EXHIBIT 10.4
COLLATERAL THERAPEUTICS, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
___________________
June 30, 1997
TABLE OF CONTENTS
PAGE
1. Purchase and Sale of Stock..................................... 1
1.1 Sale and Issuance of Series C Preferred Stock............ 1
1.2 Closing.................................................. 1
2. Representations and Warranties of the Company.................. 1
2.1 Organization; Good Standing; Qualification............... 1
2.2 Authorization............................................ 2
2.3 Valid Issuance of Preferred and Common Stock............. 2
2.4 Governmental Consents.................................... 2
2.5 Capitalization and Voting Rights......................... 3
2.6 Subsidiaries............................................. 3
2.7 Contracts and Other Commitments.......................... 4
2.8 Related-Party Transactions............................... 4
2.9 Registration Rights...................................... 4
2.10 Permits.................................................. 4
2.11 Compliance with Other Instruments........................ 4
2.12 Litigation............................................... 5
2.13 Disclosure............................................... 5
2.14 Offering................................................. 5
2.15 Title to Property and Assets; Leases..................... 5
2.16 Financial Statements..................................... 6
2.17 Changes.................................................. 6
2.18 Patents and Trademarks................................... 6
2.19 Proprietary Information and Inventions Agreements........ 7
2.20 Tax Returns, Payments, and Elections..................... 7
2.21 Section 83(b) Elections.................................. 7
2.22 Minute Books............................................. 7
2.23 Real Property Holding Corporation........................ 8
3. Representations and Warranties of Investors.................... 8
3.1 Authorization............................................ 8
3.2 Purchase Entirely for Own Account........................ 8
3.3 Reliance Upon Investors' Representations................. 8
3.4 Receipt of Information................................... 8
3.5 Investment Experience.................................... 9
3.6 Accredited Investor...................................... 9
3.7 Restricted Securities.................................... 10
3.8 Legends.................................................. 10
3.9 Public Sale.............................................. 11
3.10 Non U.S. Persons......................................... 11
4. Conditions of Investor's Obligations at the Closing............ 11
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4.1 Representations and Warranties........................... 11
4.2 Performance.............................................. 11
4.3 Compliance Certificate................................... 12
4.4 Qualifications........................................... 12
4.5 Proceedings and Documents................................ 12
4.6 Due Diligence............................................ 12
4.7 Opinion of Company Counsel............................... 12
4.8 Rights Agreement......................................... 12
5. Conditions of the Company's Obligations at the Closing......... 12
5.1 Representations and Warranties........................... 12
5.2 Payment of Purchase Price................................ 12
5.3 Qualifications........................................... 12
6. Miscellaneous.................................................. 13
6.1 Entire Agreement......................................... 13
6.2 Survival of Warranties................................... 13
6.3 Successors and Assigns................................... 13
6.4 Governing Law............................................ 13
6.5 Counterparts............................................. 13
6.6 Titles and Subtitles..................................... 13
6.7 Notices.................................................. 13
6.8 Finder's Fees............................................ 14
6.9 Expenses................................................. 14
6.10 Attorneys' Fees.......................................... 14
6.11 Amendments and Waivers................................... 14
6.12 Severability............................................. 14
6.13 Corporate Securities Law................................. 14
Exhibit A -- Amended and Restated Articles of Incorporation
Schedule A -- Schedule of Investors
Attachment A
ii
COLLATERAL THERAPEUTICS, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES C PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is
made as of the 30th day of June, 1997, by and between Collateral Therapeutics,
Inc., a California corporation (the "Company"), and the investors listed on
SCHEDULE A hereto, each of which is herein referred to as an "Investor" and
collectively referred to as the "Investors."
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
1.1 SALE AND ISSUANCE OF SERIES C PREFERRED STOCK.
(a) The Company shall adopt and file with the Secretary of
State of California on or before the Closing (as defined below) an Amended and
Restated Articles of Incorporation in the form attached hereto as EXHIBIT A (the
"Restated Articles").
(b) Subject to the terms and conditions of this Agreement,
each Investor agrees, severally, to purchase at the Closing pursuant to Section
1.2, and the Company agrees to sell and issue to each Investor at the Closing
pursuant to Section 1.2, that number of shares of the Company's Series C
Preferred Stock set forth opposite each Investor's name on SCHEDULE A hereto for
the purchase price of $8.00 per share.
1.2 CLOSING. The purchase and sale of the Series C Preferred Stock
shall take place at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, 000 Xxxx "X"
Xxxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx at 11:00 A.M., on June 30, 1997, or at
such other time and place as the Company and Investors acquiring in the
aggregate more than half the shares of Series C Preferred Stock sold pursuant
hereto mutually agree upon orally or in writing (which time and place are
designated as the "Closing"). At the Closing, the Company shall deliver to each
Investor a certificate representing the shares of Series C Preferred Stock that
such Investor is purchasing against payment of the purchase price therefor by
check, wire transfer or such other form of payment as shall be mutually agreed
upon by such Investor and the Company.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Investor that, except as set forth on a Schedule of
Exceptions furnished to special counsel for the Investors, which exceptions
shall be deemed to be representations and warranties as if made hereunder:
2.1 ORGANIZATION; GOOD STANDING; QUALIFICATION. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of California, has all requisite corporate power and authority
to own and operate its properties
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and assets and to carry on its business as now conducted and as proposed to be
conducted, to execute and deliver this Agreement, the Amended and Restated
Investor Rights Agreement (the "Rights Agreement") and the Amended and Restated
Co-Sale Agreement (the "Co-Sale Agreement"), to issue and sell the Series C
Preferred Stock and the Common Stock issuable upon conversion thereof, and to
carry out the provisions of this Agreement, the Rights Agreement, the Co-Sale
Agreement and the Restated Articles. The Company is not qualified to do business
as a foreign corporation in any jurisdiction and such qualification is not now
required.
2.2 AUTHORIZATION. All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the Rights Agreement and the Co-Sale
Agreement, the performance of all obligations of the Company hereunder and
thereunder at the Closing and the authorization, issuance (or reservation for
issuance), sale, and delivery of the Series C Preferred Stock being sold
hereunder and the Common Stock issuable upon conversion thereof has been taken
or will be taken prior to the Closing, and this Agreement, the Rights Agreement
and the Co-Sale Agreement constitute valid and legally binding obligations of
the Company, enforceable in accordance with their respective terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) to the
extent the indemnification provisions contained in the Rights Agreement may be
limited by applicable federal or state securities law.
2.3 VALID ISSUANCE OF PREFERRED AND COMMON STOCK. The Series C
Preferred Stock that is being purchased by the Investors hereunder, when issued,
sold and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement, the Rights Agreement, the Co-Sale
Agreement and the Company's Bylaws and under applicable state and federal
securities laws. The Common Stock issuable upon conversion of the Series C
Preferred Stock purchased under this Agreement has been duly and validly
reserved for issuance and, upon issuance in accordance with the terms of the
Restated Articles, will be duly and validly issued, fully paid and nonassessable
and will be free of restrictions on transfer other than restrictions on transfer
under this Agreement, the Rights Agreement, the Co-Sale Agreement and the
Company's Bylaws and under applicable state and federal securities laws.
2.4 GOVERNMENTAL CONSENTS. No consent, approval, qualification,
order or authorization of, or filing with, any local, state or federal
governmental authority is required on the part of the Company in connection with
the Company's valid execution, delivery or performance of this Agreement, the
offer, sale or issuance of the Series C Preferred Stock by the Company or the
issuance of Common Stock upon conversion of the Series C Preferred Stock, except
(i) the filing of the Restated Articles with the Secretary of State of the State
of California and (ii) such filings as have been made prior to the Closing,
except that such
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post-closing filings as may be required under applicable state securities laws
which will be timely filed within the applicable periods therefor.
2.5 CAPITALIZATION AND VOTING RIGHTS. The authorized capital
of the Company consists, or will consist prior to the Closing, of:
(a) PREFERRED STOCK. 1,221,540 shares of Preferred Stock, no par
value, of which 374,532 shares have been designated Series A Preferred Stock,
all of which are issued and outstanding, 374,532 shares have been designated
Series B Preferred Stock, all of which are issued and outstanding, and 472,476
have been designated Series C Preferred Stock, up to all of which will be sold
pursuant to this Agreement. The rights, privileges and preferences of the Series
C Preferred Stock will be as stated in the Restated Articles.
(b) COMMON STOCK. 10,000,000 shares of common stock ("Common
Stock"), no par value, of which 3,103,500 shares are issued and outstanding.
A listing of the Common Stockholders and the number of shares owned is set
forth on the Schedule of Exceptions.
(c) The outstanding shares of Common Stock have been issued in
accordance with the registration or qualification provisions of the Securities
Act of 1933, as amended (the "Securities Act") and any relevant state securities
laws or pursuant to valid exemptions therefrom.
(d) Except for (i) the conversion privileges of the outstanding
Series A Preferred Stock and the outstanding Series B Preferred Stock, (ii) the
conversion privileges of the Series C Preferred Stock to be issued under this
Agreement, (iii) the rights provided in Sections 2.3 and 3.2 of the Rights
Agreement, and (iv) the rights provided in the Co-Sale Agreement and (v)
currently outstanding options to purchase 312,500 shares of Common Stock, there
are no outstanding any options, warrants, rights (including conversion or
preemptive rights and rights of first refusal) or agreements for the purchase or
acquisition from the Company of any shares of its capital stock. In addition to
the previously mentioned options, the Company has reserved an additional 211,359
shares of its Common Stock for restricted stock purchases or for purchases upon
exercise of options to be granted in the future. The Company is not a party or
subject to any agreement or understanding, and, to the best of the Company's
knowledge, there is no agreement or understanding between any persons that
affects or relates to the voting or giving of written consents with respect to
any security or the voting by a director of the Company.
2.6 SUBSIDIARIES. The Company does not own or control, directly or
indirectly, any interest in any other corporation, association or other business
entity. The Company is not a participant in any joint venture, partnership or
similar arrangement.
2.7 CONTRACTS AND OTHER COMMITMENTS. The Company does not have any
contract, agreement, lease, commitment or proposed transaction, written or oral,
absolute or contingent, other than (i) individual contracts for the purchase of
supplies and services that were entered into in the ordinary course of business
and that do not, in the aggregate, involve
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more than $50,000, and do not extend for more than one (1) year beyond the date
hereof, (ii) sales contracts entered into in the ordinary course of business,
and (iii) contracts terminable at will by the Company on no more than thirty
(30) days notice without cost or liability to the Company and that do not
involve any employment or consulting arrangement and are not material to the
conduct of the Company's business. For the purpose of this paragraph, employment
and consulting contracts and contracts with labor unions, and license agreements
and any other agreements relating to the acquisition or disposition of the
Company's technology, shall not be considered to be contracts entered into in
the ordinary course of business.
2.8 RELATED-PARTY TRANSACTIONS. No employee, officer or director of
the Company or member of his or her immediate family thereof is indebted to the
Company, nor is the Company indebted (or committed to make loans or extend or
guarantee credit) to any of them. To the best of the Company's knowledge, none
of such persons has any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business relationship, or any firm or corporation that competes with the
Company, except that employees, officers or directors of the Company and members
of their immediate families may own stock in publicly traded companies that may
compete with the Company. To the best of the Company's knowledge, no officer or
director or any member of their immediate families is, directly or indirectly,
interested in any material contract with the Company.
2.9 REGISTRATION RIGHTS. Except as provided in the Rights
Agreement, the Company is not obligated to register under the Securities Act
any of its presently outstanding securities or any of its securities that may
subsequently be issued.
2.10 PERMITS. The Company has all governmental franchises,
governmental permits, governmental licenses and any similar governmental
authority necessary for the conduct of its business as now being conducted by
it, the lack of which could materially and adversely affect the business,
properties, prospects or financial condition of the Company and believes it can
obtain, without undue burden or expense, any similar authority for the conduct
of its business as planned to be conducted. The Company is not in default in any
material respect under any of such governmental franchises, governmental
permits, governmental licenses or other similar governmental authority.
2.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default in any material respect of any provision of its Restated
Articles or Bylaws or in any material respect of any provision of any mortgage,
indenture, agreement, instrument or contract to which it is a party or by which
it is bound or, to the best of its knowledge, of any federal or state judgment,
order, writ, decree, statute, rule or regulation applicable to the Company. The
execution, delivery and performance by the Company of this Agreement, the Rights
Agreement and the Co-Sale Agreement, and the consummation of the transactions
contemplated hereby and thereby will not result in any such violation or be in
material conflict with or constitute, with or without the passage of time or
giving of notice, either a material default under any such provision or an event
that results in the creation of any material lien, charge or encumbrance upon
any assets of the Company or the suspension,
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revocation, impairment, forfeiture or nonrenewal of any material permit,
license, authorization or approval applicable to the Company, its business or
operations, or any of its assets or properties.
2.12 LITIGATION. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company that questions
the validity of this Agreement, the Rights Agreement or the Co-Sale Agreement or
the right of the Company to enter into such agreements, or to consummate the
transactions contemplated hereby or thereby, or that might result, either
individually or in the aggregate, in any material adverse change in the assets,
business properties, prospects or financial condition of the Company, or in any
material change in the current equity ownership of the Company. The foregoing
includes, without limitation, any action, suit, proceeding or investigation
pending or currently threatened 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, their obligations under any agreements with prior employers, or
negotiations by the Company with potential backers of, or investors in, the
Company or its proposed business. The Company is not a party to, or to the best
of its knowledge, named in any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is no action, suit or
proceeding by the Company currently pending or that the Company currently
intends to initiate.
2.13 DISCLOSURE. The Company has provided the Investor with all the
information reasonably available to it without undue expense that the Investors
have requested for deciding whether to purchase the Series C Preferred Stock and
all information which the Company believes is reasonably necessary to enable
each Investor to make such decision. To the best of the Company's knowledge
after reasonable investigation, neither this Agreement nor any other written
statements or certificates made or delivered in connection herewith contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements herein or therein not misleading.
2.14 OFFERING. Subject in part to the truth and accuracy of each
Investor's representations set forth in this Agreement, the offer, sale and
issuance of the Preferred Stock as contemplated by this Agreement are exempt
from the registration requirements of the Securities Act, and neither the
Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
2.15 TITLE TO PROPERTY AND ASSETS; LEASES. Except (i) for liens for
current taxes not yet delinquent, (ii) for liens imposed by law and incurred in
the ordinary course of business for obligations not past due to carriers,
warehousemen, laborers, materialmen and the like, (iii) for liens in respect of
pledges or deposits under workers' compensation laws or similar legislation, or
(iv) for minor defects in title, none of which, individually or in the aggregate
materially interferes with the use of such property, the Company owns its
tangible property and tangible assets free and clear of all mortgages, liens,
claims and encumbrances. 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,
subject to clauses (i)-(iv) above.
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2.16 FINANCIAL STATEMENTS. The Company has delivered to each
Investor or its special counsel its audited financial statements (balance sheet
and profit and loss statement, statement of shareholders' equity and statement
of changes in financial position including notes thereto) at December 31, 1996
and for the fiscal year then ended and its unaudited financial statements
(balance sheet and profit and loss statement including notes thereto) as at and
for the five-month period ended May 31, 1997 (the "Financial Statements"). The
Financial Statements have been prepared in accordance with general 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 in the case of unaudited Financial Statements to normal year-end audit
adjustments. 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 May 31, 1997 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. Except as disclosed in the Financial Statements, the Company is
not a guarantor or indemnitor on any indebtedness of any other person, firm or
corporation. The Company maintains and will continue to maintain a standard
system of accounting established and administered in accordance with generally
accepted accounting principles.
2.17 CHANGES. To the best of the Company's knowledge, since May 31,
1997, there has not been any event or condition of any type that has materially
and adversely affected the business, properties, prospects or financial
condition of the Company.
2.18 PATENTS AND TRADEMARKS. To its knowledge, the Company owns or
possesses sufficient legal rights to all patents, trademarks, servicemarks,
trade names, copyrights, trade secrets, licenses, 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. Except as set forth on the Schedule of Exceptions, there are no
outstanding options, licenses or agreements of any kind relating to the
foregoing, nor is the Company bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information, 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, trade secrets or other proprietary rights of any
other person or entity. The Company is not aware that any of its employees is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the use of such
employee's 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 this Agreement, the Rights Agreement or the Co-Sale
Agreement, nor the carrying on of the Company's business by the employees of the
Company, nor the
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conduct of the Company's business as proposed, will, to the Company's knowledge,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a material default under, any contract, covenant or instrument
under which any of such employees is now obligated.
2.19 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each
employee and officer of the Company has executed a Proprietary Information and
Inventions Agreement substantially in the form or forms that have been delivered
to special counsel for the Investors.
2.20 TAX RETURNS, PAYMENTS, AND ELECTIONS. 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. The Company has not
elected pursuant to the Internal Revenue Code of 1986, as amended ("Code"), to
be treated as an S corporation or a collapsible corporation pursuant to Section
341(f) of Section 1362(a) of the Code, nor has it made any other elections
pursuant to the Code (other than elections which relate solely to methods of
accounting, depreciation or amortization) which would have a material effect on
the business, properties, prospects or financial condition of the Company.
2.21 SECTION 83(B) ELECTIONS. To the best of the Company's
knowledge, all individuals who have purchased shares of the Company's Common
Stock have timely filed elections under Section 83(b) of the Internal Revenue
Code and any analogous provisions of applicable state tax laws.
2.22 MINUTE BOOKS. The copy of the minute books of the Company
contain minutes of all meetings of directors and shareholders and all actions by
written consent without a meeting by the directors and shareholders since the
time of incorporation and reflect all actions by the directors (and any
committee of directors) and shareholders with respect to all transactions
referred to in such minutes accurately in all material respects.
2.23 REAL PROPERTY HOLDING CORPORATION. The Company is not a
real property holding corporation within the meaning of Internal Revenue Code
Section 897(c)(2) and any regulations promulgated thereunder.
3. REPRESENTATIONS AND WARRANTIES OF INVESTORS. Each Investor
hereby represents and warrants, with respect to himself or itself, that:
3.1 AUTHORIZATION. Such Investor has full power and authority to
enter into this Agreement and that this Agreement constitutes a valid and
legally binding obligation of such Investor.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
each Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the Series C Preferred Stock to be purchased by such Investor and
the Common Stock issuable upon
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conversion thereof (collectively, the "Securities") will be acquired for
investment for such Investor'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 such
Investor has no present intention of selling, granting any participation in or
otherwise distributing the same. By executing this Agreement, each Investor
further represents that such Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities.
3.3 RELIANCE UPON INVESTORS' REPRESENTATIONS. Each Investor
understands that the Series C Preferred Stock is not, and any Common Stock
acquired on conversion thereof at the time of issuance may not be, registered
under the Securities Act on the ground that the sale provided for in this
Agreement and the issuance of securities hereunder is exempt from registration
under the Securities Act pursuant to Section 4(2) thereof, and that the
Company's reliance on such exemption is predicated on such Investor's
representations set forth herein. Each Investor realizes that the basis for the
exemption may not be present if, notwithstanding such representations, such
Investor has in mind merely acquiring the Securities for a fixed or determinable
period in the future, or for a market rise, or for sale if the market does not
rise. Each Investor has no such intention.
3.4 RECEIPT OF INFORMATION. Each Investor believes it has received
all the information it considers necessary or appropriate for deciding whether
to purchase the Series C Preferred Stock. Each Investor 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 Series C Preferred
Stock and the business, properties, prospects and financial condition of the
Company and to obtain additional information (to the extent the Company
possessed such information or could acquire it without unreasonable effort or
expense) necessary to verify the accuracy of any information furnished to it or
to which it had access. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this Agreement or
the right of each Investor to rely thereon.
3.5 INVESTMENT EXPERIENCE. Each Investor represents that it is
experienced in evaluating and investing in securities of companies in the
development stage and acknowledges that it is able to fend for itself, can bear
the economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Series C Preferred Stock. Each Investor also
represents it has not been organized for the purpose of acquiring the Series C
Preferred Stock.
3.6 ACCREDITED INVESTOR.
(a) Each Investor represents to the Company that it, or to the
extent that the representation is being made by a trustee of a trust, such trust
is an Accredited Investor. The term "Accredited Investor" as used herein refers
to a person or entity who:
(1) is a director or executive officer of the
Company; or
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(2) Any bank as defined in section 3(a)(2) of the
Securities Act, or any savings and loan association or other institution
as defined in section 3(a)(5)(A) of the Securities Act whether acting in
its individual or fiduciary capacity; any broker or dealer registered
pursuant to section 15 of the Securities Exchange Act of 1934; an
insurance company as defined in section 2(13) of the Securities Act; an
investment company registered under the Investment Company Act of 1940 or
a business development company as defined in section 2(a)(48) of that act;
a Small Business Investment Company licensed by the United States Small
Business Administration under section 301(c) or (d) of the Small Business
Investment Act of 1958; or an employee benefit plan, including an
individual retirement account, which is subject to the provisions of the
Employee Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in section 3(21) of such
act, which is either a bank, insurance company or registered investment
adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-- directed plan, with investment decisions made
solely by persons that are accredited investors;
(3) Any private business development company as
defined in section 202(a)(22) of the Investment Advisers Act of 1940;
(4) Any organization described in section 501(c)(3) of
the Internal Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring
the securities offered, with total assets in excess of $5,000,000;
(5) Any natural person whose individual net worth, or
joint net worth with that person's spouse, at the time of his purchase
exceeds $1,000,000;
(6) Any natural person who had an individual income in
excess of $200,000 in each of the two most recent years or joint income
with that person's spouse in excess of $300,000 in each of those years and
has a reasonable expectation of reaching the same income level in the
current year;
(7) Any trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the
securities offered, whose purchase is directed by a person who has such
knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of the prospective investment;
or
(8) Any entity in which all of the equity owners
are accredited investors.
(b) Each Investor further represents to the Company that the capital
contribution of such Investor does not exceed 10% of such Investor's net worth.
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3.7 RESTRICTED SECURITIES. Each Investor understands that the
Securities may not be sold, transferred, or otherwise disposed of without
registration under the Securities Act or an exemption therefrom, and that in the
absence of an effective registration statement covering the Securities or an
available exemption from registration under the Securities Act, the Securities
must be held indefinitely. In particular, each Investor is aware that the
Securities may not be sold pursuant to Rule 144 promulgated under the Securities
Act unless all of the conditions of such Rule are met. Among the conditions for
use of Rule 144 is the availability of current information to the public about
the Company. Such information is not now available and the Company has no
present plans to make such information available.
3.8 LEGENDS. To the extent applicable, each certificate or other
document evidencing any of the Securities shall be endorsed with the legends set
forth below, and Investor covenants that, except to the extent such restrictions
are waived by the Company, Investor shall not transfer the shares represented by
any such certificate without complying with the restrictions on transfer
described in the legends endorsed on such certificate:
(a) "THE SHARES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH
RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL, SATISFACTORY
TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION
IS NOT REQUIRED."
(b) Any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations and Sections 417 and 418 of the California Corporations Code.
3.9 PUBLIC SALE. Each Investor agrees not to make, without the prior
written consent of the Company, any public offering or sale of the Securities,
or any Common Stock issued upon the conversion thereof, although permitted to do
so pursuant to Rule 144(k) promulgated under the Securities Act, until the
earlier of (i) the date on which the Company effects its initial registered
public offering pursuant to the Securities Act or (ii) the date on which it
becomes a registered company pursuant to Section 12(g) of the Securities
Exchange Act of 1934, as amended, or (iii) five years after the Closing of the
sale of such Stock to such Investor by the Company.
3.10 NON U.S. PERSONS. If any Investor is not a U.S. Person, such
Investor hereby represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with any invitation to
subscribe for the Securities or any use of this Agreement, including (i) the
legal requirements within its jurisdiction for the purchase of the shares of
Series C Preferred Stock, (ii) any foreign exchange restrictions applicable to
such
10
purchase, (iii) any governmental or other consents which may need to be
obtained and (iv) the income tax and other tax consequences, if any, which may
be relevant to the purchase, holding, redemption, sale or transfer of the
Securities. Each Investor's subscription and payment for, and its continued
beneficial ownership of the Securities will not violate any applicable
securities or other laws of its jurisdiction.
4. CONDITIONS OF INVESTOR'S OBLIGATIONS AT THE CLOSING. The obligations of
each Investor under subparagraph 1.1(b) of this Agreement are subject to the
fulfillment of each of the following conditions on or before the Closing with
respect to such Investor's purchase of Series C Preferred Stock, the waiver of
which shall not be effective against any Investor who does not consent in
writing thereto:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 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.
4.2 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.
4.3 COMPLIANCE CERTIFICATE. The President of the Company shall
deliver to each Investor at the Closing a certificate certifying that the
conditions specified in paragraphs 4.1, 4.2, 4.4, 4.7 and 4.8 have been
fulfilled.
4.4 QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
4.5 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 Investors' special counsel, which shall have received all such
counterpart original and certified or other copies of such documents as it may
reasonably request.
4.6 DUE DILIGENCE. Each Investor shall have completed its due
diligence of the Company, to its reasonable satisfaction.
4.7 OPINION OF COMPANY COUNSEL. Each Investor shall have received
from Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel for the Company, an opinion, dated
the date as of the Closing, in form and substance satisfactory to special
counsel to the Investors.
4.8 RIGHTS AGREEMENT; CO-SALE AGREEMENT. The Company and each
Investor shall have entered into the Rights Agreement and the Co-Sale
Agreement.
11
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT THE CLOSING. The obligations
of the Company to each Investor under this Agreement are subject to the
fulfillment of each of the following conditions on or before the Closing with
respect to such Investor's purchase of Series C Preferred Stock by that
Investor:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investors 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 such Closing.
5.2 PAYMENT OF PURCHASE PRICE. Each Investor shall have
delivered the purchase price specified in Section 1.2.
5.3 QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Stock pursuant to this Agreement shall be duly obtained and effective as of
the Closing.
12
6. MISCELLANEOUS.
6.1 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or therein.
6.2 SURVIVAL OF WARRANTIES. The warranties, representations and
covenants of the Company and the Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing.
6.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
permitted transferees of any Securities). 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.
6.4 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
6.5 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.
6.6 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.
6.7 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified by hand or
professional courier service or five days after deposit with the United States
Post Office, by registered or certified mail, postage prepaid and addressed to
the party to be notified at the address indicated for such party on the
signature page hereof, or at such other address as such party may designate by
ten (10) days' advance written notice to the other parties.
13
6.8 FINDER'S FEES. Each party represents that it neither is
nor will be obligated for any finder's fee or commission in connection with
this transaction.
Each Investor agrees to indemnify and to hold harmless the
Company from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Investor or any of its officers, partners,
employees or representatives is responsible.
The Company agrees to indemnify and hold harmless each
Investor from any liability for any commission or compensation in the nature of
a 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.
6.9 EXPENSES. Irrespective of whether the Closing is effected, each
party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement.
6.10 ATTORNEYS' FEES. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the Rights Agreement, the
Co-Sale Agreement or the Restated Articles, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
6.11 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
more than 50% of the Common Stock (that has not been sold to the public) issued
or issuable upon conversion of the Series C Preferred Stock. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any securities purchased under this Agreement at the time outstanding
(including securities into which such securities have been converted), each
future holder of all such securities and the Company.
6.12 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.
6.13 CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES WHICH ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
14
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS
SO EXEMPT.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COLLATERAL THERAPEUTICS, INC.
By: /s/ Xxxx Xxxxx, Ph.D.
-------------------------------------
Xxxx Xxxxx, President
Address: 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
THE INVESTORS:
Subject to ATTACHMENT A hereto, THE WELLCOME
TRUST LIMITED, AS TRUSTEE OF THE
WELLCOME TRUST
By: /s/ Xxxxx Xxxxx
-------------------------------------
Xxx Xxxxx Xxxxx, Chairman
Address: 000 XXXXXX XXXX
XXXXXX XX0 0XX
/s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxx
Address: 0 XXXXXX XXXXX
XXXXXXXXX, XXXXX XX000XX
SCHERING BERLIN VENTURE CORP.
By: /s/ Illegible
-------------------------------------
Its: TREASURER
Address: 000 Xxxx Xxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
[SIGNATURE PAGE TO SERIES C
PREFERRED STOCK PURCHASE AGREEMENT]
16
EXHIBIT A
AMENDED AND RESTATED ARTICLES OF INCORPORATION
A-1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF COLLATERAL THERAPEUTICS, INC.,
a California Corporation
The undersigned Xxxx Xxxxx and Xxxxxxxxxxx X. Xxxxxxxx hereby certify
that:
ONE: They are the duly elected and acting President and Secretary,
respectively, of said corporation.
TWO: The Amended and Restated Articles of Incorporation of said
corporation shall be amended and restated to read in full as follows:
ARTICLE I
The name of this corporation is Collateral Therapeutics, Inc.
ARTICLE II
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
A. CLASSES OF STOCK. This corporation is authorized to issue two classes
of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares which the corporation is authorized to issue is
Eleven Million Two Hundred Twenty- One Thousand Five Hundred Forty (11,221,540)
shares. Ten Million (10,000,000) shares shall be Common Stock and One Million
Two Hundred Twenty-One Thousand Five Hundred Forty (1,221,540) shares shall be
Preferred Stock. The Preferred Stock authorized by these Amended and Restated
Articles of Incorporation shall be issued by series as set forth herein. The
first series of Preferred Stock shall be designated "Series A Preferred Stock"
and shall consist of Three Hundred Seventy-Four Thousand Five Hundred Thirty-Two
(374,532) shares. The second series of Preferred Stock shall be designated
"Series B Preferred Stock" and shall consist of Three Hundred Seventy-Four
Thousand Five Hundred Thirty-Two (374,532) shares. The third series of Preferred
Stock shall be designated "Series C Preferred Stock" and shall consist of Four
Hundred Seventy-Two Thousand Four Hundred Seventy-Six (472,476) shares. Except
to the extent otherwise provided herein, the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock shall be treated as a single class
referred to herein collectively as the "Preferred Stock."
B. RIGHTS, PREFERENCES AND RESTRICTIONS OF PREFERRED STOCK. The
rights, preferences, privileges and restrictions granted to and imposed on
the Preferred Stock are as set forth below in this Article III(B).
1. DIVIDEND PROVISIONS. Subject to the rights of series of Preferred
Stock which may from time to time come into existence, the holders of shares of
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
shall be entitled to receive dividends, out of any assets legally available
therefor, pro-rata and prior and in preference to any declaration or payment of
any dividend (payable other than in Common Stock or other securities and rights
convertible into or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock of this corporation) on the Common
Stock of this corporation, (i) with respect to the Series A Preferred Stock and
Series B Preferred Stock, at the rate of $0.334 per share per annum and (ii)
with respect to the Series C Preferred Stock, at the rate of $0.40 per share per
annum, when, as and if declared by the Board of Directors. Such dividends shall
not be cumulative.
2. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of this corporation, either voluntary or involuntary, subject to the rights of
series of Preferred Stock that may from time to time come into existence, the
holders of Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock shall be entitled to receive, pro-rata and prior and in
preference to any distribution of any of the assets of this corporation to the
holders of Common Stock by reason of their ownership thereof, (i) with respect
to the Series A Preferred Stock, an amount per share equal to the sum of (A)
$6.675 for each outstanding share of Series A Preferred Stock (the "Original
Series A Issue Price") and (B) an amount equal to the sum of (I) five percent
(5%) return on the Original Series A Issue Price, compounded annually from the
Series A Purchase Date (as defined herein) through the date of liquidation,
dissolution or winding up of this corporation and (II) declared but unpaid
dividends on each share, (ii) with respect to the Series B Preferred Stock, an
amount per share equal to the sum of (A) $6.675 for each outstanding share of
Series B Preferred Stock (the "Original Series B Issue Price") and (B) an amount
equal to the sum of (I) five percent (5%) return on the Original Series B Issue
Price, compounded annually from the Series B Purchase Date (as defined herein)
through the date of liquidation, dissolution or winding up of this corporation
and (II) declared but unpaid dividends on each share and (iii) with respect to
the Series C Preferred Stock, an amount per share equal to the sum of (A) $8.00
for each outstanding share of Series C Preferred Stock (the "Original Series C
Issue Price") and (B) an amount equal to the sum of (I) five percent (5%) return
on the Original Series C Issue Price, compounded annually from the Series C
Purchase Date (as defined herein) through the date of liquidation, dissolution
or winding up of this corporation and (II) declared but unpaid dividends on each
share. If upon the occurrence of such event, the assets and funds thus
distributed among the holders of the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amounts, then,
subject to the rights of series of Preferred Stock that may from time to time
come into existence, the entire assets and funds of the corporation legally
available for distribution shall be distributed ratably among the holders of the
Series A
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Preferred Stock, Series B Preferred Stock and Series C Preferred Stock in
proportion to the amount of such stock owned by each such holder.
(b) After the distributions described in subsection (a) above
have been paid, subject to the rights of series of Preferred Stock which may
from time to time come into existence, the remaining funds and assets of the
corporation available for distribution to shareholders shall be distributed
among the holders of Common Stock pro-rata based on the number of shares of
Common Stock held by each.
(c) (i) For purposes of this Section 2, a liquidation,
dissolution or winding up of this corporation shall be deemed to be occasioned
by, or to include, (A) the acquisition of the corporation by another entity by
means of any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation, but excluding any
merger effected exclusively for the purpose of changing the domicile of the
corporation); or (B) a sale of all or substantially all of the assets of the
corporation; UNLESS the corporation's shareholders of record as constituted
immediately prior to such acquisition or sale will, immediately after such
acquisition or sale (by virtue of securities issued as consideration for the
corporation's acquisition or sale or otherwise) hold at least 50% of the voting
power of the surviving or acquiring entity.
(ii) In any of such events, if the consideration received by
the corporation is other than cash, its value will be deemed its fair market
value. Any securities shall be valued as follows:
(A) Securities not subject to investment letter or
other similar restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or
through Nasdaq National Market, the value shall be deemed to be the average of
the closing prices of the securities on such exchange over the thirty-day period
ending three (3) days prior to the closing;
(2) If actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid or sale prices
(whichever is applicable) over the thirty-day period ending three (3) days prior
to the closing; and
(3) If there is no active public market, the
value shall be the fair market value thereof, as mutually determined by the
corporation and the holders of at least a majority of the voting power of all
then outstanding shares of Preferred Stock.
(B) The method of valuation of securities subject
to investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a shareholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in (A) (1), (2) or (3) to reflect the approximate fair
market value thereof, as mutually determined by the corporation
-3-
and the holders of at least a majority of the voting power of all then
outstanding shares of such Preferred Stock.
(iii) In the event the requirements of this subsection 2(c)
are not complied with, this corporation shall forthwith either:
(A) cause such closing to be postponed until such
time as the requirements of this Section 2 have been complied with; or
(B) cancel such transaction, in which event the
rights, preferences and privileges of the holders of the Preferred Stock shall
revert to and be the same as such rights, preferences and privileges existing
immediately prior to the date of the first notice referred to in subsection
2(c)(iv) hereof.
(iv) The corporation shall give each holder of record of
Preferred Stock written notice of such impending transaction not later than
twenty (20) days prior to the shareholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 2, and the corporation shall thereafter give such holders prompt
notice of any material changes. The transaction shall in no event take place
sooner than twenty (20) days after the corporation has given the first notice
provided for herein or sooner than ten (10) days after the corporation has given
notice of any material changes provided for herein; provided, however, that such
periods may be shortened upon the written consent of the holders of Preferred
Stock that are entitled to such notice rights or similar notice rights and that
represent at least a majority of the voting power of all then outstanding shares
of such Preferred Stock.
3. CONVERSION. The holders of the Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of this corporation or any transfer agent
for such stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined, (i) with respect to the Series A Preferred Stock,
by dividing the Original Series A Issue Price by the Conversion Price applicable
to such share, determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion, (ii) with respect to the Series B
Preferred Stock, by dividing the Original Series B Issue Price by the Conversion
Price applicable to such share, determined as hereafter provided, in effect on
the date the certificate is surrendered for conversion and (iii) with respect to
the Series C Preferred Stock, by dividing the Original Series C Issue Price by
the Conversion Price applicable to such share, determined as hereafter provided,
in effect on the date the certificate is surrendered for conversion. The initial
Conversion Price per share for shares of Series A Preferred Stock shall be the
Original Series A Issue Price; provided, however, that the Conversion Price for
the Series A Preferred Stock shall be subject to adjustment as set forth in
subsection 3(d). The initial Conversion
-4-
Price per share for shares of Series B Preferred Stock shall be the Original
Series B Issue Price; provided, however, that the Conversion Price for the
Series B Preferred Stock shall be subject to further adjustment as set forth in
subsequent subsections of subsection 3(d). The initial Conversion Price per
share for shares of Series C Preferred Stock shall be the Original Series C
Issue Price; provided, however, that the Conversion Price for the Series C
Preferred Stock shall be subject to adjustment as set forth in subsection 3(d).
(b) AUTOMATIC CONVERSION. Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at the Conversion Price
at the time in effect for such series of Preferred Stock immediately upon the
earlier of (i) except as provided below in subsection 3(c), the corporation's
sale of its Common Stock in a firm commitment underwritten public offering
pursuant to a registration statement under the Securities Act of 1933, as
amended, the aggregate net proceeds to the corporation of which were not less
than $10,000,000 (provided the corporation has a fully-diluted valuation prior
to such offering of at least $25,000,000) or (ii) the date specified by written
consent or agreement of the holders of at least a majority of the
then-outstanding shares of Preferred Stock, voting as a single class.
(c) MECHANICS OF CONVERSION. Before any holder of Preferred
Stock shall be entitled to convert the same into shares of Common Stock, he
shall surrender the certificate or certificates therefor, duly endorsed, at the
office of this corporation or of any transfer agent for the Preferred Stock, and
shall give written notice to this corporation at its principal corporate office,
of the election to convert the same and shall state therein the name or names in
which the certificate or certificates for shares of Common Stock are to be
issued. This corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Preferred Stock, or to the nominee or
nominees of such holder, a certificate or certificates for the number of shares
of Common Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date. If the
conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act of 1933, as amended, the conversion
may, at the option of any holder tendering Preferred Stock for conversion, be
conditioned upon the closing with the underwriters of the sale of securities
pursuant to such offering, in which event the person(s) entitled to receive the
Common Stock upon conversion of the Preferred Stock shall not be deemed to have
converted such Preferred Stock until immediately prior to the closing of such
sale of securities.
(d) CONVERSION PRICE ADJUSTMENTS OF PREFERRED STOCK FOR
CERTAIN DILUTIVE ISSUANCES, SPLITS AND COMBINATIONS. The Conversion Price of the
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
shall be subject to adjustment from time to time as follows:
(A) If the corporation shall issue, after the
date upon which any shares of Series A Preferred Stock were first issued (the
"Series A Purchase Date")
-5-
(with respect to the Series A Preferred Stock), after the date upon which any
shares of Series B Preferred Stock were first issued (the "Series B Purchase
Date") (with respect to the Series B Preferred Stock) or after the date upon
which any shares of Series C Preferred Stock were first issued (the "Series C
Purchase Date") (with respect to the Series C Preferred Stock), any Additional
Stock (as defined below) without consideration or for a consideration per share
less than the Conversion Price for such series in effect immediately prior to
the issuance of such Additional Stock, the Conversion Price for such series in
effect immediately prior to each such issuance shall forthwith (except as
otherwise provided in this subsection 3(d)) be adjusted to a price determined by
multiplying such Conversion Price by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
issuance plus the number of shares of Common Stock that the aggregate
consideration received by the corporation for such issuance would purchase at
such Conversion Price; and the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issuance plus the
number of shares of such Additional Stock.
(B) No adjustment of the Conversion Price for
the Preferred Stock shall be made in an amount less than one cent per share,
provided that any adjustments which are not required to be made by reason of
this sentence shall be carried forward and shall be either taken into account in
any subsequent adjustment made prior to three (3) years from the date of the
event giving rise to the adjustment being carried forward, or shall be made at
the end of three (3) years from the date of the event giving rise to the
adjustment being carried forward. Except to the limited extent provided for in
subsections 3(d)(E)(3) and (E)(4), no adjustment of such Conversion Price
pursuant to this subsection 3(d) shall have the effect of increasing the
Conversion Price above the Conversion Price in effect immediately prior to such
adjustment.
(C) In the case of the issuance of Common
Stock for cash, the consideration shall be deemed to be the amount of cash paid
therefor before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by this corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(D) In the case of the issuance of the Common
Stock for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair value thereof as determined by
the Board of Directors irrespective of any accounting treatment.
(E) In the case of the issuance (whether
before, on or after the applicable Purchase Date) of options to purchase or
rights to subscribe for Common Stock, securities by their terms convertible into
or exchangeable for Common Stock or options to purchase or rights to subscribe
for such convertible or exchangeable securities, the following provisions shall
apply for all purposes of this subsection 3(d):
(1) The aggregate maximum number of
shares of Common Stock deliverable upon exercise of such options to
purchase or
-6-
rights to subscribe for Common Stock shall be deemed to have been
issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the manner
provided in subsections 3(d)(D) and (d)(E)), if any, received by the
corporation upon the issuance of such options or rights plus the
minimum exercise price provided in such options or rights (without
taking into account potential antidilution adjustments) for the
Common Stock covered thereby.
(2) The aggregate maximum number of
shares of Common Stock deliverable upon conversion of or in exchange
for any such convertible or exchangeable securities or upon the
exercise of options to purchase or rights to subscribe for such
convertible or exchangeable securities and subsequent conversion or
exchange thereof shall be deemed to have been issued at the time
such securities were issued or such options or rights were issued
and for a consideration equal to the consideration, if any, received
by the corporation for any such securities and related options or
rights (excluding any cash received on account of accrued interest
or accrued dividends), plus the minimum additional consideration, if
any, to be received by the corporation upon the conversion or
exchange of such securities or the exercise of any related options
or rights (the consideration in each case to be determined in the
manner provided in subsections 3(d)(D) and (d)(E)).
(3) In the event of any change in the
number of shares of Common Stock deliverable or in the consideration
payable to this corporation upon exercise of such options or rights
or upon conversion of or in exchange for such convertible or
exchangeable securities, including, but not limited to, a change
resulting from the antidilution provisions thereof, the Conversion
Price of the Series A Preferred Stock, Series B Preferred Stock or
Series C Preferred Stock, to the extent in any way affected by or
computed using such options, rights or securities, shall be
recomputed to reflect such change, but no further adjustment shall
be made for the actual issuance of Common Stock or any payment of
such consideration upon the exercise of any such options or rights
or the conversion or exchange of such securities.
(4) Upon the expiration of any such
options or rights, the termination of any such rights to convert or
exchange or the expiration of any options or rights related to such
convertible or exchangeable securities, the Conversion Price of the
Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock, to the extent in any way affected by or computed
using such options, rights or securities or options or rights
related to such securities, shall be recomputed to reflect the
issuance of only the number of shares of Common Stock (and
convertible or exchangeable securities which remain in effect)
actually issued upon the exercise of such options or rights, upon
the conversion or exchange of such securities or upon the exercise
of the options or rights related to such securities.
-7-
(5) The number of shares of Common
Stock deemed issued and the consideration deemed paid therefor
pursuant to subsections 3(d)(E)(1) and (2) shall be appropriately
adjusted to reflect any change, termination or expiration of the
type described in either subsection 3(d)(E)(3) or (4).
(F) "Additional Stock" shall mean any shares
of Common Stock issued (or deemed to have been issued pursuant to subsection
3(d)(E)) by this corporation after the Series C Purchase Date other than:
(1) Common Stock issued pursuant to a
transaction described in subsection 3(d)(G) hereof: or
(2) shares of Common Stock issuable or
issued to employees, consultants, directors or vendors (if in
transactions with primarily non-financing purposes) of this
corporation directly or pursuant to a stock option plan or
restricted stock plan approved by the Board of Directors of this
corporation at any time when the total number of shares of Common
Stock so issuable or issued (and not repurchased at cost by the
corporation in connection with the termination of employment) does
not exceed 708,859 or
(3) shares of Common Stock issued or
issuable (I) in a public offering before or in connection with which
all outstanding shares of Preferred Stock will be converted to
Common Stock or (II) upon exercise of warrants or rights granted to
underwriters in connection with such a public offering; or
(4) securities issued pursuant to the
acquisition of another business entity or business segment of any
such entity by this corporation by merger, purchase of substantially
all the assets or organization whereby the corporation will own not
less than fifty-one (51%) percent of the voting power of such a
business entity or business segment of any such entity; or
(5) securities issued (I) to vendors or
customers or to other persons in similar commercial situations with
the corporation or (II) in connection with obtaining lease
financing, whether issued to a lessor, guarantor or other person.
(G) In the event the corporation should at
any time or from time to time after the Series C Purchase Date fix a record date
for the effectuation of a split or subdivision of the outstanding shares of
Common Stock or the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in additional shares of Common Stock or
other securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any
-8-
consideration by such holder for the additional shares of Common Stock or the
Common Stock Equivalents (including the additional shares of Common Stock
issuable upon conversion or exercise thereof), then, as of such record date (or
the date of such dividend distribution, split or subdivision if no record date
is fixed), the Conversion Price of the Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock shall be appropriately decreased so
that the number of shares of Common Stock issuable on conversion of each share
of such series shall be increased in proportion to such increase of the
aggregate number of shares of Common Stock outstanding and those issuable with
respect to such Common Stock Equivalents with the number of shares issuable with
respect to Common Stock Equivalents determined from time to time in the manner
provided for deemed issuances in subsection 3(d)(E).
(H) If the number of shares of Common Stock
outstanding at any time after the Series C Purchase Date is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date of such combination, the Conversion Price for the Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion of each share of such series shall be decreased in proportion to such
decrease in outstanding shares.
(e) OTHER DISTRIBUTIONS. In the event this corporation shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by this corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in subsection 3(d)(G), then, in
each such case for the purpose of this subsection 3(e), the holders of the
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the corporation into which their shares of Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the corporation entitled to receive such distribution.
(f) RECAPITALIZATIONS. If at any time or from time to time
there shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 3 or Section 2) provision shall be made so that the holders of the
Preferred Stock shall thereafter be entitled to receive upon conversion of the
Preferred Stock the number of shares of stock or other securities or property of
the Company or otherwise, to which a holder of Common Stock deliverable upon
conversion would have been entitled on such recapitalization. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 3 with respect to the rights of the holders of the Preferred Stock
after the recapitalization to the end that the provisions of this Section 3
(including adjustment of the Conversion Price then in effect and the number of
shares purchasable upon conversion of the Preferred Stock) shall be applicable
after that event as nearly equivalent as may be practicable.
(g) NO IMPAIRMENT. This corporation will not, by amendment of
its Articles of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action,
-9-
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by this corporation, but will at all times in
good faith assist in the carrying out of all the provisions of this Section 3
and in the taking of all such action as may be necessary or appropriate in order
to protect the Conversion Rights of the holders of the Preferred Stock against
impairment.
(h) NO FRACTIONAL SHARES AND CERTIFICATE AS TO
ADJUSTMENTS.
(i) No fractional shares shall be issued upon
the conversion of any share or shares of the Preferred Stock, and the number of
shares of Common Stock to be issued shall be rounded to the nearest whole share.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Preferred Stock the
holder is at the time converting into Common Stock and the number of shares of
Common Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or
readjustment of the Conversion Price of Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock pursuant to this Section 3, this
corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of such series of Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. This corporation shall, upon the written
request at any time of any holder of such series of Preferred Stock, furnish or
cause to be furnished to such holder a like certificate setting forth (A) such
adjustment and readjustment, (B) the Conversion Price for such series of
Preferred Stock at the time in effect and (C) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of a share of such series of Preferred Stock.
(i) NOTICES OF RECORD DATE. In the event of any taking by this
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
corporation shall mail to each holder of Preferred Stock, at least 20 days prior
to the date specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right.
(j) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. This
corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Preferred Stock, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of the Preferred Stock; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of the Preferred Stock, in
addition to such other remedies as shall be available to the holder of such
Preferred Stock,
-10-
this corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes,
including, without limitation, engaging in best efforts to obtain the requisite
shareholder approval of any necessary amendment to these articles.
(k) NOTICES. Any notice required by the provisions of this
Section 3 to be given to the holders of shares of Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of this
corporation.
4. VOTING RIGHTS.
(a) GENERAL VOTING RIGHTS. In addition to the voting rights
described in Section 5 of this Article III, the holder of each share of
Preferred Stock shall have the right to one vote for each share of Common Stock
into which such Preferred Stock could then be converted, and with respect to
such vote, such holder shall have full voting rights and powers equal to the
voting rights and powers of the holders of Common Stock, and shall be entitled,
notwithstanding any provision hereof, to notice of any shareholders' meeting in
accordance with the bylaws of this corporation, and shall be entitled to vote,
together with holders of Common Stock, with respect to any question upon which
holders of Common Stock have the right to vote. Fractional votes shall not,
however, be permitted and any fractional voting rights available on an
as-converted basis (after aggregating all shares into which shares of Preferred
Stock held by each holder could be converted) shall be rounded to the nearest
whole number (with one-half being rounded upward).
(b) ELECTION OF DIRECTORS. With respect to the election of
directors, the holders of Series A Preferred Stock and Series B Preferred Stock,
voting separately as a class, shall have the right to elect one (1) director,
and the holders of Common Stock shall have the right to elect all other
directors.
5. PROTECTIVE PROVISIONS. Subject to the rights of series of
Preferred Stock which may from time to time come into existence, this
corporation shall not:
(a) sell, convey or otherwise dispose of or encumber all or
substantially all of its property or business or merge into or consolidate with
any other corporation (other than a wholly-owned subsidiary corporation) or
effect any transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the corporation is disposed of
without first obtaining the approval (by vote or written consent, as provided by
law) (i) for a period of two years following May 7, 1996 (the "Protective
Period"), by (A) the holders of at least a majority of the then outstanding
shares of Series A Preferred Stock and Series B Preferred Stock and (B) if the
effective price per share to be received by a shareholder (whether or not
payable in installments) is less than $8.00 per share, by the holders of at
least a majority of the then outstanding shares of Series C Preferred Stock, and
(ii) following the Protective Period, by the holders of at least a majority of
the then outstanding shares of Preferred Stock, voting together as a single
class;
-11-
(b) authorize, create or issue, or obligate itself to issue
(including by reclassification of any outstanding shares), any other equity
security, including any other security convertible into or exercisable for any
equity security having a preference on parity with or superior to any series of
currently-outstanding Preferred Stock with respect to dividends or upon
liquidation without first obtaining the approval (by vote or written consent, as
provided by law) of the holders of at least a majority of the then outstanding
shares of Preferred Stock, voting together as a single class; or
(c) alter or change the rights, preferences, privileges or
powers of, or the restrictions provided for the benefit of, the shares of Series
A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock so as to
affect adversely such shares without first obtaining the approval (by vote or
written consent, as provided by law) of the holders of at least a majority of
the then outstanding shares of the Series of Preferred Stock so adversely
affected.
6. STATUS OF CONVERTED STOCK. In the event any shares of Preferred
Stock shall be converted pursuant to Section 3 hereof, the shares so converted
shall be cancelled and shall not be issuable by the corporation. The Articles of
Incorporation of this corporation shall be appropriately amended to effect the
corresponding reduction in the corporation's authorized capital stock.
7. REPURCHASE OF SHARES. In connection with repurchases by this
Corporation of its Common Stock pursuant to its agreements with certain of the
holders thereof, Sections 502 and 503 of the California General Corporation Law
shall not apply in whole or in part with respect to such repurchases.
C. COMMON STOCK.
1. DIVIDEND RIGHTS. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of the corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors.
2. LIQUIDATION RIGHTS. Upon the liquidation, dissolution or
winding up of the corporation, the assets of the corporation shall be
distributed as provided in Section 2 of Division (B) of this Article III
hereof.
3. REDEMPTION. The Common Stock is not redeemable.
4. VOTING RIGHTS. The holder of each share of Common Stock shall
have the right to one vote, and shall be entitled to notice of any shareholders'
meeting in accordance with the bylaws of this corporation, and shall be entitled
to vote upon such matters and in such manner as may be provided by law.
-12-
ARTICLE IV
A. The liability of the directors of this corporation for monetary
damages shall be eliminated to the fullest extent permissible under
California law.
B. This corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the California Corporations Code) through bylaw
provisions, agreements with the agents, vote of shareholders or disinterested
directors, or otherwise in excess of the indemnification otherwise permitted by
Section 317 of the California Corporations Code, subject only to applicable
limits set forth in Section 204 of the California Corporations Code with respect
to actions for breach of duty to the corporation and its shareholders.
* * *
THREE: The foregoing amendment has been approved by the Board of
Directors of said corporation.
FOUR: The foregoing amendment was approved by the holders of the requisite
number of shares of said corporation in accordance with Sections 902 and 903 of
the California General Corporation Law; the total number of outstanding shares
of each class entitled to vote with respect to the foregoing amendment was
3,103,500 shares of Common Stock, 374,532 shares of Series A Preferred Stock and
374,532 shares of Series B Preferred Stock. The number of shares voting in favor
of the foregoing amendment equaled or exceeded the vote required. The percentage
vote required was (i) more than 50% of the Common Stock, Series A Preferred
Stock and Series B Preferred Stock voting together as a single class, (ii) more
than 50% of the Common Stock voting as a separate class, (iii) more than 50% of
the Series A Preferred Stock voting as a separate class and (iv) more than 50%
of the Series B Preferred Stock voting as a separate class.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this certificate on June
23, 1997.
/s/ Xxxx Xxxxx, Ph.D.
-----------------------------------------
Xxxx Xxxxx, President
/s/ Xxxxxxxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxxxxxxx X. Xxxxxxxx, Secretary
The undersigned certify under penalty of perjury that they have read
the foregoing Amended and Restated Articles of Incorporation and know the
contents thereof, and that the statements therein are true.
Executed at San Diego, California, on June 23, 1997.
/s/ Xxxx Xxxxx
-----------------------------------------
Xxxx Xxxxx, President
/s/ Xxxxxxxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxxxxxxx X. Xxxxxxxx, Secretary
-14-
SCHEDULE A
SCHEDULE OF INVESTORS
NUMBER OF SHARES OF AGGREGATE
PURCHASER SERIES C PREFERRED STOCK PURCHASE PRICE
--------- ------------------------ --------------
The Wellcome Trust 375,000 $3,000,000
Xxxxx X. Xxxxxxxx 12,500 $100,000
Schering Berlin Venture Corp. 84,976 $679,808
-------- -----------
Total 472,476 $3,779,808
Schedule A-1
The Wellcome Trust Limited
as trustee of
the Wellcome Trust
ATTACHMENT A
TO
COLLATERAL THERAPEUTICS, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
With respect to its signatory capacity and liability, as trustee of the Trust,
the Trustee enters into and delivers this Series C Preferred Stock Purchase
Agreement (the "Agreement") in its capacity as the trustee for the time being of
The Wellcome Trust but not otherwise and it is hereby agreed and declared that
notwithstanding anything to the contrary contained or implied in this Agreement
or any related agreement:
(a) the obligations incurred by the Trustee under or in consequence of this
Agreement or any related agreement shall be enforceable against it or the
other trustees of The Wellcome Trust from time to time; and
(b) the liabilities of the Trustee (or such other trustees as are referred to
in paragraph (a) above) in respect of such obligations shall be limited to
such liabilities as can, and may lawfully and properly, be met out of the
assets of The Wellcome Trust for the time being in the hands or under the
control of the Trustee or such other trustees.
Attachment A
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS, DATED JUNE 30, 1997
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
THE FOLLOWING MATTERS ARE EXCEPTIONS TO THE REPRESENTATIONS AND WARRANTIES
OF COLLATERAL THERAPEUTICS, INC., A CALIFORNIA CORPORATION (THE "COMPANY"), AS
SET FORTH IN THE SERIES C PREFERRED STOCK PURCHASE AGREEMENT, DATED AS OF JUNE
30, 1997 (THE "AGREEMENT"). THE SECTION NUMBERS IN THIS SCHEDULE OF EXCEPTIONS
CORRESPOND TO THE SECTION NUMBERS IN THE AGREEMENT; HOWEVER, ANY INFORMATION
DISCLOSED HEREIN UNDER ANY SECTION NUMBER SHALL BE DEEMED TO BE DISCLOSED AND
INCORPORATED INTO ANY OTHER SECTION NUMBER UNDER THE AGREEMENT WHERE SUCH
DISCLOSURE WOULD OTHERWISE BE APPROPRIATE. WHERE THE TERMS OF A CONTRACT OR
OTHER DISCLOSURE ITEM HAVE BEEN SUMMARIZED OR DESCRIBED IN THIS SCHEDULE OF
EXCEPTIONS, SUCH SUMMARY OR DESCRIPTION DOES NOT PURPORT TO BE A COMPLETE
STATEMENT OF THE MATERIAL TERMS OF SUCH CONTRACT OR OTHER ITEM. ANY TERMS
DEFINED IN THE AGREEMENT SHALL HAVE THE SAME MEANING WHEN USED IN THIS SCHEDULE
OF EXCEPTIONS AS WHEN USED IN THE AGREEMENT UNLESS THE CONTEXT OTHERWISE
REQUIRES.
NOTHING HEREIN CONSTITUTES AN ADMISSION OF ANY LIABILITY OR OBLIGATION ON
THE PART OF THE COMPANY NOR AN ADMISSION AGAINST THE COMPANY'S INTEREST. THE
INCLUSION OF ANY SCHEDULE HEREIN OR ANY EXHIBIT HERETO SHOULD NOT BE INTERPRETED
AS INDICATING THAT THE COMPANY HAS DETERMINED THAT SUCH AN AGREEMENT OR OTHER
MATTER IS NECESSARILY MATERIAL TO THE COMPANY. THE INVESTORS ACKNOWLEDGE THAT
CERTAIN INFORMATION CONTAINED IN THESE SCHEDULES MAY CONSTITUTE MATERIAL
CONFIDENTIAL INFORMATION RELATING TO THE COMPANY WHICH MAY NOT BE USED FOR ANY
PURPOSE OTHER THAN THAT CONTEMPLATED IN THE AGREEMENT.
SECTION 2.5. CAPITALIZATION AND VOTING RIGHTS. As of June 30, 1997 there were
3,103,500 shares of Common Stock issued and outstanding and 374,532 shares of
Series A Preferred Stock issued and outstanding. In addition, as of June 30,
1997 stock options to purchase up to 312,500 shares of Common Stock were
outstanding, and the weighted average purchase price of such stock options was
$0.3407 per share. Since the inception of the Company, stock options covering
the purchase of up to 562,500 shares of Common Stock have been issued, of which
stock options to purchase up to 497,500 shares of Common Stock have been issued
pursuant to the Company's 1995 Stock Option/Stock Issuance Plan (hereafter the
"Stock Plan"). As of June 30, 1997, the Company's Board of Directors has
authorized the issuance of up to 708,859 shares of Common Stock pursuant to the
Stock Plan. As of June 30, 1997, 211,359 shares of Common Stock were available
for future award under the Stock Plan. A list of shareholders of the Company's
Common Stock is included herein as "Exhibit 2.5A."
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 2 OF 9
SECTION 2.7. CONTRACTS AND OTHER COMMITMENTS. Set forth below is a summary
of all contracts and commitments of the Company, which as of the date hereof,
in aggregate are greater than $50,000:
COLLABORATION, LICENSE AND ROYALTY AGREEMENT WITH SCHERING XX - XXXX
THERAPY TO PROMOTE ANGIOGENESIS. On May 6, 1996, the Company entered into
a strategic alliance with Schering AG pursuant to the Collaboration,
License and Royalty Agreement covering the development and
commercialization of gene therapy products to promote angiogenesis.
UNIVERSITY OF CALIFORNIA LICENSE AGREEMENT - ANGIOGENESIS GENE Therapy.
On September 27, 1995, the Company entered into a worldwide exclusive
license agreement with the Regents of the University of California for
certain technology relating to a patent application filed by the
University of California relating to angiogenesis gene therapy, based
on scientific discovery research conducted at the laboratory of Dr. H.
Xxxx Xxxxxxx at the Veterans' Affairs Medical Center and the Department
of Medicine of the University of California, San Diego. This agreement
provides the Company with exclusive rights to develop and commercialize
technology covered by patent applications that have been filed in the
United States and in foreign countries. Pursuant to such agreement, the
Company has agreed to pay the University of California a license fee
totalling $550,000 payable in *** installments over a *** and to pay
the University of California an annual royalty fee of *** based on net
sales of products covered by such patents. Under the terms of this
agreement, the Company is required to satisfy certain due diligence
provisions with respect to the timely development and commercialization
of products covered by the patent application thereunder, and pay
certain minimum annual royalty payments following successful commercial
development of a product. As of June 30, 1997, the Company has paid a
total of $150,000 pursuant to the terms of this agreement.
UNIVERSITY OF CALIFORNIA LICENSE AGREEMENT - GENE THERAPY FOR
CONGESTIVE HEART FAILURE. On January 22, 1997, the Company entered into
an exclusive worldwide license agreement with the Regents of the
University of California for certain technology relating to a patent
application filed by the University of California relating to a gene
therapy approach for congestive heart failure based on myocardial
adrenergic responsiveness, which resulted from scientific discovery
research conducted at the laboratory of Dr. H. Xxxx Xxxxxxx at the
Veterans' Affairs Medical Center and the Department of Medicine of the
University of California, San Diego. This agreement provides the
Company with
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 3 OF 9
exclusive rights to develop and commercialize technology covered by patent
applications that have been filed in the United States and in foreign
countries. Pursuant to such agreement, the Company has agreed to pay the
University of California a license fee totalling $650,000 payable in ***
installments over a *** and to pay the University of California an annual
royalty fee of *** based on net sales of products covered by such
patents. Under the terms of this agreement, the Company is required to
satisfy certain due diligence provisions with respect to the timely
development and commercialization of products covered by patent
applications thereunder, and pay certain minimum annual royalty payments
following successful commercial development of a product.
As of June 30, 1997, the Company has paid a total of $100,000 pursuant to
the terms of this agreement.
UNIVERSITY OF CALIFORNIA LICENSE AGREEMENT - ANGIOGENIC GENE THERAPY FOR
CONGESTIVE HEART FAILURE. The Company entered into a letter agreement with
The Regents of the University of California to exclusively negotiate an
exclusive worldwide license to develop and commercialize certain technology
relating to gene angiogenic gene therapy for heart failure, based on
scientific discovery research conducted at the laboratory of Dr. H. Xxxx
Xxxxxxx at the *** *** and the Department of Medicine of the University of
California, San Diego. Based on the terms and conditions of the proposed
agreement, the Company will have exclusive rights to develop and
commercialize technology covered by patent applications that have been filed
in the United States and in foreign countries. Pursuant to such proposed
agreement, the Company has agreed to pay the University of California a
license fee totalling $325,000 payable in *** installments over a *** and to
pay the University of California an annual royalty fee of *** based on net
sales of products covered by such patents. Under the terms of this agreement,
the Company is required to satisfy certain due diligence provisions with
respect to the timely development and commercialization of products covered
by patent applications thereunder, and pay certain minimum annual royalty
payments following successful commercial development of a product. Final
draft agreements have been circulated between the parties and the Company
believes that this agreement will be finalized within the next sixty (60)
days.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 4 OF 9
NEW YORK UNIVERSITY LICENSE AGREEMENT - USE OF FIBROBLAST GROWTH FACTOR 4 FOR
GENE THERAPY FOR CORONARY ARTERY DISEASE, CONGESTIVE HEART FAILURE AND
PERIPHERAL VASCULAR DISEASE. On March 24, 1997, the Company has entered into
an exclusive worldwide license agreement with New York University for the use
of certain technology relating to issued patents and patent applications
owned by New York University covering the Company's use of Fibroblast Growth
Factor 4 (hereafter "FGF-4") for gene therapy products developed and
commercialized by the Company, or its licensees, for the treatment of
coronary artery disease, congestive heart failure and peripheral vascular
disease. This agreement provides the Company with exclusive rights to develop
and commercialize technology covered by patents that have been filed in the
United States and in foreign countries. Pursuant to such agreement, the
Company has agreed to pay New York University (i) an initial license fee of
*** ; (ii) an annual license fee of *** until first commercial sale of a
product pursuant to the Agreement; (iii) milestone payments of $1,750,000
payable in *** installments based on the Company's successful achievement of
certain *** benchmarks, for each product developed thereunder; (iv)
three-year research funding totalling $600,000 payable in six, semi-annual
installments to support Company directed research activities focused on the
development of the Company's core technology; and (v) an annual royalty fee
of *** based on net sales of products covered by such patents. Under the
terms of this agreement, the Company is required to satisfy certain due
diligence provisions with respect to the timely development and
commercialization of products covered by patents thereunder, and pay certain
minimum annual royalty payments following successful commercial development
of a product. As of June 30, 1997, the Company has paid license fees totaling
$100,000 and research funding totalling $100,000 pursuant to the terms of
this agreement.
AMRAD OPERATIONS PTY LTD. AND XXXXXX INSTITUTE FOR CANCER RESEARCH LICENSE
AGREEMENT - USE OF VASCULAR ENDOTHELIAL GROWTH FACTOR B GENES FOR GENE
THERAPY FOR CORONARY ARTERY DISEASE, CONGESTIVE HEART FAILURE AND PERIPHERAL
VASCULAR DISEASE. On March 25, 1997, the Company has entered into an
exclusive worldwide license agreement with AMRAD Operations Pty Ltd and the
Xxxxxx Institute for Cancer Research (hereafter "AMRAD/Xxxxxx") covering the
use of certain technology relating to patent applications filed by
AMRAD/Xxxxxx covering the Company's use of Vascular Endothelial Growth Factor
B (hereafter "VEGF-B") for gene therapy products developed and commercialized
by the Company, or its licensees, for the treatment of coronary artery
disease, congestive heart failure and peripheral vascular disease. This
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 5 OF 9
agreement provides the Company with exclusive rights to develop and
commercialize technology covered by patents that have been filed in the
United States and in foreign countries. Pursuant to such agreement, the
Company has agreed to pay AMRAD/Xxxxxx (i) license fees totalling $1,150,000
payable in three (3) installments during the period from March 25, 1997 to
October 30, 1997; (ii) a $1,000,000 license fee upon the earlier of the
effective date of an initial public offering involving the sale of the
Company's equity securities or eighteen (18) months from the effective date
of the agreement, (iii) milestone payments totalling up to $4,750,000, based
on the Company's successful achievement of certain product development
benchmarks; (iv) an additional $1,000,000 payment for each product developed
beyond the initial product for a medical indication; and (v) an annual
royalty fee *** on net sales of products covered by such patents issued
thereunder. Pursuant to the terms of this agreement, the Company is required
to satisfy certain due diligence provisions with respect to the timely
development and commercialization of products covered by patents thereunder,
and pay certain minimum annual royalty payments following successful
commercial development of a product. As of June 30, 1997, the Company has
paid a total of $1,000,000 pursuant to the terms of this agreement.
DIMOTECH LTD. AND TECHNION RESEARCH & DEVELOPMENT FOUNDATION LICENSE
AGREEMENT -USE OF VASCULAR ENDOTHELIAL GROWTH FACTOR GENE FOR GENE THERAPY
CARDIOVASCULAR DISEASE. On October 17, 1996, the Company entered into an
exclusive worldwide license agreement with Dimotech Ltd. and the Technion
Research and Development Foundation located at the Gurtwith Science Based
Industrial Center in Haifa, Israel (hereafter "Technion") relating to a
patent application filed by Technion covering the Company's use of a novel
vascular endothelial growth factor (hereafter "VEGF/CTI01") for gene therapy
products developed and commercialized by the Company, or its licensees, for
the treatment of cardiovascular disease. This agreement provides the Company
with exclusive rights to develop and commercialize technology covered by
patents that have been filed in the United States and in foreign countries.
Pursuant to such agreement, the Company has agreed to pay Technion (i)
license fees totalling $466,000 payable in *** installments based an the
Company's successful achievement of certain *** benchmarks; and (ii) an
annual royalty fee of *** based on net sales of products covered by patents.
Under the terms of this agreement, the Company is required to satisfy certain
due diligence provisions with respect to
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 6 OF 9
the timely development and commercialization of products covered by patents
thereunder, and pay certain minimum annual royalty payments following successful
commercial development of a product. As of June 10, 1997, the Company has paid a
total of $16,000 pursuant to the terms of this agreement.
VETERANS' MEDICAL RESEARCH FOUNDATION. On November 13, 1996, the Company entered
into an agreement with the Veterans' Medical Research Foundation (the "Medical
Research Foundation") which operates at the Veterans' Affairs Medical Center
covering certain research studies directed at the Company's core technology.
Under the terms and conditions of this agreement, Dr. H. Xxxx Xxxxxxx, a
shareholder and executive officer of the Company, serves as the investigator for
such studies. The agreement covers a one year term; however, this term may be
extended by mutual consent of both parties. In consideration for such services,
the Company has agreed to pay the Medical Research Foundation a primary monthly
fee of $20,000, payable in monthly installments (including certain
administrative overhead charges), plus a supplemental payment, payable monthly,
for additional amounts expanded by the Medical Research Foundation for
Company-directed research activities (including certain administrative overhead
charges).
UNIVERSITY OF WASHINGTON DISCOVERY RESEARCH AGREEMENT - MUSCLE
DIFFERENTIATION DURING REPAIR OF MYOCARDIAL NECROSIS THROUGH GENE THERAPY
WITH THE MYOD GENE. On April 30, 1997 the Company entered into an
agreement with the University of Washington, Seattle, School of Medicine,
Department of Pathology, for the University of Washington to conduct Company-
directed discovery research into the study of muscle differentiation during
repair of myocardial necrosis, resulting from a myocardial infarction,
through gene therapy using the MyoD gene, under the direction of Xx. Xxxxxxx
Xxxxx, M.D., Ph.D. Pursuant to the terms of this agreement, the Company has
agreed to provide the University of Washington with research funding
totalling up to $119,998. Under this agreement, the Company has a right of
first negotiation for the Company to enter an agreement with the University
of Washington to exclusively license all technology that may result from such
research. As of June 30, 1997, the Company has paid $59,999 pursuant to such
agreement.
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 7 OF 9
***
***
***
***
***
***
***
***
CORPORATE OFFICE REAL ESTATE LEASE. On July 17, 1995, the Company entered into a
real estate sublease agreement with Gensia, Inc. covering office space located
at 0000 Xxxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx, which currently serves as the
Company's corporate office. The sublease covered by this agreement will expire
on December 31, 1997. The Company has an option to extend the term of such
sublease for an additional year to expire as of December 31, 1998. Rent payable
to Gensia, Inc. for the remainder of the lease covering the current lease period
(June 1, 1997 to December 31, 1997) totals $52,836.
RESEARCH LABORATORY REAL ESTATE LEASE. On June 23, 1997, the Company submitted a
term sheet covering a proposal to lease an 11,200 square foot research facility
located at 00000 Xxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx. The major terms and
conditions of such lease as proposed by the Company to the landlord are as
follows: (i) annual base rent: $235,200, with an up to 4% annual rent
escalation; (ii) annual operating charges: $30,360; (iii) tenant improvement
allowance: $250,000: (iv) lease term five (5) years. There can be no assurance
that the Company will agree on final terms and enter into a lease agreement
covering such research facility. The Company awaits approval of such proposal or
counter-proposal covering such lease. If this facility is leased, the Company
estimates that it will invest up to $1,500,000 for leasehold improvements,
equipment and other related start-up expenses to develop this lease space as a
fully-operational research facility.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 8 OF 9
CONTRACT RESEARCH SERVICES. On March 17, 1997, the Company entered into an
agreement with HTI Bio-Services, Inc. (hereafter "HTI") for HTI to conduct
certain contract research services. For such services the Company agreed
to pay HTI $99,400. As of June 10, 1997, the unpaid balance payable to HTI
by the Company for such services totalled $19,880.
CONSULTING AGREEMENT . The Company has entered into consulting agreements
with five (5) individuals who have been appointed as members of the
Company's Scientific Advisory Board and with twelve (12) other
individuals, as set forth in the schedule attached hereto.
NOTES PAYABLE AND SECURITY AGREEMENT. In 1995, the Company entered Into
two Promissory Notes with Schering Berlin Venture Corporation ('Payor')
totalling $500,000 to fund operations. The Notes were each amended and
restated as of May 16, 1996. Since there has been an Acceptance of a
Qualified Gene, the Notes are due on Payor's demand on or after June 30,
1999 and bear Interest at 1% below the prime rate. These Notes are secured
by all of the assets of the Company pursuant to a Security Agreement dated
August 16, 1995.
SECTION 2.8 RELATED PARTY TRANSACTIONS. Mr. Xxxxx Xxxxxxx, a member of Xxxxxxx,
Phleger & Xxxxxxxx LLP (hereinafter "Xxxxxxx") is a member of the Company's
Board of Directors and a holder of 142,687 shares of Common Stock. During 1996,
the Company paid Xxxxxxx $148,974 and $19,272 for legal services for 1996 and
1997, respectively. In addition, Mr. Xxxxx Xxxx, a member of the Company's Board
Directors and a holder of 139,887 shares of Common Stock is Chief Executive
Officer of Gensia, Inc., which is the landlord of the Company's executive
office. During 1996, the Company paid Gensia, Inc. rent of $98,496 and $46,586
for 1996 and 1997, respectively.
On June 10, 1997, pursuant to the terms of the Collaboration, License and
Royalty Agreement between Schering AG and the Company, Schering AG purchased
374,532 shares of Series B Preferred Stock at a purchase price $2,500,000. As of
June 10, 1997, Schering AG owned 374,532 shares of the Company Series A
Preferred Stock and 374,532 shares of the Series B Preferred Stock, representing
100% of each class of Preferred Stock and 17.98% of the Company's capital stock,
on a fully-diluted basis.
COLLATERAL THERAPEUTICS, INC.
SCHEDULE OF EXCEPTIONS
PAGE 9 OF 9
SECTION 2.16 FINANCIAL STATEMENTS. The Company has delivered to the Investor
audited financial statements (balance sheet, profit and loss statement,
statement of shareholders' equity and statement of changes of financial
position, including notes thereto) at December 31, 1997, as prepared by Ernst &
Young, the Company's independent public accountants. In addition, the Company
has provided the Investor with unaudited financial statements, (balance sheet,
profit and loss statement, statement of shareholders' equity and statement of
changes of financial position) for the period from January 1, 1997 to May 30,
1997. Reference is made to Section 2.7 disclosure under the caption "Notes
Payable and Security" above.
EXHIBIT 2.5A
COLLATERAL THERAPEUTICS, INC.
COMMON STOCK CAPITALIZATION TABLE
Number
Shareholder of Shares Percent
-------------------------- --------------- -----------------
H. Xxxx Xxxxxxx, M.D. 941,688 30.3%
Xxxx X. Xxxxx, Ph.D. 706,688 22.8%
Xxxxxx X. Xxxxxx, M.D. 456,688 14.7%
Xxxxxx Xxxxxxxx Xxxxxx 25,000 0.8%
Xxxx Xxxxxxx Xxxxxx 25,000 0.8%
Xxxxxxxxxxx X. Xxxxxxxx 277,688 8.9%
Xxxxx Xxxxxxx 142,687 4.6%
Xxxxx Xxxx 139,887 4.5%
Xxxxxxxx Xxxx 110,887 3.6%
Xxxxx Xxxxxxxx 110,887 3.6%
Xxxx Xxxxxxx - Xxxxxxxx 60,000 1.9%
Xxxxx Xxxxxx 50,000 1.6%
Dr. PeiPei Ping 45,000 1.4%
Xxxxxx Xxxxxxxx 4,000 0.1%
Xxx Mokiman 2,000 0.1%
Xxxx Xxxxxx 1,400 0.0%
Xxxxx Xxxxx 1,500 0.0%
Grai Xxxxxxxxx 2,500 0.1%
--------------- -------------
Total Common 3,103,500 100.0%
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