EXHIBIT 2
SERIES E PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES E PREFERRED STOCK PURCHASE AGREEMENT (the "AGREEMENT") is
made as of April 26, 1996 by and between RiboGene, Inc., a California
corporation (the "COMPANY"), and Xxxxxx Laboratories, an Illinois Corporation
(the "PURCHASER").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF PREFERRED STOCK.
1.1 AUTHORIZATION. The Company shall adopt and file with the
Secretary of State of the State of California on or before the Closing (as
defined below) the Amendment to Articles of Incorporation in the form
attached hereto as EXHIBIT A (such amendment and the Company's existing
Articles of Incorporation, as amended, are herein referred to jointly as the
"RESTATED ARTICLES").
1.2 SALE AND ISSUANCE OF SERIES E PREFERRED STOCK. Subject to the
terms and conditions of this Agreement, the Purchaser agrees to purchase at
the Closing (as defined below) and the Company agrees to sell and issue to
the Purchaser at the Closing 1,555,556 shares of the Company's Series E
Preferred Stock at a purchase price of $2.25 per share. The shares of Series
E Preferred Stock issued to the Purchaser pursuant to this Agreement shall
be hereinafter referred to as the "STOCK."
2. CLOSING AND DELIVERY.
2.1 CLOSING DATE. The closing of the purchase and sale of the
Stock (the "CLOSING") shall take place at the offices of Venture Law Group,
0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx, at 1:00 p.m., on May 1, 1996, or
at such other time and place as the Company and the Purchaser mutually agree
upon, orally or in writing (the date of the Closing is hereinafter referred
to as the "CLOSING DATE").
2.2 DELIVERY. At the Closing, the Company will deliver to the
Purchaser a certificate, registered in the Purchaser's name, representing
the Stock to be purchased in the Closing by the Purchaser. Such delivery
shall be against payment of the purchase price therefor, by check payable to
the Company, by wire transfer to the Company's bank account, or against
cancellation of indebtedness.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Purchaser that, except as set forth on
a Schedule of Exceptions attached hereto as EXHIBIT B, specifically
identifying the relevant subsection hereof, which exceptions shall be deemed
to be representations and warranties as if made hereunder.
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
is a corporation duly organized, validly existing and in good standing under
the laws of the State of California and has all requisite corporate power and
authority to carry on its business as now conducted and as proposed to be
conducted. The Company is duly qualified to transact business
and is in good standing in each jurisdiction in which the failure so to
qualify would have a material adverse effect on its business or properties.
3.2 CAPITALIZATION. The authorized capital of the Company
consists, or will consist, immediately prior to the Closing, of:
(i) PREFERRED STOCK. 12,558,491 shares of Preferred
Stock, of which (A) 138,269 shares have been designated Series A Preferred
Stock, 138,268 of which are issued and outstanding, (B) 800,000 shares have
been designated Series B Preferred Stock, 580,061 of which are issued and
outstanding, (C) 2,950,000 shares have been designated Series C Preferred
Stock, 2,805,519 of which are issued and outstanding, (D) 270,222 shares have
been designated Series D Preferred Stock, all of which are issued and
outstanding, and (E) 8,400,000 shares have been designated Series E Preferred
Stock, 5,647,814 of which are issued and outstanding. The rights, privileges
and preferences of the Series A, Series B, Series C, Series D and Series E
Preferred Stock (collectively, the "PREFERRED") are as stated in the
Company's Articles of Incorporation, as amended.
(ii) COMMON STOCK. 25,000,000 shares of Common Stock, of
which 743,232 shares are issued and outstanding.
(iii) Except for (a) the conversion privileges of the
Preferred, (b) the warrants to purchase up to 21,546 shares of Series B
Preferred Stock, 15,000 shares of Series C Preferred Stock, and 17,777 shares
of Series E Preferred Stock each issued to Dominion Ventures, Inc. (and the
conversion privileges of the Preferred Stock issuable upon exercise thereof),
(c) the warrants to purchase up to an aggregate of 1,313,000 shares of
Common Stock issued to Hyline Laboratories, Inc. and another entity formerly
related thereto, (d) warrants for the purchase of up to 33,333 shares of
Series E Preferred Stock issued to Silicon Valley Bank, (e) warrants for the
purchase of up to 52,850 shares of Common Stock issued to SBC Capital
Markets and an individual affiliated therewith, and (f) the outstanding
options issued under the Company's equity incentive plan(s) described below,
there are no outstanding options, warrants, rights (including conversion or
preemptive rights) or agreements, orally or in writing, for the purchase or
acquisition from the Company of any shares of its capital stock. The Company
has from time to time reserved up to an aggregate of 2,735,000 shares of
Common Stock for issuance, at the discretion of the Board of Directors, to
officers, directors, employees and consultants pursuant to the Company's
1993 Stock Plan, of which (a) 448,292 shares are currently outstanding
pursuant to stock purchases or stock option exercises, (b) 1,910,691 shares
are currently subject to outstanding stock options or committed for issuance
pursuant to pending stock option grants, and (c) 375,817 shares are reserved
for future stock option or purchase grants. The Company has also reserved
4,000 shares of Common Stock for issuance upon the exercise of a single
outstanding stock option pursuant to the Company's 1990 Stock Option Plan.
3.3 SUBSIDIARIES. The Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
association, or other business entity.
3.4 AUTHORIZATION. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of the
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Agreement, the Ninth Amended and Restated Rights Agreement in substantially
the form attached hereto at EXHIBIT C (the "RIGHTS AGREEMENT"), and the
issuance of the Stock and the Common Stock issuable upon conversion thereof
(collectively, the "SECURITIES"), the performance of all obligations of the
Company hereunder and thereunder has been taken or will be taken prior to
the Closing, and the Agreement, the Rights Agreement constitute valid and
legally binding obligations of the Company, enforceable in accordance with
their respective terms.
3.5 VALID ISSUANCE OF SECURITIES.
(a) The Stock, when issued, sold and delivered in accordance
with the terms hereof for the consideration expressed herein, will be duly
and validly issued, fully-paid and nonassessable. Based in part upon the
representations of the Purchaser in this Agreement and subject to the
provisions of Section 3.6 below, the Securities will be issued in compliance
with all applicable federal and state securities laws. The Common Stock
issuable upon conversion of the Preferred has been duly and validly reserved
for issuance, and upon issuance in accordance with the terms of the Restated
Articles, shall be duly and validly issued, fully paid and non-assessable and
will be issued in compliance with all applicable federal and state securities
laws.
(b) The outstanding shares of Common Stock and Preferred
Stock are all duly and validly authorized and issued, fully-paid and
nonassessable, and were issued in compliance with all applicable federal and
state securities laws.
3.6 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part
of the Company is required in connection with the consummation of the
transactions contemplated by the Agreement, except for the federal and state
securities law filings to be made by the Company as set forth on the Schedule
of Exceptions attached hereto as Exhibit B.
3.7 LITIGATION. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company that
questions the validity of the Agreement, or the right of the Company to enter
into the Agreement, or to consummate the transactions contemplated thereby,
or that might result, either individually or in the aggregate, in any
material adverse changes in the assets, condition, affairs or prospects of
the Company, financially or otherwise, or any change in the current equity
ownership of the Company, nor is the Company aware that there is any basis
for the foregoing. The foregoing includes, without limitation, actions
pending or threatened (or any basis therefor known to the Company) involving
the prior employment of any of the Company's employees, their use in
connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers. The Company is not a party or
subject to the provisions of any order, writ, injunction, judgment or degree
of any court or government agency or instrumentality. There is no action,
suit, proceeding or investigation by the Company currently pending or which
the Company intends to initiate.
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3.8 EMPLOYEE AGREEMENT. Each employee and officer of the Company
has executed an agreement with the Company regarding confidentiality and
proprietary information. The Company, after reasonable investigation, is not
aware that any of its employees are in violation thereof, and the Company
will use its best efforts to prevent any such violation and to maintain and
enforce such agreement with its employees.
3.9 PATENTS AND TRADEMARKS. As of the Closing, the Company has or
will have sufficient title and ownership of all patents, trademarks, service
marks, trade names, copyrights, trade secrets, information, proprietary
rights and processes necessary for its business as now conducted and as
proposed to be conducted without any conflict with or infringement of the
rights of others. There are no outstanding options, licenses, or agreements
of any kind relating to the foregoing, nor is the Company bound by or a party
to any options, licenses or agreements of any kind with respect to the
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, proprietary rights and processes of any other person
or entity. The Company has not received any communications alleging that the
Company has violated or, by conducting its business as proposed, would
violate any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any contract
(including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his best efforts
to promote the interests of the Company or that would conflict with the
Company's business as proposed to be conducted. Neither the execution nor
delivery of the Agreement, nor the carrying on of the Company's business as
proposed, will, to the Company's knowledge, conflict with or result in a
breach of the terms, conditions or provisions of, or constitute a default
under, any contract, covenant or instrument under which any of such employees
is now obligated. The Company does not believe it is or will be necessary to
utilize any inventions of any of its employees (or people it currently
intends to hire) made prior to their employment by the Company.
3.10 COMPLIANCE WITH OTHER INSTRUMENTS.
(a) The Company is not in violation or default of any
provisions of its Articles of Incorporation, as amended, or Bylaws or of any
instrument, judgment, order, writ, decree or contract to which it is a party
or by which it is bound or, to its knowledge, of any provision of federal or
state statute, rule or regulation applicable to the Company. The execution,
delivery and performance of the Agreement, and the consummation of the
transactions contemplated hereby and thereby, will not result in any such
violation or be in conflict with or constitute, with or without the passage
of time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract or an event which
results in the creation of any lien, charge or encumbrance upon any assets of
the Company.
(b) The Company has avoided every condition, and has not
performed any act, the occurrence of which would result in the Company's loss
of any right granted under any license, distribution or other agreement.
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3.11 Agreements: Action.
(a) Except for agreements explicitly contemplated hereby,
there are no agreements, understandings or proposed transactions between the
Company and any of its officers, directors, affiliates, or any affiliate
thereof.
(b) There are no agreements, understandings, instruments,
contracts or proposed transactions to which the Company is a party or by
which it is bound that involve (i) obligations of, or payments to the Company
in excess of, $50,000, or (ii) the license of any patent, copyright, trade
secret or other proprietary right to or from the Company.
(c) The Company has not (i) declared or paid any dividends,
or authorized or made any distribution upon or with respect to any class or
series of its capital stock, (ii) incurred indebtedness for money borrowed or
incurred any other liabilities individually in excess of $10,000 or in
excess of $50,000 in the aggregate, including guarantees for such amounts,
(iii) made any loans or advances to any person, other than ordinary advances
for travel expenses, or (iv) sold, exchanged or otherwise disposed of any of
its assets or rights, other than the sale of its inventory in the ordinary
course of business.
(d) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Articles of Incorporation, as amended, or Bylaws, which adversely affects its
business as now conducted or as proposed to be conducted, its properties or
its financial condition.
(e) The Company has not engaged in the past three (3) months
in any discussion (i) with any representative of any corporation or
corporations regarding the merger of the Company with or into any such
corporation or corporations, (ii) with any corporation, partnership,
association or other business entity or any individual regarding the sale,
conveyance or disposition of all or substantially all of the assets of the
Company or a transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the Company is disposed of, or
(iii) regarding any other form of liquidation, dissolution or winding up of
the Company.
3.12 DISCLOSURE. The Company has fully provided the Purchaser with
all the information which the Purchaser has requested for deciding whether to
acquire the Stock and Warrants and all information which the Company believes
is reasonably necessary to enable the Purchaser to make such decision,
including the latest draft of the Company's Business Plan (the "BUSINESS
PLAN"). No representation or warranty of the Company contained in the
Agreement and the Exhibits attached hereto, any certificate furnished or to
be furnished to the Purchaser at the Closing, or the Business Plan (when read
together) contains any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were
made. To the extent the Business Plan was prepared by management of the
Company, the Business Plan and the financial projections contained in the
Business Plan were prepared in good faith; however, the Company does not
warrant that it will achieve such financial projections.
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3.13 RIGHTS OF REGISTRATION AND FIRST OFFER. Except as
contemplated on the Schedule of Exceptions, the Company has not granted or
agreed to grant any registration rights, including piggyback rights, to any
person or entity.
3.14 CORPORATE DOCUMENTS. The Articles of Incorporation, as
amended, and Bylaws of the Company are in the form provided to special
counsel for the Purchaser.
3.15 TITLE TO PROPERTY AND ASSETS. The Company owns its property
and assets free and clear of all mortgages, liens,loans and encumbrances,
except such encumbrances and liens which arise in the ordinary course of
business and do not materially impair the Company's ownership or use of such
property or assets. With respect to the property and assets it leases, the
Company is in compliance with such leases and, to the best of its knowledge,
holds a valid leasehold interest free of any liens, claims or encumbrances.
3.16 FINANCIAL STATEMENTS. The Company has delivered to the
Purchaser or counsel to the Purchaser its unaudited financial statements
(balance sheet and profit and loss statement) as at December 31, 1995 (the
"FINANCIAL STATEMENTS"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated and with each other,
except that unaudited Financial Statements may not contain all footnotes
required by generally accepted accounting principles. The Financial
Statements fairly present the financial condition and operating results of
the Company as of the dates, and for the periods, indicated therein, subject
to normal year-end audit adjustments, which are neither individually nor in
the aggregate material. Except as set forth in the Financial Statements, the
Company has no material liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent to
December 31, 1995, and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under generally
accepted accounting principles to be reflected in the Financial Statements,
which, in both cases, individually or in the aggregate, are not material to
the financial condition or operating results of the Company. The Company
maintains and will continue to maintain a standard system of accounting
established and administered in accordance with generally accepted accounting
principles.
3.17 EMPLOYEE BENEFIT PLANS. The Company does not have any
Employee Benefit Plan as defined in the Employee Retirement Income Security
Act of 1974.
3.18 TAX RETURNS AND PAYMENTS. The Company has filed all tax
returns and reports as required by law. These returns and reports are true
and correct in all material respects. The Company has paid all taxes and
other assessments due, except those contested by it in good faith which are
listed in the Schedule of Exceptions.
3.19 Insurance. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its
properties that might be damaged or destroyed.
3.20 LABOR AGREEMENTS AND ACTIONS. The Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to)
any written or oral, express or implied, contracts, commitments or
arrangement with any labor union, and no labor union has
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requested or, to the knowledge of the Company, has sought to represent any of
the employees, representatives or agents of the Company. There is no strike
or other labor dispute involving the Company pending, or to the knowledge of
the Company threatened, which could have a material adverse effect on the
assets, properties, financial condition, operating results, or business of
the Company (as such business is presently conducted and as it is proposed
to be conducted), nor is the Company aware of any labor organization
activity involving its employees. The Company is not aware that any officer
or key employee, or that any group of key employees, intends to terminate
their employment with the Company, nor does the Company have a present
intention to terminate the employment of any of the foregoing. The employment
of each officer and employee of the Company is terminable at the will of the
Company.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby severally and not jointly represents and warrants to the Company that:
4.1 AUTHORIZATION. This Agreement constitutes its valid and
legally binding obligation, enforceable in accordance with its terms.
4.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with the Purchaser in reliance upon the Purchaser's representation to the
Company, which by the Purchaser's execution of this Agreement the Purchaser
hereby confirms, that the Securities will be acquired for investment for the
Purchaser's own account, not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof, and that the Purchaser has
no present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, the Purchaser further
represents that the Purchaser does not presently 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. The Purchaser represents that it has full power and
authority to enter into this Agreement.
4.3 DISCLOSURE OF INFORMATION. The Purchaser believes it has
received all the information it considers necessary or appropriate for
deciding whether to acquire the Securities. The Purchaser further represents
that it has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the offering of the Securities.
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 the
Purchaser to rely thereon.
4.4 INVESTMENT EXPERIENCE. The Purchaser is acquiring the
Securities for investment for the Purchaser's own account, not as a nominee
or agent, and not with the view to, or for resale in connection with, any
distribution thereof. The Purchaser understands that the Securities have not
been, and will not be, registered under the Securities Act of 1933, as
amended (the "SECURITIES ACT") by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of the
Purchaser's representations as expressed herein. The Purchaser has not been
formed for the specific purpose of acquiring the Securities.
4.5 RESTRICTED SECURITIES. The Purchaser understands that the
Securities are characterized as "restricted securities" under the federal
securities laws inasmuch as they are
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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 Securities Act, only in certain
limited circumstances. In this connection, the Purchaser represents that it
is familiar with SEC Rule 144, as presently in effect, and understands the
resale limitations imposed thereby and by the Securities Act.
4.6 FURTHER LIMITATIONS ON DISPOSITION. Without in any way
limiting the representations set forth above, the Purchaser severally and not
jointly further agrees not to make any disposition of all or any portion of
the Securities unless and until:
(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) The Purchaser 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, in the event that such transfer is
not made pursuant to a registration statement under the Securities Act, the
Purchaser shall have furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company, that such disposition will not
require registration under the Securities Act. It is agreed that the Company
will not require opinions of counsel for transactions made pursuant to Rule
144 except in unusual circumstances.
(c) Notwithstanding the provisions of paragraphs (a) and (b)
above, no such registration statement or opinion of counsel shall be
necessary for a transfer by the Purchaser to a shareholder or partner of the
Purchaser, if the transferee or transferees agree in writing to be subject
to the terms hereof to the same extent as if they were the Purchaser
hereunder.
4.7 LEGENDS. It is understood that the Securities, and any
securities issued in respect thereof or exchange therefor, may bear one or
all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. 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 the laws of the State of
California, including any legend required by the California Department of
Corporations.
(c) Any legend required by the Blue Sky laws of any other
state to the extent such laws are applicable to the shares represented by the
certificate so legended.
4.8 U.S. PERSONS. The Purchaser is a United States person.
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5. CALIFORNIA COMMISSIONER OF CORPORATIONS.
5.1 CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES THAT
IS THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA. THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR
SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF
SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105
OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS
AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED
UNLESS THE SALE IS SO EXEMPT.
6. CONDITIONS OF PURCHASER OBLIGATIONS AT CLOSING. The obligations
of the Purchaser to the Company under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 3 shall be true on and as of
the Closing with the same effect as though such representations and
warranties had been made on and as of the date of such Closing.
6.2. PERFORMANCE. The Company shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by it on or before the
Closing.
6.3 COMPLIANCE CERTIFICATE. The Chief Executive Officer of the
Company shall deliver to the Purchaser at the Closing a certificate
certifying that the conditions specified in Sections 6.1 and 6.2 have been
fulfilled.
6.4 QUALIFICATIONS. The Commissioner of Corporations of the
State of California shall have issued a permit qualifying the offer and sale
of the Stock to the Purchaser pursuant to this Agreement, or such offer and
sale shall be exempt from such qualification under the California Corporate
Securities Law of 1968, as amended.
6.5 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
and all documents incident thereto shall be reasonably satisfactory in form
and substance to the Purchaser and its special counsel, and they shall have
received all such counterpart original and certified or other copies of such
documents as they may reasonably request.
6.6 OPINION OF COMPANY COUNSEL. The Purchaser shall have
received from Venture Law Group, A Professional Corporation, counsel for the
Company, an opinion, dated as of the Closing, in substantially the form of
EXHIBIT D.
6.7 BOARD OF DIRECTORS. The Board of Directors of the Company
as of the Closing Date shall be comprised of Xxxxxxxxx Xxxxxx, Xxxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxx, Xxx Xxxx, Xxxxx Xxxx and Petri Vainio.
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6.8 RIGHTS AGREEMENT. The Company, the Purchaser and
sufficient other shareholders of the Company shall have executed and
delivered the Rights Agreement.
7. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations of the Company to the Purchaser under this Agreement are subject
to the fulfillment, on or before the Closing, of each of the following
conditions:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser contained in Section 4 shall be true on and as
of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
7.2 CALIFORNIA QUALIFICATION. The Commissioner of Corporations
of the State of California shall have issued a permit qualifying the offer
and sale to the Purchaser of the Stock or such offer and sale shall be
exempt from such qualification under the California Corporate Securities Law
of 1968, as amended.
7.3 RIGHTS AGREEMENT. The Company, the Purchaser and sufficient
other shareholders of the Company shall have executed and delivered the
Rights Agreement.
8. COVENANTS OF THE COMPANY.
8.1 DELIVERY OF FINANCIAL STATEMENTS. The Company shall deliver
to the Purchaser so long as it holds (i) shares of Stock with respect to the
information provided for in subsection (a) and (ii) not less than 100,000
shares of Stock with respect to the information provided for in subsections
(b)-(e) (adjusted for subsequent stock splits, stock dividends or
recapitalization):
(a) as soon as practicable, but in any event within
ninety (90) days after the end of each fiscal year of the Company, an income
statement for such fiscal year, a balance sheet of the Company as of the end
of such year, and a schedule as to the sources and applications of funds for
such year, such year-end financial reports to be in reasonable detail,
prepared in accordance with generally accepted accounting principles
("GAAP"), and audited and certified by independent public accountants of
nationally recognized standing selected by the Company;
(b) as soon as practicable, but in any event within
forty-five (45) days after the end of each of the first three (3) quarters of
each fiscal year of the Company, an unaudited profit or loss statement and
schedule as to the sources and application of funds for such fiscal quarter
and an unaudited balance sheet as of the end of such fiscal quarter in
reasonable detail;
(c) within thirty (30) days of the end of each month, an
unaudited income statement and schedule as to the sources and application of
funds and balance sheet for and as of the end of such month, in reasonable
detail;
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(d) as soon as practicable, but in any event thirty (30)
days prior to the end of each fiscal year, a budget and business plan for
the next fiscal year, prepared on a monthly basis, including balance sheets
and sources and applications of funds statements for such months and, as
soon as prepared, any other budgets or revised budgets prepared by the
Company; and
(e) such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as the
Purchaser or any assignee of the Purchaser may from time to time request,
provided, however, that the Company shall not be obligated to provide
information which it deems in good faith to be proprietary.
8.2 INSPECTION. The Company shall permit the Purchaser, at the
Purchaser's expense, to visit and inspect the Company's properties, to
examine its books of account and records and to discuss the Company's
affairs, finances and accounts with its officers, all at such reasonable
times as may be requested by the Purchaser; provided, however, that the
Company shall not be obligated pursuant to this Section 8.2 to provide access
to any information which it reasonably considers to be a trade secret or
similar confidential information.
8.3 BOARD MEETINGS; EXPENSES. The Company shall reimburse the
reasonable coach-class airfare and other travel and lodging expenses
incurred by its nonemployee directors in attending any duly held regular or
special meeting of the Board of Directors.
8.4 TERMINATION OF COVENANTS. The covenants set forth in
Sections 8.1, 8.2 and 8.3 shall terminate as to the Purchaser and be of no
further force or effect immediately upon the consummation of the Company's
sale of its Common Stock in a bona fide, firm commitment underwriting
pursuant to a registration statement under the Securities Act (other than a
registration statement relating either to the sale of securities to
employees of the Company pursuant to a stock option, stock purchase or
similar plan or an SEC Rule 145 transaction).
9. ADDITIONAL INVESTMENT.
9.1 PURCHASE EVENTS AND TERMS. The Purchaser covenants that it
will contribute an additional $4,000,000 in funding to the Company or its
successor in the form of an additional equity investment in connection with
the earliest to occur of following events and on the terms stated herein:
(a) INITIAL PUBLIC OFFERING. In the event that, within
three years from the date of this Agreement, the Company consummates a sale
of capital stock in a bona fide, firm commitment underwriting pursuant to a
registration statement under the Securities Act (other than a registration
statement relating either to the sale of securities to employees of the
Company pursuant to a stock option, stock purchase or similar plan or an SEC
Rule 145 transaction) with an aggregate Price to Public of not less than
$20,000,000 (inclusive of the Purchaser's participation therein) (the
"INITIAL PUBLIC OFFERING"), the Purchaser will purchase for cash from the
underwriters shares of the Company's capital stock at the Price to Public
stated on the front cover of the final prospectus distributed in connection
with such offering. The number of securities to be purchased shall be equal
to $4,000,000 divided by the Price to Public, rounded to the nearest whole
share. The Purchaser's obligations under this subsection (a) shall
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be conditioned upon the Company delivering to the Purchaser written notice
of the Initial Public Offering at least twenty days prior to the
consummation thereof.
(b) BUSINESS COMBINATION TRANSACTION.
(i) In the event that, within three years from the
date of this Agreement, the Company consummates a Business Combination
Transaction (as defined below) in which the surviving entity is subject to
periodic reporting requirements under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), the surviving entity shall have the right,
upon twenty (20) days prior written notice (the "NOTICE"), to require the
Purchaser to purchase for cash securities of the surviving entity of the
class that is publicly traded. The number of securities to be purchased
shall be equal to $4,000,000 divided by the average closing price (or price
of the last trade if no closing price is available)for the ten trading days
ending at the close of business on the date two days prior to the date of
the closing of the Purchaser's purchase of the securities under this
subsection, as reported on the exchange or system on which the surviving
entity's securities are traded, rounded to the nearest whole share. The
Purchaser's obligations under this paragraph shall terminate in the event
that the surviving entity shall not have given the Notice to the Purchaser
within sixty days after the consummation of the Business Combination of
Transaction.
(ii) For purposes of this Section 9(b), a "Business
Combination Transaction" shall mean a merger, sale of all or substantially
all of the Company's assets (including the assets associated with the
activities being conducted pursuant to the Research Agreement between the
Purchaser at the Company of even date herewith), or similar business
combination transaction.
(iii) The Purchaser's obligations under Section
9.1(b)(i) above shall be further conditioned upon the securities to be
purchased under such section by the Purchaser (the "Purchased Securities")
being either (A) registered under Section 6 of the Securities Act, or (B)
entitled to the registration rights described in the ensuing paragraphs of
this subSection (b)(iii).
(1) In the event that the Purchased Securities
are not registered when purchased or shortly thereafter, the Purchaser shall
be granted the right to demand, in writing, on two occasions, that the
surviving entity register certain of such shares for resale pursuant to the
provisions of the Securities Act. The first of such demands may be made at
any time after the date six months after the acquisition of the Purchased
Securities and may cover not more than 50% of the Purchased Securities;
PROVIDED HOWEVER, that if the Purchased Securities represent 1% or less of
the outstanding capital stock of the issuer, such first demand registration
may cover all of the Purchased Securities. The second of such demands may be
made at any time after the date twelve months after the acquisition of the
Purchased Securities and may cover up to all of the Purchased Securities
then held by the Purchaser; provided that the second demand may not be made
less than six months after the first demand is made.
(2) Unless otherwise consented to by the
surviving entity, each registration must cover securities generating net
proceeds to the Purchaser of at least $500,000 (net of underwriting discounts
and commissions). Pursuant to each such
-12-
demand, the surviving entity will agree to file a registration statement on
Form S-3 (or a successor form), if available, on or Form S-1 covering the
Purchased Securities to be sold and will hold such registration statement
open for a thirty (30) day period in which the Purchaser may sell the
registered securities.
(3) The terms set forth in the Rights
Agreement in Sections 3.2(d) (regarding postponement for business reasons),
Section 3.6 (regarding expenses of demand registrations), 3.10 (regarding
indemnification), and 3.11 (regarding reports under the Exchange Act) shall
be applicable to the registration rights discussed in this paragraph and
such registration rights would terminate at the earlier of the date three
years from the acquisition of the Purchased Securities or such time and for
so long as the Purchaser could sell all of its Purchased Securities in any
one three-month period.
9.2 STOCK PURCHASE AGREEMENT. The Purchaser understands and agrees
that this additional equity investment, and the sale and purchase of
securities in connection therewith, other than a purchase of securities in
the Initial Public Offering, will require the Purchaser's execution of a
Stock Purchase Agreement, which shall in form be substantially similar to
this document.
10. MISCELLANEOUS.
10.1 SURVIVAL OF WARRANTIES. The warranties, representations and
covenants of the Company and the Purchaser contained in or made pursuant to
this Agreement shall survive the execution and delivery of this Agreement and
the Closing and shall in no way be affected by any investigation of the
subject matter thereof made by or on behalf of the Purchaser or the Company.
10.2 TRANSFER, SUCCESSORS AND ASSIGNS. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the
parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
10.3 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California in the United States of
America as applied to agreements among California resident entered into and
to be performed entirely within California.
10.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.5 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
-13-
10.6 NOTICES.
(a) All notices, requests, demands and other
communications under this Agreement or in connection herewith shall be given
to or made upon the respective parties as follows: if to the Purchaser, to
Xxxxxx Laboratories, 000 Xxxxxx Xxxx Xxxx, Xxxxxx Xxxx, XX, 00000-0000,
Attn: President, Pharmaceutical Products Division (with a copy to the
General Counsel at the same address), or, if to the Company, to RiboGene,
Inc., 00000 Xxxxx Xxxxxxxxx, Xxxxxxxx X, Xxxxxxx, Xxxxxxxxxx 00000, Attn:
President.
(b) All notices, requests, demands and other
communications given or made in accordance with the provisions of this
Agreement shall be in writing, and shall be sent by airmail, return receipt
requested, or by telex or telecopy (facsimile) with confirmation of receipt,
and shall be deemed to be given or made when receipt is so confirmed.
(c) Any party may, by written notice to the other, alter
its address or respondent, and such notice shall be considered to have been
given ten (10) days after the airmailing, telexing or telecopying thereof.
10.7 FINDER'S FEE. Each party represents that it neither is nor
will be obligated for any finder's fee or commission in connection with this
transaction. The Purchaser agrees to indemnify and to hold harmless the
Company from any liability for any commission or compensation in the nature
of a finder's fee (and the costs and expenses of defending against such
liability or asserted liability) for which the Purchaser or any of its
officers, employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless the Purchaser from any
liability for any commission or compensation in the nature of a finder's fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
10.8 EXPENSES. The Company and the Purchaser shall bear their
own expenses incurred with respect to this Agreement and the transactions
contemplated hereby. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorney's fees, costs and necessary disbursements
in addition to any other relief to which such party may be entitled.
10.9 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the
Purchaser. Any amendment or waiver effected in accordance with this Section
shall be binding upon each transferee of any Securities, each future holder
of all such Securities, and the Company; provided, however, that none of the
conditions set forth in Section 6 hereof may be waived with respect to a
particular Purchaser unless it consents thereto.
10.10 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
- 14-
10.11 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter
hereof, and any and all other written or oral agreements existing between the
parties hereto are expressly cancelled.
IN WITNESS WHEREOF, the parties have executed this Series E Preferred
Stock Purchase Agreement as of the date first above written.
COMPANY:
RIBOGENE, INC.
By:
------------------------------
Title:
---------------------------
PURCHASER:
XXXXXX LABORATORIES
By:
------------------------------
Title:
---------------------------
-15-
EXHIBIT C
RIBOGENE, INC.
TENTH AMENDED AND RESTATED RIGHTS AGREEMENT
________, 1998
RIBOGENE, INC.
TENTH AMENDED AND RESTATED RIGHTS AGREEMENT
THIS TENTH AMENDED AND RESTATED RIGHTS AGREEMENT (THE "RESTATED RIGHTS
AGREEMENT") is entered into as of _________, 1998, by and among RIBOGENE,
INC., a California corporation (the "COMPANY"), and
Bios Equity Fund L.P.
The Institute of Protein Research of the Academy of Sciences of the USSR,
Sierra Ventures III,
Sierra Ventures III International,
Xxxxxxx Xxxxxxx Xxxxxxxx & Xxxxx V
KPCB Zaibatsu Fund I,
Domain Partners II, L.P,
Xxxxxxx Xxxx,
Aperture Associates,
CW Ventures II, L.P.,
Biotechnology Investments Limited,
Oxford Bioscience Partners L.P.,
Oxford Bioscience Partners (Bermuda) Limited Partnership,
Oxford Bioscience Partners (Adjunct) L.P.,
Dominion Fund II,
Dominion Ventures, Inc.,
Hyline Laboratories, Inc.,
Silicon Valley Bank,
SBC Capital Markets, Inc. and an individual affiliated therewith,
Xxxxxx Laboratories,
all purchasers of Series C Shares under the Fourth Purchase Agreement,
and Dainippon Pharmaceutical Co., Ltd.
(hereinafter jointly referred to as the "SHAREHOLDERS").
WHEREAS, the Company, the Institute of Protein Research of the Academy
of Sciences of the USSR ("IPR"), Sierra Ventures III ("SIERRA III") and
Sierra Ventures III International ("SIERRA INTERNATIONAL", and collectively
with Sierra III, "SIERRA") are parties to a Preferred Stock and Warrants
Purchase Agreement dated May 23, 1990 (the "FIRST PURCHASE AGREEMENT"),
pursuant to which the Company sold, and IPR and Sierra acquired, shares of
the Company's Series A Preferred Stock (the "SERIES A SHARES") and, in the
case of Sierra, warrants to purchase shares of the Company's capital stock
(the "SIERRA WARRANTS");
WHEREAS, the Company, Sierra, Xxxxxxx Xxxxxxx Xxxxxxxx & Xxxxx V ("KPCB
V"), KPCB Zaibatsu Fund I ("KPCB ZAIBATSU," and collectively with KPCB V,
"KPCB") and Xxxxxxx Xxxx are parties to a Series B Preferred Stock Purchase
Agreement dated June 5, 1991 (the "SECOND PURCHASE AGREEMENT"), pursuant to
which the Company sold and KPCB, Sierra
1.
and Xxxxxxx Xxxx acquired, shares of the Company's Series B Preferred Stock
(the "OLD SERIES B SHARES");
WHEREAS, the Company, Sierra, KPCB V, Domain Partners II, L.P,
("DOMAIN") and Aperture Associates ("APERTURE") are parties to a Series B
Preferred Stock and Warrant Purchase Agreement dated February 28, 1992 as
amended on June 29, 1992 (the "THIRD PURCHASE AGREEMENT"), pursuant to which
the Company shares sold or shall sell, and Sierra, KPCB V, Domain and
Aperture have acquired or shall acquire, shares of the Company's Series B
Preferred Stock (the "NEW SERIES B SHARES," and collectively with the Old
Series B Shares, the "SERIES B SHARES") and warrants to purchase up to an
aggregate of 3,295,226 shares of the Company's Common Stock, which have since
terminated;
WHEREAS, the Company, Sierra, KPCB V, Domain, Aperture, CW Ventures II,
L.P. ("CW"), Xxxxxxxx X. Xxxxxxx, Xxxx Xxxxxxxxxx, JMC Family Partnership,
Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxx, Xxxx Xxxxxxxxxx, Xxxxx Xxxxxx, and Xxx
Xxxxx Xxxxxx and Xxxxxxx X. Xxxxx, as Joint Tenants with Rights of
Survivorship are or may be parties to a Series C Preferred Stock Purchase
Agreement dated March 31, 1993, or Amendment No. 1 thereto dated June 4, 1993
(collectively the "FOURTH PURCHASE AGREEMENT"), pursuant to which the Company
has sold, and Sierra, KPCB, Domain, Aperture, CW, Xxxxxxxx X. Xxxxxxx, Xxxx
Xxxxxxxxxx, JMC Family Partnership, Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxx, Xxxx
Xxxxxxxxxx and Xxxxx Xxxxxx have acquired, shares of the Company's Series C
Preferred Stock (the "SERIES C SHARES") and CW purchased a warrant to
purchase shares of the Company's Series D Preferred Stock, which warrant was
subsequently exercised for shares of the Company's Series D Preferred Stock
(the "CW WARRANT SHARES");
WHEREAS, the Company elected a 1-for-10 share reverse stock split on
August 2, 1993 pursuant to which all shares of the Company's capital stock
were automatically converted into one-tenth (1/10) of one share such class and
series of stock (all share numbers stated hereafter are stated in post-split
numbers).
WHEREAS, the Company, Sierra, KPCB V, Domain, Aperture, CW,
Biotechnology Investments Limited(1) ("BIL"), Oxford Bioscience Partners
L.P., Oxford Bioscience Partners (Bermuda) Limited Partnership, and Oxford
Bioscience Partners (Adjunct) L.P. (collectively with the previous two Oxford
Bioscience funds, "OXFORD"), and Dominion Fund II ("DOMINION FUND") are
parties to a Series E Preferred Stock Purchase Agreement dated April 26,
1994, as amended June 13, 1994 (the "FIFTH PURCHASE AGREEMENT"), pursuant to
which the Company has sold, and Sierra, KPCB, Domain, Aperture, CW, BIL,
Oxford and Dominion Fund have acquired, shares of the Company's Series E
Preferred Stock (the "FIRST SERIES E SHARES");
WHEREAS, the Company effected a 4-for-3 share stock split of the
outstanding Series E Preferred Stock on November 9, 1995, pursuant to which
all shares of the Company's Series E Preferred Stock were automatically
converted into one and one third shares (1-1/3) of such series of stock (all
share numbers stated hereafter are stated in post-split numbers);
---------------
1 Shares purchased by Biotechnology Investments Limited will be held under
the record name of "Old Court Limited."
2.
WHEREAS, the Company, Sierra, KPCB V, Domain, Aperture, CW, BIL and
Oxford are parties to a Conversion Agreement of dated November 10, 1995, (the
"CONVERSION AGREEMENT"), pursuant to which the Company has sold, and Sierra,
KPCB V, Domain, Aperture, CW, BIL and Oxford have acquired, shares of the
Company's Series E Preferred Stock (the "SECOND SERIES E SHARES");
WHEREAS, Sierra has acquired an aggregate of 73,500 shares of the
Company's Series B Preferred Stock by exercising in full the Sierra Warrants
(the "SIERRA WARRANT SHARES"), CW has acquired an aggregate of 270,222 shares
of the Company's Series D Preferred Stock by exercising in full the CW
Warrant (the "CW WARRANT SHARES"), and IPR and Sierra have acquired an
aggregate of 4,757 shares of the Company's Series A Preferred Stock as a
dividend pursuant to Section 1.1(d) of the First Purchase Agreement (the
"DIVIDEND SHARES");
WHEREAS, the Company intends to issue up to an additional 21,546 shares
of its Series B Preferred Stock to Dominion Ventures, Inc. ("DOMINION") upon
exercise of a warrant dated August 9, 1991 (as such amount may be adjusted by
the terms of such warrant, the "DOMINION B WARRANT SHARES"), up to an
additional 15,000 shares of its Series C Preferred Stock to Dominion upon
exercise of a warrant dated June 4, 1993 (as such amount may be adjusted by
the terms of such warrant, the "DOMINION C WARRANT SHARES"), up to an
additional anticipated 17,777 shares of its Series E Preferred Stock to
Dominion upon exercise of a warrant issued in May 1994 (such final amount, as
such amount may be adjusted by the terms of such warrant, to be the "DOMINION
E WARRANT SHARES" and collectively with the Dominion B Warrant Shares and the
Dominion E Warrant Shares, the "DOMINION WARRANT SHARES"), up to an
additional 1,300,000 shares of its Common Stock to Hyline Laboratories, Inc.
("HYLINE") upon exercise of warrant dated January 5, 1994 (the "HYLINE
WARRANT" and the shares of Common Stock issuable thereunder as the "HYLINE
WARRANT SHARES"), up to an additional 13,000 shares of its Common Stock to
Rip Xxxxxxxx & Associates, Inc. ("BROKER") upon exercise of a warrant dated
January 5, 1994 (the "BROKER WARRANT SHARES"), up to an additional 33,333
shares of its Series E Preferred Stock to Silicon Valley Bank ("SVB") upon
exercise of a warrants dated May 19, 1995 and September 25, 1995 (the "SVB
WARRANT SHARES"), and 52,850 shares of Common Stock to SBC Capital Markets,
Inc. and an individual affiliated therewith (together, "SBC") upon exercise
of warrants dated September 20, 1995 (the "SBC WARRANT SHARES");
WHEREAS, the Company and the Shareholders, other than the Shareholder
purchasing the Series G Shares as of the date hereof, are also parties to a
Rights Agreement originally dated June 26, 1990, as amended and restated on
June 5, 1991 and as amended on August 9, 1991, as amended and restated on
February 28, 1992, June 29, 1992, March 31, 1993, June 4, 1993, January 5,
1994, April 26, 1994 and June 13, 1994, and as amended September 20, 1995,
and as amended and restated on May 1, 1996 (the "RIGHTS AGREEMENT"), pursuant
to which the Company granted to such Shareholders certain registration rights
and a right of first offer; and
WHEREAS, the Company and Xxxxxx Laboratories ("ABBOTT") are parties to a
Series E Preferred Stock Purchase Agreement dated May 1, 1996 (the "SIXTH
PURCHASE AGREEMENT"), pursuant to which the Company has sold, and Abbott has
acquired, shares of the Company's Series E Preferred Stock (together with all
other shares of Company capital stock purchased by Abbott as a result of the
provisions of the Sixth Purchase Agreement that are "RESTRICTED SECURITIES"
under the Securities Act of 1933, the "ABBOTT SHARES");
3.
WHEREAS, the Company, Sierra, KPCB V, Domain, Aperture, CW, BIL, Oxford,
Dominion Fund and Bios Equity Fund L.P. ("BIOS") are parties to a Series E
Preferred Stock Purchase Agreement dated May 1, 1996 (the "SEVENTH PURCHASE
AGREEMENT"), pursuant to which the Company has sold, and Sierra, KPCB V,
Domain, Aperture, CW, BIL, Oxford, Dominion Fund and Bios have acquired,
shares of the Company's Series E Preferred Stock (the "THIRD SERIES E SHARES"
and collectively with the First Series E Shares and the Second Series E
Share, the "SERIES E SHARES,")
WHEREAS, The Company and Dainippon Pharmaceutical Co. Ltd. ("DAINIPPON")
are parties to a Series G Preferred Stock Purchase Agreement of even date
herewith (the "EIGHTH PURCHASE AGREEMENT"), pursuant to which the Company
will sell, and Dainippon will acquire shares of the Company's Series G
Preferred Stock (the "SERIES G SHARES", which, taken collectively with the
Series A Shares, the Series B Shares, the Series C Shares, the CW Warrant
Shares, the Sierra Warrant Shares, the Dividend Shares, the Dominion Warrant
Shares, the Hyline Warrant Shares, the Broker Warrant Shares, the SVB Warrant
Shares, the SBC Warrant Shares and the Abbott Shares are referred to herein
as the "SHARES");
WHEREAS, the Company and the Shareholders wish to execute this Restated
Rights Agreement and grant the Shareholder purchasing the Series G Shares the
rights contained herein in order to provide it with a further inducement to
purchase such Shares;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
1. TERMINATION OF PRIOR RIGHTS. The Shareholders, who include a
majority in interest of the "Shareholders" who are parties to the Rights
Agreement, and the Company hereby terminate the Rights Agreement and in place
thereof enter into this Restated Rights Agreement which shall be the sole
agreement among the Shareholders and the Company relating to the subject
matter hereof.
2. AMENDMENT. Except as expressly provided herein, neither this
Restated Rights Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the
party against whom enforcement of any such amendment, waiver, discharge or
termination is sought; PROVIDED, HOWEVER, that any provisions hereof may be
amended, waived, discharged or terminated upon the written consent of the
Company and the holders of a majority of the outstanding Registrable
Securities (as defined below), determined on the basis of assumed conversion
of all Shares into Registrable Securities.
3. REGISTRATION RIGHTS.
3.1 DEFINITIONS. As used in this Restated Rights Agreement:
(a) The terms "REGISTER," "REGISTERED," and "REGISTRATION"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act of 1933, as amended (the
"ACT") and the subsequent declaration or ordering of the effectiveness of
such registration statement.
(b) The term "REGISTRABLE SECURITIES" means:
4.
(i) the shares of Common Stock constituting or issuable
or issued upon conversion or exercise of (1) the Series A Shares, (2) the
Series B Shares, (3) the Series C Shares, (4) the Series E Shares, (5) the
Common Warrant Shares, (6) the CW Warrant Shares, (7) the Dividend Shares,
(8) the Sierra Warrant Shares, (9) the Dominion Warrant Shares, (10) the
Hyline Warrant, (11) the Broker Warrant, (12) the SVB Warrant Shares, (13)
the SBC Warrant Shares, (14) the Abbott Shares, and (15) the Series G Shares
(the shares of Common Stock referred to in the foregoing clauses (1) through
(15) being collectively referred to hereafter as the "STOCK"); and
(ii) any other shares of Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant, right
or other security which is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, the Stock, excluding all
cases, however, any Registrable Securities, or Registrable Securities
issuable upon the exercise of other securities, sold by a person in a
transaction in which his or her rights under this Restated Rights Agreement
are not assigned;
PROVIDED, HOWEVER, that Common Stock or other securities shall only be
treated as Registrable Securities if and so long as they have not been (A)
sold to or through a broker or dealer or underwriter in a public distribution
or a public securities transaction, or (B) sold in a transaction exempt from
the registration and prospectus delivery requirements of the Act under
Section 4(1) thereof, in either case, so that all transfer restrictions, and
restrictive legends with respect thereto, if any, are removed upon the
consummation of such sale.
Notwithstanding the foregoing, or any other provision herein to the
contrary, the parties hereto understand and agree that the Dominion Warrant
Shares shall be entitled only to "piggy-back" and Form S-3 registration
rights hereunder. Consequently, neither the Dominion Warrant Shares nor the
Common Stock issuable upon conversion thereof shall be deemed Registrable
Securities or Stock, and the holders of such Dominion Warrant Shares shall
not be deemed Shareholders, Holders or Rightholders as such terms are used
herein for purposes of Sections 3.2, 3.6, 3.14 and 4.
(c) The number of shares of "REGISTRABLE SECURITIES THEN
OUTSTANDING" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities (including, without
limitation, then exercisable warrants) which are, Registrable Securities.
(d) The term "HOLDER" means any holder of outstanding
Registrable Securities who acquired such Registrable Securities in a
transaction or series of transactions not involving any registered public
offering.
(e) The term "FORM S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the Securities and Exchange Commission ("SEC") which permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
3.2 REQUESTED REGISTRATION.
5.
(a) If the Company shall receive at any time after the
earlier of (i) March 31, 1998, or (ii) three (3) months after the effective
date of the first registration statement for a public offering of securities
of the Company (other than a registration statement relating either to the
sale of securities to employees of the Company pursuant to a stock option,
stock purchase or similar plan or an SEC Rule 145 transaction), a written
request from the Holders of at least twenty-five percent (25%) of the
Registrable Securities then outstanding that the Company file a registration
statement under the Act coveting the registration of the lesser of (A) at
least twenty-five percent (25%) of the Registrable Securities then
outstanding (or a lesser percent if the anticipated aggregate offering price
would exceed $2,000,000) or (B) 250,000 Registrable Securities, then the
Company shall, within ten (10) days of the receipt thereof, give written
notice of such request to all Holders and shall, subject to the limitations
of subsection 3.2(b), effect as soon as practicable, and in any event within
ninety (90) days of the receipt of such request, the registration under the
Act of all Registrable Securities which the Holders request to be registered
within twenty (20) days of the mailing of such notice by the Company in
accordance with Section 5.5.
(b) If the Holders initiating the registration request
hereunder ("INITIATING HOLDERS") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall
so advise the Company as a part of their request made pursuant to this
Section 3.2 and the Company shall include such information in the written
notice referred to in subsection 3.2(a). In such event, the right of any
Holder to include his Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Holders
participating in such public offering (the "PARTICIPATING HOLDERS") and the
underwriter of such offering) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 3.4(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority interest of the Participating
Holders. Notwithstanding any other provision of this Section 3.2, if the
underwriter advises the Participating Holders in writing that marketing
factors require a limitation of the number of shares to be underwritten, then
the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Participating Holders in proportion
(as nearly as practicable) to the amount of Registrable Securities of the
Company owned by each Participating Holder.
(c) The Company is obligated to effect only two (2) such
registrations pursuant to this Section 3.2.
(d) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this
Section 3.2, a certificate signed by the President of the Company stating
that in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company and its shareholders for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, the Company shall have the right to
defer such filing for a period of not more than ninety (90) days after
receipt of the request of the Initiating Holders; PROVIDED, HOWEVER, that the
Company may not utilize this right more than once in any twelve (12) month
period.
6.
3.3 COMPANY REGISTRATION. If (but without any obligation to do so)
the Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Holders) any of its
Common Stock or other securities under the Act in connection with the public
offering of such securities solely for cash (other than a registration
relating either to the sale of securities to participants in a Company stock
option, stock purchase or similar plan or to an SEC Rule 145 transaction, or
a registration on any other form not reasonably and customarily appropriate
for this purpose), the Company shall, at such time, promptly give each Holder
written notice of such registration. Upon the written request of each Holder
given within twenty (20) days after mailing of such notice by the Company in
accordance with Section 5.5, the Company shall subject to the provisions of
Section 3.8, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
3.4 OBLIGATIONS OF THE COMPANY. Whenever required under this
Section 3 to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for up to one hundred twenty (120)
days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Securities
owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities
or Blue Sky laws of such jurisdictions as shall be reasonably requested by
the Holders, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering. Each
Holder participating in such underwriting shall also enter into and perform
its obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
requited to be delivered under the Act of the happening of any event as a
result of which the prospectus included in such
7.
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact requited to be stated therein
or necessary to make the statements therein not misleading in the light of
the circumstances then existing.
(g) Furnish, at the request of any Holder requesting registration
of Registrable Securities pursuant to this Section 3, on the date that such
Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 3, if such securities
are being sold through underwriters, or, if such securities are not being
sold through underwriters, on the date that the registration statement with
respect to such securities becomes effective, (i) an opinion, dated such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters
in an underwritten public offering, addressed to the underwriters, if any,
and to the Holders requesting registration of Registrable Securities and (ii)
a letter dated such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public
offering, addressed to the underwriters, if any, to the Holders requesting
registration of Registrable Securities.
3.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 3 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such
Holder's Registrable Securities.
3.6 EXPENSES OF DEMAND REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 3.2, including
(without limitation), all registration, filing and qualification fees,
printers and accounting fees, fees and disbursements of counsel for the
Company, and the reasonable fees and disbursements of one counsel for the
selling Holders shall be borne by the Company; PROVIDED, HOWEVER, that the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 3.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all Participating
Holders shall bear such expenses), unless the Holders of a majority of the
Registrable Securities agree to forfeit their right to one (1) demand
registration pursuant to Section 3.2; PROVIDED FURTHER, HOWEVER, that if at
the time of such withdrawal, the Holders have learned of a material adverse
change in the condition, business, or prospects of the Company from that
known to the Holders at the time of their request, then the Holders shall not
be required to pay any of such expenses and shall retain their rights
pursuant to Section 3.2.
3.7 EXPENSES OF COMPANY REGISTRATION. The Company shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 3.3 for each Holder (which right may be assigned as
provided in Section 3.13), including (without limitation) all registration,
filing, and qualification fees, printers and accounting fees relating to or
apportionable thereto and
8.
the fees and disbursements of one counsel for the selling Holders selected by
them, but excluding underwriting discounts and commissions relating to
Registrable Securities.
3.8 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required under Section 3.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected
by it, and then only in such quantity as will not, in the written opinion of
the underwriters, jeopardize the success of the offering by the Company. If
the total amount of securities, including Registrable Securities, requested
by shareholders to be included in such offering exceeds the amount of
securities sold other than by the Company that the underwriters reasonably
believe 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 Securities, which the underwriters believe will not
jeopardize the success of the offering (the securities so included to be
apportioned pro rata among the selling shareholders according to the total
amount of securities entitled to be included therein owned by each selling
shareholder or in such other proportions as shall mutually be agreed to by
such selling shareholders); but in no event shall (i) the amount of
securities of the selling Holders included in the offering be reduced below
twenty-five percent (25%) 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 shareholders may be excluded
if the underwriters make the determination described above and no other
shareholder's securities are included or (ii) notwithstanding (i) above, any
shares being sold by a shareholder exercising a demand registration right
similar to that granted in Section 3.2 be excluded from such offering. For
purposes of the preceding parenthetical concerning apportionment, for any
selling shareholder which is a holder of Registrable Securities and which is
a partnership or corporation, the partners, retired partners and shareholders
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 SHAREHOLDER," and any pro
rata reduction with respect to such selling shareholder shall be based upon
the aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such "SELLING SHAREHOLDER," as defined
in this sentence.
3.9 DELAY OF REGISTRATION. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 3.
3.10 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 3:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the Securities Exchange Act of 1934, as
amended (the "1934 ACT"), against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Act, the 1934
Act or other federal or, state law, insofar as such losses, claims, damages,
or liabilities (or actions in respect thereof) arise out of or are based upon
any of the following statements, omissions or violations (collectively a
"VIOLATION"): (i) any untrue statement or alleged untrue
9.
statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission
to state therein a material fact required to be stated therein, or necessary
to make the statements therein not misleading, or (iii) any violation or
alleged violation by the Company of the Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Act, the 1934
Act or any state securities law; and the Company will pay as incurred to each
such Holder, underwriter or controlling person, any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; PROVIDED, HOWEVER, that the
indemnity agreement contained in this subsection 3.10(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability, or
action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld or delayed), nor shall the
Company be liable in any such case for any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration
by the Holder, underwriter or controlling person seeking indemnification
hereunder.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any
other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any
losses, claims, damages, or liabilities (joint or several) to which any of
the foregoing persons may become subject, under the Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon
any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such
registration; and each such Holder will pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified
pursuant to this subsection 3.10(b), in connection with investigating or
defending any such loss, claim, damage, liability, or action; PROVIDED,
HOWEVER, that the indemnity agreement contained in this subsection 3.10(b)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld or
delayed; provided that in no event shall any indemnity under this subsection
3.10(b) exceed the gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 3.10 of notice of a claim or of the commencement of any action
(including any governmental claim or action), such indemnified party will, if
claim in respect thereof is to be made against any indemnifying party under
this Section 3.10, deliver to the indemnifying party a written notice of the
claim or the commencement of the action and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to
assume the defense thereof with counsel mutually satisfactory to the parties;
PROVIDED, HOWEVER, that an indemnified party shall have the right to retain
its own counsel with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified
10.
party and any other party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 3.10 only to the extent
that it was so prejudiced, but the omission so to deliver written notice to
the indemnifying party will not relieve it of any liability that it may have
to any indemnified party otherwise than under this Section 3.10.
(d) The obligations of the Company and Holders under this Section
3.10 shall survive the completion of, any offering of Registrable Securities
in a registration statement under this Section 3, and otherwise.
3.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after ninety (90)
days after the effective date of the first registration statement filed by
the Company for the offering of its securities to the general public;
(b) take such action, including the voluntary registration of its
Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities,
such action to be taken as soon practicable after the end of the fiscal year
in which the first registration statement filed by the Company for the
offering of its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act;
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at
any time after it has become subject to such reporting requirements), or that
it qualifies as a registrant whose securities may be resold pursuant to Form
S-3 (at any time after it so qualifies), (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without registration or
pursuant to such form;
(e) upon the request of any Holder, remove all legends and stop
transfer orders on such Holder's Registrable Securities (i) at such time as
such Registrable Securities qualify for sale under Rule 144(k), or (ii) in
connection with a sale of such Registrable Securities pursuant to the other
provisions of Rule 144;
11.
(f) use at its best efforts to otherwise comply with the
"REGISTRANT REQUIREMENTS" for the use of Form S-3.
3.12 FORM S-3 REGISTRATION. In case the Company shall receive from any
Holder or Holders owning in the aggregate at least the lesser of (i) twenty
percent (20%) of the Registrable Securities then outstanding (or a lesser
percent if the fair market value of the Registrable Securities held by such
Holder(s) would exceed $2,000,000) or (ii) 250,000 Registrable Securities
(adjusted to reflect subsequent stock splits, stock dividends or
recapitalization), a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder
or Holders, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within 15 days after receipt of such written notice from the Company;
PROVIDED, HOWEVER, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 3.12, (1)
if Form S-3 is not available for such offering by the Holders; (2) if the
Holders, together with the holders of any other securities of the Company
entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate price to the
public (net of any underwriters' discounts or commissions) of less than
$500,000; (3) if the Company shall furnish to the Holders a certificate
signed by the president of the Company stating that in the good faith
judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its shareholders for such Form S-3
Registration to be effected at such time, in which event the Company shall
have the right to defer the filing of the Form S-3 registration statement for
a period of not more than ninety (90) days after receipt of the request of
the Holder or Holders under this Section 3.12, PROVIDED, HOWEVER, that the
Company shall not utilize this right more than once in any twelve month
period; (4) if the Company has, within the six (6) month period preceding the
date of such request, already effected one registration on Form S-3 for the
Holders pursuant to this Section 3.12; or (5) in any particular jurisdiction
in which the Company would be required to qualify to do business or to
execute a general consent to service of process in effecting such
registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt
of the request or requests of the Holders. All expenses incurred in
connection with a registration requested pursuant to Section 3.12, including
(without limitation) all registration, filing, qualification, printer's and
accounting fees and the reasonable fees and disbursements of counsel for the
selling Holder or Holders and counsel for the Company, shall be borne pro
rata by the Holder or Holders participating in the Form S-3 Registration;
PROVIDED, HOWEVER, that the Company shall bear any auditing expenses that
shall be
12.
incurred in the normal course of business and shall bear all regular salary
expenses of its employees. Registrations effected pursuant to this Section
3.12 shall not be counted as demands for registration or registrations
effected pursuant to Section 3.2 or 3.3.
3.13 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to this Section 3 may be assigned
by a Holder to a transferee or assignee of at least the lesser of (i) 150,000
shares (adjusted to reflect subsequent stock splits, stock dividends or
recapitalization) or (ii) all of such Holder's Registrable Securities
provided the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights
are being assigned; and provided, further, that such assignment shall be
effective only if immediately following such transfer the further disposition
of such securities by the transferee or assignee is restricted under the Act.
The foregoing share limitation shall not apply, however, to transfers by a
Holder to shareholders, partners (including limited partners) or retired
partners of the Holder (including spouses and ancestors, lineal descendants
and siblings of such partners or spouses, or trusts for their benefit, who
acquire Registrable Securities by glib, will or interstate succession) if all
such transferees or assignees agree in writing to appoint a single
representative as their attorney in fact for the purpose of receiving any
notices and exercising their rights under Section 3.
3.14 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date of this Restated Rights Agreement, the Company shall not, without the
prior written consent of the Holders of a majority of the outstanding
Registrable Securities, enter into any agreement with any holder or
prospective holder of any securities of the Company which would allow such
holder or prospective holder (a) to include such securities in any
registration filed under Section 3.2 hereof, unless under the terms of such
agreement, such holder or prospective holder may include such securities in
any such registration only to the extent that the inclusion of his securities
will not reduce the amount of the Registrable Securities of the Holders which
is included or (b) to make a demand registration which could remit in such
registration statement being declared effective prior to the earlier of
either of the dates set forth in subsequent 3.2(a) or within one hundred
twenty (120) days of the effective date of any registration effected pursuant
to Section 3.2.
3.15 "MARKET STAND-OFF" AGREEMENT. The Holder hereby agrees that
during the 180-day period following the effective date of a registration
statement of the Company filed under the Act, it shall not, to the extent
requested by the Company and such underwriter, sell or otherwise transfer or
dispose of (other than to donees who agree to be similarly bound) any Common
Stock of the Company held by it at any time during such period except Common
Stock included in such registration; PROVIDED, HOWEVER, that:
(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten
offering; and
(b) all officers and directors of the Company and all other
persons with registration rights (whether or not pursuant to this Restated
Rights Agreement) enter into similar agreements.
13.
To enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to the Registrable Securities of the Holder (and
the shares or securities of every other person subject to the foregoing
restriction) until the end of such period.
3.16 TERMINATION OF REGISTRATION RIGHTS. No Holder shall be entitled
to exercise any right provided for in this Section 3: (a) after seven (7)
years following the consummation of the Company's sale of its Common Stock in
a bona fide, firm commitment underwriting pursuant to a registration
statement on Form S-1 under the Act which results in aggregate gross cash
proceeds to the Company in excess of $7,500,000 and the public offering price
of which is not less than $5.00 per share (adjusted to reflect subsequent
stock dividends, stock splits or recapitalization) (other than a registration
statement relating either to the sale of securities to employees of the
Company pursuant to a stock option, stock purchase or similar plan or a SEC
Rule 145 transaction); or (b) at such time following the Company's initial
public offering and for so long as such Holder may sell all of such Holder's
Registrable Securities in any one three-month period pursuant to Rule 144 (or
such successor rule as may be adopted).
3.17 LIMIT ON SALES. Notwithstanding anything herein to the contrary,
none of (a) Hyline, (b) Xxxxxx, (c) Dainippon, or (d) the remaining Holders
of Registrable Securities as a group, respectively, shall dispose of more
than 250,000 shares of Registrable Securities within any three-month period
after the date of this Agreement pursuant to a registration made under
Sections 3.2 or 3.12 above; PROVIDED, HOWEVER, that if Hyline, Xxxxxx, or
Dainippon wishes to so dispose of more than 250,000 shares of Registrable
Securities in any such period, it may do so provided that (i) it delivers to
the Company a written notice not less than ninety (90) days prior to the date
on which shares in excess of 250,000 will be disposed of stating its desire
to so dispose of Registrable Securities and setting forth the aggregate
number of shares that Hyline, Abbott, or Dainippon wishes to so dispose of in
the such three-month period and (ii) the Company does not receive a writing
from its principal investment banker or equivalent financial advisor advising
the Company that marketing factors require a limitation of the number of
shares to be underwritten at such time, which limitation would otherwise be
exceeded by the registration of in excess of 250,000 shares of Registrable
Securities by Hyline, Abbott, or Dainippon.
3.18 SUBSEQUENT RIGHTS. If, after the date of this Agreement, the
Company shall grant registration rights to a third party different from the
rights set forth in this Section 3, the following shall apply on each such
occasion until the right set forth in this Section 3.18 is exercised:
(i) The Company shall first deliver to each of Hyline, Abbott, and
Dainippon a written notice (the "NOTICE") setting forth the material terms of
such subsequent registration rights (the "SUBSEQUENT RIGHTS").
(ii) For a period of thirty (30) days after the receipt of the
Notice (the "NOTICE PERIOD"), Hyline, Abbott and Dainippon shall each have
the right, but not the obligation, to surrender its registration rights under
this Section 3 and agree to accept and be bound by the terms of the
Subsequent Rights (the "EXCHANGE RIGHT"). If Hyline, Abbott and/or Dainippon
chooses to so exercise the Exchange Right, it shall deliver a written notice
of such intent to the Company and enter into an agreement with the Company
pursuant to which it will surrender its
14.
registration rights under this Section 3 and the Company will grant to
Hyline, Abbott and/or Dainippon, as appropriate, the Subsequent Rights.
(iii) To the extent that Hyline, Abbott, or Dainippon declines to
exercise the Exchange Right within the Notice Period, it shall retain its
registration rights and the Exchange Right under this Section 3 with respect
to future Subsequent Rights, if any, and shall not be entitled to, nor bound
by, the Subsequent Rights so declined.
4. ADDITIONAL RIGHTS.
4.1 RIGHT OF FIRST REFUSAL. Subsequent to the terms and
conditions specified in this Section 4.1, and subject to any limitations
imposed by applicable laws governing the nature and extent of foreign
investment in companies domiciled in the U.S., the Company hereby grants to
each Shareholder, so long as such Shareholder holds at least 50,000 Shares
(or, in the case of a holder of the Hyline Warrant, the portion of such
warrant so held represents the right to purchase at least 50,000 Shares) (as
subsequently adjusted for subsequent stock splits, stock dividends or
recapitalization) (the "RIGHTHOLDER"), a right of first offer with respect to
future sales by the Company of its New Securities (as hereinafter defined).
For purposes of this Section 4.1, the term Rightholder includes any partners,
shareholders or affiliates of the Rightholder. The Rightholder shall be
entitled to apportion the right of first offer hereby granted among itself
and its partners, shareholders and affiliates in such proportions as it deems
appropriate.
(a) In the event the Company proposes to issue New
Securities, it shall give the Rightholder written notice (the "NOTICE") of
its intention stating (i) a description of the New Securities it proposes to
issue, (ii) the number or shares of New Securities it proposes to offer,
(iii) the price per share at which, and other terms on which, it proposes to
offer such New Securities and (iv) the number of shares that the Rightholder
has the right to purchase under this Section 4.1, based on the Rightholder's
Percentage (as defined in Section 4.1(d)(ii)).
(b) Within thirty (30) days after the Notice is given (in
accordance with Section 5.5), the Rightholder may elect to purchase, at the
price specified in the Notice, up to the number of shares of the New
Securities proposed to be issued that the Rightholder has the right to
purchase as specified in the Notice. An election to purchase shall be made
in writing and must be given to the Company within such thirty (30) day
period (in accordance with Section 5.5). The closing of the sale of New
Securities by the Company to the participating Rightholder upon exercise of
its rights under this Section 4.1 shall take place simultaneously with the
closing of the sale of New Securities to third parties. Notwithstanding the
foregoing, the thirty-day period set forth above shall be fifteen (15) days
with respect to the holder(s) of the Hyline Warrant, other than a Shareholder
who holds other Shares in addition to such Hyline Warrant.
(c) The Company shall have ninety (90) days after the last
date on which the Rightholder's right of first offer lapsed to enter into an
agreement (pursuant to which the sale of New Securities covered thereby shall
be closed, if at all, within forty-five (45) days from the execution thereof)
to sell the New Securities which the Rightholder did not elect to purchase
under this Section 4.1, at or above the price and upon terms not materially
more favorable to the purchasers of such securities than the terms specified
in the initial Notice given in connection with such sale. In the event the
Company has not entered into an agreement to sell
15.
the New Securities within such ninety (90) day period (or sold and issued New
Securities in accordance with the foregoing within forty-five days from the
date of said agreement), the Company shall not thereafter issue or sell any
New Securities without first offering such New Securities to the Rightholder
in the manner provided in this Section 4.1.
(d) (i) "NEW SECURITIES" shall mean any shares of, or securities
convertible into or exercisable for any shares of, any class of the Company's
capital stock; provided that "NEW SECURITIES" does not include : (i) the
Shares or the Common Stock issuable upon conversion thereof; (ii) securities
issued pursuant to the acquisition of another business entity by the Company
by merger, purchase of substantially all of the assets of such entity, or
other reorganization whereby the Company owns not less than a majority of the
voting power of such entity; (iii) shares or options to purchase shares, of
the Company's Common Stock and the shares of Common Stock issuable upon
exercise of such options, issued pursuant to any arrangement approved by the
Board of Directors to employees, officers and directors of, or consultants,
advisors or other persons performing services for, the Company; (iv) shares
of the Company's Common Stock or Preferred Stock of any series issued in
connection with any stock split, stock dividend or recapitalization of the
Company; (v) Common Stock issued upon exercise of warrants, options or
convertible securities if the issuance of such warrants, options or
convertible securities was a result of the exercise of the right of first
offer granted under this Section 4.1 or was subject to the right of first
offer granted under this Section 4.1; (vi) capital stock or warrants or
options for the purchase of shares of capital stock issued by the Company to
a lender in connection with any loan or lease financing transaction; and (vii)
securities sold to the public in an offering pursuant to a registration
statement filed with the Securities and Exchange Commission under the Act.
(ii) The applicable "PERCENTAGE" for the Rightholder shall
be the number of shares of New Securities calculated by dividing (i) the
total number of shares of Common Stock owned by the Rightholder (assuming
conversion of all shares of Preferred Stock and exercise of the Hyline
Warrant) by (ii) the total number of shares of Common Stock outstanding at the
time the Notice is given (assuming conversion of all shares of Preferred
Stock and exercise of the Hyline Warrant); PROVIDED, HOWEVER, that IPR shall
not be entitled to purchase more than that number of shares of New Securities
the aggregate purchase price of which is equal to the cumulative sum of
$25,000 for each calendar quarter that has elapsed from June 26, 1990 until
the time of exercise of the right of first offer provided by this Section
4.1, less the aggregate purchase price of any New Securities already
purchased by the Rightholder pursuant to this Section 4.1; provided that in
no case may the number of shares of capital stock of the Company owned by the
Rightholder equal or exceed 25.1% of the total number of outstanding shares
of capital stock of the Company.
(e) The right of first offer granted under this Section 4.1
shall expire upon the earlier of (a) March 31, 1998, or (b) following the
consummation of the Company's sale of its Common Stock in a bona fide, firm
commitment underwriting pursuant to a registration statement on Form S-1
under the Act which results in aggregate gross cash proceeds to the Company
in excess of $7,500,000 and the public offering price of which is not less
than $600 per share (as subsequently adjusted to reflect subsequent stock
dividends, stock splits or recapitalization)( other than a registration
statement relating either to the sale of securities to
16.
employees of the Company pursuant to a stock option, stock purchase or
similar plan or a SEC Rule 145 transaction).
(f) The right of first offer granted under this section may be
assigned by the Rightholder to a transferee or assignee of the Rightholder's
shares of the Company's stock acquiring the lesser of (a) at least 50,000 of
the Rightholder's shares of the Company's Common Stock (treating all shares
of Preferred Stock for this purpose as though convened into Common Stock and
the Hyline Warrant as having been exercised) (equitably adjusted for any stock
splits, subdivision stock dividends, changes, combinations or the like) or
(b) all of the Rightholder's remaining shares of the Company's stock. In the
event that the Rightholder shall assign its right of first offer pursuant to
this Section 4.1 in connection with the transfer of less than all of its
shares of the Company's stock, the Rightholder shall also retain its right of
first otter.
5. MISCELLANEOUS.
5.1 ASSIGNMENT. Subject to the provisions of Section 3.13 hereof,
the terms and conditions of this Restated Rights Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties hereto.
5.2 THIRD PARTIES. Nothing in this Restated Rights Agreement,
express or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Restated
Rights Agreement, except as expressly provided herein.
5.3 GOVERNING LAW. This Restated Rights Agreement shall be
governed by and construed under the laws of the State of California in the
United States of America.
5.4 COUNTERPARTS. This Restated Rights Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
5.5 NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be sent by prepaid registered or certified
mail, return receipt requested (or if the addressee and addresser are in
different countries, by prepaid registered or certified airmail, return
receipt requested, or by facsimile with confirmation of receipt), and
addressed, if to the Company, to its principal offices, or if to a
Shareholder, to the address for such Shareholder set forth on Exhibit A
hereto. Such notice shall be deemed to have been given when receipt is so
confirmed.
5.6 SEVERABILITY. If one or more provisions of this Restated
Rights Agreement are held to be unenforceable under applicable law, portions
of such provisions, or such provisions in their entirety, to the extent
necessary, shall be severed from this Restated Rights Agreement, and the
balance of this Restated Rights Agreement shall be enforceable in accordance
with its terms.
5.7 AMENDMENT AND WAIVER. Any provision of this Restated Rights
Agreement may be amended with the written consent of the Company and the
Holders of at least a majority of the outstanding shares of the Registrable
Securities. Any amendment or waiver
17.
effected in accordance with this paragraph shall be binding upon each Holder
of Registrable Securities, and the Company. In addition, the Company may
waive performance of any obligation owing to it, as to some or all of the
Holders of Registrable Securities, or agree to accept alternatives to such
performance, without obtaining the consent of any Holder of Registrable
Securities. In the event that an underwriting agreement is entered into
between the Company and any Holder, and such underwriting agreement contains
terms differing from this Restated Rights Agreement, as to any such Holder
the terms of such underwriting agreement shall govern.
5.8 EFFECT OF AMENDMENT OR WAIVER. Each Shareholder and its
successors and assigns acknowledge that by the operation of Section 5.7
hereof the holders, of a majority of the outstanding Registrable Securities,
acting in conjuction with the Company, will have the right and power to
diminish or eliminate all rights pursuant to this Restated Rights Agreement.
5,9 RIGHTS OF HOLDERS. Each holder of Registrable Securities
shall have the absolute right to exercise or refrain from exercising any
right or rights that such holder may have by reason of this Restated Rights
Agreement, including, without limitation, the right to consent to the waiver
or modification of any obligation under this Restated Rights Agreement, and
such holder shall not incur any liability to any other holder of any
securities of the Company as a result of exercising or refraining from
exercising any such right or rights.
5.10 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any pant to this Restated Rights
Agreement, upon any breach or default of the other xxxxx, shall impair any
such right, power or remedy of such nonbreaching party nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any since breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the part of any party
of any breach or default under this Restated Rights Agreement, or any waiver
on the part of any party of any provisions or conditions of this Restated
Rights Agreement, must be made in writing and shall be effective only to the
extent specifically set forth in such writing. All remedies, either under
this Restated Rights Agreement, or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
18.
IN WITNESS WHEREOF, the parties hereto have executed this Tenth Amended
and Restated Rights Agreement as of the day and year first above written.
COMPANY: SHAREHOLDERS:
RIBOGENE, INC.
By: ________________________ Xxxxxx Laboratories
-----------------------------------
(Print or Type Name of Shareholder)
Title: _____________________ By:
-------------------------------
Title:
----------------------------
-----------------------------------
(Print or Type Name of Shareholder)
By: _______________________________
Title: ____________________________
-----------------------------------
(Print or Type Name of Shareholder)
By: _______________________________
Title: ____________________________
19.
EXHIBIT A
SCHEDULE OF SHAREHOLDERS
Xxxxxx Laboratories Institute of Protein Research of the Russian
000 Xxxxxx Xxxx Xxxx Academy of Sciences
Xxxxxx Xxxx, XX 00000-0000 142292 Puschino
Attn: Dr. Xx Xxxxxx Moscow Region, Russia
Biotechnology Investments Limited (2) Dominion Fund II
c/o Domain Associates Dominion Ventures, Inc.
One Xxxxxx Square 00 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000 Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxxxxx
Oxford Bioscience Partners L.P. Xxxxxxx X. Xxxx
Oxford Bioscience Partners (Bermuda) Limited 0000 Xxxxx Xxxx
Xxxxxxxxxxx Xxxxxxxxxxxx, XX 00000
Oxford Bioscience Partners (Adjunct), L.P.
000 Xxxx Xxxxxx Xxxxx, Xxx. 000 CW Ventures II, L.P.
Cost Xxxx, XX 00000 0000 Xxxxx Xxxxxx
Attn: Xxxxxx Xxxxxxx Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
Domain Partners II, L.P. Xxxxxxxx X. Xxxxxxx
One Xxxxxx Square 000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
Sierra Ventures III Xxxx Xxxxxxxxxx
Sierra Ventures III International 0000 Xxxxxxx Xxxx Xxxxx
0000 Xxxx Xxxx Xxxx Xxxxxxx, XX 00000
Xxxxx Xxxx, XX 00000
Attn: Petri Vainio JMC Family Partnership
c/o Xxxx Xxxxxxxxxx
Xxxxxxx Xxxxxxx Xxxxxxxxx & Xxxxx V 0000 Xxxxxxx Xxxx Xxxxx
KPCB Zaibatsu Fund I Potomac, MD 20854
Xxxxx Xxxx, XX 00000
Attn: Xxxxxxxxx Xxxxxx Xxxxx X. Xxxx
0000 Xxxxxxx Xxx
Xxxxxx, XX 00000
Aperture Associates, L.P.
c/x Xxxxxxx Xxxxx Associates Xxxxxx X. Xxxxx
000 Xxxxxxxxxx Xxxxxx 0000 Xxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 000000 Xxx Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxx
----------------------
(2) These shares will be held under the record name of "Old Court Limited."
1.
SCHEDULE OF SHAREHOLDERS (CON'T.)
Xxxxx Xxxxxx Xxxxxxx X. Xxxx
2642 Xxxxx Street 0000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000 Xxxx Xxxx, XX 00000
Xxx Xxxxx Xxxxxx and Xxxxxxx X. Xxxxx, as Xxxx Xxxxxxxxxx
Joints Tenants with Rights of Survivorship 0000 Xxxxxxxx Xxxxx
00000 Xxxx Xxxx Xxxxx Xxxxxxx, XX 00000
Xxx Xxxxx, XX 00000
Hyline Laboratories, Inc. Silicon Valley Bank
000 Xxxxx Xxxxxx 0000 Xxxxxxxx Xxxxx
Xxxxxxxxx Xxxxxx, XX 00000 Xxxxx Xxxxx, XX 00000
Rip Xxxxxxxx & Associates, Inc. SBC Capital Markets, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 000 000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Attn: ______________________
Xx. Xxxxxx Xxxxxxxxx Bios Equity Fund, X.X.
Xxxxxxxxx Capital Management Corporation 000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000 Xxxxxxx, XX 00000
Xxxxxxx, XX 00000 Attn: ______________________
Dainippon Pharmaceutical Co., Ltd.
0 Xxxxxxxxxxx 0 xxxxx, Xxxx-xx
Xxxxx 000-0000
Xxxxx
Attention: President
2.
AMENDMENT NO. 1 TO THE SERIES E PREFERRED STOCK PURCHASE
AGREEMENT (THE "AGREEMENT")
RiboGene, Inc. (the "Company"), and Xxxxxx Laboratories hereby agree to
amend and restate Section 9.1(a) of the Agreement in its entirety as follows:
(a) INITIAL PUBLIC OFFERING. In the event that, within three
years from the date of this Agreement, the Company consummates a sale of
capital stock in a bona fide, firm commitment underwriting pursuant to a
registration statement under the Securities Act (other than a registration
statement relating either to the sale of securities to employees of the
Company pursuant to a stock option, stock purchase or similar plan or an SEC
Rule 145 transaction) with an aggregate Price to Public of not less than
$20,000,000 (inclusive of the Purchaser's purchase of stock hereunder) (the
"INITIAL PUBLIC OFFERING"), the Purchaser will purchase for cash from the
Company shares of the Company's capital stock at the Price to Public stated
on the front cover of the final prospectus distributed in connection with
such offering. Such purchase shall be consummated as a private transaction
which shall close simultaneous with the closing of the Initial Public
Offering, which shares shall be subject to registration rights to be negotiated
and agreed to by the parties. The number of securities to be purchased shall
be equal to $4,000,000 divided by the Price to Public, rounded to the nearest
whole share. The Purchaser's obligations under this subsection (a) shall be
conditioned upon the Company delivering to the Purchaser written notice of
the Initial Public Offering at least twenty days prior to the consummation
thereof.
Dated as of the 9th day of October, 1997.
-------
COMPANY:
RiboGene, Inc.
By:
------------------------------
Title:
------------------------------
PURCHASER:
Xxxxxx Laboratories
By:
------------------------------
Title:
-------------------------------
