DISCOVERY GENOMICS, INC.
TECHNE CORPORATION
INVESTMENT AGREEMENT
August 2, 2001
TABLE OF CONTENTS
Page
1. Definitions 1
1.1 Specific Definitions 1
1.2 Definitional Provisions 4
2. Purchase and Sale of Stock 4
2.1 Sale and Purchase of Shares; Grant of Warrants 4
2.2 Closing 4
3. Representations and Warranties by Company 5
3.1 Organization, Standing, etc 5
3.2 Qualification 5
3.3 Capital Stock 5
3.4 Financial Statements; Absence of Changes 6
3.5 Title to Properties and Encumbrances 7
3.6 Litigation; Governmental Proceedings 7
3.7 Compliance with Applicable Laws and Other Instruments 7
3.8 Preferred Shares, Warrants, Conversion Stock and Warrant Stock 7
3.9 Securities Laws 8
3.10 Patents and Other Intangible Rights 8
3.11 Outstanding Debt 8
3.12 Corporate Acts and Proceedings 8
3.13 No Brokers or Finders 9
3.14 Conflicts of Interest 9
3.15 Licenses 9
3.16 Registration Rights 9
3.17 Retirement Plans 9
3.18 Application of Proceeds 9
3.19 Disclosure 9
4. Representations and Warranties of Investors 10
4.1 Investment Intent 10
4.2 Location of Principal Office/Residence and Qualification as
Accredited Investor 10
4.3 Acts and Proceedings 10
4.4 No Brokers or Finders 10
4.5 Disclosure of Information 10
4.6 Investment Experience 11
4.7 Restricted Securities 11
4.8 Further Limitations on Disposition 11
4.9 Legends 11
5. Conditions of Investors' Obligation 11
5.1 Representations and Warranties 11
5.2 Compliance with Agreement 12
5.3 Certificate of Officers 12
5.4 Opinion of Company's Counsel 12
5.5 Qualification Under State Securities Laws 14
5.7 Co-Sale Agreement 14
5.8 Research and License Agreement 14
5.9 Employment and Consulting Agreements 14
6. Affirmative Covenants 14
6.1 Corporate Existence 14
6.2 Books of Account and Reserves 15
6.3 Furnishing of Financial Statements and Information 15
6.4 Inspection 16
6.5 Preparation and Approval of Budgets 17
6.6 Payment of Taxes and Maintenance of Properties 17
6.7 Insurance 17
6.8 Directors' and Stockholders' Meetings 17
6.9 Replacement of Certificates 18
6.10 Application of Proceeds 18
6.11 Patents and Other Intangible Rights 18
6.12 Proprietary Information and Invention Agreements 19
6.13 Rights to Purchase Additional Securities 19
6.14 Waivers of Affirmative Covenants 19
7. Negative Covenants 19
7.2 Other Restrictions 20
7.3 Waivers of Negative Covenants 20
8. Registration Rights 20
8.1 Required Registration 20
8.2 Incidental Registration 21
8.3 Registration Procedures 22
8.4 Expenses 23
8.5 Indemnification 23
8.6 Transfer; Termination and Grant of Additional Registration
Rights 25
9. Miscellaneous 25
9.1 Operating Assistance 25
9.2 Termination of Certain Covenants 26
9.3 Changes, Waivers, etc 26
9.4 Payment of Fees and Expenses 26
9.5 Notice 26
9.6 Survival of Representations and Warranties, etc 26
9.7 Parties in Interest 26
9.8 Headings 27
9.9 Arbitration 27
9.10 Choice of Law 27
9.11 Counterparts 27
Exhibits
Exhibit 1A - Articles of Incorporation
Exhibit 1B - Bylaws
Exhibit 1C - Statement of Designation
Exhibit 2 - Form of Warrant
Exhibit 3 - Exceptions to the Company's Representations and Warranties
Exhibit 4A - Employment Agreement
Exhibit 4B - Consulting Agreements
Exhibit 5 - Co-Sale Agreement
Exhibit 6 - Research and License Agreement
Schedules
Schedule A - Terms of Operating Assistance
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT is made and entered into as of the 2nd day of
August, 2001, by and between Discovery Genomics, Inc., a Minnesota corporation
and Techne Corporation, a Minnesota corporation ("Techne"), and Xxxxx Xxxxx.
1. Definitions.
1.1 Specific Definitions. As used in this Agreement, the following
terms shall have the meanings set forth or as referenced below:
"Additional Shares of Common Stock" shall mean all shares of Common
Stock of the Company issued by the Company on or after the Closing Date,
except the Conversion Stock.
"Articles of Incorporation" shall mean the Company's Articles of
Incorporation, including the Statement of Designation, in effect as of the
date hereof.
"Bylaws" shall mean the Company's Bylaws in effect as of the date
hereof.
"Closing" is defined in Section 2.2.
"Closing Date" is defined in Section 2.2.
"Commission" shall mean the U.S. Securities and Exchange Commission.
"Common Stock" shall mean the Company's authorized common stock, par
value $0.01 per share, any additional common shares which may be
authorized in the future by the Company, and any stock into which such
common shares may hereafter be changed, and shall also include stock of
the Company of any other class which is not preferred as to dividends or
as to distributions of assets on liquidation, dissolution or winding up of
the Company over any other class of stock of the Company, and which is not
subject to redemption.
"Company" shall mean Discovery Genomics, Inc., a Minnesota corporation.
"Conversion Price" shall mean such price at which the Preferred
Shares are convertible into Common Stock pursuant to Section 11 hereof and
the Statement of Designation.
"Conversion Stock" shall mean the shares of Common Stock issuable
upon conversion of the Preferred Shares and all securities issued in
exchange or substitution therefore.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are at any time directly or
indirectly convertible into or exchangeable for Additional Shares of
Common Stock.
"Co-Sale Agreement" shall mean the Co-Sale Agreement, substantially
in the form attached as Exhibit 5 hereto, dated of even date herewith, by
and between the Company, the Investors, Hackett, Ekker, XxXxxx and
Xxxxxxxxxxx.
"Xxxxx" shall mean Xxxxxxx X. Xxxxx.
"GAAP" shall mean United States generally accepted accounting
principles, applied on a consistent basis.
"Xxxxxxx" shall mean Xxxxx X. Xxxxxxx.
"Indebtedness for Borrowed Money" shall include only indebtedness of
the Company and its Subsidiaries incurred as the result of a direct
borrowing of money and shall not include any other indebtedness including,
but not limited to, indebtedness incurred with respect to trade accounts.
"Investors" shall mean Techne and Xxxxx, collectively.
"Xxxxxxxxxxx" shall mean Xxxxx X. Xxxxxxxxxxx.
"Xxxxx" shall mean Xxxxx Xxxxx.
"XxXxxx" shall mean R. Xxxxx XxXxxx.
"Permitted Liens" shall mean (a) liens for taxes and assessments or
governmental charges or levies not at the time due or in respect of which
the validity thereof shall currently be contested in good faith by
appropriate proceedings; and (b) liens in respect of pledges or deposits
under worker's compensation laws or similar legislation, carriers',
warehousemen's, mechanics', laborers' and materialmen's, landlord's and
statutory and similar liens, if the obligations secured by such liens are
not then delinquent or are being contested in good faith, and (c) liens
and encumbrances incidental to the conduct of the business of the Company
or any Subsidiary which were not incurred in connection with the borrowing
of money or the obtaining of advances or credits and which do not in the
aggregate materially detract from the value of its property or materially
impair the use thereof in the operation of its business.
"Preferred Shares" is defined in Section 2.1.
"Public Offering" shall mean a firm underwritten public offering of
the Company's Common Stock pursuant to a registration filed under the
Securities Act and through NASD member firms.
"Purchased Stock" shall mean the Preferred Shares, the Conversion
Stock, the Warrant Stock and the stock or other securities of the Company
issued in a stock split or reclassification of, or a stock dividend or
other distribution on or in substitution or exchange for, or otherwise in
connection with, any of the foregoing securities, or in a merger or
consolidation involving the Company or a sale of all or substantially all
of the Company's assets.
"Qualified Public Offering" shall mean a firm commitment,
underwritten public offering registered under the Securities Act (other
than a registration relating solely to a transaction under Rule 145 under
such Act (or any successor thereto) or to an employee benefit plan of the
Company), in which the public offering price per share of Common Stock is
at least $10.00 (appropriately adjusted to reflect splits or reverse
splits of the Common Stock and dividends or distributions of additional
shares of Common Stock made with respect to the Common Stock after the
date hereof) and the aggregate public offering price of the securities
sold for cash by the Corporation in the offering is at least $30 million.
"Registrable Shares" are defined in Section 8.1.
"Research and License Agreement" shall mean the Research and License
Agreement, substantially in the form attached hereto as Exhibit 6, dated
of even date herewith, by and between the Company and R&D Systems.
"R&D Systems" shall mean Research & Diagnostic Systems, Inc., a
subsidiary of the Techne.
"Securities" shall mean the Preferred Shares, Warrants, Conversion
Stock and Warrant Stock.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Indebtedness" shall mean (a) the principal of all
Indebtedness for Borrowed Money of the Company and its Subsidiaries to
banks, insurance companies or other financial institutions, (b) the
present value of net minimum lease payments of all leases under which the
Company or any of its Subsidiaries is the lessee and which are required to
be capitalized under generally accepted accounting principles, (c) the
principal of all indebtedness of the Company or any of its Subsidiaries
under installment purchase agreements, and (d) the principal of all
indebtedness of the Company or any of its Subsidiaries to the owners of
any real property leased by the Company for leasehold improvements
financed by such owners.
"Series A Preferred Stock" shall mean the Company's authorized
Series A Preferred Stock, par value $0.01 per share, and any stock into
which such preferred shares may hereafter be changed.
"Statement of Designation" shall mean the Series A Preferred Stock
Statement of Designation attached hereto at Exhibit 1C.
"Subsidiary" shall mean any corporation, association or other
business entity more than a majority (by number of votes) of the voting
stock of which is owned or controlled, directly or indirectly, by the
Company or by one or more of its Subsidiaries or both.
"Transaction Agreements" shall mean this Agreement, the Research and
License Agreement and the Co-Sale Agreement.
"Warrants" are defined in Section 2.1.
"Warrant Stock" shall mean the shares of Series A Preferred Stock
issuable upon exercise of the Warrants and all shares of Series A
Preferred Stock or Common Stock issued in exchange or substitution
therefor.
1.2 Definitional Provisions.
(a) The words "hereof," "herein," and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement
as a whole and not to any particular provisions of this Agreement.
(b) Terms defined in the singular shall have a comparable meaning
when used in the plural, and vice-versa.
(c) References to an "Exhibit" or to a "Schedule" are, unless
otherwise specified, to one of the Exhibits or Schedules attached to or
referenced in this Agreement, and references to a "Section" or "paragraph"
are, unless otherwise specified, to one of the Sections or paragraphs of
this Agreement.
(d) All accounting terms defined below shall, except as otherwise
expressly provided, be determined by reference to the Company's books of
account and in conformity with generally accepted accounting principles as
applied to such books of account in the opinion of the independent
certified public accountants selected by the Board of Directors of the
Company as required under the provisions of Section 6.3(b) hereof.
(e) The term "person" includes any individual, partnership, joint
venture, corporation, trust, unincorporated organization or government or
any department or agency thereof.
(f) Terms not defined in this Section 1 shall have the meanings set
forth herein for such terms.
2. Purchase and Sale of Stock.
2.1 Sale and Purchase of Shares; Grant of Warrants. Subject to and in
accordance with the terms and conditions hereof, (i) the Company agrees to sell
to the Techne, and the Techne agrees to purchase from the Company, 1,500,000
shares of Series A Preferred Stock at $2.00 per share, and (ii) the Company
agrees to sell to Xxxxx, and Xxxxx agrees to purchase from the Company, 100,000
shares of Series A Preferred Stock at $2.00 per share. The term "Preferred
Shares" as used herein shall mean the 1,600,000 shares of Series A Preferred
Stock purchased in accordance with this Agreement and all shares of the
Company issued in a stock split or reclassification of, or a stock dividend or
other distribution on, such Preferred Shares or in exchange, conversion or
substitution therefor. Furthermore, the Company agrees to issue to Techne and
Xxxxx Warrants to purchase 1,500,000 and 100,000 shares of Series A Preferred
Stock, respectively, pursuant to and in accordance with the terms of this
Agreement, in the form attached hereto as Exhibit 2. The term "Warrants" as
used herein shall mean the warrants so issued.
2.2 Closing. The closing of the sale to, and purchase by, the Investors
of the Preferred Shares (the "Closing") and the issuance of the Warrants shall
occur at the offices of the Techne, at 10:00 A.M., Minneapolis time, on August
2, 2001 or on such other day or at such other time or place as the Investors and
the Company shall agree upon (the "Closing Date").
At the Closing, the Company will deliver to the Investors certificates
representing the Preferred Shares being purchased by the Investors and the
Warrants to be granted to the Investors, registered in their respective names,
against delivery to the Company of checks or wire transfers in the aggregate
amount of $3,200,000 in payment of the total purchase price of the Preferred
Shares being purchased by the Investors, of which $3,000,000 shall be tendered
by Techne and $200,000 shall be tendered by Xxxxx.
3. Representations and Warranties by Company. Except as disclosed in Exhibit
3 hereto (specifying the Section or Sections making reference to certain
disclosures), the Company represents and warrants to the Investors that:
3.1 Organization, Standing, etc. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Minnesota, and has the requisite corporate power and authority to own its
properties and to carry on its business in all material respects as it is now
being conducted. The Company has the requisite corporate power and authority to
issue the Preferred Shares, the Warrants, the Conversion Stock and the Warrant
Stock, and to otherwise perform its obligations under the Transaction
Agreements. The certified copies of the Articles of Incorporation, Bylaws and
Statement of Designation of the Company, attached hereto as Exhibits 1A, 1B and
1C, respectively, are true and complete copies of the duly authorized Articles
of Incorporation and Bylaws of the Company in effect as of the date of this
Agreement. The Company does not have any direct or indirect equity interest in
any other firm, corporation, partnership, joint venture association or other
business organization except as set forth in Exhibit 3 hereto. If the Company
has any Subsidiary, the representations and warranties set forth in this
Section 3 are being hereby restated with respect to such Subsidiary.
3.2 Qualification. The Company is duly qualified or licensed as a
foreign corporation in good standing in each jurisdiction wherein the nature
of its activities or of its properties owned or leased makes such qualification
or licensing necessary and failure to be so qualified or licensed would have a
material adverse impact on its business.
3.3 Capital Stock. The authorized capital stock of the Company consists
of 75,000,000 shares of Common Stock (of which 2,293,300 shares are issued and
outstanding as of the date hereof) and 3,200,000 shares of Series A Preferred
Stock (of which no shares are issued and outstanding as of the date hereof)
and 21,800,000 undesignated shares. The rights and preferences of the
Company's Common Stock and Series A Preferred Stock are as provided in the
Company's Articles of Incorporation. All of the Company's outstanding shares
of capital stock were duly authorized and validly issued and are fully paid
and nonassessable. There are no outstanding subscriptions, options, warrants,
calls, contracts, demands, commitments, Convertible Securities or other
agreements or arrangements of any character or nature whatever, except as
disclosed in Exhibit 3 hereto or as contemplated by this Agreement, under
which the Company is or may be obligated to issue capital stock or other
securities of any kind representing an ownership interest or contingent
ownership interest in the Company. Except as otherwise disclosed in Exhibit
3 hereto, neither the offer nor the issuance or sale of the Securities,
constitutes an event, under any anti-dilution provisions of any securities
issued or issuable by the Company or any agreements with respect to the
issuance of securities by the Company, which will either increase the number
of shares issuable pursuant to such provisions or decrease the consideration
per share to be received by the Company pursuant to such provisions. No holder
of any security of the Company is entitled to any preemptive or similar rights
to purchase securities from the Company which has not been irrevocably waived,
in writing, a copy of which waiver has been delivered to the Investors;
provided, however, that nothing in this Section 3 shall affect, alter or
diminish any right granted to the Investors in this Agreement. All outstanding
securities of the Company have been issued in full compliance with an exemption
or exemptions from the registration and prospectus delivery requirements of the
Securities Act and from the registration and qualification requirements of all
applicable state securities laws.
3.4 Financial Statements; Absence of Changes. The Company has delivered
to the Investors an unaudited balance sheet as at June 30, 2001 and a statement
of operations for the six-month period ended June 30, 2001. Such financial
statements and notes thereto fairly present the financial condition and the
results of operations of the Company, all in accordance with GAAP. Such
financial statements accurately set out and describe the financial condition
and operating results of the Company as of the dates, and during the periods,
indicated therein. The Company has no liabilities except for liabilities
reflected or reserved against in the balance sheets of such financial
statements and current liabilities incurred in the ordinary course of business
since the respective dates thereof. Since June 30, 2001 (the date of the
latest financial statements) there has not been:
(a) any change in the assets, liabilities, financial condition or
operating results of the Company from that reflected in such financial
statements;
(b) any damage, destruction or loss, whether or not covered by
insurance, affecting the assets, properties, financial condition, operating
results, prospects or business of the Company as such business is presently
conducted;
(c) any waiver by the Company of a valuable right or of a debt owed to
it;
(d) any satisfaction or discharge of any lien, claim or encumbrance or
payment of any obligation by the Company;
(e) any change or amendment to a contract or arrangement by which the
Company or any of its assets or properties are bound or subject;
(f) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets of the Company;
(g) any resignation or termination of employment of any key officer or
key employee of the Company, and the Company is not aware of any impending
resignation or termination of employment of any such officer or key employee;
(h) any mortgage, pledge, transfer of a security interest in, or lien,
created by the Company, with respect to any of its properties or assets,
except liens for taxes not yet due or payable;
(i) any loans or guarantees made by the Company to or for the benefit
of its employees, officers or directors, or any members of their immediate
families;
(j) any declaration, setting aside or payment or other distribution in
respect of any of the Company's capital stock, or any direct or indirect
redemption, purchase or other acquisition of any of such stock by the Company;
or
(k) any event or condition of any character that might adversely affect
the assets, properties, financial condition, operating results or business of
the Company as such business is presently conducted.
3.5 Title to Properties and Encumbrances. The Company has good and
marketable title to all its owned properties and assets, and the properties and
assets used in the conduct of its business, which properties and assets are not
subject to any mortgage, pledge, lease, lien, charge, security interest,
encumbrance or restriction, except (a) those which are shown and described in
the financial statements delivered to the Investors or the notes thereto and
(b) Permitted Liens.
3.6 Litigation; Governmental Proceedings. There are no legal actions,
suits, arbitrations or other legal, administrative or governmental proceedings
or investigations pending or, to the knowledge of the Company, threatened
against the Company, its properties, assets or business, and the Company is not
aware of any facts which are likely to result in or form the basis for any such
action, suit or other proceeding. The Company is not in default with respect
to any judgment, order or decree of any court or any governmental agency or
instrumentality.
3.7 Compliance with Applicable Laws and Other Instruments. The business
and operations of the Company have been and are being conducted in accordance
with all applicable laws, rules and regulations of all governmental authorities,
the violation of which could reasonably be expected to have a material adverse
impact on the Company. Neither the execution nor delivery of, nor the
performance of or compliance with, the Transaction Agreements nor the
consummation of the transactions contemplated hereby will conflict with, or,
with or without the giving of notice or passage of time, result in any breach
of, or constitute a default under, or result in the imposition of any lien or
encumbrance upon any asset or property of the Company pursuant to, any
applicable law, administrative regulation or judgment, order or decree of any
court or governmental body, any material agreement or other instrument to which
the Company is a party or by which it or any of its properties, assets or
rights is bound or affected, and will not violate the Company's Articles of
Incorporation or Bylaws. The Company is not in violation of its Articles of
Incorporation or its Bylaws nor in violation of, or in default under, any lien,
indenture, mortgage, lease, material agreement, instrument, commitment or
arrangement in any material respect. There are no consents required to
consummate the transactions contemplated hereby, which have not been obtained,
under any lien, indenture, mortgage, lease, material agreement, instrument,
commitment or arrangement to which the Company is a party.
3.8 Preferred Shares, Warrants, Conversion Stock and Warrant Stock. The
Preferred Shares, when issued and paid for pursuant to the terms of this
Agreement, will be duly authorized, validly issued and outstanding, fully
paid and non-assessable, free and clear of all pledges, liens and
encumbrances. The Warrants, when issued and delivered pursuant to this
Agreement, will constitute valid and binding obligations of the Company in
accordance with their terms. The Conversion Stock and the Warrant Stock have
been reserved for issuance based upon the initial Conversion Price and initial
Warrant Exercise Price and when issued upon conversion or exercise thereof in
accordance with the Articles of Incorporation and the terms of the Warrants
will be duly authorized, validly issued and outstanding, fully paid,
nonassessable and free and clear of all pledges, liens and encumbrances.
The certificates representing the Preferred Shares and Warrants to be delivered
by the Company hereunder, and the certificates representing the Conversion
Stock to be delivered upon the conversion of the Preferred Shares and Warrant
Stock and the certificates representing the Warrant Stock to be delivered upon
exercise of the Warrants, will be genuine, and the Company has no knowledge of
any fact which would impair the validity thereof.
3.9 Securities Laws. Based in part upon the representations and
warranties contained in Section 4 hereof, no consent, authorization, approval,
permit or order of or filing with any governmental or regulatory authority is
required under current laws and regulations in connection with the execution
and delivery of the Transaction Agreements or the offer, issuance, sale or
delivery of the Securities other than the qualification thereof, if required,
under applicable state securities laws, which qualification has been or will be
effected as a condition of this sale. The Company has not, directly or through
an agent, offered the Securities, or any similar securities for sale to, or
solicited any offers to acquire such securities from, persons other than the
Investors and other accredited investors. Under the circumstances contemplated
hereby, the offer, issuance, sale and delivery of the Preferred Shares, the
issuance of the Warrants, the offer of the Conversion Stock and Warrant Stock
will not under current laws and regulations require compliance with the
prospectus delivery or registration requirements of the Securities Act.
3.10 Patents and Other Intangible Rights. Except as otherwise set forth
in Exhibit 3 hereto, the Company (a) owns or has the exclusive right to use,
free and clear of all material liens, claims and restrictions, all of the
right, title and interest in all patents, trademarks, service marks, trade
names, copyrights, licenses, rights and other intellectual property necessary
to conduct its business as currently being conducted or as proposed to be
conducted, (b) is not obligated or under any liability to make any payments of
a material nature by way of royalties, fees or otherwise to any owner of,
licensor of, or other claimant to, any patent, trademark, trade name, copyright
or other intangible asset, with respect to the use thereof or in connection
with the conduct of its business or otherwise, (c) owns or has the unrestricted
right to use all trade secrets, including know-how, inventions, designs,
processes, computer programs and technical data necessary to the development,
operation and sale of all products and services sold or proposed to be sold by
it, free and clear of any rights, liens or claims of others, and (d) is not
using any confidential information or trade secrets of others. To the best of
its knowledge, the Company is not, nor has it received actual notice that it
is, infringing upon or otherwise acting adversely to any known right or
claimed right of any person under or with respect to any patents, trademarks,
service marks, trade names, copyrights, licenses or rights with respect to the
foregoing. Each of the Company's employees have signed a proprietary
information and inventions agreement in a form approved by the Company's Board
of Directors.
3.11 Outstanding Debt. The Company has no Indebtedness for Borrowed
Money except as set forth in Exhibit 3 hereto. The Company is not in default
in the payment of the principal of or interest or premium on any such
Indebtedness for Borrowed Money, and no event has occurred or is continuing
under the provisions of any instrument, document or agreement evidencing or
relating to any such Indebtedness for Borrowed Money which with the lapse of
time or the giving of notice, or both, would constitute an event of default
thereunder.
3.12 Corporate Acts and Proceedings. The Transaction Agreements and all
transactions contemplated thereby have been duly authorized by all necessary
corporate action on behalf of the Company. The Transaction Agreements have has
been duly executed and delivered by authorized officers of the Company. All
corporate action necessary to the authorization, creation, issuance and
delivery of the Securities, has been taken on the part of the Company, or will
be taken by the Company on or prior to the Closing Date. The Transaction
Agreements are valid and binding agreements of the Company enforceable in
accordance with their respective terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting the enforcement of creditors' rights generally, and
except for judicial limitations on the enforcement of the remedy of specific
enforcement and other equitable remedies.
3.13 No Brokers or Finders. No person, firm or corporation has or will
have, as a result of any act or omission of the Company, any right, interest or
valid claim against or upon the Company or any Investors for any commission,
fee or other compensation as a finder or broker, or in any similar capacity, in
connection with the transactions contemplated by this Agreement. The Company
will indemnify and hold each of the Investors harmless against any and all
liability with respect to any such commission, fee or other compensation which
may be payable or determined to be payable in connection with the transactions
contemplated by this Agreement.
3.14 Conflicts of Interest. Except as disclosed on Exhibit 3 hereto, no
officer, director or stockholder of the Company or any affiliate (as such term
is defined in Rule 405 under the Securities Act) of any such person has any
direct or indirect interest (a) in any entity which does business with the
Company, or (b) in any property, asset or right which is used by the Company
in the conduct of its business or (c) in any contractual relationship with
the Company other than as an employee.
3.15 Licenses. The Company possesses from the appropriate agency,
commission, board and government body and authority, whether state, local or
federal, all licenses, permits, authorizations, approvals, franchises and
rights which (a) are necessary for it to engage in the business currently
conducted by it and (b) if not possessed by the Company, would have a material
adverse impact on the Company's business. The Company has no knowledge that
would lead it to believe that it will not be able to obtain all material
licenses, permits, authorizations, approvals, franchises and rights that may
be required for any business the Company proposes to conduct.
3.16 Registration Rights. Except as disclosed on Exhibit 3 hereto or
contemplated by this Agreement, the Company has not granted, and is not
obligated to grant, any registration rights under the Securities Act relating
to any of its authorized or outstanding securities, which registration rights
are superior or preferential to those granted to the Investors pursuant to
this Agreement.
3.17 Retirement Plans. The Company does not have any retirement plan in
which any employees of the Company participate that is subject to any
provisions of the Employee Retirement Income Security Act of 1974, as amended,
and of the regulations adopted pursuant thereto ("ERISA").
3.18 Application of Proceeds. The proceeds from the issue and sale of
the Preferred Shares pursuant to this Agreement will be used to fund working
capital and other general corporate purposes.
3.19 Disclosure. The Company has not knowingly withheld from the
Investors any material facts relating to the assets, business, operations,
financial condition or prospects of the Company. No representation or
warranty in the Transaction Agreements or in any certificate, schedule,
statement, exhibit, annex or other document furnished or to be furnished to
the Investors pursuant thereto or in connection with the transactions
contemplated thereby contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact required to
be stated herein or therein or necessary to make the statements herein or
therein not misleading.
4. Representations and Warranties of Investors. Unless specifically
identified as a representation or warranty of Techne or Xxxxx, each Investor
hereby severally, and not jointly, represents and warrants that:
4.1 Investment Intent. The Securities being acquired by each Investor
hereunder or that will be acquired upon conversion of the Preferred Shares or
Warrant Stock or exercise of the Warrants are being or will be acquired, for
such Investor's own account, not as a nominee or agent, and not with a view
to, or for resale in connection with, any distribution or public offering
thereof within the meaning of the Securities Act and that such Investor has
no present intention of selling, granting, any participation in, or otherwise
distributing the same. By executing this Agreement, such Investor further
represents that such Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of
the Securities. Each Investor understands that the Securities have not been
registered under the Securities Act or any applicable state laws by reason
of their issuance or contemplated issuance in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act and
such laws, and that the reliance of the Company and others upon this
exemption is predicated in part upon this representation and warranty. Each
Investor further understands that the Securities may not be transferred or
resold without (a) registration under the Securities Act and any applicable
state securities laws, or (b) an exemption from the requirements of the
Securities Act and applicable state securities laws.
4.2 Location of Principal Office/Residence and Qualification as
Accredited Investor. Techne's principal office is located in the State of
Minnesota. Xxxxx is a resident of the State of Minnesota. Each Investor
qualifies as an accredited investor within the meaning of Rule 501 under the
Securities Act. Techne also represents it has not been organized for the
purpose of acquiring the Series A Preferred Stock.
4.3 Acts and Proceedings. Each Investor has full power and authority to
enter into this Agreement. This Agreement has been duly authorized by all
necessary corporate action on the part of Techne. This Agreement has been
duly executed and delivered by each Investor and is a valid and binding
agreement upon each Investor.
4.4 No Brokers or Finders. No person, firm or corporation has or will
have, as a result of any act or omission by such Investor, any right, interest
or valid claim against the Company for any commission, fee or other
compensation as a finder or broker, or in any similar capacity, in connection
with the transactions contemplated by this Agreement.
4.5 Disclosure of Information. Such Investor believes it has received
all the information it considers necessary or appropriate for deciding whether
to acquire the Preferred Shares and Warrants. Such Investor further
represents that it/he has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of the offering of
the Series A Preferred Stock and the business, properties, prospects and
financial condition of the Company. The foregoing, however, does not limit
or modify the representations and warranties of the Company in Section 3 of
this Agreement or the right of each Investor to rely thereon.
4.6 Investment Experience. Such Investor is an investor in securities
of companies in the development stage and acknowledges that such Investor is
able to fend for itself/himself, can bear the economic risk of its/his
investment, and has such knowledge and experience in financial or business
matters that such Investor is capable of evaluating the merits and risks of
the investment in the Securities.
4.7 Restricted Securities. Such Investor understands that the
Securities it/he is purchasing are characterized as "restricted securities"
under the federal securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Act, only in certain limited circumstances. In this
connection, such Investor represents that it/he is familiar with Commission
Rule 144, as presently in effect, and understands the resale limitations
imposed thereby and by the Act.
4.8 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, each Investor further agrees not to make any
disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 4, and:
(a) There is then in effect a registration statement under the Securities
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) (i) Such Investor shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and (ii) if reasonably
requested by the Company, such Investor shall have furnished the Company with
an opinion of counsel, reasonably satisfactory to the Company that such
disposition will not require registration of such shares under the Act. It is
agreed that the Company will not require opinions of counsel for transactions
made pursuant to Rule 144 except in unusual circumstances.
4.9 Legends. It is understood that the certificates evidencing the
Securities may bear one or all of the following legends:
(a) "These securities have not been registered under the Securities Act
of 1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with respect
to the securities under such Act or an opinion of counsel satisfactory to the
Company that such registration is not required or unless sold pursuant to Rule
144 of such Act."
(b) Any legend required by state securities laws.
5. Conditions of Investors' Obligation. The respective obligation to
purchase and pay for the Preferred Shares which each Investor has agreed to
purchase on the Closing Date is subject to the fulfillment prior to or on the
Closing Date of the following conditions:
5.1 Representations and Warranties. The representations and warranties
of the Company under this Agreement shall be true in all material respects as
of each Closing Date with the same effect as though made on and as of each
Closing Date.
5.2 Compliance with Agreement. The Company shall have performed and
complied with all agreements, covenants and conditions required by this
Agreement and by the Research and License Agreement attached hereto as Exhibit
6 to be performed and complied with by it prior to or as of the Closing Date.
5.3 Certificate of Officers. The Company shall have delivered to the
Investor a certificate, dated as of the Closing Date, executed by the senior
executive officer and the senior financial officer of the Company and
certifying to the satisfaction of the conditions specified in this Section 5.
5.4 Opinion of Company's Counsel. On the Closing Date coincident with
the date of this Agreement only, the Company shall have delivered to the
Investors an opinion of Xxxx & Xxxxxxx, counsel for the Company, dated the
Closing Date, to the effect that:
(a) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
Minnesota; has the corporate power and authority to enter into the
Transaction Agreements, to issue and sell the Securities as contemplated
by the Transaction Agreements, and to carry out the provisions of the
Transaction Agreements; has the corporate power and authority to own and
hold its properties owned and leased and to carry on the business in which
it is engaged; and has not failed to qualify to do business as a foreign
corporation in good standing in any state or jurisdiction wherein the
nature of its activities or of its properties owned or leased makes such
qualification necessary and failure to be so qualified would have a
material adverse effect upon the Company.
(b) The Transaction Agreements have been duly authorized, executed
and delivered by the Company, and constitute legal, valid and binding
agreements of the Company enforceable in accordance with their respective
terms.
(c) The Statement of Designation, in the form set forth in
Exhibit 1C hereto, have been duly adopted by all necessary corporate
action, and have been duly filed with the Secretary of State of the State
of Minnesota (no other or additional filing or recording being necessary
in order for the holders of the Preferred Shares to obtain the rights and
privileges of the Preferred Shares provided in the Articles of
Incorporation).
(d) The Company is authorized by its Articles of Incorporation to
issue 75,000,000 shares of Common Stock, 3,200,000 shares of Series A
Preferred Stock and 21,800,000 undesignated shares. Other than the Series
A Preferred Stock to be issued pursuant to this Agreement, there are no
shares of Series A Preferred Stock issued and outstanding. There are
2,293,300 shares of Common Stock duly issued and outstanding, all of which
are, to our knowledge, fully paid and nonassessable. The issuance and
sale of such outstanding shares of Common Stock were exempt from
registration under the Securities Act and such shares were issued in
conformity with the permit or qualification requirements of all applicable
state securities laws. Except for such preferred shares and such common
shares, the Company has no other authorized or outstanding series or class
of capital stock. Except for (i) the conversion privileges of the Series
A Preferred Stock, (ii) the Warrants and the 1,600,000 shares of Series A
Preferred Stock reserved for issuance pursuant to the exercise of the
Warrants to be issued pursuant to this Agreement and (iii) 600,000 shares
of Common Stock reserved for issuance pursuant to the Company's 2001
Equity Incentive Plan there are no preemptive rights or, to our knowledge,
options, warrants, conversion privileges or other rights (or agreements
for any such rights) outstanding to purchase or otherwise obtain from the
Company any of the Company's equity securities. To the knowledge of such
counsel, except as set forth on Exhibit 3 hereto, there are no agreements
or understandings on the part of the Company with respect to the
registration of any securities of the Company under the Securities Act,
other than those granted under this Agreement, and there are no
obligations on the part of the Company to purchase or redeem any
outstanding shares of capital stock of the Company.
(e) The respective rights, privileges, restrictions and preferences
of the Series A Preferred Stock are as stated in the Statement of
Designation.
(f) The Preferred Shares to be purchased at the Closing have been
duly authorized and, upon payment for and delivery of such securities in
accordance with the terms of this Agreement, will be validly issued, fully
paid and nonassessable. The certificates for the Preferred Shares when
issued, will be in valid and sufficient form, and the Preferred Shares are
entitled to the benefits of this Agreement applicable thereto. The
Conversion Stock has been duly authorized and reserved for issuance upon
conversion of the Series A Preferred Stock and when issued upon such
conversion in accordance with the terms and conditions of the Statement of
Designation, the Conversion Stock will be duly authorized and issued and
will be fully paid and nonassessable.
(g) The Warrants have been duly authorized and, when issued in
accordance with the terms and conditions of this Agreement, will be duly
authorized and issued. The Warrant Stock has been duly authorized and
reserved for issuance upon exercise of the Warrants and when issued upon
such exercise in accordance with the terms and conditions of the Warrants
and those of this Agreement, the Warrant Stock will be duly authorized and
issued and will be fully paid and nonassessable.
(h) All corporate proceedings required by law or by the provisions
of the Transaction Agreements to be taken by the Board of Directors and
the stockholders of the Company on or prior to the Closing Date in
connection with the execution and delivery of the Transaction Agreement,
the offer, issuance and sale of the Securities, and in connection with the
consummation of the transactions contemplated by the Transaction
Agreements, have been duly and validly taken.
(i) All consents, approvals, permits, orders or authorizations of,
and all qualifications, registrations, designations or declarations with,
any federal or Minnesota corporate authority on the part of the Company
required in connection with the execution and delivery of the Transaction
Agreements and consummation of the transactions contemplated thereby have
been obtained, and are effective, and we are not aware of any proceedings,
or written threat of any proceedings, that question the validity thereof.
(j) The Company's execution and delivery of, and its performance
and compliance as of the date hereof with the terms of, the Transaction
Agreements do not violate any provision of any federal, or Minnesota
corporate law, rule or regulation applicable to the Company or any
provision of the Company's Articles of Incorporation or Bylaws and do not
conflict with or constitute a default under the provisions of any
judgment, writ, decree or order to which the Company is bound or any
material agreement to which the Company is a party.
(k) Assuming the accuracy of the representations of the Investors
set forth in Section 4 hereof, the offer, sale, issuance and delivery of
the Preferred Shares, the grant and issuance of the Warrants and the offer
of the Conversion Stock and Warrant Stock to the Investors through
conversion by it of the Preferred Shares or Warrant Stock or exercise by
it of the Warrants under the circumstances contemplated by the Articles of
Incorporation, the Warrants and this Agreement are exempt from the
registration and prospectus delivery requirements of the Securities Act,
and all registrations, qualifications, permits and approvals required
under applicable state securities laws for the lawful offer, sale,
issuance and delivery of the Preferred Shares, the grant and issuance of
the Warrants and the offer of the Conversion Stock and Warrant Stock shall
have been obtained.
(m) Such counsel has no knowledge of any litigation, proceeding or
governmental investigation pending or threatened against the Company, its
key management employees, properties or business which, if determined
adversely to the Company, would have a material adverse effect upon the
financial condition, operations, results of operations or business of the
Company.
5.5 Qualification Under State Securities Laws. All registrations,
qualifications, permits and approvals required under applicable state
securities laws for the lawful execution and delivery of this Agreement and
the offer, sale, issuance and delivery of the Preferred Shares, the grant
and issuance of the Warrants and the offer of the Conversion Stock and
Warrant Stock shall have been obtained.
5.6 Proceedings and Documents. All corporate and other proceedings and
actions taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and documents mentioned herein
or incident to any such transaction shall be satisfactory in form and
substance to the Investors and their respective counsel.
5.7 Co-Sale Agreement. The Company, Hackett, Ekker, XxXxxx and
Xxxxxxxxxxx shall have entered into a Co-Sale Agreement with the Investors
substantially in the form of Exhibit 5 hereto.
5.8 Research and License Agreement. R&D Systems and the Company shall
have entered into a Research and License Agreement substantially in the form
of Exhibit 6 hereto.
5.9 Employment and Consulting Agreements. Xxxxxxx shall have entered
into the Employment Agreement attached hereto as Exhibit 4A and each of Xxxxx,
XxXxxx and Xxxxxxxxxxx shall have entered into their respective Consulting
Agreements attached hereto as Exhibit 4B.
6. Affirmative Covenants. The Company covenants and agrees that:
6.1 Corporate Existence. The Company will maintain its corporate
existence in good standing and comply with all applicable laws and
regulations of the United States or of any state or states thereof or of any
political subdivision thereof and of any governmental authority where failure
to so comply would have a material adverse impact on the Company or its
business or operations.
6.2 Books of Account and Reserves. The Company will keep books of
record and account in which full, true and correct entries are made of all of
its and their respective dealings, business and affairs, in accordance with
generally accepted accounting principles. The Company will employ certified
public accountants selected by the Board of Directors of the Company who are
"independent" within the meaning of the accounting regulations of the
Commission and have annual audits made by such independent public accountants
in the course of which such accountants shall make such examinations, in
accordance with generally accepted auditing standards, as will enable them to
give such reports or opinions with respect to the financial statements of the
Company and its Subsidiaries as will satisfy the requirements of the
Commission in effect at such time with respect to certificates and opinions
of accountants.
6.3 Furnishing of Financial Statements and Information. The Company
will deliver to Investors:
(a) as soon as practicable, but in any event within 30 days after
the close of each month, unaudited balance sheets of the Company as of the
end of such month, together with the related statements of operations for
such month, setting forth the budgeted figures for such month prepared and
submitted in connection with the Company's annual plan as required under
Section 6.5 hereof and in comparative form figures for the corresponding
month of the previous fiscal year, all in reasonable detail and certified
by an authorized officer of the Company, subject to year-end adjustments;
(b) as soon as practicable, but in any event within 90 days after
the end of each fiscal year, a balance sheet of the Company, as of the end
of such fiscal year, together with the related statements of operations,
stockholders' equity and cash flow for such fiscal year, setting forth in
comparative form figures for the previous fiscal year, all in reasonable
detail and duly certified independent public accountants selected by the
Board of Directors of the Company, which accountants shall have given the
Company an opinion, unqualified as to the scope of the audit, regarding
such statements;
(c) concurrently with the delivery of any financial statements
referred to in paragraphs (a) and (b) of this Section 6.3, current
schedules of Indebtedness for Borrowed Money and Senior Indebtedness
together with a certificate of the President and the principal accounting
officer of the Company to the effect that such schedules are accurate and
correct and that there exists no condition or event which constitutes an
event of default with respect to any indebtedness of the Company, or, if
any such condition or event exists, specifying the nature and period of
existence thereof and what action the Company is taking or proposes to
take with respect thereto;
(d) within 90 days after the end of each fiscal year, written
notice of the current Conversion Price and Warrant Exercise Price,
including a brief statement indicating any adjustments reasonably
anticipated;
(e) promptly after the submission thereof to the Company, copies of
all reports and recommendations submitted by independent public
accountants in connection with any annual or interim audit of the accounts
of the Company or any of its Subsidiaries made by such accountants;
(f) promptly upon transmission thereof, copies of all reports,
proxy statements, registration statements and notifications filed by it
with the Commission pursuant to any act administered by the Commission or
furnished to stockholders of the Company or to any national securities
exchange;
(g) with reasonable promptness, such other financial data relating
to the business, affairs and financial condition of the Company as is
available to the Company and as from time to time the Investors may
reasonably request;
(h) promptly following the issuance of any Additional Shares of
Common Stock or of any Convertible Securities, or any options, warrants or
other rights to purchase Additional Shares of Common Stock or Convertible
Securities written notice of the amount of securities so issued and the
total consideration received therefor;
(i) at least 20 days prior to the earlier of the holding of any
meeting of the stockholders of the Company for the purpose of approving
such action, written notice of the terms and conditions of such proposed
merger, consolidation, plan of exchange, sale, transfer or other
disposition;
(j) within 15 days after the Company learns in writing of the
commencement or threatened commencement of any material suit, legal or
equitable, or of any claim or assertion that the Company or any of its
products infringes on the patent rights or other intellectual property
rights of any person or party, or of any material administrative,
arbitration or other proceeding against the Company, any of its
Subsidiaries or their respective businesses, assets or properties, written
notice of the nature and extent of such suit or proceeding;
The financial statements that the Company will deliver to the Investors in
accordance with provisions of Section 6.3 hereof shall fairly present the
financial condition and the results of operations, and as to audited
statements, changes in stockholder's equity and cash flow of the Company as at
the respective dates and for the periods referred to in such financial
statements, all in accordance with GAAP, subject in the case of interim
financial statements, to normal recurring year-end adjustments (the effect of
which will not, individually or in the aggregate, be materially adverse) and
the absence of notes (that, if presented, would not differ materially from
those included in previously delivered audited balance sheets); such financial
statements will reflect the consistent application of such accounting
principles throughout the periods involved, except as disclosed in the notes to
such financial statements.
6.4 Inspection. The Company will permit the Investors and any
representatives of the Investors to visit and inspect at the respective
Investor's expense any of the properties of the Company, including its books,
records and material agreements (and to make photocopies thereof or make
extracts therefrom), and to discuss its affairs, finances, and accounts with
its officers, lawyers and accountants, all to such reasonable extent and at
such reasonable times and intervals as such Investor may reasonably request.
Except as otherwise required by applicable laws or regulations, the Investors
shall maintain, and shall require its representatives to maintain, all
information confidential to the Company obtained pursuant to Section 6.3
hereof, this Section 6.4 and Section 6.5 hereof on a confidential basis.
6.5 Preparation and Approval of Budgets. At least one month prior to
the beginning of each fiscal year of the Company, the Company shall prepare and
submit to its Board of Directors, for its review and approval, an annual plan
for such year, which shall include monthly capital and operating expense
budgets, cash flow statements and profit and loss projections itemized in such
detail as the Board of Directors may reasonably request. Each annual plan
shall be modified as often as is necessary in the judgment of the Board of
Directors to reflect changes required as a result of operating results and
other events that occur, or may be reasonably expected to occur, during the
year covered by the annual plan, and copies of each such modification shall be
submitted to the Board of Directors. The Company will, simultaneously with the
submission thereof to the Board of Directors, deliver a copy of each such
annual plan and modification thereof to the Investors.
6.6 Payment of Taxes and Maintenance of Properties. The Company will:
(a) pay and discharge promptly, or cause to be paid and discharged
promptly when due and payable, all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or upon any of its
properties, as well as all material claims of any kind (including claims
for labor, material and supplies) which, if unpaid, might by law become a
lien or charge upon its property; provided, however, that neither the
Company nor any Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim if the amount, applicability or validity
thereof shall currently be contested in good faith by appropriate
proceedings and if the Company shall have set aside on its books reserves
(segregated to the extent required by generally accepted accounting
principles) deemed adequate by it with respect thereto; and
(b) maintain and keep, or cause to be maintained and kept, its
properties in good repair, working order and condition, and from time to
time make, or cause to be made, all repairs and renewals and replacements
which in the opinion of the Company are necessary and proper so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times; the Company will maintain or cause
to be maintained back-up copies of all valuable papers and software.
6.7 Insurance. The Company will obtain and maintain in force such
property damage, public liability, business interruption, worker's
compensation, indemnity bonds and other types of insurance as the Company's
executive officers, after consultation with an accredited insurance broker,
shall determine to be necessary or appropriate to protect the Company from the
insurable hazards or risks associated with the conduct of the Company's
business. The Company's executive officers shall periodically report to the
Board of Directors on the status of such insurance coverage.
All insurance shall be maintained in at least such amounts and to
such extent as shall be determined to be reasonable by the Board of Directors;
and all such insurance shall be effected and maintained in force under a policy
or policies issued by insurers of recognized responsibility, except that the
Company may effect worker's compensation or similar insurance in respect of
operations in any state or other jurisdiction either through an insurance fund
operated by such state or other jurisdiction or by causing to be maintained a
system or systems of self-insurance which is in accord with applicable laws.
6.8 Directors' and Stockholders' Meetings. The holders of the Preferred
Shares and the Conversion Stock issued upon voluntary conversion by the holders
of the Preferred Shares shall have the right to elect three directors of the
Company as set forth in the Statement of Designation. In addition, the holders
of the Preferred Shares and the Conversion Stock issued upon voluntary
conversion by the holders of Preferred Shares shall be entitled, as a class,
to elect such additional directors so as to give such holders the right to
elect, in the aggregate, sufficient directors to represent a majority by one
of the directors in the event the Company records (i) a net loss in excess of
$800,000 in fiscal 2001, (ii) a net loss in excess of $1,600,000 in fiscal
2002, (iii) a net loss in excess of $1,600,000 in fiscal 2003 and (iv) for
each fiscal year thereafter, a net income that is less than 50% of the Board-
approved budgeted net income for such year or a net loss. The right to such
additional director as set forth in the preceding sentence shall continue
until such time as the Company provides to the such holders audited financial
statements for a subsequent fiscal year that demonstrate compliance with the
applicable financial milestone (as set forth in the preceding sentence) for
that year. The director election rights set forth in this paragraph shall
continue until the completion of a Qualified Public Offering; provided,
however, that upon the completion of a Qualified Public Offering, Techne or
its affiliates shall continue to have a right to elect one director to the
Company's Board of Directors for so long as Techne or its affiliates holds in
the aggregate at least 50% of the Common Stock issued to Techne or its
affiliates upon conversion of the Preferred Shares purchased by Techne
pursuant to this Agreement.
The Company shall reimburse the reasonable out-of-pocket expenses
incurred by the directors designated and elected by the holders of Preferred
Shares pursuant to the Statement of Designation in connection with the
attending of meetings by their director designees or carrying out any other
duties by such director designees that may be specified by the Board of
Directors or any committee thereof, shall pay such director designees the
same directors' fees paid to the other non-employee directors of the Company,
and shall maintain as part of its Articles of Incorporation or Bylaws a
provision for the indemnification of its directors to the full extent
permitted by law.
The Company agrees, as a general practice, to hold a meeting of its
Board of Directors at least once every three months, and during each year to
hold its annual meeting of stockholders on or approximately on the date
provided in its Bylaws.
6.9 Replacement of Certificates. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
the certificates representing any Securities, and, in the case of any such
loss, theft or destruction, upon delivery of a bond of indemnity satisfactory
to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of such certificates, the Company will issue new certificates
representing such Securities of like tenor, in lieu of such lost, stolen,
destroyed or mutilated certificates.
6.10 Application of Proceeds. Unless otherwise approved by the
Investors, the net proceeds received by the Company from the sale of the
Preferred Shares shall be used for working capital purposes. Pending use of
the proceeds in the business, they shall be deposited in a bank or banks
having deposits of $150,000,000 or more, invested in money market mutual funds
having assets of $500,000,000 or more, or invested in securities issued or
guaranteed by the United States Government.
6.11 Patents and Other Intangible Rights. The Company will apply for, or
obtain assignments of, or licenses to use, all patents, trademarks, trademark
rights, trade names, trade name rights and copyrights which in the opinion of a
prudent and experienced businessperson operating in the industry in which the
Company is operating are desirable or necessary for the conduct and protection
of the business of the Company.
6.12 Proprietary Information and Invention Agreements. The Company will
require each of its officers, employees and consultants to enter into
proprietary and invention assignment agreements with it in a form approved by
the Company's Board of Directors.
6.13 Rights to Purchase Additional Securities. If the Company should
decide to issue and sell additional shares of any of its capital stock or any
of its warrants, securities convertible into capital stock or other rights to
subscribe for or to purchase any of its capital stock, other than (a) shares of
Common Stock sold in a Public Offering, (b) the 600,000 shares of Common Stock
issued or reserved for issuance pursuant to the Company's 2001 Equity Incentive
Plan, and the grant of options to purchase such shares, (c) shares of Common
Stock issued upon conversion of the Preferred Shares, and (d) shares of Series
A Preferred Stock issued upon exercise of the Warrants and shares of Common
Stock issuable upon conversion thereof (all such capital stock, warrants,
options and other rights, other than securities referred to in (a), (b), (c)
and (d) above, being hereinafter sometimes collectively referred to as
"Additional Securities"), then the Company shall first offer to sell to each
Investor, upon the same terms and conditions as the Company is proposing to
issue and sell such Additional Securities to others, such Investor's pro rata
share (as defined below) of such Additional Securities. Such offer shall be
made by written notice given to such Investor and specifying therein the amount
of the Additional Securities being offered, the purchase price and other terms
of such offer. Such Investor shall have a period of 20 days from and after the
date of receipt by it of such notice within which to accept such offer. If
such Investor elects to accept such offer in whole or in part, such Investor
shall so accept by written notice to the Company given within such 20-day
period. If such Investor fails to accept such offer in whole or in part within
such 20-day period, any of such Additional Securities not purchased by such
Investor pursuant to such offer may be offered for sale to others by the
Company for a period of 120 days from the last day of such 20-day period, but
only on the same terms and conditions as set forth in the initial offer to such
third-party purchaser, free and clear of the restrictions imposed by this
Section 6.13.
For purposes of the previous paragraph, such Investor's "pro rata share"
is the number of shares of Additional Securities (rounded to the nearest whole
share) as is equal to the product of (a)(i) the number of shares of Common
Stock issued, or issuable upon the exercise or conversion of rights, options,
warrants or Convertible Securities, to such Investor immediately prior to the
issuance of the Additional Securities being offered divided by (ii) the total
number of shares of Common Stock issued, or issuable upon the exercise or
conversion of outstanding rights, options, warrants or Convertible Securities,
by the Company immediately prior to the issuance of the Additional Securities,
multiplied by (b) the entire offering of Additional Securities.
6.14 Waivers of Affirmative Covenants. Any provision of this Section 6
may be changed, waived, discharged or terminated with a statement in writing
signed by the holders of a majority of the Purchased Stock.
7. Negative Covenants. The Company will be limited and restricted as
follows:
7.1 Future Registration Rights. Except for any registration expressly
permitted by Section 8 hereof, the Company will not, without the prior approval
of the Investors, agree with the holders of any securities issued or to be
issued by the Company to register such securities under the Securities Act nor
will it grant any incidental registration rights which are superior or
preferred to those granted to the Investors by this Agreement.
7.2 Other Restrictions. The Company will not without the prior written
consent of the Investors, which consent shall not be unreasonably withheld:
(a) authorize or issue any shares of preferred stock or other
securities with preferences superior to or on parity with those of the
Series A Preferred Stock issued to the Investors pursuant to this
Agreement, or
(b) enter into any agreement, grant any right or take any action
which would impair or dilute the rights of Techne's subsidiary, Research &
Diagnostic Systems, Inc., under the Research and License Agreement
attached hereto as Exhibit 6.
7.3 Waivers of Negative Covenants. Any provision of this Section 7 may
be changed, waived, discharged or terminated with a statement in writing signed
by the holders of a majority of the Purchased Stock.
8. Registration Rights.
8.1 Required Registration. If at any time after the earlier to occur of
the fourth anniversary of the Closing Date or the date that is six-months after
the closing of the Company's initial Public Offering, the Company shall receive
a written request therefor from holders of a majority of the shares of Common
Stock issued or issuable upon conversion of the Preferred Shares or Warrant
Stock (the "Registrable Shares"), the Company shall prepare and file a
registration statement under the Securities Act covering the Registrable
Shares, which are the subject of such request and shall use its best efforts to
cause such registration statement to become effective. The Company shall be
obligated to prepare, file and cause to become effective only two registration
statements (other than on Form S-3 or any successor form promulgated by the
Commission ("Form S-3")) pursuant to this Section 8.1, and to pay the expenses
associated with such registration statements. Notwithstanding the foregoing,
the holders of a majority of the Registrable Shares may require, pursuant to
this Section 8.1, the Company to file, and to pay the expenses associated with,
any number of registration statements on Form S-3, if such form is then
available for use by the Company. In the event that holders of a majority of
the Registrable Shares participating in the registration determine for any
reason not to proceed with such registration at any time before a registration
statement has been declared effective by the Commission, and such registration
statement, if theretofore filed with the Commission, is withdrawn with respect
to the Registrable Shares covered thereby, and the holders of the Registrable
Shares participating in such registration each agree to bear their own expenses
incurred in connection therewith and to reimburse the Company, on a pro rata
basis, for the expenses incurred by it attributable to the registration of such
Registrable Shares, then such holders shall not be deemed to have exercised
their right to require the Company to register Registrable Shares pursuant to
this Section 8.1.
If, at the time any written request for registration is received by the
Company pursuant to this Section 8.1, the Company has determined to proceed
with the actual preparation and filing of a registration statement under the
Securities Act in connection with the proposed offer and sale for cash of any
of its securities by it or any of its security holders, such written request
shall be deemed to have been given pursuant to Section 8.2 hereof rather than
this Section 8.1, and the rights of the holders of Registrable Shares covered
by such written request shall be governed by Section 8.2 hereof.
Without the written consent of the holders of Registrable Shares, neither
the Company nor any other holder of securities of the Company may include
securities in a registration effected under this Section 8.1 if in the good
faith judgment of the managing underwriter of such public offering the
inclusion of such securities would interfere with the successful marketing of
the Purchased Stock or require the exclusion of any portion of the Registrable
Shares to be registered.
8.2 Incidental Registration. Each time the Company shall determine to
proceed with the actual preparation and filing of a registration statement
under the Securities Act in connection with the proposed offer and sale for
cash of any of its securities by it or any of its security holders (other
than a registration statement on Form X-0, Xxxx X-0 or any other form that
does not permit the inclusion of shares by its security holders), the Company
will give written notice of its determination to the holders of Registrable
Shares. Upon the written request of the holders of Registrable Shares given
within 20 days after receipt of any such notice from the Company, the Company
will, except as herein provided, cause all Registrable Shares, which have been
requested by such holders to be registered to be included in such registration
statement, all to the extent requisite to permit the sale or other disposition
by such holders to be so registered; provided, however, that nothing herein
shall prevent the Company from, at any time, abandoning or delaying any such
registration initiated by it; provided, further, however, that if the Company
determines not to proceed with a registration after the registration statement
has been filed with the Commission and the Company's decision not to proceed
is primarily based upon the anticipated public offering price of the
securities to be sold by the Company, the Company shall promptly complete the
registration if the holders of a majority of the Registrable Shares
participating in the registration wish to proceed with a public offering of
their Registrable Shares and will bear, on a pro rata basis, all expenses in
excess of $100,000 incurred by the Company as the result of such registration
after the Company has decided not to proceed. If any registration pursuant to
this Section 8.2 shall be underwritten in whole or in part, the Company may
require that the securities requested for inclusion by selling stockholders,
including the holders of Registrable Shares, pursuant to this Section 8.2, be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. If the total amount of
securities, including Registrable Shares, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the managing underwriters determine in their sole discretion
is compatible with the success of the offering, then the Company shall be
required to include in the offering only that number of such securities,
including Registrable Shares, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering. The securities
so included to be apportioned pro rata among the selling stockholders,
including the holders of Registrable Shares, according to the total amount
of securities entitled to be included therein owned by each such selling
stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders, but in no event shall the amount of Registrable
Shares included in the offering be reduced below 20% of the total amount of
securities included in such offering, unless such offering is the initial
public offering of the Company's securities, in which case the selling
stockholders, including the holders of Registrable Shares, may be excluded
completely if the underwriters make the determination described above and no
other stockholder's securities are included. For purposes of the preceding
sentence concerning apportionment, for any selling stockholder which is a
partnership or corporation, the partners, retired partners and stockholders
of such holder, or the estates and family members of any such partners and
retired partners and any trusts for the benefit of any of the foregoing
persons shall be deemed to be a single "selling stockholder", and any
pro-rata reduction with respect to such "selling stockholder" shall be
based upon the aggregate amount of shares carrying registration rights owned
by all entities and individuals included in such "selling stockholder", as
defined in this sentence.
8.3 Registration Procedures. If and whenever the Company is required by
the provisions of Section 8.1 or 8.2 hereof to effect the registration of
shares of Registrable Shares under the Securities Act, the Company will:
(a) prepare and file with the Commission a registration statement
with respect to such securities, and use its best efforts to cause such
registration statement to become and remain effective for such period as
may be reasonably necessary to effect the sale of such securities, not to
exceed three months;
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein
as may be necessary to keep such registration statement effective for such
period as may be reasonably necessary to effect the sale of such
securities, not to exceed two years;
(c) furnish to the holders of Registrable Shares participating in
the registration and to the underwriters of the securities being
registered such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as such
underwriters may reasonably request in order to facilitate the public
offering of such securities;
(d) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue
sky laws of such jurisdictions as the holders of Registrable Shares
participating in the registration may reasonably request in writing within
30 days following the original filing of such registration statement;
(e) notify the holders of Registrable Shares participating in the
registration, promptly after it shall receive notice thereof, of the time
when such registration statement has become effective or a supplement to
any prospectus forming a part of such registration statement has been
filed;
(f) notify the holders of Registrable Shares participating in the
registration promptly of any request by the Commission for the amending or
supplementing of such registration statement or prospectus or for
additional information;
(g) prepare and file with the Commission, promptly upon the request
of the holders of a majority of the Registrable Shares participating in
the registration, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for such holders
(and concurred in by counsel for the Company), is required under the
Securities Act or the rules and regulations thereunder in connection with
the distribution of the Registrable Shares by such holder;
(h) prepare and promptly file with the Commission and promptly
notify the holders of Registrable Shares participating in the registration
of the filing of such amendment or supplement to such registration
statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the Securities Act, any event shall have
occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were
made, not misleading;
(i) advise the holders of Registrable Shares participating in the
registration, promptly after it shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the Commission suspending
the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best
efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued;
(j) not file any amendment or supplement to such registration
statement or prospectus to which the holders of a majority of the
Registrable Shares participating in the registration shall have reasonably
objected on the grounds that such amendment or supplement does not comply
in all material respects with the requirements of the Securities Act or
the rules and regulations thereunder, after having been furnished with a
copy thereof at least five business days prior to the filing thereof,
unless in the opinion of counsel for the Company the filing of such
amendment or supplement is reasonably necessary to protect the Company
from any liabilities under any applicable federal or state law and such
filing will not violate applicable law; and
(k) at the request of the holders of Registrable Shares
participating in the registration, furnish an opinion, dated as of the
closing date, of the counsel representing the Company for the purposes of
such registration, addressed to the underwriters, if any, and to the
holders of Registrable Shares participating in the registration making
such request, in form and substance as is customarily given to
underwriters in an underwritten public offering.
8.4 Expenses. With respect to each registration, including
registrations pursuant to Form S-3, requested pursuant to Section 8.1 hereof
(except as otherwise provided in such Section with respect to registrations
voluntarily terminated at the request of the requesting security holders) and
with respect to each inclusion of Registrable Shares in a registration
statement pursuant to Section 8.2 hereof (except as otherwise provided in
Section 8.2 with respect to registrations initiated by the Company but with
respect to which the Company has determined not to proceed), the Company shall
bear the following fees, costs and expenses: all registration, filing and
NASD fees, printing expenses, fees and disbursements of counsel and accountants
for the Company, fees and disbursements of counsel for the underwriter or
underwriters of such securities (if the Company and/or selling security holders
are required to bear such fees and disbursements), all internal Company
expenses, all legal fees and disbursements and other expenses of complying with
state securities or blue sky laws of any jurisdictions in which the securities
to be offered are to be registered or qualified, and the premiums and other
costs of policies of insurance against liability (if any) arising out of such
public offering. Fees and disbursements of counsel and accountants for the
selling security holders, underwriting discounts and commissions and transfer
taxes relating to the shares included in the offering by the selling security
holders, and any other expenses incurred by the selling security holders not
expressly included above, shall be borne by the selling security holders.
8.5 Indemnification. In the event that any Registrable Shares are
included in a registration statement under Section 8.1 or 8.2 hereof:
(a) The Company will indemnify and hold harmless each holder of
Registrable Shares, its respective directors and officers, and any
underwriter (as defined in the Securities Act) for such holder and each
person, if any, who controls such holder or such underwriter within the
meaning of the Securities Act, from and against, and will reimburse each
such holder and each such underwriter and controlling person with respect
to, any and all loss, damage, liability, cost and expense to which such
holder or any such underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or
alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however,
that the Company will not be liable in any such case to the extent that
any such loss, damage, liability, cost or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission (i) made in conformity with information furnished by such
holder, such underwriter or such controlling person in writing
specifically for use in the preparation thereof or (ii) which was
corrected by a supplement or amendment to the registration statement or
prospectus filed with the Commission and provided to such holder prior to
the event allegedly giving rise to the liability.
(b) Each holder of Registrable Shares participating in the
registration will, severally and not jointly, indemnify and hold harmless
the Company, its directors and officers, any controlling person and any
underwriter from and against, and will reimburse the Company, its
directors and officers, any controlling person and any underwriter with
respect to, any and all loss, damage, liability, cost or expense to which
the Company or any controlling person and/or any underwriter may become
subject under the Securities Act or otherwise, insofar as such losses,
damages, liabilities, costs or expenses are caused by any untrue or
alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment
or supplement thereto, or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, in each case to
the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was so made in reliance
upon and in strict conformity with written information furnished by such
holder specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (a) or (b) of this Section 8.5 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is
to be made against the indemnifying party pursuant to the provisions of
said paragraph (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party
will not relieve it from any liability which it may have to any
indemnified party otherwise than hereunder. In case such action is
brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party shall have the
right to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party, provided,
however, if the defendants in any action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, or if there is a conflict of
interest which would prevent counsel for the indemnifying party from also
representing the indemnified party, the indemnified party or parties shall
have the right to select separate counsel to participate in the defense of
such action on behalf of such indemnified party or parties. After notice
from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable
to such indemnified party pursuant to the provisions of said paragraph (a)
or (b) for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless (i) the indemnified party shall
have employed counsel in accordance with the proviso of the preceding
sentence, (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after the notice of the commencement of the
action, or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying
party.
8.6 Transfer; Termination and Grant of Additional Registration Rights.
(a) The rights to cause the Company to register securities
granted to the Investors under this Section 8 may be transferred or
assigned by the Investors to any transferee or assignee of the Purchased
Stock, provided that the Company is given written notice at the time of
or within a reasonable time after said transfer or assignment, stating
the name and address of the transferee or assignee and identifying the
securities with respect to which such registration rights are being
transferred or assigned, and, provided further, that the transferee or
assignee of such rights assumes the obligations of the Investors under
this Section 8.
(b) The right of an Investor to register the Registrable
Shares under Section 8 shall terminate on the earlier of: (a) the date
on which such Investor's Registrable Shares are eligible for sale under
Rule 144 and none of such Investor;s Registrable Shares are restricted
from sale due to Rule 144 volume limitations or (c) the sale or other
disposition by such Investor of all of such Investor's Registrable
Shares.
(c) The Company shall not, without the prior written consent
of the Investors, grant additional registration rights that have a
preference over the registration rights of the Investors under this
Section 8.
(d) Any provision of this Section 8 may be changed, waived,
discharged or terminated with a statement in writing signed by the holders
of a majority of the Registrable Shares.
9. Miscellaneous.
9.1 Operating Assistance. Techne may provide laboratory and
administrative office space, access to equipment, accounting services and such
other assistance as Techne may agree to provide. The terms of any such
agreement shall be set forth in Schedule A hereto, which schedule may amended
by the parties hereto from time to time. Such operating assistance shall be
provided at Techne's cost, but in the case of space, such costs shall not
exceed $10 per square foot.
9.2 Termination of Certain Covenants. Unless another termination date
is specifically provided for therein, the obligations of the Company under
Sections 6 and 7 of this Agreement shall terminate upon the closing of a
Qualified Public Offering except that the Techne shall continue to have a
right to one director, as provided in Section 6.8.
9.3 Changes, Waivers, etc. Except as specifically provided in Sections
6, 7 and 8, this Agreement and any provision hereof may not be changed, waived,
discharged or terminated orally without a statement in writing signed by the
party against which enforcement of the change, waiver, discharge or termination
is sought.
9.4 Payment of Fees and Expenses. The Company and each Investor will
each pay its own expenses incurred in connection with entering into this
Agreement. Payment of expenses related to disputes arising out of or related
to this Agreement shall be determined in accordance with Section 9.8 below.
9.5 Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be delivered, or
mailed first-class postage prepaid, registered or certified mail,
(a) if to Techne, 000 XxXxxxxx Xxxxx, X.X., Xxxxxxxxxxx, Xxxxxxxxx
00000, Attention: Xxxxxx X. Xxxxx, President, with a copy to Xxxxxxx X.
Xxxx, Xxxxxxxxxx & Xxxxx, P.A., 1100 International Centre, 000 Xxxxxx
Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000 or
(b) if to Xxxxx, 000 XxXxxxxx Xxxxx, X.X., Xxxxxxxxxxx, Xxxxxxxxx
00000, with a copy to Xxxxxxx X. Xxxx, Xxxxxxxxxx & Xxxxx, P.A., 1100
International Centre, 000 Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx
00000 or
(c) if to the Company, Attention: President, 0000 Xxxx Xxxxxx, Xx.
Xxxx, Xxxxxxxxx 00000 or to such other address as the Company may specify
by written notice to the Investors, with a copy to Xxxxx Xxxxxxxxx, Xxxx &
Xxxxxxx, 4800 Xxxxx Fargo Center, 00 X. 0xx Xxxxxx, Xxxxxxxxxxx, XX 00000.
Such notices and other communications shall for all purposes of this
Agreement be treated as being effective or having been given if delivered
personally, or, if sent by mail, when received.
9.6 Survival of Representations and Warranties, etc. All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement, any investigation at any time made by the Investors
or on their behalf, and the sales and purchases of the Purchased Stock. All
statements contained in any certificate, instrument or other writing delivered
by or on behalf of the Company pursuant hereto or in connection with or
contemplation of the transactions herein contemplated (other than legal
opinions) shall constitute representations and warranties by the Company
hereunder.
9.7 Parties in Interest. All the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto, whether so expressed
or not, and, in particular, shall inure to the benefit of and be enforceable by
the holder or holders at the time of any of the Purchased Stock.
9.8 Headings. The headings of the Sections and paragraphs of this
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
9.9 Arbitration. Any dispute arising out of or relating to this
Agreement or the alleged breach of it, or the making of this Agreement or the
agreements referenced herein, including claims of fraud in the inducement,
shall be discussed between the disputing parties in a good faith effort to
arrive at a mutual settlement of any such controversy. If, notwithstanding,
such dispute cannot be resolved, such dispute shall be settled by binding
arbitration. Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The arbitrator shall be a
retired state or federal judge or an attorney who has practiced in substantive
areas similar to the issues under dispute for at least 10 years. If the
parties cannot agree on an arbitrator within 20 days, any party may request
that the chief judge of the District Court for Hennepin County, Minnesota,
select an arbitrator. Arbitration will be conducted pursuant to the
provisions of this Agreement, and the commercial arbitration rules of the
America Arbitration Association, unless such rules are inconsistent with the
provisions of this Agreement, but without submission of the dispute to such
Association. Limited civil discovery shall be permitted for the production
of documents and taking of depositions. Unresolved discovery disputes may
be brought to the attention of the arbitrator who may dispose of such
dispute. The arbitrator shall have the authority to award any remedy or
relief that a court of this state could order or grant; provided, however,
that punitive of exemplary damages shall not be awarded. The arbitrator may
award to the prevailing party, if any, as determined by the arbitrator, all
of its costs and fees, including the arbitrator's fees. Unless otherwise
agreed by the parties, the place of any arbitration proceedings shall
be Hennepin County, Minnesota.
9.10 Choice of Law. It is the intention of the parties that the laws of
the State of Minnesota (other than its law with respect to conflicts of law)
shall govern the validity of this Agreement, the construction of its terms and
the interpretation of the rights and duties of the parties.
9.11 Counterparts. This Agreement may be executed concurrently 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
DISCOVERY GENOMICS, INC.
By:__________________________
Its:_________________________
TECHNE CORPORATION
By:_________________________
Xxxxxx X. Xxxxx
President and Chief Executive
Officer
____________________________
Xxxxx Xxxxx
