Exhibit 10.26
SCRIPTGEN PHARMACEUTICALS, INC.
STOCKHOLDERS AGREEMENT
THIS AGREEMENT is made as of December 12, 1997, among SCRIPTGEN
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), BioChem Pharma
Inc., a Quebec corporation (the "Investor") and each of the stockholders listed
on the Schedule of Stockholders attached hereto (the "Other Stockholders"). The
Investor and the Other Stockholders are collectively referred to as the
"Stockholders". Capitalized terms used herein are defined in Section 11 hereof.
The Investor shall purchase shares of the Company's Series D Preferred
Stock, per value $.01 per share (the "Series D Stock") pursuant to a Stock
Purchase Agreement between the Investor and the Company dated as of the date
hereof (the "Purchase Agreement").
The Company and the Stockholders desire to enter into this Agreement
for the purposes, among others, of (i) establishing the composition of the
Company's Board of Directors (the "Board"), (ii) assuring continuity in the
management and ownership of the Company, and (iii) limiting the manner and terms
by which the Stockholders' Preferred Stock and Common Stock ("Stockholder
Shares") may be transferred. The execution and delivery of this Agreement is a
condition to the Investor's purchase of the Company's Series D Stock pursuant to
the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. BOARD OF DIRECTORS.
(a) From and after the date of this Agreement and until the
provisions of this Section 1 cease to be effective, each holder of Stockholder
Shares shall vote all of his Stockholder Shares which are voting shares and any
other voting securities of the Company over which such Stockholder has voting
control and shall take all other reasonably necessary or desirable actions
within his control (whether in his capacity as a stockholder, director, member
of a board committee or officer of the Company or otherwise, and including,
without limitation, attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), and
the Company shall take all reasonably necessary or desirable actions within its
control (including, without limitation, calling special board and stockholder
meetings), so that:
(i) one representative designated by Investor shall be elected
to the Board ("Investor Director");
(ii) the composition of the board of directors of each of the
Company's Subsidiaries (if any) (a "Sub Board") shall be the same as that
of the Board;
(iii) the removal from the Board or a Sub Board (with or without
cause) of any Investor Director shall be at the Investor's written request,
but only upon such written request and under no other circumstances; and
(iv) in the event that any Investor Director ceases to serve as a
member of the Board or a Sub Board during his term of office, the resulting
vacancy on the Board or the Sub Board shall be filled by a representative
designated by the Investor as provided hereunder.
In all other respects, the rights and obligations of the Other Stockholders
pursuant to Section 1 of the Preferred Stockholders' Agreement, dated as of
May 17, 1996 (the "Prior Stockholders' Agreement") shall remain unaffected, and
the Investor hereby agrees to be bound by the provisions regarding voting
contained in said Section 1 of the Prior Stockholders' Agreement. The Investor
Director shall not be appointed until the earlier of (i) the consummation of a
Qualified Public Offering and (ii) February 16, 1998.
(b) The Company shall pay the reasonable out-of-pocket expenses
incurred by the Investor Director in connection with attending the meetings of
the Board, any Sub Board and any committee thereof. In addition, the Company
shall pay to the Investor Director, an annual fee not less than the amount of
any fee paid by the Company to any other director. Commencing upon consummation
of a Qualified Public Offering, the Company shall maintain directors and
officers indemnity insurance coverage in a minimum amount customary for a public
company with the Company's capitalization. The Company's certificate of
incorporation and bylaws shall provide for indemnification and exculpation of
directors to the fullest extent permitted under applicable law.
(c) The provisions of this Section 1 shall terminate
automatically and be of no further force and effect upon the tenth
anniversary of the date hereof or at such time as the Investor and its
Permitted Transferees (as defined in Section 7(d) hereof) collectively own
less than 10% of the issued and outstanding shares of (i) Series D Stock and,
(ii) the Common Stock issued upon conversion of such stock; provided that the
Investor may assign its right to designate directors hereunder to any Person
or group of affiliated Persons who acquire more than 50% of the Series D
Stock and any Common Stock issued upon conversion of such stock held by the
Investor as of the date hereof.
(d) If the Investor fails to designate the Investor Director to fill
a directorship pursuant to the terms of this Section 1, the election of an
individual to such directorship shall be accomplished in accordance with the
Company's bylaws and applicable law.
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2. MEETINGS. The Board shall hold a regularly scheduled meeting at
least once every fiscal quarter (at which such meeting the Company's financial
statements for the immediately preceding fiscal quarter or fiscal year, as the
case may be, will be discussed) at such time as may be fixed by resolution of
the Board. Special meetings of the Board may be held at any time upon the call
of the chairperson of the Board or at least one director. Notice of each
regularly scheduled and special meeting must be duly given or sent at least
three Business Days prior to such meeting by oral, telephonic, telegraphic or
facsimile notice or by written notice sent by express mail. All reasonable best
efforts shall be made to ensure that each director actually receives timely
notice of any such meeting.
3. ACTION BY THE BOARD; CERTAIN APPROVAL RIGHTS.
(a) A quorum of the Board shall consist of a majority of the persons
serving as members of the Board. All actions of the Board shall require the
affirmative vote of at least a majority of the directors at a duly convened
meeting of the Board at which a quorum is present or the unanimous written
consent of the Board; PROVIDED that, in the event there is a vacancy on the
Board and an individual has been nominated to fill such vacancy, the first order
of business shall be to fill such vacancy.
(b) Until such time as the aggregate number of shares of the Series D
Stock and any Common Stock issued upon conversion of such stock held by the
Investor and its Permitted Transferees at any time is less than the Series D
Minimum, the Company or any of its Subsidiaries (including but not limited to
any action by a Sub Board or committee thereof) shall be subject to the
following restrictive covenants:
(i) DIVIDENDS; SHARE REPURCHASES. The Company will not pay or
declare any cash dividend or distribution on any shares of capital stock of
the Company, other than the Series D Stock, or apply any of the Company's
assets to the redemption, retirement, purchase or other acquisition,
directly or indirectly, through Subsidiaries or otherwise, of any shares of
Common Stock of the Company, or any rights, options or warrants to
purchase, or securities convertible into, Common Stock of the Company,
except for (A) any repurchase of shares by the Company pursuant to any
stock option or restricted stock agreement with an employee of the Company
entered into by the Company and approved by the Board, and (B) the
redemption of any shares of Series D Stock, or the mandatory redemption of
the other Preferred Stock pursuant to the Amended and Restated Certificate
of Incorporation of the Company, as in effect as of the date hereof.
(ii) SALES OF SECURITIES. The Company will not (A) create or
issue any securities of the Company which have equity features and which
rank on a parity with or senior to the Series D Stock with respect to the
payment of dividends or upon liquidation or other distribution of assets or
with a conversion price lower than that of the Series D Stock or terms more
favorable than those of the Series D Stock or (B) sell or issue any shares
of Common Stock of the Company for which the consideration is other than
cash, except as contemplated with respect to the conversion of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Series D Stock into Common Stock.
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(iii) FOREIGN SUBSIDIARIES. Except in the ordinary course of
business, the Company will not directly or through any Subsidiary create or
acquire any Subsidiary or any interest in any corporation, partnership,
limited partnership, joint venture or similar entity located outside, or
formed pursuant to the laws of other than, the United States of America,
its territorial possessions or any political subdivision of any thereof.
(iv) MERGER, CONSOLIDATION, SALE OF ASSETS. The Company will not
merge, consolidate or dispose of all or substantially all its assets,
except a merger or consolidation pursuant to which the Company is the
surviving corporation. This section shall not in any way limit the ability
of the Company (A) to sell inventory or (B) to sell other assets, each in
the ordinary course of business.
(v) TRANSACTIONS WITH OFFICERS, DIRECTORS AND STOCKHOLDERS. The
Company will not furnish or sell services or products to or acquire or
purchase services or products from any corporation, partnership,
proprietorship, association, joint venture or other person or entity in
which any officer, director or 5% stockholder of the Company or any
Affiliate of any such officer, director, or 5% stockholder has a material
interest or enter into any material contract or arrangement (excluding
employment or option agreements with an employee approved by the Board)
with any such officer, director, 5% stockholder or Affiliate which is less
than an arms-length transaction or which transaction has or reasonably can
be expected to have a material adverse effect on the Company. For purposes
of this Section 3(b)(v), there may be disregarded any interest which arises
solely from the ownership of less than a 2% equity interest in a
corporation whose voting securities are regularly traded in any national
securities exchange or in the over-the-counter market.
(vi) INVESTMENTS, LOANS, GUARANTEES, JOINT VENTURES AND
SUBSIDIARIES. The Company will not, (A) directly or through any Subsidiary
create or acquire any interest in any partnership, limited partnership,
joint venture or similar entity and will not create or acquire any interest
in any Subsidiaries of which it does not own all the capital stock or
(B) make any investments in or loans or advances to or endorse, guarantee
or become surety for the obligations of any person, corporation or other
entity except that the Company may endorse checks for collection or deposit
in the ordinary course of business.
(vii) CERTIFICATE OF INCORPORATION AND BY-LAW AMENDMENTS;
RECLASSIFICATION OF COMMON STOCK; CHANGES TO SERIES D STOCK. The Company
may not amend its Certificate of Incorporation or By-Laws so as to affect
adversely the Series D Stock. The Company may not reclassify any shares of
its Common Stock into shares having preference or priority to dividends or
assets which are superior to the preferences and priorities of the Series D
Stock. The Company may not make any change to the rights, preferences or
privileges of the Series D Stock so as to affect adversely the rights,
preferences or privileges the Series D Stock.
(viii) CHANGE OF BUSINESS. The Company shall not enter into any
transaction or series of transactions which results in the Company engaging
in any material respect in any business other than the drug discovery,
agricultural,
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human healthcare and pharmaceutical fields and such business activities as
are incidental or related thereto.
(ix) IMPAIRMENT OF DIVIDENDS. The Company may not enter into any
contract or agreement which by its terms restricts the Company's ability to
pay dividends on the Series D Stock or which may otherwise restrict the
Company's ability to comply with and perform the terms of this Agreement.
(x) COMPLIANCE WITH ERISA. The Company will not:
(A) Engage in any transaction in connection with which the
Company or any of its Subsidiaries could be, to the knowledge of the
Company or any of its Subsidiaries could be, to the knowledge of the
Company, subject to either a civil penalty assessed pursuant to
section 502(i) of ERISA or a tax imposed by section 4975 of the Code,
based on existing regulations or published interpretations in effect
from time to time;
(B) Terminate any plan in a manner, or take any other
action, including withdrawal from any plan that is a multiemployer
plan, which could result in any material liability of the Company or
any of its Subsidiaries to the Pension Benefit Guaranty corporation or
to such plan;
(C) Fail to make full payment when due of all amounts
which, under the provisions of any plan, the Company or any of its
Subsidiaries is required to pay as contributions thereto, or permit to
exist any accumulated funding deficiency, whether or not waived, with
respect to any plan; or
(D) Permit the current value of all vested accrued benefits
under all plans which are subject to Title IV of ERISA to exceed the
current value of the assets of such plans allocable to such vested
accrued benefits.
As used in this Section 3(b)(x), the term "accumulated funding deficiency" has
the meaning specified in section 302 of ERISA an section 412 of the Code, the
term "accrued benefit" has the meaning specified in section 3 of ERISA, the term
"current value" has the meaning specified in section 4062(b)(1)(A) of ERISA and
the term "multiemployer plan" has the meaning specified in section 4001(a)(3) of
ERISA.
(xi) BORROWINGS. Neither the Company nor any of its Subsidiaries
will incur, create, assume, become or be liable in any manner with respect
to, or permit to exist, any indebtedness for borrowed money, or any other
indebtedness evidenced by, or liability evidenced by notes, bonds,
debentures or similar obligations or either directly or indirectly
guarantee, endorse or become surety for, or otherwise in any manner become
responsible for the obligations of any other person, other than
indebtedness with respect to trade and operation obligations and other
normal accruals in the ordinary course of business (which the Company
covenants will be paid in accordance with customary trade practice) or with
respect to which it is contesting in good faith the amount or
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validity thereof by appropriate proceedings, and then only to the extent it
has set aside on its books adequate reserves therefor.
(xii) CAPITAL EXPENDITURES; COMMITMENTS. The Company shall not,
and shall cause each of its Subsidiaries, if any, not to, incur capital
expenditures or make commitments for capital expenditures, services or
product development in excess of the greater of $100,000 or 110% of the
amount budgeted in the Company's yearly budget for any such capital
expenditure or commitment.
(xiii) EMPLOYEE STOCK PURCHASE ARRANGEMENTS. The Company will not
issue any of its capital stock to, or grant an option or right to subscribe
for any of its capital stock to, or purchase or acquire any of its capital
stock from, any employee, consultant, director or officer of the Company or
a Subsidiary thereof, except as provided in Section 6.11(b) of the Series C
Purchase Agreement (as defined in Section 11 hereof).
The provisions of Section 2 and this Section 3 shall terminate automatically and
be of no further force and effect upon the first to occur of (i) the tenth
anniversary of the date hereof or (ii) a Qualified Public Offering (as defined
in Section 11 hereof). The failure of the Company to comply with this Section 3
shall only be waivable by written consent of the holders of a majority of the
outstanding Series D Stock and by the Requisite C Holders (as defined in Section
11).
4. AFFIRMATIVE COVENANTS. Until such time as the Investor and its
Permitted Transferees at any time hold less than 40% of the Series D Stock, the
Company shall be subject to the following affirmative covenants:
(a) BASIC FINANCIAL INFORMATION. The Company will furnish the
following reports to the Investor (or its representatives):
(i) As soon as practicable after the end of each fiscal year of
the Company, and in any event within one hundred twenty (120) days
thereafter, a consolidated balance sheet of the Company and its
Subsidiaries, if any, as at the end of such fiscal year, and consolidated
statements of income and retained earnings and of statement of cash flows
of the Company and its Subsidiaries, if any (collectively with the balance
sheet, the "Investment Financial Statements"), for such year, prepared in
accordance with generally accepted accounting principles consistently
applied and setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail and certified by
independent public accountants of nationally recognized standing selected
by and reporting to the Board and approved by the Investor, and including a
Company prepared comparison to budget.
(ii) As soon as practicable after the end of each month and each
of the first, second and third quarterly accounting periods in each fiscal
year of the Company, and in any event within thirty (30) days thereafter,
consolidated Investment Financial Statements of the Company and its
Subsidiaries, if any, for such period, prepared in accordance with
generally accepted accounting principles consistently applied, subject to
changes resulting from year-end audit adjustments, and setting forth in
comparative form the figures for the
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corresponding periods of the previous fiscal year, certified by the
principal financial or accounting officer of the Company.
(iii) If the Company becomes subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act,"
which term shall include any successor federal statute), it may in lieu of
the financial information required pursuant to this Section 4(a)(i) and
(ii) provide copies of its annual reports on Form 10-K and its quarterly
reports on Form 10-Q, respectively, or other then-equivalent report form.
(iv) Immediately upon any officer of the Company obtaining actual
knowledge of the occurrence of any material violation or default by the
Company or any of its Subsidiaries in the performance of (A) its agreements
or covenants contained herein, (B) its material agreements or covenants
contained in any other agreement to which the Company or any of its
Subsidiaries is a party or (C) its agreements or covenants contained in the
Certificate of Incorporation or of the occurrence of any condition, event
or act which, with or without notice or lapse of time, or both, would
constitute a material violation or an event of default, a written notice
specifying the nature and status thereof and, what action the Company has
taken, is taking and proposes to take with respect thereto.
(v) Annually, but in any event no later than sixty (60) days
after the commencement of each fiscal year of the Company, the yearly
budget and operating plan of the Company, in such manner and form
reasonably acceptable to the Investor and as approved by the Board, which
plan shall include a projection of income and projected Investment
Financial Statements as of the end of such fiscal year. Any material
changes in such plan shall be submitted as promptly as practicable after
such changes have been approved by the Board.
(vi) As soon as practicable after transmission or occurrence and
in any event within ten (10) days thereof, (A) copies of any reports or
communications delivered to any of the Company's security holders (in their
capacity as such), any governmental entity (excluding ordinary permit
applications or similar types of correspondence and documentation in
connection therewith), any financial institution or member of the financial
community (other than correspondence and documents delivered to such
financial institutions or members in the ordinary course of business which
do not materially adversely impact on the Investor's investment in the
Company) or to any other individual or entity who may receive such
information by law or pursuant to a contract or other agreement with the
Company (except in the ordinary course of business), including any filings
by the Company, or by any of its officers or directors relating to the
Company, with any securities exchange or the Commission or the National
Association of Securities Dealers, Inc., (B) notice of any event which has
a material adverse effect on the Company's business, prospects or
condition, financial or otherwise, or on the ability of the Company to
perform its obligations under this Agreement, or under any other agreement,
or on the Investor's investment in the Series D Stock or in the Common
Stock issuable upon conversion of the Series D Stock, and (C) notice of
material breach or failure to comply with any representation, warranty,
covenant or agreement of the Company contained herein, including the
Exhibits hereto.
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(vii) Immediately upon any principal officer of the Company or any
other officer of the Company involved in its financial administration
obtaining knowledge of the occurrence of any (A) "reportable event," as
such term is defined in section 4043 of ERISA, other than any such event
with respect to which the statutory thirty (30)-day notice requirement has
been waived by regulation, or (B) "prohibited transaction," as such term is
defined in section 4975 of the Internal Revenue Code of 1986, as amended
(the "Code"), in connection with any plan or any trust created thereunder,
a written notice specifying the nature thereof, what action the Company has
taken, is taking and proposes to take with respect thereto, and, when
known, any action taken or threatened by the internal Revenue Service or
the Pension Benefit Guaranty Corporation with respect thereto.
(viii) With reasonable promptness, such other information and data
with respect to the Company and its Subsidiaries, if any, as the Investor
may from time to time reasonably request.
(ix) The provisions of this Section 4(a)shall not be in
limitation of any rights which the Investor may have to inspect the books
and records of the Company and its Subsidiaries, or to inspect their
properties or discuss their affairs, finances and accounts; and, in the
event that the Company is unable to comply with the provisions of this
Section 4(a), the Board shall, by resolution duly adopted, authorize and
cause a firm of independent public accountants of nationally recognized
standing in the United States to prepare promptly and furnish such
information to the Investor at the Company's expense.
(b) VISITATION. The Company will permit the Investor (or
representatives of the Investor) to visit and inspect any of the properties of
the Company, including its books of account and other records (and make copies
thereof and take extracts therefrom), and to discuss its affairs, finances and
accounts with the Company's directors, officers, senior employees and its
independent public accountants, all at such reasonable times and as often as any
such person may reasonably request. Any expenses incurred by the Investor in
connection with any such visitation and inspection shall be borne by the
Investor; PROVIDED, HOWEVER, in the event such visitation is necessitated by or
is a result of a material default hereunder or under the terms of a material
contract or arrangement on the part of the Company, all such expenses shall be
borne by the Company.
(c) PROMPT PAYMENT OF TAXES, ETC. The Company will promptly pay and
discharge, or cause to be paid and discharged, when due and payable, all lawful
taxes, assessments and governmental charges or levies imposed upon the income,
profits, property or business of the Company or any Subsidiary; PROVIDED,
HOWEVER, that any such tax, assessment, charge or levy need not be paid if the
validity thereof shall currently be contested in good faith by appropriate
proceedings and if the Company shall have bonded or set aside on its books
adequate reserves with respect thereto; and PROVIDED, FURTHER, that the Company
will pay all such taxes, assessments, charges or levies, or otherwise take any
action which has the effect of preventing a foreclosure, forthwith upon the
commencement of proceedings to foreclose any lien which may have attached as
security therefor. The Company will promptly pay or cause to be paid when due
all other indebtedness incident to operations of the Company; PROVIDED, HOWEVER,
that any such indebtedness need not be paid if the validity thereof shall
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currently be contested in good faith by appropriate proceedings and if the
Company shall have bonded or set aside on its books adequate reserves with
respect thereto; and PROVIDED, FURTHER, that the Company will pay all such
indebtedness on or prior to the time when failure to pay would materially
adversely affect the Company.
(d) MAINTENANCE OF PROPERTIES AND LEASES. The Company will keep its
properties and those of its Subsidiaries, if any, in good repair, working order
and condition, reasonable wear and tear excepted, and from time to time make all
necessary and proper repairs, renewals, replacements, additions and improvements
thereto; and the Company and its subsidiaries, if any, will at all times comply
with each provision of all leases to which any of them is a party or under which
any of them occupies property if the breach of such lease would have a material
adverse effect on the condition, financial or otherwise, prospects or operations
of the Company.
(e) INSURANCE. The Company shall maintain adequate insurance, by
financially sound and reputable insurers, on its properties and assets and the
properties and assets of its Subsidiaries, if any, which are of an insurable
character and in such amounts and on such terms usually insured by corporations
engaged in the same or similar business and similarly situated, against loss or
damage by fire, explosion and other risks customarily insured against by such
corporations which amounts shall be sufficient to prevent the Company or any
such Subsidiary from becoming a co-insurer and not in any event less than 100%
of the insurable value of the property and assets insured; and the Company will
maintain, with financially sound and reputable insurers, insurance against other
hazards and risks and liability to persons, property and assets, including
without limitation insurance against claims for personal injury, death or
property damage occurring upon, in, about or in connection with the use of any
of the properties or assets of it or any Subsidiary, and in such amounts and on
such terms usually insured by corporations engaged in the same or similar
business and similarly situated, which amounts shall be sufficient to prevent
the Company or any Subsidiary from becoming a co-insurer; and the Company will
maintain such other insurance as may be required by law or other agreements to
which the Company is or shall become a party.
(f) ACCOUNTS AND RECORDS. The Company will keep true records and
books of account in which full, true and correct entries will be made of all
dealings or transactions in relation to its business and affairs in accordance
with generally accepted accounting principles applied on a consistent basis.
(g) INDEPENDENT ACCOUNTANTS. The Company will retain independent
public accountants of nationally recognized standing who shall certify the
Company's financial statements at the end of each fiscal year. In the event the
services of the independent public accountants, so selected, or any firm of
independent public accountants hereafter employed by the Company are terminated,
the Company will promptly thereafter notify the Investor and will request the
firm of independent public accountants whose services are terminated to deliver
to the Investor a letter of such firm setting forth the reasons for the
termination of their services. In the event of such termination, the Company
will promptly thereafter engage another accounting firm of similar quality. In
its notice to the Investor the Company shall state whether the change of
accountants was recommended or approved by the Board.
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(h) COMPLIANCE WITH REQUIREMENTS OF GOVERNMENTAL AUTHORITIES. The
Company and all its Subsidiaries, if any, shall duly observe and conform in all
material respects to all valid requirements of governmental authorities relating
to the conduct of their businesses or to their properties or assets.
(i) MAINTENANCE OF CORPORATE EXISTENCE, ETC. The Company shall
maintain and shall cause each Subsidiary, if any, to maintain in full force and
effect (i) its corporate existence, rights and franchises and all licenses,
privileges and other rights in or to use patents, processes, licenses,
trademarks, trade names or copyrights owned or possessed by it or any Subsidiary
and shall obtain and maintain any such right, franchise, license or privilege
deemed by the Company to be necessary on the date hereof or in the future to the
conduct of their business without any conflict with any business in or rights of
others to use such patents, processes, licenses, trademarks, trade names or
copyrights and (ii) its qualification to do business in each jurisdiction in
which the character of its properties (owned, leased or licensed) or the nature
of its business requires such qualification, except where the failure to so
qualify would not have a material adverse effect upon the business or operations
of the Company or such Subsidiary, as the case may be.
(j) NOTICE OF RECORD DATES. In the event of any taking by the
Company of a record of the holders of any class of securities (other than the
Series D Stock) for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, the Company shall mail
to the Investor at least ten (10) days prior to such record date specified
therein, a notice specifying the date on which any such record is to be taken
for the purpose of such dividend or distribution.
(k) PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. The Company
will cause each person currently or hereafter employed by it or any Subsidiary
with access to confidential information to enter into a proprietary information
and inventions agreement in substantially the form attached as EXHIBIT 6.13 to
the Series C Purchase Agreement.
(l) MEETINGS OF STOCKHOLDERS. The Investor shall be entitled to call
for a Stockholders' meeting upon five (5) days notice to the Company.
(m) COMPLIANCE WITH ERISA. The Company will file or cause to be
filed on a timely basis each and every return, report, statement, notice,
declaration and other document required by any governmental agency, federal,
state or local authority (including, without limitation, the Internal Revenue
Service, the Department of Labor, the Pension Benefit Guaranty Corporation and
the Commission) with respect to any plan maintained by the Company.
(n) ENVIRONMENTAL MATTERS. The Company agrees to comply in all
material respects with, and abide by, all Federal, state and local laws or
regulations relating to environmental protection or to the storage or disposal
of hazardous waste (including, but not limited to, asbestos, polychlorinated
biphenyls and petroleum products) in connection with or relating to the Company
or any of its businesses, operations or assets.
The provisions of this Section 4 shall terminate automatically and be of no
further force and effect upon the first to occur of (i) the tenth anniversary of
the date hereof or (ii)
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a Qualified Public Offering (as defined in Section 11 hereof). The failure of
the Company to comply with this Section 4 shall only be waivable by written
consent of the holders of a majority of the outstanding Series D Stock and the
Requisite C Holders.
5. CONFLICTING CHARTER OR BYLAW PROVISIONS. Each Stockholder shall
vote all of its shares, and shall take all other actions, to ensure that the
Company's Certificate of Incorporation and Bylaws and the certificate of
incorporation and bylaws of each of its Subsidiaries facilitate and do not at
any time conflict with any provision of this Agreement.
6. REPRESENTATIONS AND WARRANTIES. Each Stockholder represents and
warrants that (i) such Stockholder is the record owner of the number of
Stockholder Shares set forth opposite its name on the Schedule attached hereto,
(ii) this Agreement has been duly authorized, executed and delivered by such
Stockholder and constitutes the valid and binding obligation of such
Stockholder, enforceable in accordance with its terms, and (iii) such
Stockholder has not granted and is not a party to any proxy, voting trust or
other agreement which is inconsistent with, conflicts with or violates any
provision of this Agreement. No holder of Stockholder Shares shall grant any
proxy or become party to any voting trust or other agreement which is
inconsistent with, conflicts with or violates any provision of this Agreement.
7. RESTRICTIONS ON TRANSFER OF STOCKHOLDER SHARES.
(a) TRANSFER OF STOCKHOLDER SHARES. No Stockholder shall either,
directly or indirectly, sell, assign, mortgage, transfer, pledge, create a
security interest in or lien upon, encumber, give, place in trust, hypothecate,
or otherwise in any manner voluntarily or involuntarily dispose of (hereinafter
"Transfer"), any or all of his, her or its Stockholder Shares, now owned or
hereafter acquired, unless such Stockholder (in such capacity, the "Offeror")
shall first offer to Transfer any or all of his, her or its Stockholder Shares
to all other Stockholders (in such capacity, such Stockholders are referred to
as the "Offerees"), in their respective proportionate shares (as defined below).
In the event any Offeror proposes to Transfer Stockholder Shares, he, she or it
shall give the Offerees written notice of his, her or its intention, describing
the type of Stockholder Shares, the price and the general terms upon which the
Offeror proposes to Transfer the same. Each Offeree shall have thirty (30) days
from the date such notice is given to agree to have transferred to him, her or
it any or all of such Stockholder Shares up to such Offeree's proportionate
share, for the price and upon the general terms specified in the notice by
giving written notice to the Offeror and stating the quantity of Stockholder
Shares such Offeree desires to have transferred to him, or it. As used in this
Section 7, and except as otherwise provided, the term "proportionate share"
shall mean, with respect to each Offeree who is entitled to receive the
particular offer, the total number of Stockholder Shares proposed to be
transferred, multiplied by a fraction, the numerator of which shall be the sum
of (i) the total number of shares of Common Stock owned by such Offeree and (ii)
the total number of shares of Common Stock into which the shares of Preferred
Stock and other convertible securities of the Company held by such Offeree are
then convertible, and the denominator of which shall be the sum of (i) the total
number of shares of Common Stock owned by all Offerees and (ii) the total number
of shares of Common Stock into which the shares of Preferred Stock and other
convertible securities of the Company held by all Offerees are then convertible;
-11-
(b) OVER-ALLOTMENT. Each Offeree shall have a right of
over-allotment such that if any Offeree fails to exercise such Offeree's right
hereunder to have transferred to him, her or it such Offeree's full
proportionate share of the Stockholder Shares proposed to be transferred (in
such capacity, an "Incomplete Purchaser" and collectively, the "Incomplete
Purchasers"), the Offerees exercising their right to have transferred to them
their full respective proportionate share of such Stockholder Shares (in such
capacity, collectively, the "Complete Purchasers" and individually, a "Complete
Purchaser") may have transferred to them the portion of such Stockholder Shares
which has not been transferred to the Incomplete Purchasers as hereinafter
provided. Each Complete Purchaser shall have fifteen (15) days from the date
notice is given by the Offeror to the Complete Purchasers that the Incomplete
Purchaser(s) have rejected or failed to accept their right to have transferred
to them their proportionate share of Stockholder Shares, to agree to have
transferred to such Complete Purchaser up to such Complete Purchaser's
proportionate share of Stockholder Shares not transferred to the Incomplete
Purchaser(s). Notwithstanding anything in Section 7 to the contrary, as used in
this Section 7(b) with respect to the Complete Purchasers only, each Complete
Purchaser's "proportionate share" shall be calculated by excluding from the
denominator of the fraction the total number of shares of Common Stock of all
Incomplete Purchasers and the total number of shares of Common Stock into which
the shares of all such Incomplete Purchasers' Preferred Stock and other
convertible securities of the Company are convertible. In the event the
Offerees fail to exercise their rights pursuant to paragraphs (a) and (b) above
within said forty-five (45) day period for the full amount of Stockholder Shares
proposed to be transferred, the Offeror shall have sixty (60) days thereafter to
Transfer the Stockholder Shares with respect to which the Offeree's options were
not exercised, at a price and upon general terms no more favorable to the
transferees thereof than specified in the Offeror's notice to the Offerees. In
the event the Offer or has not transferred the Stockholder Shares within said
60-day period, he, she or it shall not thereafter Transfer any Stockholder
Shares without first offering such Stockholder Shares to the Offerees in the
manner provided above;
(c) TAG-ALONG RIGHTS. At least thirty (30) days prior to any
Transfer of Stockholder Shares (other than a Public Sale), including the
Transfer of Stockholder Shares to the Company, the Stockholder making such
Transfer (the "Transferring Stockholder") shall deliver a written notice (the
"Sale Notice") to the Company and the other Stockholders specifying in
reasonable detail the identity of the prospective transferee(s), the number of
shares to be transferred and the terms and conditions of the Transfer (which
notice may be the same notice and given at the same time as the offer notice
under Section 7(a)). The other Stockholders (the "Electing Holders") may elect
to participate in the contemplated Transfer at the same price per share and on
the same terms by delivering written notice to the Transferring Stockholder
within thirty (30) days after delivery of the Sale Notice. If the Electing
Holders have elected to participate in such Transfer, the Transferring
Stockholder and the Electing Holders shall be entitled to sell in the
contemplated Transfer, at the same price and on the same terms, a number of
Stockholder Shares (determined on a class-by-class basis) equal to the product
of (i) the quotient determined by dividing (A) the percentage of Stockholder
Shares in any class of Stockholder Shares owned by such Person by (B) the
aggregate percentage of Stockholder Shares in such class owned, respectively, by
the Transferring Stockholder and the Electing Holders, and (ii) the number of
Stockholder Shares in such class to be sold in the contemplated Transfer.
-12-
FOR EXAMPLE, if the Sale Notice contemplated a sale of 100 Stockholder
Shares by the Transferring Stockholder, and if the Transferring
Stockholder at such time owns 35% of all Stockholder Shares and if the
Electing Holder elects to tag-along and owns 15% of all Stockholder
Shares, the Transferring Stockholder would be entitled to sell 70
shares (35% DIVIDED BY 50% x 100 shares) and the Electing Holder would
be entitled to sell 30 shares (15% DIVIDED BY 50% 100 shares).
Each Transferring Stockholder shall use best efforts to obtain the agreement of
the prospective transferee(s) to the participation of the Electing Holders in
any contemplated Transfer, and no Transferring Stockholder shall transfer any of
its Stockholder Shares to any prospective transferee if such prospective
transferee(s) declines to allow the participation of the Electing Holders.
(d) PERMITTED TRANSFERS. Notwithstanding anything to the contrary
contained herein, the procedures specified in this Section 7 shall not be
applicable to a Transfer by (i) a Stockholder to a Permitted Transferee (as
defined below) of such Stockholder, if such Permitted Transferee agrees in
writing with the parties hereto to be bound by and comply with all provisions of
this Agreement applicable to the individual or entity transferring the
Stockholder Shares immediately prior to such Transfer, (ii) a Stockholder to any
or all of the partners (general and/or limited) of such Stockholder in which
event such Stockholder Shares shall no longer be subject to this Agreement, or
(iii) to the Company pursuant to any repurchase Agreement, right of first
refusal or other right on the part of the Company to acquire Stockholder Shares
(provided that this sub-section (iii) shall not be deemed to authorize the
Company to repurchase any Stockholder Shares if otherwise prohibited). For
purposes of this Section 7(d), a "Permitted Transferee" shall mean (i) in the
case of a Stockholder that is an individual, the spouse or immediate family
member or any partnership, corporation or other entity wholly-owned by such
individual, and (ii) in the case of a Stockholder that is a partnership, any of
its partners (general and/or limited), employees or affiliates and any
partnership, corporation or other entity controlled by or under common control
with such partnership or the parties thereof.
(e) If any Transfer or attempted Transfer of the Stockholder Shares
is made contrary to the provisions of this Section 7, each Stockholder shall
have the right, in addition to any other legal or equitable remedies which it
may have, to enforce its rights hereunder by an action for specific performance;
the parties hereto recognize the rights set forth herein as unique, the
violation of which cannot be remedied by an award of monetary damages.
Notwithstanding the foregoing, no party hereto shall avoid the
provisions of this Agreement by making one or more transfers to one or more
Permitted Transferees and then disposing of all or any portion of such party's
interest in any such Permitted Transferee.
The provisions of Section 2.1 of the Preferred Stockholders' Agreement
dated May 17, 1996 are hereby terminated.
(f) TERMINATION OF RESTRICTIONS. The restrictions set forth in this
Section 7 shall continue with respect to each Stockholder Share until the
earlier of (i) the date on which such Stockholder Share has been transferred in
a Public Sale, (ii) the
-13-
date on which such Stockholder Share has been transferred pursuant to this
Section 7 (other than subsection 7(d)), (iii) the fifth anniversary of the date
of this Agreement or (iv) the consummation of a Qualified Public Offering.
8. LEGEND. Each certificate evidencing Stockholder Shares and each
certificate issued in exchange for or upon the transfer of any Stockholder
Shares (if such shares remain Stockholder Shares after such transfer) shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"The securities represented by this certificate are subject
to a Stockholders Agreement dated as of _____________, among
the issuer of such securities (the "Company") and certain of
the Company's stockholders, as amended and modified from
time to time. A copy of such Stockholders Agreement shall
be furnished without charge by the Company to the holder
hereof upon written request."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding as of the date hereof. The legend set forth above shall be
removed from the certificates evidencing any shares which cease to be
Stockholder Shares in accordance with Section 7 hereof.
9. TRANSFER. Prior to transferring any Stockholder Shares (other
than a Public Sale) to any Person, the Stockholders shall cause the prospective
transferee to be bound by this Agreement and to execute and deliver to the
Company, the Investor and the Other Stockholders a counterpart of this
Agreement.
10. PREEMPTIVE RIGHTS.
(a) The Company hereby grants to the Stockholders the right to
purchase any or all "New Securities" (as hereinafter defined) on a proportionate
basis as defined in Section 10(b). For purposes of this Section 10, "New
Securities" shall mean any capital stock of the Company whether now authorized
or not, and rights, options or warrants to purchase capital stock, and
securities of any type whatsoever that are, or may become, convertible into
capital stock and any borrowings, direct or indirect, from financial
institutions or other persons by the Company, whether or not presently
authorized, including any type of loan or payment endorsed by any type of debt
instrument, but only to the extent such borrowings contain any equity features,
but "New Securities" shall not include (i) securities issued to employees,
directors or officers of the Company, (ii) shares of capital stock issued upon
conversion of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, or Series D Stock (iii) securities issued as part of the
purchase price in connection with the closing of an acquisition by the Company
of all or substantially all the assets or stock of another entity or person,
approved by the Board, (iv) warrants issued in connection with business
transactions, including corporate partnerships, approved by the Board or
securities issued pursuant to such warrants and (v) the sale of Series D Stock
pursuant to the Purchase Agreement.
(b) In the event the Company proposes to undertake an issuance of New
Securities, it shall give the Stockholders written notice of its intention,
describing the type of New Securities, the price and the general terms upon
which the Company
-14-
proposes to issue the same. Each Stockholder shall have thirty (30) days from
the date such notice is given to agree to purchase any or all of the New
Securities up to such Stockholder's proportionate share, for the price and upon
the general terms specified in the notice by giving written notice to the
Company and stating the quantity of New Securities to be purchased. As used in
this Section 10, and except as otherwise provided, the term "proportionate
share" shall mean, with respect to any Stockholder, the total number of New
Securities proposed to be issued, multiplied by a fraction, the numerator of
which shall be the sum of (i) the total number of shares of Common Stock owned
by the Stockholder (prior to such contemplated issuance), and (ii) the total
number of shares of Common Stock into which the shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Stock and
other convertible securities of the Company (including the Warrant), if any,
held by the Stockholder (prior to such contemplated issuance) are convertible,
and the denominator of which shall be the sum of (i) the total number of shares
of Common Stock owned by all Stockholders (prior to such contemplated issuance),
and (ii) the total number of shares of Common Stock into which the shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Stock and other convertible securities of the Company (including the
Warrant) held by all Stockholders (prior to such contemplated issuance) are
convertible.
(c) Each Stockholder shall have a right of over-allotment such that
if any such Stockholder fails to exercise his right hereunder to purchase such
full proportionate share of the New Securities proposed to be issued (the
"Incomplete Holders"), the Stockholders purchasing their full respective
proportionate share of such New Securities (the "Complete Holders") may purchase
the portion of such New Securities which has not been purchased by the
Incomplete Holders as hereinafter provided. The Complete Holders shall have
fifteen (15) days from the date notice is given by the Company to the Complete
Holders that such Incomplete Holders have rejected or failed to accept their
right to purchase their proportionate share of New Securities, to agree to
purchase up to such Complete Holder's proportionate share of such New Securities
not purchased by the Incomplete Holders. Notwithstanding anything in Section
10(b) to the contrary, as used in this Section 10(c) with respect to the
Complete Holders only, each Complete Holder's "proportionate share" shall be
calculated by excluding from the denominator of the fraction the total number of
shares of Common Stock of any Incomplete Holder and the total number of shares
of Common Stock of any Incomplete Holder and the total number of shares of
Common Stock into which the shares of such Incomplete Holder's Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Stock or other convertible securities, if any, are convertible.
(d) In the event the Stockholders fail to exercise the preemptive
right and right of over-allotment within said forty-five (45) day period for the
full amount of New Securities proposed to be issued, the Company shall have
sixty (60) days thereafter to sell or enter into an agreement (pursuant to which
the sale of New Securities covered thereby shall be closed, if at all, within
sixty (60) days from the date of said agreement) to sell the New Securities
respecting which the Stockholders' options were not exercised, at a price and
upon general terms no more favorable to the purchasers thereof than specified in
the Company's notice to the Stockholders. In the event the Company has not sold
within said sixty (60)-day period or entered into an agreement to sell the New
Securities within said sixty (60)-day period (or sold and issued New Securities
in accordance with the foregoing within sixty (60) days from the
-15-
date of said agreement), the Company shall not thereafter issue or sell any New
Securities, without first offering such securities to the Stockholders in the
manner provided above.
(e) If, in connection with an offering of New Securities in which the
Stockholders have the right, pursuant to this Section 10, to purchase their
proportionate share of such New Securities, any Stockholder declines to purchase
such Stockholder's full proportionate share of such New Securities, then such
Stockholder's rights pursuant to this Section 10 shall terminate as to any
subsequent offering of New Securities. Any Stockholder's rights to purchase New
Securities pursuant to the Series C Purchase Agreement which has terminated
prior to the date hereof pursuant to Section 8.2 of the Series C Purchase
Agreement shall not be reinstated by reason of this Agreement, and any such
Stockholder shall have no rights under this Section 10.
(f) The preemptive right granted under this Section 10 shall expire
upon, and shall not be applicable to, the first sale of Common Stock of the
Company to the public in a Qualified Public Offering. Any preemptive rights
granted to the Other Stockholders pursuant to the Series C Purchase Agreement is
hereby terminated.
11. DEFINITIONS.
"BOARD" has the meaning set forth in the preamble.
"COMMON STOCK" means the Company's Common Stock, $.01 par value per
share.
"COMPANY" has the meaning set forth in the preamble.
"INVESTOR" has the meaning set forth in the preamble.
"INVESTOR DIRECTOR" has the meaning set forth in Section 1(a)(i).
"PERMITTED TRANSFEREE" has the meaning set forth in Section 7(d)
hereof.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"PREFERRED STOCK" means the Company's Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, and the Series D Stock.
"PUBLIC SALE" means any sale of Stockholder Shares to the public
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
adopted under the Securities Act.
"PURCHASE AGREEMENT" has the meaning set forth in the preamble.
-16-
"QUALIFIED PUBLIC OFFERING" means the sale in an underwritten public
offering registered under the Securities Act of shares of the Company's Common
Stock having an aggregate offering value of at least $25 million.
"REQUISITE C HOLDERS" means the requisite holders of the issued and
outstanding Series C Preferred Stock pursuant to the Series C Purchase
Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SERIES C PURCHASE AGREEMENT" means the Series C Preferred Stock
Agreement dated as of May 17, 1996.
"STOCKHOLDER SHARES" means (i) any Common Stock purchased or otherwise
acquired by any Stockholder, (ii) any capital stock or other equity securities
issued or issuable directly or indirectly with respect to the Common Stock
referred to in clause (i) above by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization, and (iii) any other shares of any class or series of
capital stock of the Company held by a Stockholder; provided that Stockholder
Shares shall not include nonvoting stock described in (iii) for purposes of
Section 1 hereof. As to any particular shares constituting Stockholder Shares,
such shares shall cease to be Stockholder Shares when they have been (x)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them or (y) sold to the public through
a broker, dealer or market maker pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act.
"SUB BOARD" has the meaning set forth in Section 1(a)(ii).
"SUBSIDIARY" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the limited liability company, partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control the managing director or general partner
of such limited liability company, partnership, association or other business
entity.
"TRANSFER" has the meaning set forth in Section 7(a).
"WARRANT" means the Warrant issued to Investor pursuant to a Warrant
Agreement of even date.
-17-
12. TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or attempted
Transfer of any Stockholder Shares in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Stockholder Shares as the owner
of such shares for any purpose.
13. AMENDMENT AND WAIVER. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company, the Other Stockholders or the Investor unless
such modification, amendment or waiver is approved in writing by the Company,
85% in interest of the Other Stockholders and the holders of a majority of the
outstanding shares of Series D Stock. The failure of any party to enforce any
of the provisions of this Agreement shall in no way be construed as a waiver of
such provisions and shall not affect the right of such party thereafter to
enforce each and every provision of this Agreement in accordance with its terms.
The rights and obligations of the Other Stockholders pursuant to Section 6 of
the Series C Purchase Agreement shall not be affected by Sections 3(b) and 4 of
this Agreement.
14. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
15. ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein, this Agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
16. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and the respective successors and assigns of each
of them, so long as they hold Stockholder Shares.
17. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
18. REMEDIES. The Company, the Investor and the Other Stockholders
shall be entitled to enforce their rights under this Agreement specifically, to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights existing in their favor. The parties hereto agree
and acknowledge that money damages would not be an adequate remedy for any
breach of the provisions of this Agreement and that the Company, any Investor
and any Stockholder may in its sole discretion apply to any court of law or
equity of competent jurisdiction for specific
-18-
performance and/or injunctive relief (without posting a bond or other security)
in order to enforce or prevent any violation of the provisions of this
Agreement.
19. NOTICES. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated on the schedules hereto and to any subsequent
holder of Stockholder Shares subject to this Agreement at such address as
indicated by the Company's records, or at such address or to the attention of
such other person as the recipient party has specified by prior written notice
to the sending party. Notices shall be deemed to have been given hereunder when
delivered personally, three (3) days after deposit in the U.S. mail and one (1)
day after deposit with a reputable overnight courier service. The Company's
address is:
SCRIPTGEN Pharmaceuticals, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
20. GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF DELAWARE SHALL
GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE COMPANY
AND ITS STOCKHOLDERS. ALL OTHER ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEABILITY OF THIS AGREEMENT AND
THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF
NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS
OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. IN FURTHERANCE OF THE
FOREGOING, THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL CONTROL THE
INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT (AND ALL SCHEDULES AND
EXHIBITS HERETO), EVEN THOUGH UNDER THAT JURISDICTION'S CHOICE OF LAW OR
CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD
ORDINARILY APPLY.
21. BUSINESS DAYS. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or legal holiday
in the state in which the Company's chief-executive office is located, the time
period shall automatically be extended to the business day immediately following
such Saturday, Sunday or legal holiday.
22. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
23. MISCELLANEOUS. The Company and the Other Stockholders
acknowledge that Investor has advised them that it proposes to carry out a
reorganization, including an amalgamation, pursuant to which, among other
things, a corporation named BioChem Pharma Canada Inc. (the "Successor") will
own all of the assets and be liable for all liabilities of Investor (the
"Amalgamation") and that a new corporation, entirely owned by Investor and
named BioChem Pharma Holdings Inc. will become the owner of the Series D
Stock to be issued pursuant to the Purchase Agreement. The Company and the
Other Stockholders hereby agree that, upon consummation of the Amalgamation,
the Successor shall have all of the rights and obligations of Investor as if
Successor had executed this Agreement on the date hereof in lieu of Investor,
and that neither Investor nor Successor shall be
-19-
required to send any notice of any kind regarding the Amalgamation nor seek the
consent of the Company to such Amalgamation. The Company and the Other
Stockholders furthermore agree and acknowledge that the Successor intends to
change its corporate name to BioChem Pharma Inc. and that, prior to the
Amalgamation, Investor will transfer the Series D Stock to BioChem Pharma
Holdings, Inc.
* * * *
-20-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
SCRIPTGEN PHARMACEUTICALS, INC.
By /s/ Xxxx X. Xxxxxx
-----------------------------
Name: Xxxx X. Xxxxxx
Title: President and CEO
BIOCHEM PHARMA, INC.
By /s/ Xxxxxxxx Xxxxxxx
-----------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Executive Vice President
By /s/ Xxxxxx Xxxx
-----------------------------
Name: Xxxxxx Xxxx
Title: Vice President
ACCEL IV L.P.
By: Accel IV Associates, L.P., its
General Partner
By: /s/
------------------------------
Name:
Title:
ACCEL INVESTORS '93 L.P.
By: /s/
------------------------------
Name:
Title:
ACCEL JAPAN L.P.
By: Accel Japan Associates, L.P., its
General Partner
By: /s/
------------------------------
Name:
Title:
ACCEL KEIRETSU L.P.
By: Accel Partners & Co., Inc., its
General Partner
By: /s/
------------------------------
Name:
Title:
ADVENT INTERNATIONAL INVESTORS II
LIMITED PARTNERSHIP
By: Advent International Corporation,
its General Partner
By: /s/
------------------------------
Name:
Title:
ADVENT PERFORMANCE MATERIALS LIMITED
PARTNERSHIP
By: Advent International Limited
Partnership, its General Partner
By: Advent International Corporation,
its General Partner
By: /s/
------------------------------
Name:
Title:
ATLAS VENTURE FUND II, L.P.
By: Atlas Venture Associates II, L.P.,
its General Partner
By: /s/
------------------------------
Name:
Title:
---------------------------------
Xxxxxx X. Xxxxxxx
XX VENTURES II, L.P.
By: CW Partners III, L.P., its General
Partner
By: /s/
------------------------------
Name:
Title:
XXXXXXX X. XXXXXXXXX PARTNERS
By:
------------------------------
Name:
Title:
GOLDEN GATE DEVELOPMENT AND
INVESTMENT LIMITED PARTNERSHIP
By: Advent International Limited
Partnership, its General Partner
By: Advent International Corporation,
its General Partner
By: /s/
------------------------------
Name:
Title:
LOMBARD ODIER & CIE
By: /s/
------------------------------
Name:
Title:
---------------------------------
Xxxxxxx Xxxx
NEW ENTERPRISE ASSOCIATES 5
By: /s/
------------------------------
Name:
Title:
PROSPER PARTNERS
By:
------------------------------
Name:
Title:
ROVENT II LIMITED PARTNERSHIP
By: Advent International Limited
Partnership, its General Partner
By: Advent International Corporation,
its General Partner
By: /s/
------------------------------
Name:
Title:
SCRIPT PARTNERS LIMITED PARTNERSHIP
By: /s/
------------------------------
Name:
Title:
VENROCK ASSOCIATES
By: /s/
------------------------------
Name:
Title:
VENROCK ASSOCIATES II, L.P.
By: /s/
------------------------------
Name:
Title: General Partner
