Second
Closing, reimburse the reasonable fees of special counsel for the Investors
which are anticipated to be approximately $3,500 and shall, upon receipt of a
xxxx therefor, reimburse out-of-pocket expenses of such counsel incurred in
connection with the Second Closing.
j. Attorney's Fees. If any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
k. Amendments and Waivers. Any term of this Agreement
may be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
more than 50% of the Common Stock (that has not been sold to the public) issued
or issuable upon conversion of the Series C Preferred Stock. Any amendment or
waiver effected in accordance with this Section shall be binding upon each
holder of any securities purchased under this Agreement at the time outstanding
(including securities into which such securities have been converted), each
future holder of all such securities and the Company.
l. Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
m. Exculpation Among Investors. Each Investor
acknowledges that it is not relying upon any person, firm or corporation, other
than the Company and its officers and directors, in making its investment or
decision to invest in the Company. Each Investor agrees that no Investor nor
the respective controlling persons, officers, directors, partners, agents or
employees of any Investor shall be liable for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
Series C Preferred Stock (and Common Stock issued upon conversion thereof).
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-5-
6
IN WITNESS WHEREOF, the parties have executed this Series A
Preferred Stock Purchase Agreement as of the date first above written.
COMBICHEM, INC.
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Xxxxxxx Xxxxx, President
INVESTORS:
SPROUT CAPITAL VII, L.P.
By: DLJ Capital Corporation
Managing General Partner
By: /s/ Xxxxxxxx Xxxxxxx
-------------------------------
Title: Attorney in Fact
----------------------------
Address: 0000 Xxxx Xxxx Xxxx, 0-000
Xxxxx Xxxx, XX 00000
DLJ CAPITAL CORPORATION
By: /s/ Xxxxxxxx Xxxxxxx
---------------------------------
Title: Attorney in Fact
------------------------------
Address: 0000 Xxxx Xxxx Xxxx, 0-000
Xxxxx Xxxx, XX 00000
[SIGNATURE PAGE TO
SUPPLEMENTAL PURCHASE AGREEMENT]
7
SOFINNOVA VENTURES III L.P.
By: /s/ Xxxx Xxxxxxx, M.D.
-------------------------------
Title: General Partner
---------------------------
Address: Xxx Xxxxxx Xxxxx, Xxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
SEQUOIA CAPITAL VI
By: /s/ Xxxxxx Xxxxxx
-------------------------------
Title: General Partner
-----------------------------
Address: 0000 Xxxx Xxxx Xxxx,
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
SEQUOIA TECHNOLOGY PARTNERS VI
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Title: General Partner
-----------------------------
Address: 0000 Xxxx Xxxx Xxxx,
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
SEQUOIA 1995
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Title: General Partner
----------------------------
Address: 0000 Xxxx Xxxx Xxxx,
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
[SIGNATURE PAGE TO
SUPPLEMENTAL PURCHASE AGREEMENT]
8
SINGAPORE BIO-INNOVATIONS PTE LTD
By: /s/ illegible
-------------------------------
Title: Director/General Manager
----------------------------
Address: 000 Xxxxx Xxxxxx Xxxx #00-00
Xxxxxxx Xxxx Xxxxx
Xxxxxxxxx 0617
/s/ Xxxxx X. Xxxxxxx
-----------------------------------
XXXXX X. XXXXXXX
Address: 000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
XXX FBO XXXXX X. XXXXXXX
/s/ Xxxxxxx Xxxxxxxx for DLJSC
-------------------------------
By: Xxxxxxx Xxxxxxxx for DLJSC
Title: Custodian
Address: Xxx Xxxxxxxx Xxxxx
Xxxxxx Xxxx, XX 00000
X. X. XXXXXXXX REVOCABLE TRUST
/s/ Xxxxxxx Xxxx
-------------------------------
By: Xxxxxxx Xxxx
Title: Trustee
Address: Corporate Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
[SIGNATURE PAGE TO
SUPPLEMENTAL PURCHASE AGREEMENT]
9
XXXXXX INC.
By: /s/ Xxxxxxx Bogaelie
--------------------------------
Title: Vice President & Controller
-----------------------
Address: 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
SORRENTO VENTURES II, L.P.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
President, Sorrento Associates,
Inc. General Partner, Sorrento
Equity Partners, L.P.
Title: General Partner, Sorrento
Ventures II, L.P.
------------------------------
Address: 0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
SORRENTO GROWTH PARTNERS I, L.P.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
President, Sorrento Growth, Inc.
General Partner, Sorrento Equity
Growth Partners, I L.P.
Title: General Partner, Sorrento
Growth Partners I, L.P.
---------------------------
Title:
-----------------------------
Address: 0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
COMDISCO, INC.
By: /s/ Xxxx X. Xxxxxx
---------------------------------
Title: Assistant Vice President
------------------------------
Address: 0000 X. Xxxxx Xxxx
Xxxxxxxx, XX 00000
[SIGNATURE PAGE TO
SUPPLEMENTAL PURCHASE AGREEMENT]
10
XXXXXXX VENTURE CAPITAL FUND III, L.P.
By: Its General Partner,
Xxxxxxx Partners, Inc.
By: /s/ Xxxxx Xxxxx
----------------------------
Title: Partner, Xxxxxxx Partners, Inc.
-------------------------------
Address: 000 X. XxXxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
XXXXXXX TRUST COMPANY AS TRUSTEE
OF THE XXXXXXX MAP
VENTURE CAPITAL FUND III
By: /s/ Xxxxx Xxxxx
--------------------------------
Title: Assistant Trust Officer,
Xxxxxxx Trust Company
----------------------------
Address: 000 X. XxXxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
[SIGNATURE PAGE TO
SUPPLEMENTAL PURCHASE AGREEMENT]
11
SCHEDULE A
SCHEDULE OF INVESTORS
SECOND CLOSING
NUMBER OF SHARES OF SERIES CASH PURCHASE PRICE FOR
C PREFERRED STOCK TO BE SHARES OF SERIES C PREFERRED
NAME OF INVESTOR PURCHASED STOCK
---------------- ------------
Sprout Capital VII, L.P. 1,340,066 $830,840.92
DLJ Capital Corporation 111,547 $69,159.14
Sofinnova Ventures III, L.P. 483,871 $300,000.02
Singapore Bio-Innovations Ptd, Ltd 241,936 $150,000.32
Sequoia Capital VI 572,420 $354,900.40
Sequoia Technology Partners VI 31,452 $19,500.24
Sequoia XXIV 25,162 $15,600.44
Xxxxx X. Xxxxxxx 24,194 $15,000.28
XXX FBO Xxxxx X. Xxxxxxx 48,388 $30,000.56
X.X. Xxxxxxxx Revocable Trust 96,775 $60,000.50
Xxxxxx Inc. 362,904 $225,000.48
Sorrento Ventures II, L.P. 241,936 $150,000.32
Sorrento Growth Partners I, L.P. 483,871 $300,000.02
Comdisco, Inc. 72,581 $45,000.22
Xxxxxxx Venture Capital Fund III, L.P. 832,046 $515,868.52
Xxxxxxx Trust Company as Trustee of 135,696 $84,131.52
the Xxxxxxx MAP Venture Capital
Fund III
TOTALS: 5,104,845 $3,165,003.90
[SIGNATURE PAGE TO
SUPPLEMENTAL PURCHASE AGREEMENT]
12
EXHIBIT A
SUPPLEMENTAL SCHEDULE OF EXCEPTIONS
13
SCHEDULE OF EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
This Schedule of Exceptions is made and given pursuant to Section 4 of
the Supplemental Purchase Agreement (the "Agreement"). The section numbers in
this Schedule of Exceptions correspond to the section numbers in the Series C
Preferred Stock Purchase Agreement dated August 17, 1995, by and among
CombiChem, Inc. ("CombiChem") and the investors listed on Schedule A thereto
(the "First Closing Agreement"); however, any information disclosed herein
under any section number shall be deemed to be disclosed and incorporated into
any other section number where such disclosure would otherwise be appropriate.
Any terms defined in the Agreement or the First Closing Agreement shall have
the same meaning when used in this Schedule of Exceptions as when used in the
Agreement or the First Closing Agreement unless the context otherwise requires.
Nothing herein constitutes an admission of any liability or obligation
on the part of CombiChem nor an admission against CombiChem's interest. The
inclusion of any schedule herein or any exhibit hereto should not be
interpreted as indicating that CombiChem has determined that such an agreement
or other matter is necessarily material to CombiChem. The Investors
acknowledge that certain information contained in these schedules may
constitute material confidential information relating to CombiChem which may
not be used for any purpose other than that contemplated in the Agreement.
14
SCHEDULE 2.5
CAPITALIZATION AND VOTING RIGHTS
Certain investors of the Company are parties to assignment agreements
pursuant to which they have assigned the right to receive warrants issuable in
connection with the Series C Preferred Stock financing to other investors.
12,053,641 shares of Series C Preferred Stock are issued and
outstanding and up to an additional 5,104,845 shares of Series C Preferred
Stock will be issued pursuant to the Agreement.
2,646,660 shares of Common Stock are issued and outstanding.
There are currently outstanding options to purchase 3,089,920 shares
of Common Stock pursuant to the Company's 1995 Stock Option/Stock Issuance
Plan. In addition to the aforementioned options, the Company has reserved an
additional 330,354 shares of its Common Stock for purchase or upon exercise of
options to be granted in the future under the Plan.
The Company intends to issue an option to purchase 840,000 shares of
Common Stock to Xxxxxxx Xxxxx pursuant to the Company's 1995 Stock Option/Stock
Issuance Plan. Prior to issuing such option to Xx. Xxxxx, the Company plans to
(i) amend the Restated Articles in order to avoid triggering an antidilution
adjustment and (ii) amend the Company's 1996 Stock Option/Stock Issuance Plan
in order to authorize additional shares.
The Company intends to grant warrants to Comdisco, Inc. pursuant to
which 240,322 shares of Series C Preferred Stock may be issued.
Xxxxxxx Xxxxx has been granted a right to purchase a number of shares
sufficient to allow him to maintain a 6% ownership percentage in the Company
upon future financings.
Xxxxxxx Xxxxx has been granted the right to obtain a number of shares
of the Company's Common Stock ("Shares") equal to 96,000 divided by (i) the per
share price paid by investors in the Company next preferred stock financing
(excluding the issuance of Series C Preferred Stock pursuant to the Agreement)
occurring prior to September 15, 1996 or (ii) in the event the Company's next
preferred stock financing has not occurred prior to September 15, 1996, $1.50.
The Shares, or the purchase price therefore, are to be provided to Xx. Xxxxx
either as a one-time bonus or through a forgivable loan.
Schedule 2.5
15
The outstanding shares of Preferred Stock and Common Stock are owned
by the shareholders and in the numbers specified herein:
CLASS/SERIES SHAREHOLDER NO. SHARES
------------ ----------------------------------------- ----------
Common Xxx X. Xxxxx 175,000
Common Chi-Xxxx Xxxx 150,000
Common Xxxx X. Xxxxx 150,000
Common Xxxx Xxx 10,000
Common Xxxxxxxx Xxxxxxx 37,500
Common Trustees of Royston Family Trust UTA 2/12/82 37,500
Common Xxxxxx Xxxxxxx 150,000
Common Forward Ventures II, L.P. 225,000
Common Xxxxxxx Xxxxxxxxx 10,000
Common Xxxxxx X. Xxxxxx 229,160
Common Xxxx Xxxxx 2,500
Common Sequoia Capital VI 91,000
Common Sequoia Technology Partners VI 5,000
Common Sequoia XXIV 4,000
Common Xxxx X. Xxxxxxxx 175,000
Common Xxxxxx X. Xxxxxx 10,000
Common Xxxx Xxx 5,000
Common Xxxxxx Castillino, Ph.D. 20,000
Common Xxxxx X. Xxxx 20,000
Common Xxxx Xxxxx 20,000
Common Xxxxxx X. X. Sun 10,000
Common Xxxx Xxxxx 40,000
Common Xxxxxxxxx X. Xxxxx 14,000
Common Xxxxx X. Xxxxxxxxx, Ph.D. 11,764
Common Xxxxxxx X. Xxxxxx, M.D. 83,000
Common The Scripps Research Institute 305,236
Common Xxxxx Xxxxx 350,000
Schedule 2.5
16
CLASS/SERIES SHAREHOLDER NO. SHARES
------------ ----------------------------------------- ----------
Common Xxxxxxxx Xxxxxx 100,000
Common Xxxxxx Xxxx 200,000
Common Xxx Xxxxxxxxxx 6,000
TOTAL COMMON: 2,646,660
Series A Forward Ventures II, L.P. 600,000
Series A Sequoia Capital VI 364,000
Series A Sequoia Technology Partners VI 20,000
Series A Sequoia XXIV 16,000
TOTAL SERIES A: 1,000,000
Series B Sequoia Capital VI 1,213,334
Series B Sequoia Technology VI 66,667
Series B Sequoia Capital VI 53,333
Series B Forward Ventures II, L.P. 866,666
Series B Xxxx X. Xxxxxxxx 26,667
TOTAL SERIES B: 2,226,667
Series C Sprout Capitol VII, L.P. 3,126,821
Series C DLJ Capital Corporation 260,276
Series C Sofinnova Ventures III, L.P. 1,129,033
Series C Singapore Bio-Innovation Ptd., Ltd. 564,517
Series C Sequoia Capital VI 1,335,646
Series C Sequoia Technology Partners VI 73,388
Series C Sequoia XXIV 58,710
Series C PaineWebber Incorporated as Custodian of
the Xxxxxxx Xxxxxxxx Rollover XXX 37,218
Series C Xxxxxx X. Xxxx 16,185
Schedule 2.5
17
CLASS/SERIES SHAREHOLDER NO. SHARES
------------ ----------------------------------------- ----------
Series C First Interstate Bank as Trustee for SK 80,874
International Securities Corp. 401(k) PS em Xxxxxxx
X. Xxxxxx
Series C Xxxxx X. Xxxxxxx 56,452
Series C XXX FBO Xxxxx X. Xxxxxxx 112,904
Series C X.X. Xxxxxxxx Revocable Trust 225,807
Series C Xxxxxx Inc. 846,775
Series C Sorrento Ventures II, L.P. 564,517
Series C Sorrento Growth Partners I, L.P. 1,129,033
Series C Comdisco, Inc. 169,355
Series C Xxxxxxx Venture Capital Fund III, L.P. 1,941,441
Series C Xxxxxxx Trust Company as Trustee of the Xxxxxxx MAP 316,624
Venture Capital Fund III
Series C Xxxx Xxxxxxx 8,065
TOTAL SERIES C: 12,053,641
Series Z Xxxxxx Xxxxxxx 200,000
TOTAL SERIES Z: 200,000
Schedule 2.5
18
SCHEDULE 2.7
CONTRACTS AND OTHER COMMITMENTS
The Company is a party to the following agreements:
(a) (i) Lease for 0000 Xxxxxx Xxxxx Xx, Xxx Xxxxx, XX 00000
dated December 22, 1995.
(ii) Industrial Lease for 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxx,
XX dated December 7, 1992.
(iii) Second Sublease for 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxx,
XX and draft of Addendum No. 1.
(iv) See (e)(iv) and (v) below.
(v) Pursuant to that certain Agreement dated August 4,
1995 among the Company, Molecular Simulations
Inc.("MSI") and Entropix Corporation, the Company was
obligated to make the following cash payments on or
before December 31, 1995: (A) $100,000 and (B) at the
sole discretion of MSI, either (i) a cash payment in
an amount equal to $140,000 or (ii) 225,807 shares of
Series Z Preferred Stock (to date MSI has not made
the election described in (B) and the Company has not
made the payment). In addition, the Company issued a
promissory note to MSI for $300,000 payable June 15,
1996 in cash, or at the Company's option, by issuing
100,000 shares of Series Z Preferred Stock.
(vi) In connection with the execution of the Agreement
with MSI described in (v) above and pursuant to a
License Agreement dated August 4, 1995 between the
Company and MSI ("MSI License Agreement"), the
Company agreed to pay to MSI royalties equal to: (A)
in connection with the sale of a single product, the
lesser of 5% of net sales of such product or $25,000;
(B) in connection with the sale of more than one
product in a single transaction, the sum of (I) with
respect to the first product included in such
transaction, the lesser of 5% of net sales of such
product or $25,000 and (II) with respect to the
additional products, a flat royalty of $5,000 per
additional product; or (C) in connection with a
collaboration or contract research project, the
lesser of 2% of net sales for such collaboration or
contract research project or $100,000. The maximum
aggregate royalties payable under the agreement is
$5.0 million.
(vii) Certain employees have arrangements with the Company
pursuant to which severance payments would be made
following their termination of employment in certain
circumstances. No such payments are currently being
made, except for payments being made to Xxxxxx X.
Xxxxxx whom the Company is obligated to pay an
additional $58,230.
(viii) Pursuant to the Sublicense Agreement dated July 20,
1995 between the Company and Xxxxxxx & Xxxxxxx (the
"J&J Sublicense"), the Company has paid $40,000 to
Xxxxxxx & Xxxxxxx and is required to make the
following additional payments: (A) aggregate payments
of $60,000 (subject to certain time and performance
milestones) (B) an additional royalty of 1% of
monetary compensation received in connection with a
further sublicense of rights under the Agreement and
(C) earned royalties 10% of
Schedule 2.7
19
net sales value of products sold under the agreement
by the Company or affiliates or 10% of the royalty or
other income received by the Company from sublicensee
or third parties in consideration of granting of
further sublicenses.
(ix) See (c)(i) below.
(b) (i) Preferred Stock Purchase Agreement (600,000 Shares of
Series A Preferred Stock) dated August 26, 1994
between the Company and Forward Ventures II, L.P.
(ii) Common Stock Purchase Agreement (225,000 Shares of
Common Stock) dated September 28, 1994 between the
Company and Forward Ventures II, L.P.
(iii) Preferred Stock Purchase Agreement (200,000 Shares of
Series Z Preferred Stock) dated October 12, 1994
between the Company and Dr. Xxxxxx Xxxxxxx.
(iv) Stock Purchase Agreement Preferred and Common
(400,000 Shares of Series A Preferred Stock and
100,000 Shares of Common Stock) dated November 1,
1994 among the Company, Sequoia Capital VI, Sequoia
Technology Partners VI and Sequoia XXIV.
(v) Stock Purchase Agreement Series B Preferred dated
November 29, 1994 among the Company, Sequoia Capital
VI, Sequoia Technology Partners VI, Sequoia XXIV and
Forward Ventures II, L.P.
(vi) Stock Purchase Agreement (Series B Preferred) dated
January 15, 1995 between the Company and Xxxx X.
Xxxxxxxx, Ph.D.
(vii) Common Stock Purchase Agreement dated March 20, 1995
between the Company and The Scripps Research
Institute, as amended through the date hereof.
(viii) The Company is party to the following Common Stock
Purchase Agreements:
AMOUNT OF SHARES
NAME DATE CURRENTLY OUT-
STANDING UNDER AGMTS
Xxx X. Xxxxx 09/28/94 175,000
Chi-Xxxx Xxxx 09/28/94 150,000
Xxxx X. Xxxxx 09/28/94 150,000
Xxxx Xxx 09/28/94 10,000
Xxxxxxxx Xxxxxxx 09/28/94 37,500
Trustee of Royston Family Trust UTA 2/12/82 09/28/94 37,500
Schedule 2.7
20
AMOUNT OF SHARES
NAME DATE CURRENTLY OUT-
STANDING UNDER AGMTS
Xxxxxx Xxxxxxx 09/28/94 150,000
Xxxxxxx Xxxxxxxxx 09/28/94 10,000
Xxxxxx X. Xxxxxx 10/18/94 229,160
Xxxx Xxxxx 10/18/94 2,500
Xxxx X. Xxxxxxxx 11/08/94 175,000
Xxxxxx X. Xxxxxx 11/18/94 10,000
Xxxx X. Xxx 01/01/95 5,000
Xxxxxx X. Xxxxxxxxxx 01/19/95 20,000
Xxxxx X. Xxxx 01/23/95 20,000
Xxxx Xxxxx 01/23/95 20,000
Xxxxxx X.X. Sun 01/30/95 10,000
Xxxx Xxxxx 02/06/95 40,000
Xxxxxxxxx X. Xxxxx 04/24/95 14,000
Xxxxx Xxxxx 3/1/95 350,000
Xxxxx Xxxx 6/2/95 200,000
Xxxxxxxx Xxxxxx 6/3/95 100,000
(ix) See (a)(vi) above.
(x) The Company intends to enter into Series J Option
Agreements with each of Xxxxxx Xxxx, Xxxxxxxx Xxxxxx
and Xxxxxx Xxxxxxx, pursuant to which an aggregate of
465,000 shares of Series J Preferred Stock may be
issued.
(x) The Company had previously entered into (A) that
certain Amended and Restated Stock Registration
Rights Agreement dated November 1, 1994, as amended
on November 29, 1994, January 15, 1995 and March 20,
1995 and (B) that certain Stock Registration Rights
Agreement dated October 12, 1994 which granted to
certain investors registration rights. These
agreements were terminated pursuant to Investors'
Rights Agreement.
(xi) Warrant Agreement with Comdisco, Inc., dated December
20, 1994
(xii) Pursuant to a consulting agreement with Xxx
Xxxxxxxxxx pursuant to which Xx. Xxxxxxxxxx received
1,000 shares of the Company's common stock for each
month in which he performed consulting services.
This consulting
Schedule 2.7
21
agreement has been terminated, and Xx. Xxxxxxxxxx
received a total of 6,000 shares of the Company's
Common Stock pursuant to the agreement.
(xiii) The Company has granted an aggregate of 3,089,920
options to certain employees and consultants pursuant
to which up to an aggregate of 3,089,920 shares of
common stock may be issued.
(xv) The First Closing Agreement.
(xvi) The Company has entered into a Stock Purchase
Agreement with Xxxx Xxxxxxx pursuant to which Xx.
Xxxxxxx was issued 8,065 shares of the Company's
Series C Preferred Stock.
(xvii) The Company intends to enter into Warrant Agreements
with Comdisco, Inc. pursuant to which 240,322 shares
of Series C Preferred Stock may be issued.
(c) (i) Master Lease Agreement with Comdisco, Inc.
("Comdisco") dated November 16, 1994
(ii) See (a)(v) above.
(iii) The Company has made a loan to Xxxxx Xxxxx in the
principal amount of $150,000.
(iv) The Company expects to incur a commitment to Xxxx
Xxxxxxxx to make a loan for the purchase of a home in
the principal amount of up to $70,000.
(v) The Company is obligated to reimburse certain
employees with respect to certain tax liabilities.
The aggregate amount of these obligations are
approximately $30,000.
(d) (i) The Company is party to employment agreements with
the following individuals: Xxxx Xxx; Xxxx X.
Xxxxxxxx; Xxxxx Xxxxx; Xxxxxxxx Xxxxxx; Xxxxxx Xxxx;
Xxxxxx Xxxxxxx; and Xxxxxxx Xxxxx. In addition, the
Company is a party to offer letters and/or memoranda
with the following employees in which certain terms
and conditions of the employee's employment are set
forth: X. Xxxxxx; X. Xxxxx; X. Xxxxxx; X.
Xxxxxxxxxx; X. Xxxxx; X. Xxxxx; X. Xxxxx; X.
Xxxxxxxxxxx; X. Xxxxxxxx-Xxxxx; X. Xxxxxx; X. Xxxx;
X. Xxxxxx; X. Xxxxxxx; D. Sun; X. Xxxxx; X. Xxxxxxx;
X. Xxxxxxxx.
(ii) The Company is a party to the following consulting
agreements: X. Xxxxxx (dated 01/19/96); Xxxx X. Xxxxx
(dated 05/01/94); Xxx X. Xxxxx (dated 08/09/94);
Xxxxxx Xxxxxxx (dated 08/10/94); and Chi-Xxxx Xxxx
(dated 08/11/94). The Company entered into a letter
agreement dated July 25, 1995 with Transpect
Incorporated ("Transpect") pursuant to which
Transpect is retained as an advisor and consultant
with respect to the establishment of a relationship
with Daiichi Pharmaceutical Co., Ltd (or any company
mutually agreed to). In addition, the Company is a
party to Scientific Advisory Board Agreement with the
following individuals: X. Xxxx (dated 09/07/95); X.
Xxxxxxxxxxx (dated 04/08/95); X. Xxxxxxxxx (dated
05/18/95).
Schedule 2.7
22
(e) (i) Agreement for Purchase and Sale of Assets dated
September 28, 1994 among the Company, Combichem,
Inc., a Delaware corporation, KPCB VI and KPCB IV-FF.
(ii) License Agreement with The Scripps Research Institute
("Scripps License").
(iii) Assignments of Dr. Xxxxxx Xxxxxxx.
(iv) Letter of Intent - R&D Collaboration and
Manufacturing and Supply Agreement with LJL
Biosystems, Inc. dated March 15, 1995 as amended June
1, 1995, July 25, 1995 and August 16, 1995.
(v) Letter to LJL Biosystems, Inc. detailing revised
payment schedule for COMBISYN 100 program dated July
21, 1995. Letter from LJL Biosystems, Inc. detailing
proposed engineering and pricing changes.
(vi) See (a)(vii) above.
(vii) Sublicense Agreement dated July 20, 1995 between the
Company and Xxxxxxx & Xxxxxxx.
(viii) Option Agreement with The Scripps Research Institute
("Scripps Option").
(ix) Evaluation Study and Test Site Agreement between the
Company and Chugai Pharmaceutical pursuant to which
Chugai has paid to the Company an amount equal to
$300,000 in order to Beta Test the Company's product,
which sum may be applied to future purchases of the
Company's products, and a portion of which sum the
Company may be required to return to Chugai in
certain circumstances.
(x) Collaboration Agreement dated on or about March 29,
1996 between the Company and Teijin Limited to
design, synthesize and screen compound libraries for
*** and *** . The Company
retains all rights with respect to compounds in Xxxxx
Xxxxxxx, Xxxxxxx Xxxxxxx xxx Xxxxx Xxxxxxx subject to
an option to acquire such rights granted to Teijin.
Teijin retains all rights with respect to compounds
in all other territories. The Company is entitled to
receive a *** upfront fee, milestone payments,
annual research funding and royalties from Teijin.
(f) The Company intends to enter into indemnification agreements
with each of the directors of the Company following the Second
Closing. In addition, other agreements listed in this
Schedule of Exceptions or to be entered into in connection
with the Second Closing may contain indemnification
provisions.
(i) None
(ii) See (a) above.
(iii) See (c)(iii) and (c)(iv) above.
(iv) See (a)(v) and (a)(vi) above.
In connection with the MSI transaction discussed above and in addition
to the agreements noted above, the Company also entered into a separate License
Agreement (pursuant to which it obtained a license to certain MSI products), an
Acknowledgement and General Release (pursuant to which the operation of certain
sections of Xx. Xxxx'x prior contracts with MSI were waived
***Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Schedule 2.7
23
and the Company and Xx. Xxxx were released from claims arising out of such
released sections of the contracts).
The sale of shares of Series C Preferred Stock pursuant to the First
Closing Agreement resulted in a change of ownership of greater than 50% of the
voting power of the Company prior to the date of the First Closing Agreement.
The Company has performed all obligations and conditions required to
be performed or met by it through the date hereof under each of the Scripps
License and Scripps Option. The Scripps License is in full force and effect as
of the date hereof. The Scripps Option has not been exercised, as of the date
of the Closing. The Company will use its best efforts not to waive any rights
of the Company under the Scripps License or Scripps Option, without the consent
of a majority of the outstanding shares of Series C Preferred Stock (and shares
of the Company's capital stock issuable upon exchange or conversion of the
Series C Preferred Stock).
Schedule 2.7
24
SCHEDULE 2.8
RELATED-PARTY TRANSACTIONS
Venture capital funds affiliated with directors participated in the
Company's prior rounds of financing and will purchase shares of the Company's
Series C Preferred Stock pursuant to the Agreement. Such directors may engage
in the development and financing of other companies and/or research projects
which may be developing, or may in the future develop, products which may
compete directly, or indirectly, with the products intended to be developed by
the Company.
See Schedule 2.7(c) above.
Schedule 2.8
25
SCHEDULE 2.9
REGISTRATION RIGHTS
The Company is obligated to register shares of Common Stock issuable
upon conversion of Series Z Preferred Stock and Series C Preferred Stock
issuable upon exercise of warrants issued (or to be issued) in connection with
the Company's equipment lease lines.
Schedule 2.9
26
SCHEDULE 2.10
PERMITS
The Company is in the process of obtaining permits in connection with
certain tenant improvements being made, or planned to be made at the Company's
facility at 0000 Xxxxxx Xxxxx Xx, Xxx Xxxxx, XX 00000.
Schedule 2.10
27
SCHEDULE 2.15
TITLE TO PROPERTY AND ASSETS; LEASES
Under the terms of the Company's lease lines, Comdisco retains all
rights to the equipment purchased under such lines, with the Company having an
option to purchase at the completion of the term of the agreement.
Schedule 2.15
28
SCHEDULE 2.16
FINANCIAL STATEMENTS
The contingent severance payments due under certain employment
arrangements with the Company's employees are not reflected on the February 29,
1996 financial statements.
Schedule 2.16
29
SCHEDULE 2.18
PATENTS AND TRADEMARKS
A list of pending patent applications is attached hereto as Exhibit A
to Schedule 2.18.
The Company filed intent to use application Serial No. 74/363,514 with
the United States Patent and Trademark Office ("PTO") to register the xxxx
COMBICHEM on February 26, 1993 in Class 42 for the services of combinatorial
chemistry and molecular biology research and analysis. The application was
inadvertently abandoned and a petition to revive the application, filed on June
14, 1995 with the PTO was rejected. The Company filed a duplicate application
on June 5, 1995 in case the petition to revive was denied. This application
was suspended pending resolution of a prior application for the Company.
The Company filed intent to use application Serial No. 74/363,515 to
register the xxxx COMBICHEM on February 26, 1993 in Class 5 for the
pharmaceuticals and chemical compounds. The application was inadvertently
abandoned and a petition to revive the application was rejected. The Company
filed a duplicate application on November 15, 1994. This application was
suspended pending resolution of a prior application for the Company.
An intent to use application for the xxxx COMBISYN was filed by the
Company on February 13, 1995 and was approved from publication by the PTO. The
application was filed in Class 9 for scientific apparatus for use in
synthesizing by combinatorial chemistry small molecules for use in scientific
research.
An intent to use application for the xxxx COMBIWARE was filed by the
Company November 7, 1995 and is now pending. The application was filed in
Class 9 for computer software for use in scientific research, mainly, for the
design and maintenance of chemical libraries and the automation of molecular
synthesis in the field of combinatorial chemistry, an instruction and user
manual sold as a unit therewith.
In connection with the MSI License Agreement, the Company received
certain licenses to use MSI proprietary technology and granted to MSI an
exclusive option to negotiate a distribution agreement with respect to a
stand-alone chemical diversity measure software program.
The J&J Sublicense contains a grant-back of a non-exclusive
irrevocable royalty-free license (with the right to sublicense affiliates)
under all patent improvements for the term of the agreement.
See Schedule 2.7.
Schedule 2.18
30
SCHEDULE 2.19
MANUFACTURING AND MARKETING RIGHTS
Pursuant to the MSI License Agreement, the Company has granted to MSI
an exclusive option to negotiate a distribution agreement with respect to a
stand-alone chemical diversity measure software program.
LJL Biosystems, Inc. is preparing test models of certain of the
Company's products.
Schedule 2.19
31
SCHEDULE 2.23
INSURANCE
The Company has covenanted to certain investors to maintain key man
life insurance on the life of Xxxxxx Xxxx in the amount of $2,000,000. The
Company currently maintains only $1,350,000 in insurance on the life of Xx.
Xxxx.
Schedule 2.23
32
EXHIBIT A TO SCHEDULE 2.18
The Company has applied for a patent application entitled "A TEMPLATE
FOR SOLUTION PHASE SYNTHESIS OF COMBINATORIAL LIBRARIES", Docket Number
215/288, as of October 17, 1995.
Schedule 2.23
