1
EXHIBIT 10.8
INTERMUNE PHARMACEUTICALS, INC.
SERIES A-1 AND A-2 PREFERRED STOCK PURCHASE AGREEMENT
2
INTERMUNE PHARMACEUTICALS, INC.
SERIES A-1 AND A-2 PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES A-1 AND A-2 PREFERRED STOCK PURCHASE AGREEMENT (the
"Agreement") is entered into as of April 27, 1999, by and among INTERMUNE
PHARMACEUTICALS, INC. a California corporation (the "Company"), and each of
those persons and entities, severally and not jointly, whose names are set forth
on the Schedule of Purchasers attached hereto as Exhibit A (which persons and
entities are hereinafter collectively referred to as "Purchasers" and each
individually as a "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of Preferred
Stock (the "Shares") in the amount of one million eight hundred thirty-five
thousand (1,835,000) Shares of Series A-1 Preferred Stock ("Series A-1
Preferred") and five million six hundred thousand (5,600,000) Shares of Series
A-2 Preferred Stock ("Series A-2 Preferred");
WHEREAS, Purchasers desire to purchase the Shares on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares to Purchasers
on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF SHARES. On or prior to the Closing (as
defined in Section 2 below), the Company shall have authorized (i) the sale and
issuance to Purchasers of the Shares and (ii) the issuance of such shares of
Common Stock to be issued upon conversion of the Shares (the "Conversion
Shares"). The Shares and the Conversion Shares shall have the rights,
preferences, privileges and restrictions set forth in the Amended and Restated
Articles of Incorporation of the Company, as amended, in the form attached
hereto as Exhibit B (the "Restated Articles").
1.2 SALE OF SERIES A PREFERRED STOCK. Subject to the terms and
conditions hereof, at the Closing (as defined below) the Company hereby agrees
to issue and sell to Purchaser, and Purchaser agrees to purchase from the
Company, the number of Shares set forth opposite Purchaser's name on Exhibit A.
Consideration for the purchase of Series A-1 shares is more particularly
described in Exhibit A. The Purchasers of Series A-2 shares shall pay a purchase
price of One Dollar Twenty-Five Cents ($1.25) per share. Subject to the terms
and conditions hereof, at a Subsequent Closing (as defined below) the Company
will sell an additional eight hundred thousand (800,000) shares of Series A-2
Preferred Stock to third party Purchasers at a price of One Dollar Twenty-Five
Cents ($1.25) per share. The Series A-1
3
Preferred and Series A-2 Preferred may be referred to herein collectively as the
"Series A Preferred."
2. CLOSING, DELIVERY AND PAYMENT.
2.1 CLOSING. The first closing of the sale and purchase of the
Shares under this Agreement (the "Closing") shall take place at 5:00 p.m. on the
date hereof, at the offices of at the offices of Cooley Godward LLP, Five Palo
Alto Square, 0000 Xx Xxxxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000 or at such other
time or place as the Company and Purchaser may mutually agree (such date is
hereinafter referred to as the "Closing Date"). The subsequent closing shall
occur within one hundred twenty (120) days following the Closing Date
("Subsequent Closing"). The purchase and sale of additional Shares of Series A-2
Preferred at any Subsequent Closing shall be pursuant to an agreement identical
to this one, except for date and exhibits, and any such purchase and sale of
Series A-2 Preferred for the purposes of this Agreement shall be deemed to be a
purchase and sale at the Closing, as of the Closing Date.
2.2 DELIVERY. At the Closing and the Subsequent Closing, subject
to the terms and conditions hereof, the Company will deliver to the Purchaser
certificates representing the number of Shares to be purchased at the Closing
and Subsequent Closing by Purchaser, against payment of the purchase price
therefor by check, wire transfer made payable to the order of the Company, such
consideration as the Board of Directors shall determine, or any combination of
the foregoing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth in the Schedule of Exceptions attached hereto as
Exhibit G, the Company hereby represents and warrants to each Purchaser as
follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of California. The Company has all requisite corporate power
and authority to own and operate its properties and assets, to execute and
deliver this Agreement and the First Refusal and Co-Sale Agreement in the form
attached hereto as Exhibit C (the "Co-Sale Agreement") and the Investor Rights
Agreement in the form attached hereto as Exhibit D (the "Investor Rights
Agreement" and together with the Co-Sale Agreement and this Agreement, the
"Financing Agreements"), to issue and sell the Shares and the Conversion Shares
and to carry out the provisions of the Financing Agreements and the Restated
Articles and to carry on its business as presently conducted and as presently
proposed to be conducted. The Company is duly qualified and is authorized to do
business and is in good standing as a foreign corporation in all jurisdictions
in which the nature of its activities and of its properties (both owned and
leased) makes such qualification necessary, except for those jurisdictions in
which failure to do so would not have a Material Adverse Effect (as hereinafter
defined) on the Company or its business. The Company owns no equity securities
of any other corporation, limited partnership or similar entity. The Company is
not a participant in any joint venture, partnership or similar arrangement.
"Material Adverse Effect" means any adverse effect on the assets, liabilities,
business, operations, properties or financial condition of the Company taken as
a whole.
2
4
3.2 CAPITALIZATION; VOTING RIGHTS. The authorized capital stock
of the Company, immediately prior to the Closing, will consist of fifteen
million (15,000,000) shares of Common Stock, none of which is issued and
outstanding, and eleven million two hundred thousand (11,200,000) shares of
Series A Preferred Stock, eleven million two hundred thousand (11,200,0000) of
which are issued and outstanding, one million eight hundred thirty-five thousand
(1,835,000) shares of Series A-1 Preferred Stock, none of which is issued and
outstanding, five million six hundred thousand (5,600,000) shares of Series A-2
Preferred Stock, none of which is issued and outstanding, five million six
hundred thousand (5,600,000) shares of Series A-3 Preferred Stock, none of which
is issued and outstanding and one million eight hundred thirty-five thousand
(1,835,000) shares of Series A-4 Preferred Stock, none of which is issued and
outstanding. The rights, preferences, privileges and restrictions of the Shares
are as stated in the Restated Articles. Other than as set forth in the Schedule
of Exceptions, and except as may be granted pursuant to the Financing
Agreements, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal), proxy or
shareholder agreements, commitments or agreements of any kind for the purchase
or acquisition from the Company of any of its securities.
(a) All issued and outstanding shares of the Company's
Common Stock (i) have been duly authorized and validly issued, (ii) are fully
paid and nonassessable, and (iii) were issued in compliance with all applicable
state and Federal laws concerning the issuance of securities. The rights,
preferences, privileges and restrictions of the Shares are as stated in the
Restated Articles. Each series of Preferred Stock is convertible into Conversion
Shares on a one-for-one basis, subject to adjustment as provided in the Restated
Articles. The Conversion Shares have been duly and validly reserved for
issuance. Except as hereinabove described, the Company has no shares of capital
stock reserved for issuance.
(b) When issued in compliance with the provisions of this
Agreement and the Restated Articles, the Shares and the Conversion Shares will
be validly issued, fully paid and nonassessable and will have been issued in
compliance with all applicable state and Federal laws concerning the issuance of
securities, and will be free of any liens or encumbrances; provided, however,
that the Shares and the Conversion Shares may be subject to restrictions on
transfer under state and/or Federal securities laws as set forth herein or in
the Financing Agreements or as otherwise required by such laws at the time a
transfer is proposed.
(c) The Company does not have outstanding any bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or are convertible into or exercisable for securities having the right to
vote) with the stockholders of the Company on any matter.
3.3 AUTHORIZATION; BINDING OBLIGATIONS. The Company has all
requisite corporate power and authority to execute, deliver and perform its
obligations under the Financing Agreements. All corporate action on the part of
the Company, its officers, directors and shareholders necessary for the
authorization of the Financing Agreements, the performance of all obligations of
the Company hereunder and thereunder at the Closing and the authorization, sale,
issuance and delivery of the Shares pursuant hereto and the Conversion Shares
pursuant to the Restated Articles has been taken or will be taken prior to the
Closing. The Financing Agreements, when executed and delivered, will be valid
and binding obligations of the Company
3
5
enforceable against the Company in accordance with their terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights;
(ii) general principles of equity that restrict the availability of equitable
remedies; and (iii) to the extent that the enforceability of the indemnification
provisions in Section 2.9 of the Investor Rights Agreement may be limited by
applicable laws. The sale of the Shares and the subsequent conversion of the
Shares into Conversion Shares are not and will not be subject to any rights of
conversion, preemptive rights or rights of first refusal that have not been
properly waived or complied with.
3.4 FINANCIAL STATEMENTS. The Company has delivered to each
Purchaser (i) its unaudited balance sheet as at December 31, 1998 and unaudited
statement of income and cash flows for the twelve months ending December 31,
1998, and (ii) its unaudited balance sheet as at February 28, 1999 (the
"Statement Date") and unaudited consolidated statement of income and cash flows
for the two month period ending on the Statement Date (collectively, the
"Financial Statements"). The Financial Statements, together with the notes
thereto, are complete and correct in all material respects, have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated, except as disclosed therein,
and present fairly the financial condition and position of the Company as of
February 28, 1999 and the Statement Date; provided, however, that the unaudited
financial statements are subject to normal recurring year-end audit adjustments
(which are not expected to be material), and do not contain all footnotes
required under generally accepted accounting principles.
3.5 LIABILITIES. The Company has no material liabilities and, to
the best of its knowledge after making due inquiry, knows of no material
contingent liabilities not disclosed in the Financial Statements, except current
liabilities incurred in the ordinary course of business subsequent to the
Statement Date which will not have, either in any individual case or in the
aggregate, a Material Adverse Effect.
3.6 AGREEMENTS; ACTION.
(a) Other than as set forth on the Schedule of Exceptions
and except for the Financing Agreements and agreements between the Company and
its employees with respect to the sale of the Company's Common Stock, there are
no agreements, understandings or proposed transactions between the Company and
any of its officers, directors, affiliates or any affiliate thereof. For
purposes of this Agreement, Connetics Corporation ("Connetics") shall not be
considered an affiliate of the Company.
(b) Other than as set forth on the Schedule of Exceptions,
there are no agreements, understandings, instruments, contracts, proposed
transactions, judgments, orders, writs or decrees to which the Company is a
party or, to the best of its knowledge after making due inquiry, by which it is
bound which may involve (i) obligations (contingent or otherwise) of, or
payments to, the Company in excess of Twenty-Five Thousand Dollars ($25,000), or
(ii) the license of any patent, copyright, trade secret or other proprietary
right to or from the Company (other than licenses arising from the purchase of
"off the shelf" or other standard products), or (iii) provisions restricting or
affecting the development, manufacture or distribution of the Company's products
or services, or (iv) indemnification by the Company with respect to
4
6
infringements of proprietary rights (other than indemnification obligations
arising from purchase or sale agreements entered into in the ordinary course of
business).
(c) The Company has not (i) declared or paid any
dividends, or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (ii) incurred any indebtedness for money
borrowed or any other liabilities individually in excess of Twenty-Five Thousand
Dollars ($25,000) or, in the case of indebtedness and/or liabilities
individually less than Twenty-Five Thousand Dollars ($25,000), in excess of
Fifty Thousand Dollars ($50,000) in the aggregate, (iii) made any loans or
advances to any person, other than ordinary advances for travel expenses, or
(iv) sold, exchanged or otherwise disposed of any of its assets or rights.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
3.7 OBLIGATIONS TO RELATED PARTIES. There are no obligations of
the Company to officers, directors, shareholders, affiliates or employees of the
Company other than (a) for payment of salary for services rendered, (b)
reimbursement for reasonable expenses incurred on behalf of the Company and, (c)
for other standard employee benefits made generally available to all employees
(including stock option agreements outstanding under any stock option plan
approved by the Board of Directors of the Company). None of the officers,
directors or shareholders of the Company, or any members of their immediate
families, are indebted to the Company or have 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 which
competes with the Company, except that officers, directors and/or shareholders
of the Company may own stock in publicly traded companies which may compete with
the Company and except as contemplated by this Agreement and the Common Stock
Purchase Agreements between the Company and certain of the Purchasers. No
officer, director or shareholder of the Company, or any member of their
immediate families, has an interest, directly or indirectly, in any material
contract with the Company (other than such contracts as relate to any such
person's ownership of capital stock or other securities of the Company). Except
as may be disclosed in the Financial Statements, the Company is not a guarantor
or indemnitor of any indebtedness of any other person, firm or corporation.
3.8 CHANGES. Since the Statement Date, the Company has conducted
its business only in, and has not engaged in any material transaction other than
according to, the ordinary and usual course of its business and as contemplated
by this Agreement and the Common Stock Purchase Agreements and there has not
been to the Company's knowledge:
(a) Any change in the assets, liabilities, financial
condition or operations of the Company from that reflected in the Financial
Statements, other than changes in the ordinary course of business, none of which
individually or in the aggregate has had or is expected to have a Material
Adverse Effect;
5
7
(b) Any resignation or termination of any key officers of
the Company; and the Company, to the best of its knowledge after making due
inquiry, does not know of the impending resignation or termination of employment
of any such officer;
(c) Any material change, except in the ordinary course of
business, in the contingent obligations of the Company by way of guaranty,
endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not
covered by insurance which has a Material Adverse Effect;
(e) Any waiver by the Company of a valuable right or of a
material debt owed to it;
(f) Any direct or indirect loans made by the Company to
any shareholder, employee, officer, affiliate or director of the Company, other
than advances made in the ordinary course of business;
(g) Any material change in any compensation arrangement or
agreement with any employee, officer, director or shareholder of the Company;
(h) Any declaration or payment of any dividend or other
distribution of the assets of the Company;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except those for immaterial amounts and for current
liabilities incurred in the ordinary course of business;
(k) Any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
(l) Any change in any material agreement to which the
Company is a party or by which it is bound which has a Material Adverse Effect,
including compensation agreements with the Company's employees; or
(m) Any other event or condition of any character that,
either individually or cumulatively, has a Material Adverse Effect.
3.9 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has
good and marketable title to its properties and assets, including the properties
and assets reflected in the most recent balance sheet included in the Financial
Statements, and good title to its leasehold estates, in each case subject to no
mortgage, pledge, lien, lease, encumbrance or charge, other than (i) those
resulting from taxes which have not yet become delinquent, (ii) minor liens and
encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company, and (iii)
liens and encumbrances that have otherwise arisen in the ordinary course of
business. All facilities, machinery, equipment,
6
8
fixtures, vehicles and other properties owned, leased or used by the Company are
in good operating condition and repair and are reasonably fit and usable for the
purposes for which they are being used. The Company is in compliance with all
material terms of each lease to which it is a party or is otherwise bound.
3.10 PATENTS AND TRADEMARKS. The Company owns or possesses
sufficient legal rights to all patents, trademarks, service marks, trade names,
copyrights, trade secrets, information and other proprietary rights and
processes necessary for its business as now conducted and as proposed to be
conducted, without any known infringement of the rights of others. The Company
is not aware of any reasonable basis for the denial of any pending patent
application (including divisions, continuations, continuations in part and
renewal applications) relating to any patents filed by the Company and does not
believe that anything contained in such patent applications is reasonably likely
to effect adversely any extension, modification or renewal of existing patents
or patent applications relating to the Company's intellectual property. 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 and other
proprietary rights and processes of any other person or entity other than such
licenses or agreements arising from the purchase of "off the shelf" or standard
products. The Company has not received any communications alleging that the
Company has violated or, by conducting its business as proposed, would violate
any of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any 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 their duties to the Company or that would
conflict with the Company's business as proposed to be conducted. Neither the
execution nor delivery of the Financing Agreements, nor the carrying on of the
Company's business by the employees of the Company, nor the conduct of the
Company's business as proposed, will, to the Company's knowledge, conflict with
or result in a material breach of the terms, conditions or provisions of, or
constitute a material default under, any contract, covenant or instrument under
which any employee is now obligated. The Company does not believe it is or will
be necessary to utilize any inventions, trade secrets or proprietary information
of any of its employees made prior to their employment by the Company, except
for inventions, trade secrets or proprietary information that have been assigned
to the Company.
3.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of any term of its Restated Articles or Bylaws, or of any
provision of any mortgage, indenture, contract, agreement, instrument or
contract to which it is party or by which it is bound or of any judgment,
decree, order, writ or, to its knowledge after making due inquiry, any statute,
rule or regulation applicable to the Company which would have a Material Adverse
Effect. The execution, delivery, and performance of and compliance with the
Financing Agreements, and the issuance and sale of the Shares pursuant hereto
and of the Conversion Shares pursuant to the Restated Articles, will not, with
or without the passage of time or giving of notice, result in any such material
violation, or be in material conflict with or constitute a material default
under any such term, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company or the
suspension, revocation, impairment,
7
9
forfeiture or nonrenewal of any permit license, authorization or approval
applicable to the Company, its business or operations or any of its assets or
properties.
3.12 LITIGATION. There is no action, suit, proceeding or
investigation pending or to the Company's knowledge currently threatened against
the Company that questions the validity of the Financing Agreements or the right
of the Company to enter into any of such agreements, or to consummate the
transactions contemplated hereby or thereby, or which might result, either
individually or in the aggregate, in any material adverse change in the assets,
condition, affairs or prospects of the Company, financially or otherwise, or any
change in the current equity ownership of the Company, nor is the Company aware
that there is any basis for the foregoing. The foregoing includes, without
limitation, actions pending or threatened (or any basis therefor known to the
Company) involving the prior employment of any of the Company's employees, their
use in connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers. The Company is not a party or subject
to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.
3.13 TAX RETURNS AND PAYMENTS. The Company has timely filed all
tax returns (Federal, state and local) required to be filed by it. All taxes
shown to be due and payable on such returns, any assessments imposed, and, to
the Company's knowledge, all other taxes due and payable by the Company on or
before the Closing have been paid or will be paid prior to the time they become
delinquent. The Company has no knowledge of any liability of any tax to be
imposed upon its properties or assets as of the date of this Agreement that is
not adequately provided for. As of the date hereof, there are not pending or, to
the knowledge of the Company, threatened in writing, any audits, examinations,
investigations or other proceedings against the Company in respect to taxes or
tax matters. There are not any unresolved questions or claims concerning the
Company's tax liability that may have a Material Adverse Effect. The provision
for taxes of the Company as shown in the Balance Sheet as at December 31, 1998
is adequate for taxes due or accrued as of the date thereof. The Company has not
elected pursuant to the Internal Revenue Code of 1986, as amended (the "Code")
to be treated as a Subchapter S corporation or a collapsible corporation
pursuant to Section 341(f) and 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 Adverse Effect.
3.14 EMPLOYEES. The Company has no collective bargaining
agreements with any of its employees. There is no labor union organizing
activity pending or, to the Company's knowledge, threatened with respect to the
Company. The Company is not a party to or bound by any currently effective
employment contract, deferred compensation or severance arrangement, bonus plan,
incentive plan, profit sharing plan, retirement agreement or other employee
compensation plan or agreement. To the Company's knowledge, no employee of the
Company, nor any consultant with whom the Company has contracted, is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, the Company because of the nature of the
business to be conducted by the Company; and to the Company's knowledge the
8
10
continued employment by the Company of its present employees, and the
performance of the Company's contracts with its independent contractors, will
not result in any such violation. The Company has not received any notice
alleging that any such violation has occurred. No employee of the Company has
been granted the right to continued employment by the Company or to any material
compensation following termination of employment with the Company. The Company
is not aware that any officer or key employee, or that any group of key
employees, intends to terminate their employment with the Company, nor does the
Company have a present intention to terminate the employment of any officer, key
employee or group of key employees.
3.15 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each
former and current employee, officer and consultant of the Company has executed
a Proprietary Information and Inventions Agreement. No current employee, officer
or consultant of the Company has excluded works or inventions made prior to his
or her employment with the Company from his or her assignment of inventions
pursuant to such employee, officer or consultant's Proprietary Information and
Inventions Agreement.
3.16 OBLIGATIONS OF MANAGEMENT. Each officer of the Company is
currently devoting one hundred percent (100%) of his business time to the
conduct of the business of the Company. The Company is not aware of any officer
or key employee of the Company planning to work less than full time at the
Company in the future.
3.17 REGISTRATION RIGHTS. Except as required pursuant to the
Financing Agreements, the Company is presently not under any obligation, and has
not granted any rights, to register (as defined in Section 1.1 of the Investor
Rights Agreement) any of the Company's presently outstanding securities or any
of its securities that may hereafter be issued.
3.18 COMPLIANCE WITH LAWS; PERMITS. To its knowledge, after
making due inquiry, the Company is not in violation of any applicable statute,
rule, regulation, order or restriction of any domestic or foreign government or
any instrumentality or agency thereof in respect of the conduct of its business
or the ownership of its properties which violation would have a Material Adverse
Effect. No governmental orders, permissions, consents, approvals or
authorizations are required to be obtained and no registrations or declarations
are required to be filed in connection with the execution and delivery of the
Financing Agreements and the issuance of the Shares or the Conversion Shares,
except such as has been duly and validly obtained or filed, or with respect to
any filings that must be made after the Closing, as will be filed in a timely
manner. The Company has all franchises, permits, licenses and any similar
authority necessary for the conduct of its business as now being conducted by
it, except for those the lack of which would have a Material Adverse Effect. The
Company believes it can obtain, without undue burden or expense, any similar
authority for the conduct of its business as planned to be conducted.
3.19 ENVIRONMENTAL AND SAFETY LAWS. To its knowledge, after
making due inquiry, the Company is not in violation of any applicable statute,
law or regulation relating to the environment or occupational health and safety,
and to its knowledge, after making due inquiry, no material expenditures are or
will be required in order to comply with any such existing statute, law or
regulation.
9
11
3.20 OFFERING VALID. Assuming the accuracy of the representations
and warranties of the Purchasers contained in Section 4.2 hereof, the offer,
sale and issuance of the Shares and the Conversion Shares will be exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"Securities Act") and will have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws. Neither the Company nor
any agent on its behalf has solicited or will solicit any offers to sell or has
offered to sell or will offer to sell all or any part of the Shares to any
person or persons so as to bring the sale of such Shares by the Company within
the registration provisions of the Securities Act or any state securities laws.
3.21 FULL DISCLOSURE. The Financing Agreements, the Exhibits
thereto and all other agreements delivered by the Company to Purchasers or their
attorneys or agents in connection herewith or therewith or with the transactions
contemplated hereby or thereby, do not contain any untrue statement of a
material fact nor, to the Company's knowledge, omit to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. Notwithstanding the foregoing, the business plan most recently
provided by the Company to the Purchasers (the "Business Plan") was prepared by
the management of the Company in a good faith effort to describe the Company's
proposed business and products and the markets therefor. The assumptions applied
in preparing the Business Plan appeared reasonable to management as of the date
thereof; however, there is no assurance that these assumptions will prove to be
valid or that the objectives set forth in the Business Plan will be achieved. To
the Company's knowledge, there are no facts which (individually or in the
aggregate) would or could reasonably be expected to have a Material Adverse
Effect that have not been set forth in the Agreement, the Exhibits hereto, the
Financing Agreements, the Financial Statements or in other documents delivered
to Purchasers or their attorneys or agents in connection herewith.
3.22 CORPORATE DOCUMENTS. The Restated Articles and Bylaws of the
Company are in the form provided to counsel for the Purchaser. The copy of the
minute books of the Company provided to counsel for the Purchasers contains
minutes of all meetings of directors and shareholders and all actions by written
consent without a meeting by the directors and shareholders since the date of
incorporation and reflects accurately in all material respects all actions by
the directors and shareholders with respect to all transactions referred to in
such minutes.
3.23 SECTION 83(b) ELECTIONS. To the Company's knowledge, all
elections and notices permitted by Section 83(b) of the Code and any analogous
provisions of applicable state tax laws will be or have been timely filed by all
employees who have purchased shares of the Company's Common Stock under
agreements that provide for the vesting of such shares.
3.24 REAL PROPERTY HOLDING CORPORATION. The Company is not a real
property holding corporation within the meaning of Section 897(c)(2) of the Code
and any regulations promulgated thereunder.
3.25 INSURANCE. Fire and casualty, clinical trials, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies are in full force
10
12
and effect and are with reputable insurance carriers, provide adequate coverage
for all normal risks incident to the business of the Company and its properties
and assets, and are in character and amount at least equivalent to that carried
by companies engaged in similar businesses and subject to the same or similar
perils or hazards.
3.26 INVESTMENT COMPANY ACT. The Company is not an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
3.27 YEAR 2000. The Company has reviewed its operations to
evaluate the extent to which the business or operations of the Company will be
affected by the Year 2000 Problem, as defined below. The Year 2000 Problem is
not reasonably likely to have a Material Adverse Effect. The "Year 2000 Problem"
as used herein, means any significant risk that the computer hardware or
software used in the receipt, transmission, processing, manipulation, storage,
retrieval, retransmission or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the case of dates or
time periods occurring after December 31, 1999, function at least as effectively
as in the case of dates or time periods occurring prior to January 1, 2000.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser hereby represents and warrants, severally but not
jointly, to the Company as follows (such representations and warranties do not
lessen or obviate the representations and warranties of the Company set forth in
this Agreement):
4.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary
power and authority under all applicable provisions of law to execute and
deliver the Financing Agreements and to carry out their provisions. All action
on Purchaser's part required for the lawful execution and delivery of the
Financing Agreements have been or will be effectively taken prior to the
Closing. Upon their execution and delivery, the Financing Agreements will be
valid and binding obligations of Purchaser, enforceable in accordance with their
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights, (ii) general principles of equity that
restrict the availability of equitable remedies, and (iii) to the extent that
the enforceability of the indemnification provisions of Section 2.9 of the
Investor Rights Agreement may be limited by applicable laws.
4.2 INVESTMENT REPRESENTATIONS. Purchaser understands that
neither the Shares nor the Conversion Shares have been registered under the
Securities Act. Purchaser also understands that the Shares are being offered and
sold pursuant to an exemption from registration contained in the Securities Act
based in part upon Purchaser's representations contained in the Agreement.
Purchaser hereby represents and warrants as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser understands
the business in which the Company is engaged and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of its investment in the Company and has the capacity to
protect its own interests. Purchaser must bear the economic risk
11
13
of this investment indefinitely unless the Shares (or the Conversion Shares) are
registered pursuant to the Securities Act, or an exemption from registration is
available. Purchaser understands that the Company has no present intention of
registering the Shares, the Conversion Shares or any shares of its Common Stock.
Purchaser also understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow Purchaser to transfer all or any portion
of the Shares or the Conversion Shares under the circumstances, in the amounts
or at the times Purchaser might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring
the Shares and the Conversion Shares for Purchaser's own account for investment
only, and not with a view towards their distribution.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser
represents that by reason of its, or of its management's, business or financial
experience, Purchaser has the capacity to protect its own interests in
connection with the transactions contemplated in the Financing Agreements.
Further, Purchaser is aware of no publication of any advertisement in connection
with the transactions contemplated in the Agreement.
(d) ACCREDITED INVESTOR. Purchaser represents that it is
an accredited investor within the meaning of Regulation D under the Securities
Act.
(e) COMPANY INFORMATION. Purchaser has received and read
the Financial Statements and Business Plan and has had an opportunity to discuss
the Company's business, management and financial affairs with directors,
officers and management of the Company and has had the opportunity to review the
Company's operations and facilities. Purchaser has also had the opportunity to
ask questions of and receive answers from, the Company and its management
regarding the terms and conditions of this investment. The foregoing, however,
does not limit or modify the representations and warranties of the Company in
Section 3 of this Agreement or the right of Purchaser to rely thereon.
(f) RULE 144. Purchaser acknowledges and agrees that the
Shares, and, if issued, the Conversion Shares must be held indefinitely unless
they are subsequently registered under the Securities Act or an exemption from
such registration is available. Purchaser has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act, which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: the
availability of certain current public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold, the sale being through an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934, as amended) and the number of
shares being sold during any three-month period not exceeding specified
limitations.
(f) RESIDENCE. The office of the Purchaser in which its
investment decision was made is located at the address of the Purchaser set
forth on Exhibit A.
12
14
4.3 TRANSFER RESTRICTIONS. Each Purchaser acknowledges and agrees
that the Shares and, if issued, the Conversion Shares are subject to
restrictions on transfer as set forth in the Financing Agreements.
5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING.
Purchasers' obligations to purchase the Shares to be purchased at the Closing
are subject to the satisfaction, at or prior to the Closing, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
Obligations. The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects as of the Closing Date
with the same force and effect as if they had been made as of the Closing Date,
and the Company shall have performed all obligations and conditions herein
required to be performed or observed by it on or prior to the Closing.
(b) LEGAL INVESTMENT. On the Closing Date, the sale and
issuance of the Shares and the proposed issuance of the Conversion Shares shall
be legally permitted by all laws and regulations to which Purchasers and the
Company are subject.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Financing Agreements
(except for such as may be properly obtained subsequent to the Closing).
(d) FILING OF RESTATED ARTICLES. The Restated Articles
shall have been filed with the Secretary of State of the State of California.
(e) CORPORATE DOCUMENTS. The Company shall have delivered
to Purchasers or their counsel, copies of all corporate documents of the Company
as Purchasers shall reasonably request.
(f) RESERVATION OF CONVERSION SHARES. The Conversion
Shares issuable upon conversion of the Shares shall have been duly authorized
and reserved for issuance upon such conversion.
(g) COMPLIANCE CERTIFICATE. The Company shall have
delivered to Purchasers a Compliance Certificate, executed by the President of
the Company, dated the date of the Closing, to the effect that the conditions
specified in subsections (a), (c), (d) and (f) of this Section 5.1 have been
satisfied.
(h) INVESTOR RIGHTS AGREEMENT. An Investor Rights
Agreement substantially in the form attached hereto as Exhibit D shall have been
executed and delivered by the parties thereto.
(i) CO-SALE AGREEMENT. The Co-Sale Agreement substantially
in the form attached hereto as Exhibit C shall have been executed and delivered
by the parties thereto.
13
15
The stock certificates representing the shares subject to the Co-Sale Agreement
shall have been delivered to the Secretary of the Company and shall have had
appropriate legends placed upon them to reflect the restrictions on transfer set
forth on the Co-Sale Agreement.
(j) BOARD OF DIRECTORS. As shall be more specifically set
forth in the Voting Agreement, the authorized size of the Board of Directors of
the Company shall be five. The Board of Directors shall initially consist of W.
Xxxxx Xxxxxxxx, Xxxxx X. Xxxxx, Xxxx Xxxxxxx and Xxxxx Xxxxxxxx.
(k) LEGAL OPINION. The Purchasers shall have received from
legal counsel to the Company an opinion addressed to them, dated as of the
Closing Date, in substantially the form attached hereto as Exhibit E.
(l) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
hereby and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the Purchasers and their
special counsel, and the Purchasers and their special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
(m) VOTING AGREEMENT. The Voting Agreement substantially
in the form attached hereto as Exhibit F shall have been executed and delivered
by the parties thereto.
(n) CONVERSION OF SERIES A PREFERRED. Connetics shall have
delivered a notice of conversion of the Series A Preferred Stock to be effective
upon the delivery of its Series A Preferred Stock certificate, which certificate
shall be delivered promptly following the payment of the dividend by the Company
to Connetics contemplated by Article IV.A.1 of the Restated Articles.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to issue and sell the Shares to be purchased at the Closing is
subject to the satisfaction, on or prior to the Closing, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties made by those Purchasers acquiring Shares in
Section 4 hereof shall be true and correct in all material respects at the date
of the Closing, with the same force and effect as if they had been made on and
as of said date.
(b) PERFORMANCE OF OBLIGATIONS. Such Purchasers shall have
performed and complied with all agreements and conditions herein required to be
performed or complied with by such Purchasers on or before the Closing.
(c) FILING OF RESTATED ARTICLES. The Restated Articles
shall have been filed with the Secretary of State of the State of California.
(d) INVESTOR RIGHTS AGREEMENT. An Investor Rights
Agreement substantially in the form attached hereto as Exhibit D shall have been
executed and delivered by the Purchasers.
14
16
(e) CO-SALE AGREEMENT. The Co-Sale Agreement substantially
in the form attached hereto as Exhibit C shall have been executed and delivered
by the parties thereto.
(f) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Financing Agreements
(except for such as may be properly obtained subsequent to the Closing).
(g) VOTING AGREEMENT. The Voting Agreement substantially
in the form attached hereto as Exhibit F shall have been executed and delivered
by the parties thereto.
6. MISCELLANEOUS.
6.1 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of California as such laws are applied to
agreements between California residents entered into and performed entirely in
California.
6.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by any Purchaser and
the closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
6.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares from time to time.
6.4 ENTIRE AGREEMENT. The Financing Agreements, the Exhibits and
Schedules thereto and the other documents delivered pursuant hereto constitute
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and no party shall be liable or bound to any other in any
manner by any representations, warranties, covenants and agreements except as
specifically set forth herein and therein.
6.5 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
6.6 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon
the written consent of at least fifty-five percent (55%) of then-outstanding
shares of Series A-1 Preferred and Series A-2 Preferred of the Company,
respectively voting separately by each series.
(b) The obligations of the Company and the rights of the
holders of the Shares and the Conversion Shares under the Agreement may be
waived only with the written
15
17
consent of at least fifty-five percent (55%) of then-outstanding shares of
Series A-1 Preferred and Series A-2 Preferred of the Company, respectively
voting separately by each series.
6.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission
to exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under the Financing Agreements or the
Restated Articles, shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. It is further agreed that any waiver, permit, consent or
approval of any kind or character on any Purchaser's part of any breach, default
or noncompliance under the Financing Agreements or under the Restated Articles
or any waiver on such party's part of any provisions or conditions of the
Financing Agreements, or the Restated Articles must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under the Financing Agreements, the Restated Articles, by law,
or otherwise afforded to any party, shall be cumulative and not alternative.
6.8 NOTICES. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (i) upon personal delivery to
the party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Company at the address as set forth on the signature page hereof and to
Purchaser at the address set forth on Exhibit A attached hereto or at such other
address as the Company or Purchaser may designate by ten (10) days advance
written notice to the other parties hereto.
6.9 EXPENSES. The Company shall pay all costs and expenses that
it incurs with respect to the negotiation, execution, delivery and performance
of the Financing Agreements. The Company shall, at the Closing, reimburse the
reasonable fees and expenses of separate counsel for the Purchasers of up to
Twenty-Five Thousand Dollars ($25,000), and shall reimburse such special counsel
for reasonable expenses incurred in connection with the negotiation, execution,
delivery and performance of the Financing Agreements of up to Ten Thousand
Dollars ($10,000).
6.10 ATTORNEYS' FEES. In the event that any dispute among the
parties to the Financing Agreements should result in litigation, the prevailing
party in such dispute shall be entitled to recover from the losing party all
fees, costs and expenses of enforcing any right of such prevailing party under
or with respect to the Financing Agreements, including without limitation, such
reasonable fees and expenses of attorneys and accountants, which shall include,
without limitation, all fees, costs and expenses of appeals.
6.11 TITLES AND SUBTITLES. The titles of the sections and
subsections of the Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
16
18
6.12 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
6.13 BROKER'S FEES. Each party hereto represents and warrants,
severally but not jointly, that no agent, broker, investment banker, person or
firm acting on behalf of or under the authority of such party hereto is or will
be entitled to any broker's or finder's fee or any other commission directly or
indirectly in connection with the transactions contemplated herein. Each party
hereto further agrees to indemnify each other party for any claims, losses or
expenses incurred by such other party as a result of the representation in this
Section 6.13 being untrue.
6.14 EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges
that it is not relying upon any person, firm, or corporation, other than the
Company and its officers and directors, in making its investment or decision to
invest in the Company. Each Purchaser agrees that no Purchaser nor the
respective controlling persons, officers, directors, partners, members, agents,
or employees of any Purchaser shall be liable for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
Shares and Conversion Shares.
6.15 PRONOUNS. All pronouns contained herein, and any variations
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as to the identity of the parties hereto may require.
6.16 WAIVER OF CONFLICTS. Each party to this Agreement
acknowledges that legal counsel for the Company, Xxxxxx Godward LLP ("Xxxxxx
Godward") has in the past and may continue in the future to perform legal
services for one or more of the Purchasers or their affiliates in matters
unrelated to the transactions contemplated by this Agreement, including, but not
limited to, the representation of the Purchasers in matters of a similar nature
to the transactions contemplated herein. Each party to this Agreement hereby (a)
acknowledges that they have had an opportunity to ask for and have obtained
information relevant to such representation, including disclosure of the
reasonably foreseeable adverse consequences of such representation; (b)
acknowledges that with respect to the transactions contemplated herein, Xxxxxx
Godward has represented the Company and not any individual Purchaser or any
individual shareholder, director or employee of the Company; and (c) gives its
informed consent to Xxxxxx Godward's representation of the Company in the
transactions contemplated by this Agreement and Xxxxxx Godward's representation
of one or more of the Purchasers or their affiliates in matters unrelated to
such transactions.
6.17 CALIFORNIA 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
THEREFOR PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN EXEMPTION FROM SUCH
QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH CONSIDERATION BY THE
COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION FROM SUCH QUALIFICATION
BEING AVAILABLE.
17
19
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
18
20
PURCHASE AGREEMENT
21
IN WITNESS WHEREOF, the parties hereto have executed the SERIES A-1 AND
A-2 PREFERRED STOCK PURCHASE AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY
INTERMUNE PHARMACEUTICALS, INC.
/s/ W. Xxxxx Xxxxxxxx
------------------------------------
W. Xxxxx Xxxxxxxx
President
PURCHASERS
CONNETICS CORPORATION
/s/ X. Xxxxxxx
------------------------------------
Xxxxxx Xxxxxxx
Chief Executive Officer
GENENTECH, INC.
By:
------------------------
Print Name:
------------------------
Title:
------------------------
SANDERLING VENTURE PARTNERS IV, L.P.
------------------------------------ ------------------------------------
Xxxx X. Xxxxxxxxx Xxxxxx X. XxXxxx
General Partner General Partner
SANDERLING IV LIMITED, L.P.
------------------------------------ ------------------------------------
Xxxx X. Xxxxxxxxx Xxxxxx X. XxXxxx
General Partner General Partner
PURCHASE AGREEMENT
22
SANDERLING IV BIOMEDICAL, L.P.
------------------------------------ ------------------------------------
Xxxx X. Xxxxxxxxx Xxxxxx X. XxXxxx
General Partner General Partner
SANDERLING [FERI TRUST] VENTURE PARTNERS IV, L.P.
------------------------------------ ------------------------------------
Xxxx X. Xxxxxxxxx Xxxxxx X. XxXxxx
General Partner General Partner
SANDERLING IV VENTURE MANAGEMENT
------------------------------------ ------------------------------------
Xxxx X. Xxxxxxxxx Xxxxxx X. XxXxxx
General Partner General Partner
BIOTECHNOLOGY DEVELOPMENT FUND, L.P. BIOTECHNOLOGY DEVELOPMENT FUND III,
L.P.
By: BioAsia Investments, LLC, By: BioAsia Investments, LLC,
its General Partner its General Partner
By: By:
--------------------------------- ---------------------------------
Xxxxx Xxxx, Managing Member Xxxxx Xxxx, Managing Member
CHARTER VENTURES III, LLC
By:
---------------------------------
Print Name:
-------------------------
Managing Member
PURCHASE AGREEMENT
23
VERON INTERNATIONAL, LTD.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
PURCHASE AGREEMENT
24
Index of Exhibits
Schedule of Purchasers Exhibit A
Restated Articles Exhibit B
Co-Sale Agreement Exhibit C
Investor Rights Agreement Exhibit D
Form of Legal Opinion Exhibit E
Voting Agreement Exhibit F
Schedule of Exceptions Exhibit G
25
EXHIBIT A
SERIES A-1 PURCHASERS
NUMBER OF NON-CASH
PURCHASER SHARES CONSIDERATION
----------------------- ----------- -------------
Genentech, Inc.(1) 875,000 (2)
Connetics Corporation(3) 960,000 (4)
TOTAL 1,835,000
----------
(1) Genentech, Inc.
0 XXX Xxx
Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
(2) Consideration for the shares is the execution on the Closing Date of an
Amendment of the License Agreement for Interferon Gamma between Connetics
and Genentech, Inc. in a form approved by the Purchasers.
(3) Connetics Corporation
0000 Xxxx Xxxxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: General Counsel
(4) Consideration for the shares is (a) the surrender of 11,200,000 shares of
outstanding Series A Preferred shares of the Company, (b) execution on the
Closing Date of that certain Collaboration Agreement between Connetics and
the Company in a form satisfactory to Purchasers, (c) execution on the
Closing Date of that certain Transition Agreement between Connetics and the
Company, (d) execution prior to the Closing Date of that certain Amended and
Restated Service Agreement between Connetics and the Company in a form
satisfactory to Purchasers, (e) execution on the Closing Date of an
Amendment of the Sublicense Agreement between Connetics Corporation and
Company in a form approved by the Purchasers, and (f) execution on the
Closing Date of an Amendment of the License Agreement for Interferon Gamma
between Connetics and Genentech, Inc. in a form approved by the Purchasers.
26
SERIES A-2 PURCHASERS
NUMBER TOTAL
PURCHASER OF SHARES PURCHASE PRICE
--------- --------- --------------
Sanderling Venture Partners IV, L.P.(5) 1,266,989 $1,583,736.25
Sanderling IV Limited Partnership, L.P.(6) 494,287 $ 617,858.75
Sanderling IV Biomedical, L.P.(7) 493,231 $ 616,538.75
Sanderling [Feri Trust] Venture Partners IV, L.P.(8) 140,571 $ 175,713.75
Sanderling IV Venture Management(9) 4,922 $ 6,152.50
Biotechnology Development Fund, L.P.(10) 842,688 $1,053,360.00
Biotechnology Development Fund, L.P.(10) 357,312 $ 446,640.00
Veron International, Ltd.(11) 800,000 $ 1,000,000
Charter Ventures III, LLC(12) 400,000 $ 500,000.00
Other Third Party Investor(s) 800,000 $1,000,000.00
--------- -------------
TOTALS 5,600,000 $7,000,000.00
========= =============
(5) 0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: General Partner
(6) Same address as in footnote 5.
(7) Same address as in footnote 5.
(8) Same address as in footnote 5.
(9) Same address as in footnote 5.
(10) 000 Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attention: General Partner
(11) ChinaChem Golden Plaza
Top Floor
00 Xxxx Xxxx
Xxxxxxxxxxx Xxxx, Xxxxxxx
Xxxx Xxxx
(12) 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx, XX 00000
Attention: Managing Member
27
EXHIBIT B
RESTATED ARTICLES
(attached)
28
EXHIBIT C
CO-SALE AGREEMENT
(attached)
29
EXHIBIT D
INVESTOR RIGHTS AGREEMENT
(attached)
30
EXHIBIT E
FORM OF LEGAL OPINION
(attached)
31
EXHIBIT F
VOTING AGREEMENT
(attached)
32
EXHIBIT G
SCHEDULE OF EXCEPTIONS
(attached)
33
TABLE OF CONTENTS
PAGE
1. AGREEMENT TO SELL AND PURCHASE.................................................... 1
1.1 Authorization of Shares.................................................... 1
1.2 Sale of Series A Preferred Stock........................................... 1
2. CLOSING, DELIVERY AND PAYMENT..................................................... 2
2.1 Closing.................................................................... 2
2.2 Delivery................................................................... 2
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................... 2
3.1 Organization, Good Standing and Qualification.............................. 2
3.2 Capitalization; Voting Rights.............................................. 3
3.3 Authorization; Binding Obligations......................................... 3
3.4 Financial Statements....................................................... 4
3.5 Liabilities................................................................ 4
3.6 Agreements; Action......................................................... 4
3.7 Obligations to Related Parties............................................. 5
3.8 Changes.................................................................... 5
3.9 Title to Properties and Assets; Liens, etc................................. 6
3.10 Patents and Trademarks..................................................... 7
3.11 Compliance with Other Instruments.......................................... 7
3.12 Litigation................................................................. 8
3.13 Tax Returns and Payments................................................... 8
3.14 Employees.................................................................. 8
3.15 Proprietary Information and Inventions Agreements.......................... 9
3.16 Obligations of Management.................................................. 9
3.17 Registration Rights........................................................ 9
3.18 Compliance with Laws; Permits.............................................. 9
3.19 Environmental and Safety Laws.............................................. 9
3.20 Offering Valid............................................................. 10
3.21 Full Disclosure............................................................ 10
3.22 Corporate Documents........................................................ 10
3.23 Section 83(b) Elections.................................................... 10
i.
34
TABLE OF CONTENTS
(CONTINUED)
PAGE
3.24 Real Property Holding Corporation.......................................... 10
3.25 Insurance.................................................................. 10
3.26 Investment Company Act..................................................... 11
3.27 Year 2000.................................................................. 11
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.................................. 11
4.1 Requisite Power and Authority.............................................. 11
4.2 Investment Representations................................................. 11
4.3 Transfer Restrictions...................................................... 13
5. CONDITIONS TO CLOSING............................................................. 13
5.1 Conditions to Purchasers' Obligations at the Closing....................... 13
5.2 Conditions to Obligations of the Company................................... 14
6. MISCELLANEOUS..................................................................... 15
6.1 Governing Law.............................................................. 15
6.2 Survival................................................................... 15
6.3 Successors and Assigns..................................................... 15
6.4 Entire Agreement........................................................... 15
6.5 Severability............................................................... 15
6.6 Amendment and Waiver....................................................... 15
6.7 Delays or Omissions........................................................ 16
6.8 Notices.................................................................... 16
6.9 Expenses................................................................... 16
6.10 Attorneys' Fees............................................................ 16
6.11 Titles and Subtitles....................................................... 17
6.12 Counterparts............................................................... 17
6.13 Broker's Fees.............................................................. 17
6.14 Exculpation Among Purchasers............................................... 17
6.15 Pronouns................................................................... 17
6.16 Waiver of Conflicts........................................................ 17
6.17 California Corporate Securities Law........................................ 17
ii.
