EXHIBIT 10.1
EXECUTION COPY
================================================================================
SECURITIES PURCHASE AGREEMENT
dated as of May 12, 2003
among
SEATTLE GENETICS, INC.
and
THE PURCHASERS NAMED HEREIN
================================================================================
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINED TERMS; RULES OF CONSTRUCTION.......................................... 1
1.1 Defined Terms.................................................................... 1
1.2 Rules of Construction............................................................ 8
ARTICLE II PURCHASE AND SALE OF SHARES; CLOSING.......................................... 9
2.1 Filing of the Certificate of Designations........................................ 9
2.2 Authorization of Issuance of Preferred Shares and Warrants....................... 9
2.3 Purchase and Sale of Securities................................................. 10
2.4 Company Actions................................................................. 10
2.5 Closing......................................................................... 10
2.6 Closing Deliveries.............................................................. 10
2.7 Use of Proceeds................................................................. 11
ARTICLE III REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY............................. 11
3.1 Organization, Power, Authority and Good Standing................................ 11
3.2 Authorization, Execution, Enforceability and Consents........................... 11
3.3 Capitalization.................................................................. 12
3.4 Reports and Financial Information............................................... 14
3.5 Absence of Undisclosed Liabilities.............................................. 14
3.6 Compliance with Laws............................................................ 15
3.7 Absence of Changes.............................................................. 15
3.8 Taxes........................................................................... 16
3.9 Title to Assets................................................................. 17
3.10 Intellectual Property........................................................... 17
3.11 Litigation and Other Proceedings................................................ 18
3.12 Material Agreements............................................................. 18
3.13 Insurance....................................................................... 18
3.14 ERISA........................................................................... 19
3.15 Environmental Protection........................................................ 20
3.16 Accounting...................................................................... 20
3.17 Investment Company.............................................................. 20
-i-
TABLE OF CONTENTS
(continued)
PAGE
3.18 Private Sale.................................................................... 21
3.19 Brokers......................................................................... 21
3.20 State Takeover Statutes......................................................... 21
3.21 Certificates of Officers........................................................ 21
3.22 Listed Securities............................................................... 21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS............................. 21
4.1 Authorization of the Documents.................................................. 21
4.2 Investment Representations...................................................... 22
4.3 Non-United States Persons....................................................... 23
4.4 Non-Public Information.......................................................... 23
ARTICLE V CONDITIONS TO CLOSING........................................................ 24
5.1 Conditions to Purchasers' Obligations........................................... 24
5.2 Conditions to the Company's Obligations......................................... 26
ARTICLE VI INDEMNIFICATION.............................................................. 27
6.1 Survival of Representations, Warranties, Agreements and Covenants, Etc.......... 27
6.2 Indemnification................................................................. 27
ARTICLE VII TRANSFER OF SECURITIES....................................................... 29
7.1 Restriction on Transfer........................................................ 29
7.2 Restrictive Legends............................................................ 29
7.3 Notice of Transfer............................................................. 30
7.4 Transfer Pursuant to Rule 144.................................................. 31
ARTICLE VIII ADDITIONAL AGREEMENTS OF THE COMPANY......................................... 31
8.1 Conduct Pending Closing......................................................... 31
8.2 Access to Information........................................................... 33
8.3 No Solicitation................................................................. 33
8.4 Certain Tax Matters............................................................. 35
8.5 Other Actions................................................................... 35
8.6 Advice of Changes; Filings...................................................... 35
8.7 Financial Information........................................................... 35
-ii-
TABLE OF CONTENTS
(continued)
PAGE
8.8 Stockholders Meeting............................................................ 35
8.9 Reasonable Efforts; Notification................................................ 36
8.10 Certain Notifications........................................................... 37
8.11 Public Announcements............................................................ 38
8.12 NASD............................................................................ 38
ARTICLE IX TERMINATION.................................................................. 38
9.1 Termination..................................................................... 38
9.2 Effect of Termination........................................................... 40
ARTICLE X MISCELLANEOUS................................................................ 40
10.1 Fees............................................................................ 40
10.2 Further Assurances.............................................................. 41
10.3 Remedies........................................................................ 41
10.4 Successors and Assigns.......................................................... 42
10.5 Entire Agreement................................................................ 42
10.6 Notices......................................................................... 42
10.7 Amendments, Modifications and Waivers........................................... 43
10.8 Governing Law; Waiver of Jury Trial............................................ 43
10.9 No Third Party Reliance......................................................... 44
10.10 Submission to Jurisdiction...................................................... 44
10.11 Severability.................................................................... 45
10.12 Independence of Agreements, Covenants, Representations and Warranties........... 45
10.13 Counterparts; Facsimile Signatures.............................................. 45
-iii-
SCHEDULES and EXHIBITS
Schedules
Schedule I - Purchasers, Purchase Price
Schedule 3.2(c) - Consents and Approvals
Schedule 3.5 - Undisclosed Liabilities
Schedule 3.7 - Absence of Changes
Schedule 3.8 - Taxes
Schedule 3.10 - Intellectual Property
Schedule 3.12 - Material Agreements
Schedule 3.13 - Insurance Policies
Schedule 3.14(g) - Employment Agreements
Schedule 8.1(b)(viii) - Modifications to Material Agreements
EXHIBITS
Exhibit A - Form of Certificate of Designations for
Series A Preferred Stock
Exhibit B - Form of Warrant
Exhibit C - Form of Investor Rights Agreement
Exhibit D - Form of Regulatory Sideletter
Exhibit E - Form of Legal Opinion of Venture Law Group
EXECUTION COPY
SECURITIES PURCHASE AGREEMENT dated as
of May 12, 2003 among SEATTLE GENETICS, INC., a
Delaware corporation (the "Company"), and the
PURCHASERS listed on Schedule I (collectively,
the "Purchasers").
The Company is in the business of discovering, developing and
commercializing monoclonal antibody-based drugs to treat cancer and other human
diseases (the "Business"). The Company desires to raise up to $40,000,000 in
preferred equity financing, and the Purchasers are willing to purchase (i)
shares of a newly-created series of preferred stock to be designated as Series A
Convertible Preferred Stock, $0.001 par value per share (the "Series A Preferred
Stock"), and (ii) warrants to purchase shares of the Company's Common Stock (the
"Warrants"), all on the terms and subject to the conditions set forth herein.
ACCORDINGLY, in consideration of the foregoing and the
covenants, agreements, representations and warranties contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINED TERMS; RULES OF CONSTRUCTION
1.1 DEFINED TERMS.
Capitalized terms used and not otherwise defined in this Agreement have
the meanings given to them below or in the other locations of this Agreement
specified below:
"Acquisition Proposals" has the meaning given to such term in
Section 8.3.
"Affiliate" means, with respect to any specified Person, any
corporation or business entity controlled by, controlling or under common
control with such specified Person. In addition, any relative or spouse
(including any partner with whom such person resides on a permanent basis) of
the specified Person, any relative of such spouse, any spouse of any such
relative or any other Person who, directly or indirectly, is under common
ownership or control with, or is owned or controlled by such spouse or relative
shall be considered an Affiliate of such Person. As used in this definition, the
term "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise. As used in this definition, the
term "relative" means any former or current spouse, parent, grandparent,
great-grandparent, great-great-grandparent, child, grandchild, great-grandchild,
great-great-grandchild, sibling, first uncle, first aunt or first cousin (in
each case, whether natural or adoptive).
"Agreement" has the meaning given to such term in Section 1.2.
"Alternative Transaction" has the meaning given to such term in
Section 8.3.
"Applicable Law," with respect to any Person, means all
provisions of laws, statutes, ordinances, rules, regulations, permits,
certificates or orders of any Governmental Authority applicable to such Person
or any of its assets or property or to which such Person or any of its assets or
property is subject, and all judgments, injunctions, orders and decrees of all
courts and arbitrators in proceedings or actions in which such Person is a party
or by which it or any of its assets or properties is or may be bound or subject.
"Applicable Securities" means the Series A Preferred Stock, the
Warrants or the Reserved Common Shares, as applicable.
"BBI" means collectively, Xxxxx/Xxxxx Investments, L.P., Xxxxx
Bros. Investments, L.P., Xxxxx Bros. Investments II, L.P., Xxxxx Biotech Fund I,
L.P., Xxxxx Biotech Fund II, L.P., Xxxxx Biotech Fund II (Z), L.P. and/or any
other entity controlled by, controlling or under common control with any of the
preceding Persons at such time, to the extent such Persons hold shares of Series
A Preferred Stock, Warrants or Common Stock issued upon conversion of the Series
A Preferred Stock or exercise of the Warrants.
"Benefit Arrangement" means each employment, severance or other
similar contract, arrangement or policy (written or oral) and each plan or
arrangement (written or oral) providing for severance benefits, insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits which (i) is not an Employee
Plan and (ii) covers any employee or former employee of the Company.
"Board" means the Board of Directors of the Company.
"Breached Representation" has the meaning given to it in Section
8.10.
"Breaching Purchaser" has the meaning given to it in Section
10.1(c).
"Business" has the meaning given to it in the Preamble to this
Agreement.
"Business Day" means any day other than a Saturday, Sunday or a
day on which all United States securities exchanges (or Nasdaq) on which
Securities issued by the Company are listed, are authorized or required to be
closed.
"Certificate of Designations" means the certificate of
designations, powers, preferences and relative, participating, optional or other
special rights and qualifications, limitations or restrictions of the Series A
Preferred Stock, in substantially the form set forth in Exhibit A.
2
"Certificate of Incorporation" means the Fourth Amended and
Restated Certificate of Incorporation of the Company, as it may be amended,
restated or modified from time to time.
"Claim" means any claim, demand, assessment, judgment, Order,
decree, action, cause of action, litigation, suit, investigation or other
Proceeding initiated or brought by any Third Party.
"Closing" has the meaning given to it in Section 2.5.
"Closing Date" has the meaning given to it in Section 2.5.
"Closing Certificate" has the meaning given to it in Section
6.1.
"Code" means the Internal Revenue Code of 1986, as amended, or
any similar Federal law then in force, and the rules and regulations promulgated
thereunder, all as the same may from time to time be in effect.
"Commission" means the Securities and Exchange Commission or any
successor or replacement thereto.
"Common Stock" means the common stock, par value $0.001 per
share, of the Company.
"Company" has the meaning given to it in the caption to this
Agreement.
"Company Indemnified Persons" has the meaning given to it in
Section 6.2(b).
"Company Update Letter" has the meaning given to it in Section
8.10.
"Documents" means this Agreement, the Certificate of
Designations, the Investor Rights Agreement, the Warrants, the Option Agreement,
the Regulatory Sideletter and the Assignment Agreement.
"Employee Plan" means each "employee benefit plan, " as such
term is defined in Section 3(3) of ERISA, that (i) (A) is subject to any
provision of ERISA and (B) is maintained or contributed to by the Company, or
(ii) (A) is subject to any provision of Title IV of ERISA and (B) is maintained
or contributed to by any of the Company's ERISA Affiliates.
"Environmental Laws" means any Federal, state or local law or
ordinance or regulation pertaining to the protection of human health or the
environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Sections 9601, et seq., the
Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Sections 11001, et
seq., and the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901,
et seq.
3
"Equity Incentive Plans" means the Seattle Genetics, Inc. 1998
Stock Option Plan, the 2000 Directors' Stock Option Plan and the 2000 Employee
Stock Purchase Plan.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended, or any similar Federal law in force, and the rules and
regulations promulgated thereunder, all as the same may be amended.
"ERISA Affiliate" of any entity means any other entity that,
together with such entity, would be treated as a single employer under Section
414 of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar Federal Statute then in force, and the rules and
regulations promulgated thereunder, all as the same may from time to time be in
effect.
"Existing Rights Agreement" has the meaning given to it in
Section 3.3(h).
"Fee Cap" has the meaning given to it in Section 10.1(a).
"Financial Statements" has the meaning given to it in Section
3.4(b).
"Fundamental Documents" means the documents by which any Person
(other than an individual) establishes its legal existence or which govern its
internal affairs. The Fundamental Documents of the Company are the Certificate
of Incorporation and the By-laws of the Company.
"GAAP" means United States generally accepted accounting
principles.
"Governmental Authority" means any domestic or foreign
government or political subdivision thereof, whether on a Federal, state or
local level and whether executive, legislative or judicial in nature, including
any agency, authority, board, bureau, commission, court, department or other
instrumentality thereof.
"Hazardous Substances" means and includes oil and petroleum
products, asbestos, polychlorinated biphenyls, urea formaldehyde and any other
materials classified as hazardous or toxic under any Environmental Laws.
"Indemnified Persons" means any of the Company Indemnified
Persons or any of the Purchaser Indemnified Persons, as the context may require.
"Indemnifying Persons" means any of the Purchasers or the
Company, as the context may require.
"Intellectual Property Rights" has the meaning given to it in
Section 3.10.
"Investor Rights Agreement" means the Investor Rights Agreement
among the Company and the Purchasers, in substantially the form set forth in
Exhibit C.
4
"JPMP Entities" means, collectively, X.X. Xxxxxx Partners
(BHCA), L.P., X.X. Xxxxxx Partners Global Investors, L.P., X.X. Xxxxxx Partners
Global Investors (Cayman), L.P., X.X. Xxxxxx Partners Global Investors A, L.P.,
X.X. Xxxxxx Partners Global Investors (Cayman) II, L.P. and/or any other entity
controlled by, controlling or under common control with any of the preceding
Persons at such time, including any entity controlled by JPMP Master Fund
Manager, L.P., or any Affiliate thereof, or any entity managed or advised by
X.X. Xxxxxx Partners, LLC, JPMP Capital Corp. or any Affiliate thereof, to the
extent such Persons hold shares of Series A Preferred Stock, Warrants or Common
Stock issued upon conversion of the Series A Preferred Stock or exercise of the
Warrants.
"Knowledge" has the meaning given to it in Section 1.2.
"Liability" means any liability or obligation, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and whether due or to become due, regardless of when
asserted.
"Liens" means and includes mortgages, judgments, claims, liens,
security interests, pledges, escrows, charges, restrictions or other
encumbrances of any kind or character whatsoever.
"Loss" means any loss (including diminution in value of
Securities), Liability (to the extent incurred or reasonably likely to be
incurred), cost, damage, deficiency, Tax payable (including any Taxes imposed
with respect to any indemnity payments for any such Loss), penalty, fine or
expense, whether or not arising out of any Claims by or on behalf of any party
to this Agreement or any third party, including interest, penalties, reasonable
attorneys' fees and expenses and all amounts paid in investigation, defense or
settlement of any of the foregoing which any such party may suffer, sustain or
become subject to, as a result of, in connection with, relating or incidental to
or by virtue of any indemnifiable event or condition.
"Material Adverse Change" means, with respect to any Person, a
material adverse change to the business, condition (financial and otherwise),
operations, results of operations, assets (including levels of working capital
and components thereof), Liabilities, and prospects of such Person.
Notwithstanding the foregoing, the following events, matters or occurrences
shall not give rise to a "Material Adverse Change" with respect to the Company:
(a) the Company's expenditures of funds in the ordinary course consistent with
past practice, (b) matters disclosed in the 33 and 34 Act Reports filed on or
prior to March 31, 2003 to the extent the matter giving rise to the "Material
Adverse Change" is consistent with such disclosures and (c) the occurrence of
any Liability, the amount of which has been fully reserved for and disclosed in
the 2002 Financial Statements.
"Material Adverse Effect" means, with respect to any Person, a
material adverse effect on the business, condition (financial and otherwise),
operations, results of operations, assets (including levels of working capital
and components thereof), Liabilities, and prospects of such Person.
Notwithstanding the foregoing, the following
5
events, matters or occurrences shall not give rise to a "Material Adverse
Effect" with respect to the Company: (a) the Company's expenditures of funds in
the ordinary course consistent with past practice, (b) matters disclosed in the
33 and 34 Act Reports filed on or prior to March 31, 2003 to the extent the
matter giving rise to the "Material Adverse Effect" is consistent with such
disclosures and (c) the occurrence of any Liability, the amount of which has
been fully reserved for and disclosed in the 2002 Financial Statements.
"Material Agreements" has the meaning given to it in Section
3.12(a).
"Multiemployer Plan" means each Employee Plan that is a
multiemployer plan, as defined in Section 3(37) of ERISA.
"Nasdaq" has the meaning given to it in Section 3.22.
"Option Agreement" means that certain Option Agreement dated as
of the date hereof among the Company, the JPMP Entities and BBI.
"Order" means any judgment, writ, decree, injunction, order,
stipulation, compliance agreement or settlement agreement issued or imposed by,
or entered into with, a Governmental Authority, whether or not having the force
of law.
"Outside Date" has the meaning given to it in Section 9.1(b).
"Permitted Liens" means (i) liens on the Company's furniture,
fixtures and equipment granted to the Company's landlord as collateral for the
Company's office and laboratory lease, (ii) Liens for taxes not yet due and
payable and for which an appropriate reserve has been taken, (iii) rights of
way, easements and other minor defects in title which do not adversely affect in
any material respect the use or value of the real property subject to such and
(iv) other Liens not to exceed $100,000 in the aggregate.
"Permits" has the meaning given to it in Section 3.6(c)
"Person" shall be construed as broadly as possible and shall
include an individual, a partnership (including a limited liability
partnership), a limited liability company, a company, an association, a joint
stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization and a Governmental Authority.
"Post-Signing Returns" has the meaning given to it in Section
8.4.
"Preferred Shares" means shares of the Company's Series A
Preferred Stock.
"Premises" has the meaning given to it in Section 3.15.
"Proxy Statement" has the meaning given to it in Section 8.8.
"Proceeding" means any legal, administrative or arbitration
action, suit, complaint, charge, hearing, inquiry, investigation or proceeding.
6
"Purchased Securities" means, collectively, the Preferred Shares
issuable hereunder, the shares of Common Stock issuable upon conversion of such
Preferred Shares, the Warrants and the Warrant Shares.
"Purchaser" has the meaning given to it in the caption to this
Agreement and any Person succeeding to the rights of a Purchaser pursuant to the
terms hereof.
"Purchaser Indemnified Person" has the meaning given to it in
Section 6.2(a).
"Purchaser Representatives" has the meaning given to it in
Section 6.2(a).
"Regulatory Sideletter" means the Regulatory Sideletter among
the Company and the JPMP Entities, in substantially the form set forth in
Exhibit D.
"Requisite Purchasers" means Purchasers that have agreed
pursuant to the terms of this Agreement to acquire at least 66-2/3% of the
shares of Series A Preferred Stock being sold hereunder.
"Reserved Common Shares" means shares of Common Stock that will
be reserved for issuance upon the conversion of the Series A Preferred Stock or
the exercise of the Warrants, as the case may be.
"SEC Reports" has the meaning given to it in Section 3.4(a).
"Securities" means, with respect to any Person, such Person's
"securities" as defined in Section 2(1) of the Securities Act and includes such
Person's capital stock or other equity interests or any options, warrants or
other securities or rights that are directly or indirectly convertible into, or
exercisable or exchangeable for, such Person's capital stock or other equity
interests.
"Securities Act" means the Securities Act of 1933, as amended,
or any successor Federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same may from time to time be in
effect.
"Series A Preferred Stock" has the meaning set forth in the
Preamble to this Agreement.
"Stockholder Approval" has the meaning given to it in Section
8.8.
"Stockholders Meeting" has the meaning given to it in Section
8.8.
"Subsidiary" means, at any time, with respect to any Person (the
"Subject Person"), any Person of which either (a) more than 50% of the shares of
stock or other interests entitled to vote in the election of directors or
comparable Persons performing similar functions (excluding shares or other
interests entitled to vote only upon the failure
7
to pay dividends thereon or other contingencies) or (b) more than a 50% interest
in the profits or capital of such Person, are at the time owned or controlled
directly or indirectly by the Subject Person or through one or more Subsidiaries
of the Subject Person or by the Subject Person and one or more Subsidiaries of
the Subject Person.
"Tax" means any Taxes and the term "Taxes" means, with respect
to any Person, (A) all income taxes (including any tax on or based upon net
income, or gross income, or income as specially defined, or earnings, or
profits, or selected items of income, earnings or profits) and all gross
receipts, sales, use, ad valorem, transfer, franchise, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property or
windfall profits taxes, alternative or add-on minimum taxes, customs duties or
other taxes, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts imposed
by any taxing authority (domestic or foreign) on such Person and (B) any
Liability for the payment of any amount of the type described in the immediately
preceding clause (A) as a result of (i) being a "transferee" (within the meaning
of Section 6901 of the Code or any other Applicable Law) of another Person, (ii)
being a member of an affiliated, combined or consolidated group or (iii) a
contractual arrangement or otherwise.
"Third Party" means any person or "group," as described in Rule
13d-5(b) promulgated under the Exchange Act, other than the Purchasers or any of
their respective Affiliates.
"2002 Financial Statements" has the meaning given to it in
Section 3.5.
"Warrants" has the meaning given to it in the Preamble to this
Agreement, which shall be substantially in the form of Exhibit B attached
hereto.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
"33 and 34 Act Reports" has the meaning given to it in Section
3.4(a).
1.2 RULES OF CONSTRUCTION.
The term this "Agreement" means this agreement together with all
schedules and exhibits hereto, as the same may from time to time be amended,
modified, supplemented or restated in accordance with the terms hereof. In this
Agreement, the term "Knowledge," "best Knowledge" or words of similar import of
any Person means (i) actual knowledge of such Person (including the actual
knowledge of the officers, key employees and directors of such Person) and (ii)
that knowledge which could have been acquired by such Person after making such
due inquiry and exercising such due diligence as a prudent businessperson would
have made or exercised in the management of his or her business affairs,
including due inquiry of those key employees and professionals of such Person
who could reasonably be expected to have actual knowledge of the matters in
question. The use in this Agreement of the term "including" means "including,
without limitation." The words "herein," "hereof," "hereunder" and other words
of
8
similar import refer to this Agreement as a whole, including the schedules and
exhibits, as the same may from time to time be amended, modified, supplemented
or restated, and not to any particular section, subsection, paragraph,
subparagraph or clause contained in this Agreement. All references to sections,
schedules and exhibits mean the sections of this Agreement and the schedules and
exhibits attached to this Agreement, except where otherwise stated. The title of
and the section and paragraph headings in this Agreement are for convenience of
reference only and shall not govern or affect the interpretation of any of the
terms or provisions of this Agreement. The use herein of the masculine, feminine
or neuter forms shall also denote the other forms, as in each case the context
may require or permit. Where specific language is used to clarify by example a
general statement contained herein, such specific language shall not be deemed
to modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement has been
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party. Unless expressly provided
otherwise, the measure of a period of one month or year for purposes of this
Agreement shall be that date of the following month or year corresponding to the
starting date, provided that if no corresponding date exists, the measure shall
be that date of the following month or year corresponding to the next day
following the starting date. For example, one month following February 18 is
March 18, and one month following March 31 is May 1.
ARTICLE II
PURCHASE AND SALE OF SHARES; CLOSING
2.1 FILING OF THE CERTIFICATE OF DESIGNATIONS.
Prior to the Closing, the Company shall file with the Secretary of State
of the State of Delaware the Certificate of Designations. The Certificate of
Designations designates 1,600,000 shares of Series A Preferred Stock and sets
forth the powers, preferences and relative, participating, optional or other
special rights and qualifications, limitations or restrictions thereof.
2.2 AUTHORIZATION OF ISSUANCE OF PREFERRED SHARES AND WARRANTS.
Subject to the Stockholder Approval, the Company has authorized (a) the
issuance to the Purchasers at the Closing of an aggregate of (i) 1,600,000
shares of Series A Preferred Stock at a per share price of $25.00 and (ii)
Warrants to purchase an aggregate of 2,000,000 shares of Common Stock and (b)
the reservation of 18,000,000 Reserved Common Shares for issuance upon
conversion of the Series A Preferred Stock and upon exercise of the Warrants.
2.3 PURCHASE AND SALE OF SECURITIES.
At the Closing, subject to the satisfaction or waiver of the conditions
set forth in Article V, the Company shall issue and sell to each Purchaser, and
each Purchaser shall severally purchase from the Company, (a) that number of
shares of Series A Preferred Stock set forth opposite such Purchaser's name on
Schedule I and (b) a Warrant
9
exercisable for that number of Warrant Shares set forth opposite such
Purchaser's name on Schedule I. The aggregate purchase price for the Securities
referred to in this Section 2.3 shall equal the amount set forth opposite such
Purchaser's name on Schedule I, with an aggregate amount of $3,650,000 of such
purchase price allocated to the Warrants on a pro rata basis.
2.4 COMPANY ACTIONS.
The Company represents and warrants that at meetings duly called and
held, its Board, has (a) taken all necessary steps to render the restrictions of
Section 203 of the Delaware General Corporation Law (the "DGCL") and Section
23B.19.040 of the Washington Business Corporations Act (the "WBCA") inapplicable
to the transactions contemplated by this Agreement and (b) resolved to elect not
to be subject, to the extent permitted by Applicable Law, to any state takeover
law other than Section 203 of the DGCL that may purport to be applicable to the
transactions contemplated by this Agreement.
2.5 CLOSING.
The closing (the "Closing") hereunder with respect to the issuance and
sale of the Series A Preferred Stock and the Warrants being purchased by each
Purchaser at the Closing, and the consummation of the related transactions
contemplated hereby shall, subject to the satisfaction or waiver of the
applicable conditions set forth in Article V, take place at the offices of
O'Melveny & Xxxxx LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00
a.m., local time, on the date that is five Business Days after the Stockholders
Meeting or as otherwise provided herein or agreed upon by the parties hereto
(such date, the "Closing Date").
2.6 CLOSING DELIVERIES.
At the Closing, the Company shall deliver to each Purchaser a stock
certificate and a warrant agreement, each registered in such Purchaser's name,
representing the number of shares of Series A Preferred Stock and Warrant
Shares, respectively, being purchased by such Purchaser at the Closing, against
receipt by the Company of a wire transfer, of immediately available funds to an
account or accounts designated by the Company, of an aggregate amount equal to
the aggregate purchase price set forth opposite such Purchaser's name on
Schedule I.
2.7 USE OF PROCEEDS.
The proceeds received by the Company from the sale of all shares of
Series A Preferred Stock and Warrants shall be used by the Company for general
corporate purposes.
10
ARTICLE III
REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY
The Company represents and warrants to each Purchaser as follows:
3.1 ORGANIZATION, POWER, AUTHORITY AND GOOD STANDING.
(a) The Company is duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
power and authority (corporate or otherwise) to own, lease and operate its
assets and properties and to carry on its Business as presently conducted and as
presently proposed to be conducted.
(b) The Company is duly qualified and validly existing
and/or in good standing (as applicable) to transact business as a foreign Person
in each jurisdiction where failure to so qualify could reasonably be expected to
have a Material Adverse Effect on the Company. The Purchasers have been
furnished with true, correct and complete copies of the Fundamental Documents of
the Company, in each case as amended and in effect on the date hereof. The
Company has never engaged in any businesses other than the Business.
3.2 AUTHORIZATION, EXECUTION, ENFORCEABILITY AND CONSENTS.
(a) The Company has all requisite power and authority
(corporate and otherwise) to execute, deliver and perform each of its
obligations under this Agreement and each other Document. This Agreement and
each other Document has been duly and validly authorized by the Company. This
Agreement has been and, prior to the Closing, each other Document will be duly
executed and delivered by the Company. This Agreement constitutes and, when
executed and delivered by the Company, each other Document to which it is a
party will constitute a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies
together with general principles of equity and the discretion of the court
before which any proceeding therefor may be brought and (iii) to the extent any
indemnification provisions may be limited by applicable federal or state
securities laws.
(b) The authorization, reservation, issuance, sale and
delivery, as applicable, of the shares of Series A Preferred Stock and the
Warrants, have been duly and validly authorized by all requisite action on the
part of the Company. The shares of Series A Preferred Stock and the Reserved
Common Shares (assuming the issuance thereof in accordance with the applicable
terms of the Series A Preferred Stock and/or the Warrants), will be duly and
validly issued and outstanding, fully paid and nonassessable, and not subject to
any preemptive rights, rights of first refusal or other similar rights of the
stockholders of the Company.
(c) Except as set forth on Schedule 3.2(c), no consent,
approval, authorization, Permit or Order of any Governmental Authority or third
party is required for the issuance and sale by the Company of the Series A
Preferred Stock or the Warrants to the Purchasers or the consummation by the
Company of the other transactions contemplated hereby or by any other Document.
11
(d) The execution, delivery and performance by the Company
of this Agreement and each other Document, and the consummation of the
transactions contemplated hereby and thereby, including the authorization,
reservation, issuance, sale and delivery, as the case may be, of the shares of
Series A Preferred Stock, the Warrants and the Reserved Common Shares (assuming
the issuance thereof in accordance with the applicable terms of the Series A
Preferred Stock and/or the Warrants), will not (i) violate any Applicable Law or
(ii) conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute (with due notice or lapse of time, or both) a
default or give rise to any right of termination, cancellation or acceleration,
or result in the creation of any Lien upon any of the properties or assets of
the Company, under any provision of the Fundamental Documents of the Company or
any Material Agreement or Permit to which the Company is a party or by which the
Company or its assets or properties are or may be bound.
3.3 CAPITALIZATION.
As of the date of this Agreement, the authorized capital stock of the
Company consists of:
(a) 100,000,000 duly authorized shares of Common Stock, of
which (i) 30,782,344 shares are duly and validly issued and outstanding, fully
paid and nonassessable, (ii) 4,119,852 shares are duly and validly reserved for
issuance pursuant to outstanding options, (iii) 1,984,049 shares are duly and
validly reserved for issuance pursuant to options that may be granted after the
date hereof to employees of the Company pursuant to the Company's Equity
Incentive Plans, (v) 16,000,000 shares shall be duly and validly reserved for
issuance upon conversion of the Series A Preferred Stock, and (vi) 2,000,000
shares shall be duly and validly reserved for issuance upon exercise of the
Warrants.
(b) 5,000,000 duly authorized shares of Preferred Stock,
1,600,000 of which shall, upon filing of the Certificate of Designations, be
designated Series A Preferred Stock and all of which shares sold pursuant to
this Agreement shall be duly and validly issued and outstanding, fully paid and
nonassessable and held of record and beneficially by the Purchasers and in the
amounts set forth on Schedule I, free and clear of all Liens.
(c) All Reserved Common Shares, if and when issued, will be
duly and validly issued and outstanding, fully paid and nonassessable.
(d) No outstanding securities are entitled to any
anti-dilution or similar adjustments upon the issuance of additional Securities
of the Company or otherwise.
(e) There are no preemptive rights, rights of first refusal
or other similar rights to purchase or otherwise acquire shares of capital stock
or other Securities of the Company pursuant to any Applicable Law, any
Fundamental Document of the Company or any agreement to which the Company is a
party or may be bound.
12
(f) Except as contemplated by the Documents and the
Fundamental Documents of the Company, there is no Lien (such as a right of first
refusal, right of first offer, proxy, voting trust or voting agreement) created
by the Company or, to the Knowledge of the Company, any of its stockholders with
respect to the sale or voting of any Securities of the Company (whether
outstanding or issuable upon the conversion, exchange or exercise of outstanding
Securities).
(g) There are no obligations to redeem, repurchase or
otherwise acquire shares of capital stock or other Securities of the Company
pursuant to any Applicable Law, any Fundamental Document of the Company or any
agreement to which the Company is a party or may be bound.
(h) Except as contemplated by the Investor Rights Agreement
and the Amended and Restated Investors' Rights Agreement dated December 22, 1999
by and among the Company and certain holders of the Company's Common Stock (the
"Existing Rights Agreement"), no Person has any right to cause the Company to
effect the registration under the Securities Act of any shares of Common Stock
or any other Securities of the Company.
(i) The Company does not have any Subsidiaries, nor does it
own any capital stock, any other equity or long-term debt securities or any
equity interest, directly or indirectly, in any other Person other than
short-term and long-term investments made in the ordinary course of business
consistent with past practice as disclosed in the SEC Reports.
(j) All Securities issued by the Company have been either
issued in transactions in accordance with, or exempt from registration under,
the Securities Act and the rules and regulations promulgated thereunder and all
applicable state securities or "blue sky" laws, and the Company has not violated
the Securities Act or any applicable state securities or "blue sky" laws in
connection with the issuance of any such Securities. To the Company's Knowledge,
there are no restrictions upon the voting rights associated with, or the
transfer of, any of the capital stock of the Company, except as provided by (i)
United States federal or state securities laws or (ii) the terms and provisions
of the Documents.
3.4 REPORTS AND FINANCIAL INFORMATION.
(a) The Company is a reporting company and has, since March
6, 2001, filed in a timely manner, all reports, forms, schedules and statements
and other documents required to be filed by it with the Commission pursuant to
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the Commission promulgated thereunder applicable thereto
(collectively, the "SEC Reports"). The Company has previously furnished or made
available to the Purchasers true and complete copies of all SEC Reports. None of
the SEC Reports or any registration statement, definitive proxy statement or
other document filed by the Company with the SEC since March 6, 2001
(collectively, the "33 and 34 Act Reports"), as of their respective dates (as
amended through the date hereof), (i) contained any untrue statement of a
material fact or
13
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading or (ii) failed in any material respect to comply with the
requirements of the Securities Act, the Exchange Act or the respective rules and
regulations of the SEC thereunder.
(b) The financial statements contained in the 33 and 34 Act
Reports, and the related statements of operations and statements of cash flows
for the periods then ended (collectively, the "Financial Statements") (i) were
in accordance with the books and records of the Company, (ii) presented fairly
in all material respects the consolidated financial condition and results of
operations of the Company as of the dates and for the periods indicated and
(iii) were in all material respects prepared in accordance with GAAP
consistently applied (except as set forth in the notes thereto and subject, in
the case of Financial Statements as at the end of or for the periods other than
fiscal years, to normal year-end audit adjustments, provided that such
adjustments are not material individually or in the aggregate).
(c) The Financial Statements complied, when filed, as to
form in all material respects with the applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, including,
but not limited to, the applicable requirements of Regulation S-X promulgated
under the Exchange Act and the Xxxxxxxx-Xxxxx Act of 2002.
3.5 ABSENCE OF UNDISCLOSED LIABILITIES.
Except as set forth on Schedule 3.5, the Company does not have any
material Liability which was not provided for or disclosed in the financial
statements for the Company for the fiscal year ended December 31, 2002, (the
"2002 Financial Statements"), other than Liabilities incurred in the ordinary
course of business consistent with past practice since December 31, 2002.
3.6 COMPLIANCE WITH LAWS.
(a) The Company is not in violation of, and to the Knowledge
of the Company is not under investigation by a Governmental Authority with
respect to and has not been threatened to be charged with or given notice of any
violation of, any Applicable Law (including the Xxxxxxxx-Xxxxx Act of 2002),
except violations that have not had, and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
(b) There are no Orders to which the Company or any of its
assets or properties is bound.
(c) The Company holds all licenses, certificates and permits
from Governmental Authorities ("Permits") that are necessary to the conduct of
the Business, the lack of which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company. Such
Permits are in full force and effect, no violations with respect to any thereof
have occurred or are or have been recorded, no Proceeding is pending or, to the
Knowledge of the Company, threatened, to revoke or limit any thereof.
14
(d) To the Knowledge of the Company, there is no proposed
change in any Applicable Law which would require the Company to obtain any
Permits in order to conduct the Business as presently conducted and as presently
proposed to be conducted that the Company does not currently possess and the
lack of which could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
(e) To the Company's Knowledge, there is no Applicable Law
that would prohibit or restrict the Company from, or otherwise materially
adversely affect the Company in, conducting the Business in any jurisdiction in
which it is now conducting the Business or in which it proposes to conduct the
Business.
(f) The Company has not received any opinion or memorandum
or legal advice from legal counsel to the effect that it is exposed, from a
legal standpoint, to any Liability or disadvantage which could reasonably be
expected to have a Material Adverse Effect on the Company.
3.7 ABSENCE OF CHANGES.
Except as set forth on Schedule 3.7 attached hereto, since December 31,
2002, there has not been any (a) event or condition which has had or could
reasonably be expected to have a Material Adverse Effect on the Company, (b)
material deviation from historical accounting and other practices in connection
with the maintenance of the Company's books and records, (c) except as in the
ordinary course of business consistent with past practice, increase in or
prepayment of the compensation payable or to become payable by the Company to
any of its directors or officers, or the making of any bonus payment or similar
arrangement to or with any of them, (d) except for the write-off of accounts
receivable in the ordinary course of business consistent with past practice,
cancellation of indebtedness due to the Company from others, (e) waiver or
release of any material rights of the Company, except in the ordinary course of
business and for fair value, or any lapse or other loss of a material right of
the Company to use its assets or conduct the Business, (f) material change in
the policies of the Company with respect to the payment of accounts payable or
other current Liabilities or the collection of accounts receivable, including
any acceleration or deferral of the payment or collection thereof, as
applicable, (g) purchase by the Company of any of its outstanding capital stock
nor any declaration or payment of any dividend or other distribution of any kind
on the Company's capital stock, (h) delivery of a notice of non-renewal or any
other failure to renew Material Agreements between the Company, on the one hand,
and its customers, suppliers, collaborators, or strategic partners on the other
hand, which are material, individually or in the aggregate, or (i) loss of any
employee who earned more than $150,000 in the most recent fiscal year (in
salary, bonus and other cash compensation).
15
3.8 TAXES.
Except as disclosed on Schedule 3.8, (a) the Company and each other
Person included in any consolidated or combined Tax Return and part of an
affiliated group, within the meaning of Section 1504 of the Code, of which the
Company is or has been a member has filed all returns, declarations of estimated
tax, tax reports, information returns and statements (collectively, the
"Returns") required to be filed by it (other than those for which extensions
have been granted and have not expired) relating to any Taxes; (b) as of the
time of filing, the Returns were complete and correct in all material respects
and all Taxes shown on the Returns have been paid; (c) the Company has paid all
Taxes required to have been paid or made provisions for all Taxes payable for
any period that ended on or before the date hereof and for any period that began
on or before the date hereof and ends after the date hereof, as required by
Applicable Law and GAAP; (d) the Company is not delinquent in the payment of any
Taxes nor has it requested any extension of time within which to file any
Return, which Return has not since been filed (other than any taxes for which
adequate reserves have been established in accordance with GAAP); (e) there are
no pending tax audits of any Returns of the Company and the Company has not
received notice of any pending tax audits of any Returns of the Company; (f) no
tax liens have been filed and no deficiency or addition to Taxes, interest or
penalties for any Taxes have been proposed, asserted or assessed in writing
against the Company; (g) the Company has not granted any extension of the
statute of limitations applicable to any Return or other Tax claim with respect
to any of its income, properties or operations; (h) the Company has complied in
all material respects with all Applicable Laws relating to the withholding of
Taxes and has paid such withheld Taxes (including any sales and use Taxes for
which withholding may be required, and amounts required by law to be withheld
and paid from the wages or salaries of employees), and the Company is not liable
for any Taxes for failure to comply with any such Applicable Law; (i) the
Company has not agreed to, is not required to, and will not be obligated to,
make any adjustments either on, before or after the date hereof, to its existing
tax accounting method by reason of Section 481 of the Code, or due to a
determination by the Board (acting on the advice of the Company's accountant, as
the case may be) that any existing method of accounting is not permissible or
appropriate, and the Internal Revenue Service has not proposed any such
adjustments or changes in the Company's accounting method; (j) no claim has ever
been made by any Taxing authority in a jurisdiction in which the Company does
not file Tax Returns that any such Person is or may be subject to Taxation by
that jurisdiction, and no basis exists for any such claim to be made; (k) the
Company is not and has never been a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code, a "real estate
investment trust" under Section 856 of the Code, or any other type of entity
that is subject to tax treatment different from that normally applicable to
corporations under Subchapter C of the Code; (l) the Company will not be
required to include in income during a taxable period that ends after the
Closing Date any income that economically accrued and was accounted for prior to
the Closing Date by reason of the installment method of accounting, the
completed method of accounting or otherwise; (m) the Company does not have and
has never had any Subsidiary, and is not, and has never been, a member of a
federal, state or local consolidated tax group; and (n) the Company believes its
net operating loss carryforwards for federal and state income tax purposes are
as set forth in the Company's federal and state income tax returns.
16
3.9 TITLE TO ASSETS.
The Company has good and marketable title to, or a valid leasehold
interest in, all properties, interests in properties and assets, real, personal,
intangible or mixed, used in the conduct of the Business, free and clear of all
Liens, other than Permitted Liens and Liens which do not have a Material Adverse
Effect on the Company.
3.10 INTELLECTUAL PROPERTY.
Unless otherwise disclosed on Schedule 3.10, to the best Knowledge of
the Company the Company has sufficient title or ownership of, or rights by
license or other agreement to all of the patents, patent applications,
trademarks, service marks, trademark and service xxxx applications and
registrations, trade names, copyright applications and registrations (the
"Intellectual Property Rights") necessary for, or used in, the conduct of the
Business as presently conducted and as presently proposed to be conducted, in
each case the lack of which could be reasonably expected to have a Material
Adverse Effect on the Company. To the Company's Knowledge, and except for rights
and restrictions disclosed in the 33 and 34 Act Reports and the exhibits
thereto, the Intellectual Property Rights are not subject to any Lien or any
rights of others, however evidenced or created which would reasonably be
expected to have a Material Adverse Effect on the Company. The Company has not
received any written or oral communications alleging, nor is the Company
otherwise aware, that the Company has violated, or by conducting the Business as
presently conducted or as presently proposed to be conducted, would violate any
of the patents, trademarks, trade names, service marks, copyrights, domain names
or trade secrets or other proprietary rights of any other Person. To the best of
the Company's Knowledge, no other Person is infringing or violating the
Intellectual Property Rights of the Company. To the best of the Company's
Knowledge, no employee of the Company is obligated under any contract
(including, licenses, covenants, or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of such employee's best
efforts to promote the interests of the Company or that would conflict with the
Business as presently conducted and as presently proposed to be conducted.
Neither the execution nor delivery of this Agreement, nor the carrying on of the
Business by the employees of the Company, nor the conduct of the Business as
presently conducted and as proposed, will, to the best of the Company's
Knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees is now obligated.
3.11 LITIGATION AND OTHER PROCEEDINGS.
There are no (a) Proceedings pending or, to the Knowledge of the
Company, threatened against or involving the Company, whether at law or in
equity, whether civil or criminal in nature or by or before any Governmental
Authority, which if adversely determined could reasonably be expected
individually or in the aggregate to have a Material Adverse Effect on the
Company, nor to the Knowledge of the Company does
17
there exist any reasonable basis therefor, or (b) Orders of any Governmental
Authority with respect to or involving the Company.
3.12 MATERIAL AGREEMENTS.
(a) Except for agreements filed with the 33 and 34 Act
Reports and as set forth on Schedule 3.12, the Company is not a party to (i) any
notes payable by the Company, bonds, mortgages or indentures or (ii) other
written or oral contracts, agreements, instruments and other understandings that
are material to the Business, financial condition or results of operations of
the Company or that would have been required to be described in a prospectus
pursuant to the Securities Act or filed as exhibits to any registration
statement filed in connection therewith (collectively, the "Material
Agreements").
(b) Each Material Agreement constitutes a valid and binding
obligation of the Company and, to the Knowledge of the Company, is enforceable
against such other party in accordance with its terms. The Company has in all
material respects performed all of the obligations required to be performed by
it to date pursuant to the Material Agreements, and there exists no default, or
any event which upon the giving of notice or the passage of time, or both, would
give rise to a claim of a default in the performance by the Company or, to the
Knowledge of the Company, any other party to any of the Material Agreements,
except where such default or event, individually or in the aggregate, has not
had nor could it reasonably be expected to have a Material Adverse Effect on the
Company.
3.13 INSURANCE.
Schedule 3.13 sets forth a list, as of the date hereof, of all insurance
policies (including self insurance policies and arrangements, if any) and sets
forth, with respect to each such policy, a description of the insured loss
coverage, the expiration date and time of coverage, the dollar limitations of
coverage and a general description of each deductible feature. The Company
carries insurance in such amounts and covering such risks as is adequate for the
conduct of the Business and the value of its properties. The Company has not
received any notice that (a) any of such policies has been or will be canceled
or terminated or will not be renewed on substantially the same terms as are now
in effect or (b) the premium on any of such policies will be materially
increased on the renewal thereof.
3.14 ERISA.
(a) No Employee Plan is a Multiemployer Plan and no Employee
Plan is subject to Title IV of ERISA. The Company and its Affiliates have not
incurred, nor do they expect to incur, any liability under Title IV of ERISA
arising in connection with the termination of any plan covered or previously
covered by Title IV of ERISA.
(b) None of the Employee Plans or other arrangements covers
any non-United States employee or former employee of the Company.
18
(c) No "prohibited transaction," as defined in Section 406
of ERISA or Section 4975 of the Code, has occurred with respect to any Employee
Plan.
(d) Except for the Company's 401(k) plan, no Employee Plan
is an "employee pension benefit plan" as defined in Section 3(2) of ERISA.
(e) To the Knowledge of the Company, each Benefit
Arrangement has been maintained in substantial compliance with its terms and
with the requirements prescribed by any and all statutes, orders, rules and
regulations, which are applicable to such Employee Plan and Benefit Arrangement.
(f) All material contributions required to be made under the
terms of each Employee Plan and Benefit Arrangement have been made or a
reasonable amount has been reflected in the Financial Statements for the
Company's most recent fiscal year. Except as disclosed in writing to the
Purchasers prior to the date hereof, there has been no amendment to, written
interpretation of or announcement (whether or not written) by the Company or any
of its ERISA Affiliates relating to, or change in employee participation or
coverage under, any Employee Plan or Benefit Arrangement that would increase
materially the expense of maintaining such Employee Plan or Benefit Arrangement
above the level of the expense incurred in respect thereof for the fiscal year
ended prior to the date hereof.
(g) Except as set forth on Schedule 3.14(g), there is no
contract, agreement, plan or arrangement covering any employee or former
employee of the Company that, individually or collectively, could give rise to
the payment of any amount that would not be deductible pursuant to the terms of
Section 280G of the Code.
(h) No tax under Section 4980B or 4980D of the Code has been
incurred in respect of any Employee Plan that is a group health plan, as defined
in Section 5000(b)(1) of the Code.
(i) With respect to the employees and former employees of
the Company, there are no employee post-retirement medical or health plans in
effect, except as required by Section 4980B of the Code.
(j) No employee, stockholder or consultant of the Company
will become entitled to any bonus, retirement, severance or similar benefit or
enhanced benefit solely as a result of the transactions contemplated hereby.
3.15 ENVIRONMENTAL PROTECTION.
To the Knowledge of the Company, the Company, the operation of Business,
and any real property that the Company owns, leases or otherwise occupies or
uses (the "Premises") are in compliance, during the period of the Company's
ownership, operation or lease, in all material respects with all applicable
Environmental Laws and Orders or directives of any Governmental Authorities
having jurisdiction under such Environmental Laws, including, without
limitation, any Environmental Laws or orders or directives with respect to any
cleanup or remediation of any release or threat of release of Hazardous
19
Substances. The Company has not received any citation, directive, letter or
other communication, written or oral, or any notice of any proceeding, claim or
lawsuit, from any Person arising out of the ownership or occupation of the
Premises, or the conduct of its operations, and the Company is not aware of any
basis therefor. The Company has obtained and is maintaining in full force and
effect all necessary Permits and approvals required by all Environmental Laws
applicable to the Premises and the Business operations conducted thereon
(including operations conducted by tenants on the Premises), and is in
compliance in all material respects with all such Permits, licenses and
approvals. The Company has not caused or allowed a release, or a threat of
release, of any Hazardous Substance unto, at or near the Premises, the potential
Liability of which would be required to be disclosed by it in any SEC Report or
described in a prospectus pursuant to the Securities Act, and, to the best of
the Company's Knowledge, neither the Premises nor any property at or adjacent to
the Premises has ever been subject to a release, or a threat of release, of any
Hazardous Substance.
3.16 ACCOUNTING.
The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (a) transactions are executed
in accordance with management's general or specific authorization; (b)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets;
(c) access to assets is permitted only in accordance with management's general
or specific authorization; and (d) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
3.17 INVESTMENT COMPANY.
The Company is not an "investment company" within the meaning of such
term under the Investment Company Act of 1940 and the rules and regulations of
the Commission thereunder.
3.18 PRIVATE SALE.
Assuming the accuracy of the representations of the Purchasers in
Sections 4.2 and 4.3, the offering, sale, and issuance of the Series A Preferred
Stock, the Warrants and, when and if issued, the Reserved Common Shares, as the
case may be, will be, exempt from registration under the Securities Act and
applicable state securities laws and the rules and regulations promulgated
thereunder.
3.19 BROKERS.
In connection with this transaction, none of the Company or any of its
officers, directors, stockholders or employees (or any Affiliate of the
foregoing) has employed any broker or finder or incurred any actual or potential
Liability or obligation, whether direct or indirect, for any brokerage fees,
commissions or finders' fees in connection with the transactions contemplated by
this Agreement.
20
3.20 STATE TAKEOVER STATUTES.
Other than Section 23B.19.040 of the WBCA and Section 203 of the DGCL,
no state takeover statute or similar statute or regulation applies or purports
to apply to this Agreement or the transactions contemplated by this Agreement.
3.21 CERTIFICATES OF OFFICERS.
Any certificate signed by any officer of the Company and delivered to
any Purchaser or to counsel for the Purchasers shall be deemed a joint and
several representation and warranty by the Company to each Purchaser as to the
matters covered thereby.
3.22 LISTED SECURITIES.
The Common Stock is quoted on the Nasdaq National Market System
("Nasdaq") under the ticker symbol SGEN. To the Company's Knowledge, there is no
stop order suspending the trading of the Common Stock on Nasdaq or any
information that would result in the Common Stock being delisted from Nasdaq.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser represents and warrants to the Company as to itself
severally, and not jointly as to any other Purchaser, as follows:
4.1 AUTHORIZATION OF THE DOCUMENTS.
Such Purchaser has all requisite power and authority to execute, deliver
and perform the Documents to which it is a party and the transactions
contemplated thereby, and the execution, delivery and performance by such
Purchaser of the Documents to which it is a party have been duly authorized by
all requisite action (corporate or otherwise) by such Purchaser. This Agreement
has been duly executed and delivered by such Purchaser and each such Document
constitutes a valid and binding obligation of such Purchaser, enforceable
against such Purchaser in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies together with general principles of equity and the
discretion of the court before which any proceeding therefor may be brought and
(iii) to the extent any indemnification provisions may be limited by applicable
federal or state securities laws.
4.2 INVESTMENT REPRESENTATIONS.
Solely for establishing that the sale or issuance of the Series A
Preferred Stock, the Warrants, and the Reserved Common Shares (if any), to such
Purchaser, is exempt from the registration requirements of the Securities Act
and comparable provisions of state "blue-sky" laws and not in any way to
mitigate the responsibility or Liability of the
21
Company for any breach of the representations and warranties made by it in this
Agreement, on which such Purchaser is relying in full in connection with its
decision to invest in the Company:
(a) Such Purchaser is acquiring the shares of Series A
Preferred Stock and the Warrants to be purchased hereunder and, in the event
that such Purchaser should acquire any Reserved Common Shares, will be acquiring
such Reserved Common Shares, for its own account, for investment and not with a
view to the distribution thereof in violation of the Securities Act or
applicable state securities laws.
(b) Such Purchaser understands that (i) the Series A
Preferred Stock and the Warrants have not been, and the Reserved Common Shares
will not be, registered under the Securities Act or applicable state securities
laws by reason of their issuance by the Company in a transaction exempt from the
registration requirements of the Securities Act and applicable state securities
laws and (ii) the Series A Preferred Stock, the Warrants, and if acquired, the
Reserved Common Shares must be held by such Purchaser indefinitely unless a
subsequent disposition thereof is registered under the Securities Act and
applicable state securities laws or is exempt from such registration.
(c) Such Purchaser further understands that the exemption
from registration afforded by Rule 144 (the provisions of which are known to
such Purchaser) promulgated under the Securities Act depends on the satisfaction
of various conditions, and that, if applicable, Rule 144 may afford the basis
for sales of Securities acquired hereunder in limited amounts.
(d) Such Purchaser has not employed any broker or finder in
connection with the transactions contemplated by this Agreement.
(e) Such Purchaser is an "accredited investor" (as defined
in Rule 501(a) of Regulation D promulgated under the Securities Act). Such
Purchaser has such knowledge and experience in financial and business matters
that it is capable of evaluating the risks and merits of this investment. Such
Purchaser's representations in this subsection shall in no way limit the
enforceability of any representations made by the Company in any of the
Documents to which it is a party.
(f) Such Purchaser was not formed for the purpose of
consummating the transactions contemplated hereby.
(g) Such Purchaser is an "institutional investor" for
purposes of compliance with "blue sky" laws in the State of New York.
(h) The state in which any offer to purchase Series A
Preferred Stock or the Warrants hereunder was made to or accepted by such
Purchaser is the state shown as the Purchaser's address on Schedule I hereto.
22
4.3 NON-UNITED STATES PERSONS.
If the Purchaser is not a United States person (as defined by Section
7701(a)(30) of the Code), such Purchaser hereby represents that it has satisfied
itself as to the full observance of the laws of its jurisdiction in connection
with any invitation to subscribe for the Purchased Securities, or any use of
this Agreement, including (i) the legal requirements within its jurisdiction for
the purchase of the Purchased Securities, (ii) any foreign exchange restrictions
applicable to such purchase, (iii) any governmental or other consents that may
need to be obtained, and (iv) the income tax and other tax consequences, if any,
that may be relevant to the purchase, holding, redemption, sale, or transfer of
the Purchased Securities. Such Purchaser's subscription and payment for and
continued beneficial ownership of the Purchased Securities, will not violate any
applicable securities or other laws of the Purchaser's jurisdiction.
4.4 NON-PUBLIC INFORMATION
(a) The JPMP Entities acknowledge that they are subject to
the terms of the Non-Disclosure Agreement dated as of January 23, 2002, between
the Company and X.X. Xxxxxx Partners, LLC. BBI acknowledges that it is subject
to the terms of the Non-Disclosure Agreement dated as of November 6, 2002,
between the Company and Xxxxx Bros. Advisors, LLC. Notwithstanding any
provisions contained in such Non-Disclosure Agreements, each party thereto
authorizes the other to disclose all information and materials regarding the
structure and tax aspects of the transaction to the extent required by Internal
Revenue Code Section 6011 and the Treasury Regulations thereunder in order to
avoid the transaction described herein and therein being treated as a
"Confidential Transaction" as defined by such Treasury Regulations.
(b) Each Purchaser (other than the JPMP Entities and BBI)
understands and agrees that any information provided to such Purchaser by the
Company in connection with the offering contemplated by this Agreement,
including, without limitation, the existence and nature of discussions regarding
this offering, the Documents and any other presentations or non-public
information given by the Company to such Purchaser (collectively, the
"Confidential Information") is strictly confidential and is being submitted to
such Purchaser solely for such Purchaser's confidential use in connection with
its investment decision regarding the Purchased Securities. Such Purchaser
agrees to use such Confidential Information for the sole purpose of evaluating a
possible investment in the Purchased Securities and such Purchaser hereby
acknowledges that it is prohibited from reproducing, distributing, divulging or
discussing such Confidential Information, in whole or in part, except for use
internally and by its legal counsel and except as required by law or legal
process. Such Purchaser hereby acknowledges that it is aware that the United
States securities laws prohibit any person who has material nonpublic
information about a company from purchasing or selling securities of such
company. Notwithstanding anything to the contrary contained in this Section
4.4(c), Confidential Information shall not include any information that (i) is
in the possession of such Purchaser at the time of disclosure by the Company,
(ii) prior to or after the time of disclosure becomes part of the public
knowledge or literature other than as a result of any improper action by such
Purchaser, (iii) is approved by the Company, in writing, for release, or (iv) is
included in any 33 and 34 Act Reports. Notwithstanding any other provisions
contained herein, each such Purchaser and the Company authorizes the other to
disclose all information and materials regarding the structure and tax aspects
23
of the transaction to the extent required by Internal Revenue Code Section 6011
and the Treasury Regulations thereunder in order to avoid the transaction
described herein being treated as a "Confidential Transaction" as defined by
such Treasury Regulations.
ARTICLE V
CONDITIONS TO CLOSING
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS.
The obligation of each Purchaser to purchase and pay for the Securities
to be purchased hereunder at the Closing is subject to the satisfaction of the
following conditions precedent (unless waived by such Purchaser).
(a) The Company shall have filed the Certificate of
Designations with, and such filing shall have been accepted by, the Secretary of
State of the State of Delaware and evidence of such filing and acceptance
satisfactory to the Purchasers shall have been delivered to the Purchasers.
(b) The Company shall have (i) duly issued and delivered to
each Purchaser (A) a stock certificate for the number of shares of Series A
Preferred Stock purchased by such Purchaser and (B) a warrant agreement
evidencing the right to acquire that number of Warrant Shares purchased by such
Purchaser and (ii) reserved the Reserved Common Stock for issuance upon
conversion of the Series A Preferred Stock and exercise of the Warrants.
(c) The Company shall have duly executed and delivered to
each Purchaser the Investor Rights Agreement.
(d) The Company shall have duly executed and delivered to
the JPMP Entities the Regulatory Sideletter.
(e) The Company and the other requisite parties thereto
shall have amended the Amended and Restated Investor Rights Agreement dated as
of December 22, 1999 to provide for pro rata cutbacks among the stockholders
party to such agreement and the Purchasers in connection with a registration of
securities by the Company in accordance with Section 4.2(ii) of the Investor
Rights Agreement.
(f) The Company shall have amended the By-laws to permit
written consents in lieu of meetings by the holders of Series A Preferred Stock.
(g) No event or occurrence which could reasonably be
expected to have a Material Adverse Effect shall have occurred with respect to
the Company since the date hereof.
(h) The Company shall have performed its obligations under,
and shall have complied with, all the covenants and agreements set forth in this
Agreement and all representations and warranties contained in Article III shall
be true and correct in all material respects (except those representations and
warranties that are qualified as to
24
materiality, which shall be true and correct in all respects) as of the date
hereof (except for those representations and warranties which are made as of a
specific date, which shall have been true and correct as of such date), and each
Purchaser shall have received a certificate to that effect signed by an officer
of the Company.
(i) The Purchasers shall have received from the Company a
certificate signed by an officer of the Company either (i) confirming that no
additional items would be required to be disclosed in the Company Update Letter
pursuant to Section 8.10 if the Company was required to deliver such letter to
the Purchasers on the Closing Date or (ii) if additional items would be required
to be so disclosed, setting forth such items in accordance with Section 8.10.
(j) Each Purchaser shall have received a legal opinion from
Venture Law Group, counsel to the Company, in substantially the form attached
hereto as Exhibit E.
(k) Each Purchaser shall have received a certificate from
the Secretary or an Assistant Secretary of the Company, dated as of the Closing
Date, certifying (i) that true and complete copies of the Fundamental Documents
of the Company as in effect on the Closing Date are attached thereto, (ii) as to
the incumbency and genuineness of the signatures of each Person executing this
Agreement and the other Documents on behalf of the Company and (iii) the
genuineness of the resolutions (attached thereto) of the board of directors (or
similar governing body of the Company) and the stockholders of the Company
authorizing the execution, delivery and performance of this Agreement and the
other Documents to which the Company is a party and the consummation of the
transactions contemplated hereby and thereby and that all such resolutions are
still in full force and effect.
(l) No Applicable Law shall have been enacted after the date
hereof and no Proceeding shall be pending which prohibits or seeks to prohibit,
or materially restricts or delays the consummation of the transactions
contemplated by the Documents or materially restricts or impairs the ability of
the Purchasers to own Securities of the Company.
(m) There shall be no Proceeding pending or threatened by
the National Association of Securities Dealers, Inc. (the "NASD") to terminate
the NASD's quotation of the Common Stock on the Nasdaq.
(n) The Company shall have made and/or obtained all notices,
consents, approvals, and authorizations necessary to consummate the transactions
contemplated hereby, including, without limitation the Stockholder Approval.
(o) The Company shall have in effect director and officer
liability insurance with coverage of at least $10,000,000 from a nationally
recognized insurance company rated "A" or above, and otherwise in form and
substance satisfactory to the Purchasers and shall have agreed to indemnify all
directors to the fullest extent permissible under Applicable Law.
25
(p) The Purchasers shall have received (i) a certificate of
the Secretary of State of the State of Delaware, dated as of a recent date as to
the due incorporation or organization of the Company and its good standing in
such jurisdiction and (ii) a facsimile, telegram, telex or other acceptable
method of confirmation from said Secretary as of the close of business on the
next Business Day preceding the Closing Date as to the continued good standing
of the Company.
(q) The Purchasers shall have been provided with a
certificate from an officer of the Company certifying that the conditions
precedent to the Purchasers' obligations set forth in this Section 5.1 shall
have been satisfied.
(r) To the extent that any Purchaser did not execute this
Agreement on the date hereof, such Purchaser shall be reasonably acceptable to
each of the JPMP Entities and BBI.
5.2 CONDITIONS TO THE COMPANY'S OBLIGATIONS.
The obligation of the Company to issue the shares of Series A Preferred
Stock and Warrants to each Purchaser at the Closing is subject to the
satisfaction of the following condition precedent (unless waived by the
Company):
(a) A number of shares of Series A Preferred Stock having an
aggregate purchase price hereunder equal to at least $25,000,000 shall have been
purchased by the Purchasers (or such lower amount as is permitted under the
Option Agreement in the event of an exercise of the option granted thereunder).
(b) Such Purchaser shall have delivered to the Company by
wire transfer, of immediately available funds to an account or accounts
designated by the Company, an aggregate amount equal to the purchase price for
the shares of Series A Preferred Stock and Warrants being purchased by such
Purchaser.
(c) Such Purchaser shall have performed its obligations
under, and shall have complied with, all the covenants and agreements set forth
in this Agreement and all representations and warranties contained in Article IV
shall be true and correct in all material respects (except those representations
and warranties that are qualified as to materiality, which shall be true and
correct in all respects) as of the date hereof and at and as of the Closing Date
with the same effect as if such representations and warranties had been made at
and as of the Closing Date.
(d) Such Purchaser shall have duly executed and delivered to
the Company each of the Documents to which such Purchaser is a party.
(e) All authorizations, approvals or permits described on
Schedule 3.2(c) above shall have been obtained and shall be effective as of the
Closing Date.
(f) The Company shall have obtained Stockholder Approval.
26
ARTICLE VI
INDEMNIFICATION
6.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AGREEMENTS AND COVENANTS, ETC.
All statements contained in this Agreement or any other Document or any
closing certificate delivered by the Company or the Purchasers, pursuant to this
Agreement or in connection with the transactions contemplated by this Agreement
(each, a "Closing Certificate"), shall constitute representations and warranties
by the Company, or the Purchasers, as applicable, under this Agreement.
Notwithstanding any investigation made at any time by or on behalf of any party
hereto, all representations and warranties contained in this Agreement or made
in writing by or on behalf of the Company, or any Purchaser, in connection with
the transactions contemplated by this Agreement shall survive the Closing until
the first anniversary of the Closing Date; provided, however, that the
representations and warranties contained in Sections 3.1, 3.2(a), 3.2(b) and
3.2(d)(i), 3.18 and 3.19 shall survive the Closing indefinitely and the
representations and warranties contained in Section 3.8 shall survive the
Closing and continue in full force and effect until the sixtieth day after the
expiration of the statute of limitations applicable to the matters covered.
6.2 INDEMNIFICATION.
(a) In addition to all other rights and remedies available
to the Purchasers, the Company shall indemnify, defend and hold harmless each
Purchaser and its Affiliates and their respective partners, officers, directors,
employees, agents and representatives (collectively, the "Purchaser
Representatives"; and together with such Purchaser, the "Purchaser Indemnified
Persons") against all Losses, and none of the Purchaser Indemnified Persons
shall be liable to the Company or any other stockholder of the Company for or
with respect to any and all Losses, together with all costs and expenses
(including reasonable legal and accounting fees and expenses) related thereto or
incurred in enforcing this Article VI, (i) arising from the untruth, inaccuracy
or breach of any of the representations or warranties of the Company contained
in any Document or Closing Certificate or any facts or circumstances
constituting any such untruth, inaccuracy or breach, (ii) arising from any
material breach of any covenant or agreement of the Company contained in any
Document or Closing Certificate or any facts or circumstances constituting such
breach, or (iii) arising from any Claim, except for any Claim made by the
Company against such Purchaser pursuant to Section 6.2(b) (whenever made),
resulting from or caused by any transaction, status, event, condition,
occurrence or situation relating to, arising out of or in connection with the
execution, delivery and performance of this Agreement and the other Documents
and the related documents and agreements contemplated hereby and thereby.
Notwithstanding the foregoing, and subject to the following part of this
sentence, upon judicial determination, which is final and no longer appealable,
that the act or omission giving rise to the indemnification pursuant to Section
6.2(a)(iii) resulted primarily out of or was based primarily upon the
indemnified party's gross negligence, fraud or willful misconduct, (unless such
action was based upon the indemnified party's reliance in good faith upon any of
the representations, warranties, covenants or promises made by the Company
27
herein, or in the Documents), the Company shall not be responsible for any
Losses sought to be indemnified in connection therewith, and the Company shall
be entitled to recover from the indemnified party all amounts previously paid in
full or partial satisfaction of such indemnity, together with all costs and
expenses of the Company reasonably incurred in effecting such recovery, if any.
(b) In addition to all other rights and remedies available
to the Company, each Purchaser severally as to itself only and not as to any
other Purchaser, shall indemnify, defend and hold harmless the Company and its
officers, directors, employees, agents and representatives (collectively, the
"Company Indemnified Persons") against all Losses, together with all reasonable
out-of-pocket costs and expenses (including legal and accounting fees and
expenses) related thereto or incurred in enforcing this Article VI, (i) arising
from the untruth, inaccuracy or breach of any of the representations or
warranties of such Purchaser contained in any Document or Closing Certificate or
any facts or circumstances constituting such untruth, inaccuracy or breach or
(ii) arising from any material breach of any covenant or agreement of such
Purchaser contained in any Document or Closing Certificate or any facts or
circumstances constituting such breach.
(c) All indemnification rights hereunder shall survive the
execution and delivery of the Documents (subject to the limitations contained in
Section 6.1) and the consummation of the transactions contemplated herein and
therein indefinitely, regardless of any investigation, inquiry or examination
made for or on behalf of, or any knowledge of the Purchaser and/or any of the
other Indemnified Parties or the acceptance by the Purchaser of any certificate
or opinion.
(d) By executing this Agreement, the Company agrees that no
Purchaser Indemnified Person shall have any Liability to the Company pursuant to
this Agreement, the other Documents or the transactions contemplated hereby or
thereby (the "Covered Conduct") except (i) as provided in Section 6.2(b), and
(ii) to the extent that a court of competent jurisdiction shall have determined
by final judgment, no longer subject to appeal, that the losses resulting from
such Covered Conduct primarily resulted from or were based primarily upon such
Purchaser Indemnified Person's willful misconduct or gross negligence.
(e) Each party agrees that it will not make under any
circumstances, and it will cause it Affiliates not to make under any
circumstances, any claim against any Indemnified Person, with respect to a Claim
or Loss with respect to which such party is entitled to indemnification
hereunder, for any special, indirect or consequential damages in respect of any
breach or wrongful conduct (whether the claim therefore is based on contract,
tort or duty imposed by law) in connection with, arising out of or in any way
related to, the transactions contemplated by and the relationship established by
this Agreement, the other Documents or the transactions contemplated hereby or
thereby, or any act, omission or event occurring in connection therewith,
including, without limitation, the provisions of this Article VI, and waives,
releases and agrees not to xxx upon, and it agrees to cause its Affiliates not
to xxx upon any such Claim, for any such damages, whether or not accrued and
whether or not known or suspected to exist in any such party's favor.
28
ARTICLE VII
TRANSFER OF SECURITIES
7.1 RESTRICTION ON TRANSFER.
The Series A Preferred Stock, the Warrants, and, when and if issued, the
Reserved Common Shares, shall not be transferable except upon the conditions
specified in this Article VII, which conditions are intended to insure
compliance with the provisions of the Securities Act in respect of the transfer
thereof.
7.2 RESTRICTIVE LEGENDS.
Each certificate evidencing the Series A Preferred Stock, the Warrants,
and, when and if issued, the Reserved Common Shares, and each certificate for
any such securities issued to subsequent transferees of any such certificate
shall (unless otherwise permitted by the provisions of Section 7.3 hereof) be
stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR APPLICABLE STATE BLUE
SKY LAWS. ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE
CONDITIONS SPECIFIED IN THE SECURITIES PURCHASE AGREEMENT DATED AS OF MAY 12,
2003 AMONG THE ISSUER HEREOF AND CERTAIN OTHER SIGNATORIES THERETO, AND NO
TRANSFER OF THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS
HAVE BEEN FULFILLED. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE ISSUER HEREOF."
7.3 NOTICE OF TRANSFER.
(a) The holder of any Applicable Securities, by acceptance
thereof agrees, prior to any transfer of any such Applicable Securities, to give
written notice to the Company of such holder's intention to effect such transfer
and to comply in all other respects with the provisions of this Section 7.3.
Each such notice shall describe the manner and circumstances of the proposed
transfer and shall be accompanied by the written opinion, addressed to the
Company, of counsel for the holder of such Applicable Securities (unless waived
by the Company), as to whether in the opinion of such counsel (which opinion and
counsel shall be reasonably satisfactory to the Company) such proposed transfer
involves a transaction requiring registration of such Applicable Securities
under the Securities Act; provided, however, that (i) in the case of a holder of
29
Applicable Securities which is a partnership or a limited liability company, no
such opinion of counsel shall be necessary for a transfer by such holder of
Applicable Securities to a partner or member or a retired partner or retired
member of such holder who retires after the date hereof, or the estate of any
such partner, member, retired partner or retired member and (ii) in the case of
a holder of Applicable Securities which is a corporation, no such opinion of
counsel shall be necessary for a transfer by such holder of Applicable
Securities to an Affiliate, officer or director of such corporation, if in the
case of clause (i) and (ii) the transferee agrees in writing to be subject to
the terms of this Article VII to the same extent as if such transferee were
originally a signatory to this Agreement.
(b) If in the opinion of such counsel (if such opinion is
required hereunder) the proposed transfer of Applicable Securities may be
effected without registration under the Securities Act, the holder of Applicable
Securities shall thereupon be entitled to transfer such Applicable Securities in
accordance with the terms of the notice delivered by it to the Company.
(c) Each certificate or other instrument evidencing the
securities issued upon the transfer of any Applicable Securities (and each
certificate or other instrument evidencing any untransferred balance of such
Securities) shall bear the legend set forth in Section 7.2 hereof unless (i) in
the opinion of such counsel registration of future transfer is not required by
the applicable provisions of the Securities Act or (ii) the Company shall have
waived the requirement of such legends; provided, however, that such legend
shall not be required on any certificate or other instrument evidencing the
securities issued upon such transfer in the event such transfer shall be made in
compliance with the requirements of Rule 144 (as amended from time to time)
promulgated under the Securities Act (or successor rule thereto), unless the
Company determines in good faith that such legend is required under Applicable
Law as a result of the transferee's ownership of such securities.
7.4 TRANSFER PURSUANT TO RULE 144.
The Company agrees to make publicly available the current information
with respect to the Company that is required by Rule 144(c) under the Securities
Act and otherwise to take any other action or to execute any certificates
necessary to permit a transfer by any holder of Applicable Securities to qualify
for the exemption set forth in Rule 144. Without limiting the foregoing, if such
information is not publicly available, then, upon a holder's request, the
Company will provide such information to such holder or any prospective
purchaser designated by such holder.
30
ARTICLE VIII
ADDITIONAL AGREEMENTS OF THE COMPANY
8.1 CONDUCT PENDING CLOSING.
(a) From the date hereof through the Closing Date, the
Company shall, and shall cause each Subsidiary to:
(i) carry on the Business in the ordinary course
consistent with past practice and use reasonable efforts to preserve
intact its current business organization, keep available the services of
its current officers and preserve its relationships with customers,
suppliers, licensors, licensees and others having significant business
dealings with it;
(ii) maintain the assets of the Company in customary
repair, order and condition, maintain insurance comparable to that in
effect on the date hereof, replace in accordance with past practice
inoperable or worn out assets with new assets of comparable quality and,
in the event of casualty, loss or damage to any of such assets or
properties prior to the Closing Date for which the Company is insured or
the condemnation of any assets or properties, either repair or replace
such assets or property, or, with the consent of the Purchasers, retain
such insurance or condemnation proceeds; and
(iii) deliver notice to the Purchasers of any capital
expenditure or expenditures with respect to property, plant or equipment
that are approved by the Board and which materially increase the amounts
budgeted therefor.
(b) Without limiting the generality of Section 8.1(a) above,
from the date hereof through the Closing Date, the Company shall not and shall
cause each Subsidiary not to (except as expressly permitted by this Agreement or
with the consent of the Requisite Purchasers, which consent will not be
unreasonably withheld):
(i) (A) declare, set aside or pay any dividends on,
or make any other distributions in respect of, any of its capital stock
(other than cash dividends and distributions by a wholly-owned
Subsidiary to the Company or to a Subsidiary all of the capital stock of
which is owned directly or indirectly by the Company), (B) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (C) purchase, redeem or
otherwise acquire any shares or any capital stock of the Company or any
other securities thereof or any rights, warrants or options to acquire
any such shares or other securities other than for repurchases of shares
pursuant to agreements providing for the option to repurchase shares at
cost upon termination of employment;
(ii) issue, deliver, sell, pledge or otherwise
encumber any Securities except Securities issued pursuant to the Equity
Incentive Plans;
(iii) amend its Fundamental Documents;
(iv) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial portion of the assets
or stock of, or by any other manner, any business or any Person or (B)
any assets except for the purchase of equipment or other assets in the
ordinary course of business, consistent with past practice;
31
(v) sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of its
properties or assets, except (i) immaterial assets, (ii) Permitted Liens
and (iii) in the ordinary course of business consistent with past
practice;
(vi) except in the ordinary course of business
consistent with past practice (i) incur any debt or guarantee any such
debt of another Person, issue or sell any debt securities or warrants or
other rights to acquire any debt securities of the Company or any
Subsidiary, guarantee any debt securities of another Person, enter into
any "keep well" or other agreement to maintain any financial statement
condition of another Person into any arrangement having the economic
effect of any of the foregoing or (ii) make any loans, advances (other
than advances to Subsidiaries or among Subsidiaries) or capital
contributions to, or investments in, any other Person;
(vii) pay, discharge, settle or satisfy any material
claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge
or satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities reflected or
reserved against in the most recent consolidated financial statements
(or the notes thereto) of the Company included in the 2002 Financial
Statements or incurred thereafter in the ordinary course of business
consistent with past practice, or waive any material benefits of, or
agree to modify any confidentiality, standstill, non-solicitation or
similar agreement to which the Company or any Subsidiary is a party;
(viii) modify or amend in any material respect or
terminate any Material Agreement to which the Company or any Subsidiary
is a party, or waive, release or assign any material rights or claims,
other than as set forth on Schedule 8.1(b)(viii);
(ix) delay or postpone the payment of accounts
payable and other obligations and Liabilities or accelerate the
collection of accounts receivable, other than in the ordinary course of
business;
(x) take any action or omit to take any action which
would or reasonably could be expected to cause any of the
representations and warranties contained in Article III to be untrue or
inaccurate in a manner that could reasonably be expected to constitute a
Material Adverse Change to the Company or its Business as of the Closing
Date as if made as of the Closing Date;
(xi) take any action or omit to take any action which
would or reasonably could be expected to cause any of the conditions set
forth in Section 5.1 to not be satisfied; or
(xii) authorize any of, or commit or agree to take any
of, the foregoing actions.
32
(c) The Company shall use its best efforts to ensure that
all conditions to the Closing set forth in Section 5.1 are satisfied on or prior
to the Closing Date, including executing and delivering all documents required
to be delivered by the Company at the Closing and taking any and all actions
which may be necessary on its part to cause each other party to the Documents to
so execute and deliver each Document.
8.2 ACCESS TO INFORMATION.
From the date hereof and continuing through the Closing Date, the
Company shall afford to the Purchasers (and their respective representatives and
advisors) reasonable access, upon reasonable notice during normal business
hours, to its officers and employees to discuss matters pertaining to the
Company and its Business and during such period shall furnish promptly to the
Purchasers (and their respective representatives and advisors) (a) a copy of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of Federal or state securities
laws and (b) all information concerning the Business, properties and personnel
as the Purchasers may reasonably request.
8.3 NO SOLICITATION.
Prior to Closing, the Company shall not and shall cause each Subsidiary
and its Subsidiaries' officers and directors not to, and each of the foregoing
shall not permit their respective agents, representatives, advisors or
subsidiaries to (whether directly or indirectly) (i) solicit, initiate or take
any action knowingly to facilitate the submission of inquiries, proposals or
offers ("Acquisition Proposals") from any Third Party relating to (A) any
acquisition or purchase of assets of the Company and its Subsidiaries other than
in the ordinary course of business consistent with past practice, (B) the
purchase of any equity security of the Company or any of its Subsidiaries
(including a self tender offer) or any security that is convertible,
exchangeable or exercisable for any equity security, other than Securities
issued in connection with corporate partnering activities entered into by the
Company in the ordinary course of its Business (provided that such Securities
shall not have an aggregate value in excess of $5 million) or pursuant to the
Equity Incentive Plans, (C) any merger, consolidation, business combination,
sale of substantially all assets, recapitalization, liquidation, dissolution or
similar transaction involving the Company or any of its Subsidiaries, or (D) any
other transaction the consummation of which would, or could reasonably be
expected to impede, interfere with, prevent or materially delay the transactions
contemplated by this Agreement (each of the foregoing items set forth in (A)
through (D), an "Alternative Transaction"), or agree to or endorse any
Alternative Transaction, or (ii) enter into or participate in any discussions or
negotiations regarding any of the foregoing, or furnish to any Third Party any
information with respect to its business, properties or assets or any of the
foregoing, or otherwise cooperate in any way with, or knowingly assist or
participate in, facilitate or encourage, any effort or attempt by any Third
Party (other than the Purchasers) to do or seek any of the foregoing. Subject to
the provisions of the previous sentence, the Company shall immediately cease and
cause its Subsidiaries and its and their advisors, agents and other
intermediaries to cease any and all existing activities, discussions or
negotiations with any Third Party conducted heretofore with respect to any of
the foregoing, except to
33
advise such Third Party of the existence of the provisions of this Section, and
shall use its reasonable best efforts to cause any such parties in possession of
confidential information about the Company that was furnished by or on behalf of
the Company to return or destroy all such information in the possession of any
such Third Party or in the possession of any agent or advisor of any such Third
Party; provided, however, that the foregoing shall not prohibit the Company
(either directly or indirectly through advisors, agents or other intermediaries)
from (i) furnishing information pursuant to an appropriate confidentiality
letter (which letter shall not be less favorable to the Company in any material
respect than the Confidentiality Agreement, and a copy of which shall be
provided for informational purposes only to the Purchasers) concerning the
Company and its businesses, properties or assets to a Third Party who has made a
bona fide Acquisition Proposal, (ii) engaging in discussions or negotiations
with such a Third Party who has made a bona fide Acquisition Proposal, (iii)
following receipt of a bona fide Acquisition Proposal, taking and disclosing to
its stockholders a position contemplated by Rule 14d-9 or Rule 14e-2(a) under
the Exchange Act or otherwise making disclosure to its stockholders and/or (iv)
taking any non-appealable, final action ordered to be taken by the Company by
any court of competent jurisdiction but in each case referred to in the
foregoing clauses (i) through (iv) only to the extent that the Board of the
Company shall have concluded in good faith after consultation with outside
counsel that such action is required to prevent the Board of the Company from
breaching its fiduciary duties to the stockholders of the Company under
applicable law (it being understood that the Board of the Company may rely on
the written advice of its outside counsel in good faith and the Purchasers agree
not to take a contrary position to any such written advice); provided, further,
that (A) the Board shall not take any of the foregoing actions until after it
provides at least three (3) Business Days prior notice to the Purchasers of its
intent to take such action; and (B) if the Board receives an Acquisition
Proposal, then the Company shall promptly inform the Purchasers of the terms and
conditions of such Acquisition Proposal and the identity of the Person making
it.
8.4 CERTAIN TAX MATTERS.
From the date hereof until the Closing Date, (a) the Company and each
Subsidiary will file all material tax returns and reports ("Post-Signing
Returns") required to be filed; (b) the Company and each Subsidiary will timely
pay all taxes shown as due and payable on the Company's Post-Signing Returns
that are so filed; (c) the Company and each Subsidiary will make provision for
all taxes payable by the Company for which no Post-Signing Return is due prior
to the Closing Date; and (d) the Company will promptly notify the Purchasers of
any action, suit, proceeding, claim or audit pending against or with respect to
the Company and each Subsidiary in respect of any tax.
8.5 OTHER ACTIONS.
Effective immediately after Closing, the Company shall increase the size
of its board of directors to nine persons and cause one person designated by the
JPMP Entities and one person designated by BBI to be added to the Company's
board of directors, who shall initially be Xxxxxxxx Xxxxxxxx and Xxxxx Xxxxx,
respectively.
34
8.6 ADVICE OF CHANGES; FILINGS.
Prior to Closing, the Company shall confer with the Purchasers on a
regular and frequent basis as reasonably requested by the Purchasers, report on
operational matters and promptly advise the Purchasers orally and, if requested
by the Purchasers, in writing of any material change with respect to the Company
or any Subsidiary. The Company shall promptly provide to the Purchasers (or its
counsel) copies of all filings made by the Company or any Subsidiary with any
Governmental Authority in connection with this Agreement and the transactions
contemplated hereby.
8.7 FINANCIAL INFORMATION.
Prior to Closing, the Company shall furnish to the Purchasers (a) all
documents filed with or submitted to the Commission by the Company promptly
after such filing or submission; and (b) as soon as available but in any event
within 45 days of each fiscal quarter, the unaudited consolidated and
consolidating balance sheets and income statements of the Company, showing its
financial condition as of the close of such quarter and the results of
operations during such quarter and for then elapsed portion of the Company's
fiscal year, in each case, setting forth, to the extent available, the
comparative figures for the corresponding month in the prior fiscal year, the
corresponding elapsed portion of the prior fiscal year and the budget amount for
such month (all to be prepared in accordance with GAAP consistently applied).
The parties hereto agree that delivery to each Purchaser of a copy of its Form
10-Q for the applicable quarter shall satisfy the requirements of this clause
(b) above.
8.8 STOCKHOLDERS MEETING.
The Company shall use commercially reasonable efforts to hold a special
meeting of its stockholders within 60 days after the date hereof for the purpose
of voting on the transactions contemplated by this Agreement (the "Stockholders
Meeting"). Such efforts will include, without limitation, the preparation,
delivery and dissemination of a proxy statement or information statement
relating to the transactions contemplated by this Agreement (the "Proxy
Statement"), prepared in accordance with the Exchange Act, to the stockholders
of the Company soliciting their vote in favor of the transactions contemplated
hereby (the "Stockholder Approval") and containing advice that the Board
recommends that the stockholders approve the transactions contemplated by this
Agreement. The Company shall deliver copies of the Proxy Statement to each
Purchaser and such Purchaser's counsel at least two (2) Business Days prior to
the dissemination of the Proxy Statement to the stockholders of the Company.
8.9 REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set forth in this Agreement,
each of the parties agrees to use all commercially reasonable efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the
35
transactions contemplated by this Agreement, including (i) the obtaining of all
necessary actions or non-actions, waivers, consents and approvals from
Governmental Authorities and the making of all necessary registrations and
filings (including filings with Governmental Authorities, if any) and the taking
of all reasonable steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Authority, (ii)
the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
any of the transactions contemplated by this Agreement, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Authority vacated or reversed, and (iv) the execution and delivery
of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing, the Company and its Board
shall (x) take all action necessary to ensure that no state takeover statute or
similar statute or regulation is or becomes applicable to this Agreement or any
of other transactions contemplated by this Agreement and (y) if any state
takeover statute or similar statute or regulation becomes applicable to any
transaction contemplated by this Agreement, take all action reasonably necessary
to ensure that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
this Agreement and the transactions contemplated by this Agreement. Nothing in
this Agreement shall be deemed to require the Company or the Purchasers to
dispose of or hold separate any asset or collection of assets.
(b) The Company shall give prompt notice to the Purchasers
of (i) any representation or warranty made by it contained in this Agreement
becoming untrue or inaccurate in any material respect or (ii) the failure by it
or any Subsidiary to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it or any
Subsidiary under this Agreement; provided, however, that no such notification
shall affect the representations, warranties, covenants or agreement of the
parties or the conditions to the obligations of the parties under this
Agreement.
(c) Each Purchaser shall give prompt notice to the Company
of (i) any representation or warranty made by such Purchaser contained in this
Agreement becoming untrue or inaccurate in any material respect or (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
8.10 CERTAIN NOTIFICATIONS.
At least five (5) Business Days, but not more than twenty (20) Business
Days, prior to the Closing (or five (5) Business Days after request by the JPMP
Entities or BBI in the event either such Purchaser elects to exercise the option
pursuant to the Option Agreement), the Company shall notify the Purchasers in
writing of the occurrence, or failure to occur, of any event, which occurrence
or failure to occur could be reasonably
36
likely to cause any representation or warranty by the Company contained in this
Agreement to be untrue or inaccurate in any material respect as if such
representation and warranty were made at such time (except for those
representations and warranties that are qualified as to materiality, which shall
be true and correct in all respects and those representations and warranties
which are made as of a specific date, which shall have been true and correct as
of such date). The Company shall, in good faith, prepare such notice (each, a
"Company Update Letter"), which shall describe in reasonable detail (i) any
event or circumstance which has occurred or arisen, or is reasonably likely to
occur or arise, after the date hereof and has caused or is reasonably likely to
cause the inaccuracy or a breach of any representation or warranty made by the
Company in this Agreement on the date hereof (each, a "Breached
Representation"), (ii) the Breached Representation which will, or is reasonably
likely to, be made inaccurate or be breached and (iii) a good faith estimate of
the amount and composition of the Losses reasonably likely to arise out of,
result from, or relate to such Breached Representation. The receipt or
acceptance by the Purchasers of a Company Update Letter shall not constitute a
waiver of any inaccuracy or breach of any representation or warranty made or to
be made by the Company or prevent the Purchasers from exercising their rights to
terminate this Agreement pursuant to Section 9.1(a)(iv)(A) or (v) at any time
prior to the Closing. Further, the receipt or acceptance by the Purchasers of a
Company Update Letter and the subsequent occurrence of a Closing shall not
constitute a waiver of any Losses which arise out of, result from, or relate to
any fact, circumstance or matter in existence, or event which had occurred, on
or prior to the date hereof and which would have been required to be set forth
or described in response to a representation or warranty made by the Company
hereunder or which is necessary to correct or make the representations and
warranties contained herein correct and complete as of the date hereof.
Notwithstanding anything to the contrary contained in this Section 8.10, in the
event that at any time after the date hereof the Board's good faith estimate of
the amount and composition of the Losses reasonably likely to arise out of,
result from, or relate to Breached Representations equals or exceeds $3,500,000,
the Company shall promptly prepare and deliver a Company Update Letter to the
Purchasers.
8.11 PUBLIC ANNOUNCEMENTS.
From the date hereof until the Closing Date, the Purchasers, on the one
hand, and the Company, on the other hand, will consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the transactions
contemplated by this Agreement and shall not issue any such press release or
make any such public statement without the prior consent of the other party
(which consent shall not be unreasonably withheld), except to the extent
expressly required by Applicable Law.
8.12 NASD.
Prior to the Closing, the Company will not engage in any discussions or
otherwise communicate in writing or orally with the NASD or any of its agents or
representatives with respect to the transactions contemplated by the Documents
without the prior written consent of the Requisite Purchasers. The Purchasers
agree to cooperate and assist the Company in connection with the foregoing.
37
ARTICLE IX
TERMINATION
9.1 TERMINATION.
(a) Except as otherwise provided in Section 9.1(b), this
Agreement may be terminated at any time prior to the Closing Date as follows:
(i) By mutual written consent of the Requisite
Purchasers and the Company.
(ii) By the Requisite Purchasers (A) if the
preliminary Proxy Statement shall not have been filed with the
Commission on or before the 30th day after the date hereof and the
Stockholders Meeting shall not have been held by the 90th day
immediately following the date hereof or (B) if the preliminary Proxy
Statement shall have been filed with the Commission on or before the
30th day after the date hereof and the Stockholders Meeting shall not
have been held by the 120th day immediately following the date hereof.
(iii) By either the Requisite Purchasers or the
Company if any Governmental Authority shall have issued an Order or
taken any other action permanently enjoining, restraining or otherwise
prohibiting the issuance of the Series A Preferred Stock and such Order
or other action shall have become final and nonappealable.
(iv) By the Requisite Purchasers, if (A) any of the
representations and warranties of the Company contained in this
Agreement shall fail to be true and correct in any material respect as
of the date hereof or (B) the Company shall have breached or failed to
comply in any material respect with any of its obligations under this
Agreement, and such failure to be true and correct, breach or failure
shall continue unremedied, if able to be remedied, for 15 days after the
Company has received written notice from the Requisite Purchasers of the
occurrence of such failure to be true and correct, breach or failure;
provided, however, that in remedying any such failure to be true and
correct, breach or failure the Company shall not have spent any money,
incurred any liabilities or undertaken any obligations that individually
or together with the breach or failure so remedied, would itself
constitute a material breach of or failure to perform any
representation, warranty or covenant of this Agreement.
(v) By the Requisite Investors if the aggregate
Losses attributable to any Breached Representations could reasonably be
expected to exceed $3,500,000.
(vi) By the Requisite Purchasers if there shall have
occurred any event or occurrence which could reasonably be expected to
have a Material Adverse Effect on the Company since the date of this
Agreement.
38
(vii) By the Company if prior to the Closing Date, (A)
the Company shall have received an Acquisition Proposal, (B) in
connection with such Acquisition Proposal, the Board shall have
concluded in good faith after consultation with outside counsel that it
is required to terminate this Agreement to prevent the Board from
breaching its fiduciary duties to its stockholders under Applicable Law,
(C) the Company has complied and is in compliance with Section 8.3, and
(D) prior to being entitled to terminate this ----------- Agreement
under this Section 9.1(a), the Company shall have provided to the
Purchasers at least five (5) -------------- Business Days prior written
notice (which notice shall set forth the terms and conditions of such
Acquisition Proposal and identify the applicable Third Party), the
Company shall have provided the Purchasers during such five (5) Business
Day period with the opportunity to make a counter-offer prior to any
commitment by the Company with respect to such Acquisition Proposal.
(b) In the event that on or before the date that is 120 days
after the date of this Agreement (the "Outside Date") (i) the Company has not
held the Stockholders Meeting, (ii) the Stockholders Meeting has been held but
the Company does not obtain the Stockholder Approval or (iii) the Company elects
to terminate this Agreement pursuant to Section 9.1(a)(vii) above, then, as of
the Business Day immediately following the Outside Date or such earlier date on
which the Stockholders Meeting was held under clause (ii) or the Company elected
to terminate this Agreement under clause (iii), this Agreement shall terminate
as to all of the Purchasers, other than the JPMP Entities and BBI, and such
other Purchasers shall not have any further right under this Agreement or
otherwise to purchase shares of Series A Preferred Stock or Warrants. This
Agreement shall remain in full force and effect thereafter solely for the
purpose of giving effect to the options granted to the JPMP Entities and BBI
pursuant to the Option Agreement. A closing under the Option Agreement shall be
deemed the Closing hereunder for all purposes of this Agreement. Notwithstanding
anything to the contrary contained herein, the Company may terminate this
Agreement at any time after the Expiration Date (as such term is defined in the
Option Agreement).
9.2 EFFECT OF TERMINATION.
In the event of a termination of this Agreement by either the Company or
the Requisite Purchasers as provided in Section 9.1(a), this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of the Purchasers or the Company or their respective officers, directors or
Affiliates (other than as expressly set forth in Section 9.1(b)), provided that
Section 9.1, this Section 9.2 and Article X shall survive any such termination;
provided further, that nothing herein shall relieve any party for liability for
any breach hereof.
39
ARTICLE X
MISCELLANEOUS
10.1 FEES.
(a) At the Closing, the Company will pay, and save the
Purchasers harmless against all Liability for the payment of, (i) all costs and
other expenses incurred from time to time by the Company in connection with the
Company's performance of and compliance with all agreements and conditions
contained herein on its part to be performed or complied with (including the
reasonable costs and expenses of counsel incurred in connection with the review
and preparation of the Documents), (ii) the actual and reasonable out-of-pocket
costs and expenses incurred by the Purchasers in connection with the
transactions contemplated by this Agreement and by the Documents, including,
without limitation, all fees, expenses and charges of O'Melveny & Xxxxx LLP
(counsel to the Purchasers), accountants and other advisors to the Purchasers,
(iii) the reasonable costs and expenses (including fees, expenses and charges of
counsel) incurred by the Purchasers in connection with any amendment or waiver
of, or enforcement of, any Document relating to the transactions contemplated
hereby and (iv) the reasonable costs and expenses incurred by each Purchaser in
connection with any filing with any Governmental Authority with respect to its
investment in the Company or in any other filing with any Governmental Authority
with respect to the Company that mentions such Purchaser; provided, however,
that the Company's obligation under clauses (ii),(iii) and (iv) of this Section
10.1 shall not exceed, in the aggregate, $150,000 (the "Fee Cap") without the
prior written consent of the Company; provided further, however, that if the
Closing does not occur by reason of (x) the Company's failure to hold the
Stockholders Meeting as described in Section 9.1(a)(ii), or (y) the Company's
acceptance of an Acquisition Proposal, then in each case, the Company shall be
obligated to pay the amounts provided under clause (ii) of this Section 10.1(a),
subject to the Fee Cap.
(b) The Company further agrees that it will pay, and will
save the Purchasers harmless from, any and all Liability with respect to any
stamp or similar taxes imposed by the government of the United States or any
state or political subdivision thereof which may be determined to be payable in
connection with the execution and delivery and performance of the Documents or
any modification, amendment or alteration of the terms or provisions of the
Documents, and that it will similarly pay and hold the Purchasers harmless from
all issue taxes imposed by the government of the United States or any state or
political subdivision thereof in respect of the issuance of the Series A
Preferred Stock, the Warrants, and, when and if issued, the Reserved Common
Shares.
(c) If, after execution of this Agreement, the JPMP Entities
or BBI (the "Breaching Purchaser") commits a breach of the Purchase Agreement by
failing to close the transactions contemplated hereby for any reason other than
(i) the Company's failure to satisfy any of the conditions set forth in Section
5.1 or (ii) the failure of the Company's conditions in Section 5.2 to have been
satisfied, then the Breaching Purchaser shall reimburse the Company for the
actual, out-of-pocket costs and expenses incurred by the Company prior to the
date of such breach in connection with the transactions
40
contemplated by this Agreement and by the Documents (including, without
limitation, reasonable fees and expenses of counsel, accountants, and printers,
in connection with the preparation of this Agreement, the Documents and the
consummation of the transactions contemplated hereby and thereby); provided,
however, that the reimbursement obligations of the Breaching Purchaser under
this Section 10.1(c) shall not exceed in the aggregate $150,000; provided,
further, however, that if the Closing occurs and either the JPMP Entities or BBI
purchases at least that number of shares of Series A Preferred Stock set forth
on Schedule I opposite the name of such Person(s), then the Company shall not be
entitled to reimbursement pursuant to this Section 10.1(c) and the Breaching
Purchaser will have no obligation to the Company for the reimbursement of costs
and expenses under this Section 10.1(c), provided that the Company will be
entitled to exercise its rights under Section 6.2. The JPMP Entities or BBI, as
applicable, shall pay amounts payable under this Section 10.1(c), if any, within
five (5) Business Days after receipt of reasonably detailed invoices for such
fees.
(d) The Company shall pay amounts payable under Section
10.1(a)(ii), (iii) and (iv) within five (5) Business Days after receipt of
reasonably detailed invoices for such fees.
10.2 FURTHER ASSURANCES.
The Company and the Purchasers shall duly execute and deliver, or cause
to be duly executed and delivered, at its own cost and expense, such further
instruments and documents and to take all such action, in each case as may be
reasonably necessary or proper to carry out the provisions and purposes of the
Agreement, the other Documents, and to comply with Applicable Law, including,
but not limited to, all information necessary to effect any securities,
governmental, bank regulatory or other governmental filings.
10.3 REMEDIES.
In case any one or more of the representations, warranties, covenants
and/or agreements set forth in this Agreement shall have been breached by a
party hereto, any other party may proceed to protect and enforce its rights
either by suit in equity and/or by action at law, including an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Agreement.
10.4 SUCCESSORS AND ASSIGNS.
This Agreement shall bind and inure to the benefit of the Company and
the Purchasers and their respective successors, assigns, heirs and personal
representatives. Upon any transfer of any Applicable Securities, the transferee
shall be bound by, and entitled to the benefits of, this Agreement with respect
to such transferred Securities in the same manner as the transferring Purchaser.
41
10.5 ENTIRE AGREEMENT.
This Agreement and the other writings referred to herein or delivered
pursuant hereto which form a part hereof contain the entire agreement among the
parties with respect to the subject matter hereof and thereof and supersede all
prior and contemporaneous arrangements or understandings with respect thereto,
including, without limitation, the Summary of Principal Terms dated as of April
9, 2003 among the Company, X.X. Xxxxxx Partners, LLC and Xxxxx Bros. Advisors
LLC.
10.6 NOTICES.
All notices and other communications delivered hereunder (whether or not
required to be delivered hereunder) shall be deemed to be sufficient and duly
given if contained in a written instrument (a) personally delivered, (b) sent by
telecopier, (c) sent by nationally-recognized overnight courier guaranteeing
next Business Day delivery or (d) sent by first class registered or certified
mail, postage prepaid, return receipt requested, in each case addressed as
follows:
if to the Company, to:
Seattle Genetics, Inc.
00000 00xx Xxxxx X.X.
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Chief Executive Officer
with a copy to:
Seattle Genetics, Inc.
00000 00xx Xxxxx X.X.
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: General Counsel
With an additional copy to:
Venture Law Group
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
if to any Purchaser, to him, her or it at the address set forth
on Schedule I attached hereto;
42
or to such other address as the party to whom such notice or other communication
is to be given may have furnished to each other party in writing in accordance
herewith. Any such notice or communication shall be deemed to have been received
(i) when delivered, if personally delivered, (ii) when sent, if sent by telecopy
on a Business Day (or, if not sent on a Business Day, on the next Business Day
after the date sent by telecopy), (iii) on the next Business Day after dispatch,
if sent by nationally recognized, overnight courier guaranteeing next Business
Day delivery, and (iv) on the fifth Business Day following the date on which the
piece of mail containing such communication is posted, if sent by mail.
10.7 AMENDMENTS, MODIFICATIONS AND WAIVERS.
The terms and provisions of this Agreement may not be modified or
amended, nor may any of the provisions hereof be waived, temporarily or
permanently, except pursuant to a written instrument executed by the Company and
Requisite Purchasers; provided however that any such amendment, modification or
waiver that would adversely affect the rights hereunder of any Purchaser, in its
capacity as a Purchaser, without similarly affecting the rights hereunder of all
Purchasers, in their capacities as Purchasers, shall not be effective as to such
Purchaser without its prior written consent. No waiver by any party shall
operate or be construed as a waiver of any subsequent breach by any other party.
10.8 GOVERNING LAW; WAIVER OF JURY TRIAL.
All questions concerning the construction, interpretation and validity
of this Agreement shall be governed by and construed and enforced in accordance
with the domestic laws of the State of New York, without giving effect to any
choice or conflict of law provision or rule (whether in 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 will control the interpretation and
construction of this Agreement, even if under such jurisdiction's choice of law
or conflict of law analysis, the substantive law of some other jurisdiction
would ordinarily apply. Notwithstanding the foregoing provisions of this Section
10.8, those provisions of this Agreement that relate to the internal governance
of the Company and are required by Delaware corporate law to be governed by
such, shall be governed by and construed and enforced in accordance with the
internal laws of the State of Delaware.
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO
ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS
RELATED HERETO.
43
10.9 NO THIRD PARTY RELIANCE.
Anything contained herein to the contrary notwithstanding, the
representations and warranties of the Company contained in this Agreement (a)
are being given by the Company as an inducement to the Purchasers to enter into
this Agreement and the other Documents (and the Company acknowledges that the
Purchasers have expressly relied thereon) and (b) are solely for the benefit of
the Purchasers. Accordingly, no third party (including, without limitation, any
holder of capital stock of the Company) or anyone acting on behalf of any
thereof other than the Purchasers, and each of them, shall be a third party or
other beneficiary of such representations and warranties and no such third party
shall have any rights of contribution against the Purchasers or the Company with
respect to such representations or warranties or any matter subject to or
resulting in indemnification under this Agreement or otherwise.
10.10 SUBMISSION TO JURISDICTION.
Any legal action or proceeding with respect to this Agreement or the
other Documents may be brought in the courts of the State of New York or
Delaware and the United States of America for the District of New York or
Delaware and, by execution and delivery of this Agreement, the Company hereby
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The Company hereby
irrevocably waives, in connection with any such action or proceeding, any
objection, including, without limitation, any objection to the venue or based on
the grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions. The
Company hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to it at its address
as set forth herein. Nothing herein shall affect the right of the Purchasers to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Company in any other jurisdiction.
10.11 SEVERABILITY.
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not be invalid,
prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
44
10.12 INDEPENDENCE OF AGREEMENTS, COVENANTS, REPRESENTATIONS AND WARRANTIES.
All agreements and covenants hereunder shall be given independent effect
so that if a certain action or condition constitutes a default under a certain
agreement or covenant, the fact that such action or condition is permitted by
another agreement or covenant shall not affect the occurrence of such default,
unless expressly permitted under an exception to such initial covenant. In
addition, all representations and warranties hereunder shall be given
independent effect so that if a particular representation or warranty proves to
be incorrect or is breached, the fact that another representation or warranty
concerning the same or similar subject matter is correct or is not breached will
not affect the incorrectness of or a breach of a representation and warranty
hereunder.
10.13 COUNTERPARTS; FACSIMILE SIGNATURES.
This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement. Facsimile
counterpart signatures to this Agreement shall be acceptable and binding.
* * * *
45
IN WITNESS WHEREOF, the parties hereto have executed this Securities
Purchase Agreement as of the date first above written.
COMPANY:
SEATTLE GENETICS, INC.
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: President and CEO
PURCHASERS:
X.X. XXXXXX PARTNERS (BHCA), L.P.
By: JPMP Master Fund Manager, L.P.,
its general partner
By: JPMP Capital Corp.,
its general partner
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: Managing Director
X.X. XXXXXX PARTNERS GLOBAL
INVESTORS, L.P.
By: JPMP Global Investors, L.P.,
its general partner
By: JPMP Capital Corp.,
its general partner
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: Managing Director
X.X. XXXXXX PARTNERS GLOBAL
INVESTORS (CAYMAN), L.P.
By: JPMP Global Investors, L.P.,
its general partner
By: JPMP Capital Corp.,
its general partner
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: Managing Director
X.X. XXXXXX PARTNERS GLOBAL
INVESTORS A, L.P.
By: JPMP Global Investors, L.P.,
its general partner
By: JPMP Capital Corp.,
its general partner
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: Managing Director
X.X. XXXXXX PARTNERS GLOBAL
INVESTORS (CAYMAN) II, L.P.
By: JPMP Global Investors, L.P.,
its general partner
By: JPMP Capital Corp.,
its general partner
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: Managing Director
-2-
XXXXX/TISCH INVESTMENTS, L.P.
By: Xxxxx/Xxxxx Capital, L.P.,
its general partner
By: Xxxxx/Tisch Capital (GP), LLC,
its general partner
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
XXXXX BROS. INVESTMENTS, L.P.
By: Xxxxx Bros. Capital, L.P.,
its general partner
By: Xxxxx Bros. Capital (GP), LLC,
its general partner
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
XXXXX BROS. INVESTMENTS II, L.P.
By: Xxxxx Bros. Capital, L.P.,
its general partner
By: Xxxxx Bros. Capital (GP), LLC,
its general partner
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
-3-
XXXXX BIOTECH FUND I, L.P.
By: Xxxxx Biotech Capital, L.P.,
its general partner
By: Xxxxx Biotech Capital (GP), LLC,
its general partner
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
XXXXX BIOTECH FUND II, L.P.
By: Xxxxx Biotech Capital II, L.P.,
its general partner
By: Xxxxx Biotech Capital II (GP), LLC,
is general partner
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
XXXXX BIOTECH FUND II (Z), L.P.
By: Xxxxx Biotech Capital II, L.P.,
its general partner
By: Xxxxx Biotech Capital II (GP), LLC,
is general partner
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
-4-
BAVP, L.P.
By: BA Venture Partners VI, LLC,
its general partner
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: Managing Director
DELPHI VENTURES VI, L.P.
By: Delphi Management Partners VI,
L.L.C., its general partner
By: /s/ Xxxxx Xxxxxxxxxxx
Name: Xxxxx Xxxxxxxxxxx
Title: Managing Member
DELPHI BIOINVESTMENTS VI, L.P.
By: Delphi Management Partners VI,
L.L.C., its general partner
By: /s/ Xxxxx Xxxxxxxxxxx
Name: Xxxxx Xxxxxxxxxxx
Title: Managing Member
-5-
SCHEDULE I
NUMBER OF PREFERRED NUMBER OF AGGREGATE
NAME AND ADDRESS SHARES WARRANTS PRICE OF SHARES
--------------------------------------------------------------------------------------------------------
X.X. Xxxxxx Partners (BHCA), L.P. 512,031 640,039 $ 12,800,775.00
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Official Notices Clerk
(fbo Xxxxxxxx Xxxxxxxx)
with a copy to:
O'Melveny & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxx, Esq.
--------------------------------------------------------------------------------------------------------
X.X. Xxxxxx Partners Global Investors, L.P. 81,137 101,421 $ 2,028,425.00
c/o JPMP Global Investors, L.P.
c/o X.X. Xxxxxx Partners, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Official Notices Clerk
(fbo Xxxxxxxx Xxxxxxxx)
with a copy to:
O'Melveny & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxx, Esq.
--------------------------------------------------------------------------------------------------------
NUMBER OF PREFERRED NUMBER OF AGGREGATE
NAME AND ADDRESS SHARES WARRANTS PRICE OF SHARES
--------------------------------------------------------------------------------------------------------
X.X. Xxxxxx Partners Global Investors
(Cayman), L.P. 41,182 51,478 $ 1,029,550.00
c/o JPMP Global Investors, L.P.
c/o X.X. Xxxxxx Partners, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Official Notices Clerk
(fbo Xxxxxxxx Xxxxxxxx)
with a copy to:
O'Melveny & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxx, Esq.
--------------------------------------------------------------------------------------------------------
X.X. Xxxxxx Partners Global Investors A, L.P. 11,061 13,826 $ 276,525.00
c/o JPMP Global Investors, L.P.
c/o X.X. Xxxxxx Partners, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Official Notices Clerk
(fbo Xxxxxxxx Xxxxxxxx)
with a copy to:
O'Melveny & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxx, Esq.
--------------------------------------------------------------------------------------------------------
-2-
NUMBER OF PREFERRED NUMBER OF AGGREGATE
NAME AND ADDRESS SHARES WARRANTS PRICE OF SHARES
--------------------------------------------------------------------------------------------------------
X.X. Xxxxxx Partners Global Investors
(Cayman) II, L.P. 4,589 5,736 $ 114,725.00
c/o JPMP Global Investors, L.P.
c/o X.X. Xxxxxx Partners, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Official Notices Clerk
(fbo Xxxxxxxx Xxxxxxxx)
with a copy to:
O'Melveny & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxx, Esq.
--------------------------------------------------------------------------------------------------------
Xxxxx/Tisch Investments, L.P. 39,650 49,563 $ 991,250
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy to:
Xxxxx Brothers Investments
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx
--------------------------------------------------------------------------------------------------------
Xxxxx Bros. Investments, L.P. 26,780 33,475 $ 669,500
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy to:
Xxxxx Brothers Investments
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx
--------------------------------------------------------------------------------------------------------
-3-
NUMBER OF PREFERRED NUMBER OF AGGREGATE
NAME AND ADDRESS SHARES WARRANTS PRICE OF SHARES
--------------------------------------------------------------------------------------------------------
Xxxxx Bros. Investments II, L.P. 27,625 34,531 $ 690,625
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy to:
Xxxxx Brothers Investments
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx
--------------------------------------------------------------------------------------------------------
Xxxxx Biotech Fund I, L.P. 271,830 339,788 $ 6,795,750
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy to:
Xxxxx Brothers Investments
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx
--------------------------------------------------------------------------------------------------------
Xxxxx Biotech Fund II, L.P. 249,730 312,162 $ 6,243,250
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy to:
Xxxxx Brothers Investments
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx
--------------------------------------------------------------------------------------------------------
-4-
NUMBER OF PREFERRED NUMBER OF AGGREGATE
NAME AND ADDRESS SHARES WARRANTS PRICE OF SHARES
--------------------------------------------------------------------------------------------------------
Xxxxx Biotech Fund II (Z), L.P. 34,385 42,981 $ 859,625
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy to:
Xxxxx Brothers Investments
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx
--------------------------------------------------------------------------------------------------------
BAVP, L.P. 100,000 125,000 $ 2,500,000
c/o BA Venture Partners
000 Xxxxx Xxxx
Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxx
--------------------------------------------------------------------------------------------------------
Delphi Ventures VI, L.P./1/ 200,000 250,000 $ 5,000,000
c/o Delphi Ventures
0000 Xxxx Xxxx Xx.
Xxxx. 0, Xxx. 000
Xxxxx Xxxx, XX 00000
(000) 000-0000
(000) 000-0000 fax
Attention: Xxxxx Xxxxxxxxxxx
--------------------------------------------------------------------------------------------------------
Delphi BioInvestments VI, L.P.
c/o Delphi Ventures
0000 Xxxx Xxxx Xx.
Xxxx. 0, Xxx. 000
Xxxxx Xxxx, XX 00000
(000) 000-0000
(000) 000-0000 fax
Attention: Xxxxx Xxxxxxxxxxx
--------------------------------------------------------------------------------------------------------
----------
/1/ Prior to Closing, a portion of the shares of Preferred Stock and
Warrants being purchased by Delphi Ventures VI, L.P. will be allocated
to Delphi BioInvestments VI, L.P.
-5-
NUMBER OF PREFERRED NUMBER OF AGGREGATE
NAME AND ADDRESS SHARES WARRANTS PRICE OF SHARES
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
Total 1,600,000 2,000,000 $ 40,000,000
--------------------------------------------------------------------------------------------------------
-6-
