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EXHIBIT 10.4
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
MYCO PHARMACEUTICALS INC.
One Xxxxxxx Square
Building 300 - Third Floor
Xxxxxxxxx, XX 00000
July 27, 1994
To the Persons listed on Exhibit 1.01 hereto
and Certain Other Stockholders of
Myco Pharmaceuticals Inc.
Re: Series C Preferred Stock
Ladies and Gentlemen:
Myco Pharmaceuticals Inc. (the "Company"), a Delaware corporation,
agrees with each of you as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF SHARES
1.01. THE SERIES C PREFERRED STOCK. The Company has authorized the
issuance, sale and exchange of up to an aggregate of 767,739 shares of its
authorized but unissued Series C Convertible Preferred Stock, $.01 par value per
share (the "Series C Preferred Stock") at a purchase price of $3.00 per share to
the persons (collectively, the "Purchasers" and, individually, a "Purchaser")
and in the respective amounts set forth in Exhibit 1.01 hereto. The designation,
rights, preferences and other terms and provisions of the Series C Preferred
Stock are set forth in Exhibit A hereto.
1.02. THE CONVERSION SHARES. The Company has authorized and has
reserved and covenants to continue to reserve, free of preemptive rights and
other similar contractual rights of shareholders, a sufficient number of its
authorized but unissued shares of Common Stock to satisfy the rights of
conversion of the holders of the Series C Preferred Stock. Any shares of Common
Stock issuable upon conversion of the Series C Preferred Stock (and such shares
when issued) are herein referred to as the "Conversion Shares". The shares of
Series C Preferred Stock to be issued pursuant to this Agreement (the "Series C
Preferred Shares") and Conversion Shares are sometimes collectively referred to
as the "Shares".
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1.03. PURCHASE PRICE AND CLOSING. The Company agrees to issue, sell and
exchange to the Purchasers and, in consideration of and in express reliance upon
the representations, warranties, covenants, terms and conditions of this
Agreement, the Purchasers, severally but not jointly, agree to purchase, that
number of Series C Preferred Shares set forth opposite their respective names in
Exhibit 1.01. The aggregate purchase price of the Series C Preferred Shares
being acquired by each Purchaser is set forth opposite such Purchaser's name in
Exhibit 1.01. The closing of the purchase, sale and exchange of the Series C
Preferred Stock to be acquired by the Purchasers from the Company under this
Agreement shall take place at the offices of Messrs. Xxxxx, Xxxxxxx & Xxxxxxxxx,
00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx at 10:00 a.m. on July 27, 1994, or at
such time and date thereafter as the Purchasers and the Company may agree (the
"Closing"). At the Closing, the Company will deliver to each Purchaser
certificates for the number of Series C Preferred Shares set forth opposite its
name in Exhibit 1.01 registered in such Purchaser's name (or its nominee),
against delivery of a check or checks payable to the order of the Company, or a
transfer of funds to the account of the Company by wire transfer, representing
the aggregate purchase price set forth opposite each such Purchaser's name on
Exhibit 1.01, as payment in full of the purchase price of the Shares.
1.04. USE OF PROCEEDS. The Company shall use the cash proceeds from the
sale of the Series C Preferred Stock for working capital and general corporate
purposes.
1.05. REPRESENTATIONS BY THE PURCHASERS.
(a) INVESTMENT REPRESENTATIONS. Each of the
Purchasers represents severally, but not jointly, that it is its
present intention to acquire the Shares to be acquired by it for its
own account (and it will be the sole beneficial owner thereof) and that
the Shares are being and will be acquired by it for the purpose of
investment and not with a view to distribution or resale thereof except
pursuant to registration under the Securities Act or exemption
therefrom. The acquisition by each Purchaser of the Shares acquired by
it shall constitute a confirmation of this representation by each such
Purchaser. Each Purchaser is purchasing with its own funds and not with
the funds of any pension or employee benefit plan. Each of the
Purchasers further represents that it understands and agrees that,
until registered under the Securities Act or transferred pursuant to
the provisions of Rule 144 or Rule 144A as promulgated by the
Commission, all certificates evidencing any of the Shares, whether upon
initial issuance or upon any transfer thereof, shall bear a legend,
prominently stamped or printed thereon, reading substantially as
follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 or applicable
state securities laws. These securities have been acquired for
investment and not with a view to distribution or resale.
These securities may not be offered for sale, sold, delivered
after sale, transferred, pledged or hypothecated in the
absence of an effective registration statement covering such
shares under the Act and any
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applicable state securities laws, or the availability, in the
opinion of counsel satisfactory to the Company, of an
exemption from registration thereunder."
(b) SOPHISTICATION AND KNOWLEDGE. Each Purchaser or
his representative has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks
of the purchase of the Shares. Each Purchaser can bear the economic
risks of this investment and can afford a complete loss of his
investment.
(c) TRANSFER RESTRICTIONS IMPOSED BY SECURITIES LAWS.
Each Purchaser understands that: no state or governmental authority has
made any finding or determination relating to the fairness of the terms
of the investment in the Company proposed hereunder and the Shares have
not been registered under the Securities Act and applicable state
securities laws, and, therefore, cannot be resold unless they are
subsequently registered under the Securities Act and applicable state
securities laws or unless an exemption from such registration is
available; each Purchaser is and must be purchasing the Shares for
investment for the account of such Purchaser and not for the account or
benefit of others, and not with any present view toward resale or other
distribution thereof. Each Purchaser agrees not to resell or otherwise
dispose of all or any part of the Shares purchased by him, except as
permitted by law, including, without limitation, any regulations under
the Securities Act and applicable state securities laws; the Company
does not have any present intention and is under no obligation to
register the Shares under the Securities Act and applicable state
securities laws, except as provided in Article V hereof; and Rule 144
or Rule 144A under the Securities Act may not be available as a basis
for exemption from registration of the Shares thereunder.
(d) LACK OF LIQUIDITY. Each Purchaser has no present
need for liquidity in connection with his purchase of the Shares.
(e) SUITABILITY AND INVESTMENT OBJECTIVES. The
purchase of the Shares by each Purchaser is consistent with the general
investment objectives of the Purchaser. The Purchaser understands that
the purchase of the Shares involves a high degree of risk in view of
the fact that, among other things, the Company is a development stage
enterprise, and there may never be an established market for the
Company's capital stock.
(f) ACCREDITED INVESTORS STATUS. Each Purchaser is an
"Accredited Investor" as that term is defined in Rule 501 of Regulation
D promulgated under the Securities Act.
(g) ACCESS TO INFORMATION. Each Purchaser has had the
opportunity to ask questions and receive answers from the officers and
other employees of the Company regarding the terms and conditions of
this Agreement, the transactions
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contemplated hereby (including, without limitation, its acquisition of
Shares), as well as the affairs of the Company and related matters, and
it has obtained such information and has had the opportunity to obtain
additional information necessary to verify the accuracy of all
information so obtained.
(h) CORPORATE AND PARTNERSHIP REPRESENTATION. If a
Purchaser is a corporation, partnership, trust or other entity, it
represents and warrants that (i) the individual executing this
Agreement on its behalf has been duly authorized to execute and deliver
this Agreement; (ii) the signature of such individual is binding upon
such partnership, corporation, trust or other entity; (iii) the
Purchaser is duly organized, validly existing and in good standing in
its jurisdiction of incorporation or organization and has all requisite
power and authority to execute and deliver this Agreement; and (iv) the
execution and delivery of this Agreement and the purchase of the Shares
hereunder will not result in the violation of, constitute a breach or
default under, or conflict with, any term or provision of the charter,
bylaws or other governing document of the Purchaser or, to its
knowledge, material breach or default under any material agreement,
judgment, decree, order, statute or regulation by which it is bound or
applicable to it.
(i) ADDITIONAL REPRESENTATIONS. Each Purchaser
understands that the Company is a research and development stage
enterprise with limited resources. The Company is engaged and intends
to engage in research activities which will require substantial funds
which may not be available. For this and other reasons, the Company's
prospects are highly speculative. Accordingly, each Purchaser
acknowledges that he, she or it may lose her, his or its entire
investment in the Company. Each of the Bessemer Purchasers is relying
on the information provided by Bessemer Venture Partners L.P. with
respect to its investment in the Company. Bessemer Venture Partners
L.P. represents that it has provided to each of such purchasers access
to all of the information which it has regarding the Company.
ARTICLE II
CONDITIONS TO PURCHASERS' OBLIGATION
The obligation of each Purchaser to purchase and pay for the Series C
Preferred Shares to be purchased by it at the Closing is subject to the
following conditions (all of which shall be deemed satisfied or waived by the
Purchasers at or prior to the Closing in the event all of the transactions
contemplated to be effected at the Closing are consummated and all or any of
which in any case may be waived by the Purchasers prior to a Closing):
2.01. REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Company set forth in Article III hereof shall be true,
accurate and correct on the date of the Closing.
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2.02. DOCUMENTATION AT CLOSING. The Purchasers shall have received
prior to or at the Closing all of the following materials, each in form and
substance reasonably satisfactory to the Purchasers and their special counsel,
and each of the following events shall have occurred, or each of the following
documents shall have been delivered, prior to or simultaneous with the Closing:
(a) A copy of the Restated Certificate of
Incorporation of the Company, as amended or restated to date, together
with such evidence as is satisfactory to the Purchasers of the filing
thereof; a copy of the resolutions of the Board of Directors providing
for the approval of the Restated Certificate of Incorporation of the
Company in the form attached as Exhibit A, the approval of this
Agreement, the issuance of the Series C Preferred Shares and all other
agreements or matters contemplated hereby or executed in connection
herewith; a copy of a consent of stockholders of the Company approving
the Restated Certificate of Incorporation of the Company; and a copy of
the By-laws of the Company, all of which have been certified by the
Secretary of the Company to be true, complete and correct in every
particular; and certified copies of all documents evidencing other
necessary corporate or other action and governmental approvals, if any,
required to be obtained at or prior to the Closing with respect to this
Agreement and the issuance of the Series C Preferred Shares.
(b) The favorable opinion of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., counsel for the Company, in the form
set forth in Exhibit 2.02(b).
(c) A certificate of the Secretary or an Assistant
Secretary of the Company which shall certify the names of the officers
of the Company authorized to sign this Agreement, the certificates for
the Series C Preferred Stock and the other documents, instruments or
certificates to be delivered pursuant to this Agreement by the Company
or any of its officers, together with the true signatures of such
officers.
(d) A certificate of the President and the Treasurer
of the Company stating that the representations and warranties of the
Company contained in Article III hereof are true and correct as of the
time of the Closing and that all conditions required to be performed by
the Company prior to or at the Closing have been performed as of the
Closing.
(e) The Company shall have obtained any consents or
waivers necessary to be obtained at or prior to the Closing to execute
and deliver this Agreement, the Series C Preferred Stock and the other
agreements and instruments executed and delivered by the Company in
connection herewith and to carry out the transactions contemplated
hereby and thereby, and such consents and waivers shall be in full
force and effect at the Closing. All corporate and other action and
governmental filings necessary to effectuate the terms of this
Agreement, the Series C Preferred Stock and the other agreements and
instruments executed and delivered by the Company in connection
herewith shall have been made or taken.
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(f) The Restated Certificate of Incorporation of the
Company shall have been amended and restated in the form set forth in
Exhibit A attached hereto.
(g) A Certificate of the Secretary of State of the
State of Delaware as to the due incorporation and good standing of the
Company and a certificate of the Secretary of State of each
jurisdiction in which the Company is required to qualify to do business
as a foreign corporation shall have been provided to the Purchasers and
their special counsel.
(h) Payment for the costs, attorneys' fees, expenses,
taxes and filing fees identified in Section 8.04.
(i) The members of the Board of Directors of the
Company (the "Board") immediately following the Closing shall consist
of five (5) members, which members shall include Xxxx X. Xxxxxxxx,
M.D., Xxxxxx Xxxxxxxxxx, Ph.D., Xxxxxxxxxxx Xxxxxxxx, Xxxxx Xxxxxxxxx,
Ph.D. (for so long as he is an officer, employee or otherwise
materially involved with the Company, as determined by the Board of
Directors, including the Investor Directors), and Xxxxx X. Xxxxx.
(j) This Agreement shall have been executed by
Purchasers that are obligated to purchase an aggregate of at least
$2,303,217 of Series C Preferred Stock at the Closing in the amounts
set forth in Exhibit 1.01 and such Purchasers shall have delivered to
the Company the full purchase price for the Series C Preferred Shares
being purchased.
(k) A Scientific Advisory Board of the Company
composed of individuals acceptable to the Purchasers in their sole
discretion shall continue to be constituted.
(l) At the Closing, each Purchaser (other than the
Bessemer Purchasers and the Company Friends) shall have simultaneously
with the other Purchasers (other than the Bessemer Purchasers and the
Company Friends) purchased the Series C Preferred Shares that such
Purchaser is obligated to purchase hereunder and shall have paid the
full purchase price therefor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as follows:
3.01. ORGANIZATION AND STANDING OF THE COMPANY. The Company is a duly
organized and validly existing corporation in good standing under the laws of
the State of Delaware and has all requisite corporate power and authority for
the ownership and operation
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of its properties and for the carrying on of its business as now conducted and
as now proposed to be conducted and to execute and deliver this Agreement and
any other agreement to which it is a party hereunder, to issue, sell and deliver
the Series C Preferred Shares, to issue and deliver the Conversion Shares and to
perform its other obligations pursuant hereto and thereto. The Company is duly
licensed or qualified and in good standing as a foreign corporation authorized
to do business in all jurisdictions wherein the character of the property owned
or leased or the nature of the activities conducted by it makes such licensing
or qualification necessary, except where the failure to be so licensed or
qualified would not have a material adverse effect on the business, operations
or financial condition of the Company.
3.02. CORPORATE ACTION. This Agreement and any other agreement to
which it is a party hereunder have been duly authorized, executed and delivered
by the Company and constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms.
3.03. GOVERNMENTAL APPROVALS. Except for the filing of any notice
prior or subsequent to the Closing that may be required under applicable state
and/or Federal securities laws, and the filing of the Restated Certificate of
Incorporation (which, if required, shall be filed on a timely basis), no
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be necessary
for, or in connection with, the execution and delivery by the Company of this
Agreement, for the offer, issue, sale, execution or delivery of the Series C
Preferred Shares, or for the performance by the Company of its obligations under
this Agreement.
3.04. LITIGATION. There is no litigation or governmental proceeding
or investigation pending or, to the knowledge of the Company, threatened against
the Company affecting any of its properties or assets, or, to the knowledge of
the Company, against any officer, Key Employee or the holder of more than ten
percent (10%) of the capital stock of the Company relating to the Company or its
business, nor, to the knowledge of the Company, has there occurred any event or
does there exist any condition on the basis of which it is reasonably likely
that any such litigation, proceeding or investigation might properly be
instituted. There are no actions or proceedings pending or, to the Company's
knowledge, threatened (or any basis therefor known to the Company) which might
result, either in any case or in the aggregate, in any material adverse change
in the business, operations, Intellectual Property Rights, affairs or financial
condition of the Company or in any of its properties or assets, or which might
call into question the validity of this Agreement, the Series C Preferred Stock,
or any action taken or to be taken pursuant hereto or thereto.
3.05. CERTAIN AGREEMENTS OF OFFICERS AND EMPLOYEES. To the Company's
knowledge, no officer, employee or consultant of the Company is, or is now or is
expected to be, in violation of any material term of any employment contract,
patent disclosure agreement, proprietary information agreement, noncompetition
agreement, nonsolicitation agreement, confidentiality agreement, or any other
similar contract or agreement or any restrictive covenant,
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relating to the right of any such officer, employee, or consultant to be
employed or engaged by the Company because of the nature of the business
conducted or to be conducted by the Company or relating to the use of trade
secrets or proprietary information of others, and to the Company's knowledge and
belief, the continued employment or engagement of the Company's officers,
employees or consultants does not subject the Company or any Purchaser to any
material liability with respect to any of the foregoing matters.
3.06. COMPLIANCE WITH OTHER INSTRUMENTS. The Company is in compliance
in all respects with the terms and provisions of this Agreement and of its
Restated Certificate of Incorporation and By-laws, each as amended and/or
restated to date, and in all respects with the terms and provisions of all
mortgages, indentures, leases, agreements and other instruments by which it is
bound or to which it or any of its properties or assets are subject where
noncompliance would have a material adverse affect on the business, assets,
operations, or financial condition of the Company. The Company is in compliance
in all respects with all judgments, decrees, governmental orders, laws,
statutes, rules or regulations by which it is bound or to which it or any of its
properties or assets are subject where noncompliance with which would have a
material adverse affect on the business, assets, operations, or financial
condition of the Company. Neither the execution, issuance and delivery of this
Agreement or the Series C Preferred Shares, nor the consummation of any
transaction contemplated hereby or thereby, has constituted or resulted in or
will constitute or result in a default or violation of any term or provision of
any of the foregoing documents, instruments, judgments, agreements, decrees,
orders, statutes, rules and regulations where noncompliance with which would
have a material adverse affect on the business, assets, operations, or financial
condition of the Company.
3.07. TITLE TO ASSETS, PATENTS. The Company has good and marketable
title in fee to such of its fixed assets as are real property and purported to
be owned, and good and merchantable title to all of its other assets, tangible
and intangible, free of any mortgages, pledges, charges, liens, security
interests or other encumbrances, except those indicated in Exhibit 3.07. The
Company enjoys peaceful and undisturbed possession under all leases under which
it is operating, and all said leases are valid and subsisting and in full force
and effect. All of such assets and leases are listed in Exhibit 3.07.
The Company owns or has a valid right to use the Intellectual
Property Rights being used to conduct its business (i) as now operated and (ii)
as now proposed to be operated (a complete list of licenses, contract rights and
registrations of such Intellectual Property Rights is attached hereto as Exhibit
3.07); and the conduct of its business as now operated and as now proposed to be
operated does not and is not expected to conflict with or infringe upon the
intellectual property rights of others. Except as set forth on Exhibit 3.07, no
claim is pending or threatened against the Company and/or, to the Company's
knowledge, its officers, employees and consultants to the effect that any such
Intellectual Property Right owned or licensed by the Company, or which the
Company otherwise has the right to use, is invalid or unenforceable by the
Company or subject to any claim of infringement. Except pursuant to the terms of
any licenses specified on Exhibit 3.07, the Company has no obligation to
compensate any Person for
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the use of any such Intellectual Property Rights and the Company has not granted
any Person any license or other right to use any of the Intellectual Property
Rights of the Company or otherwise has licensed from others the intellectual
property rights of third parties, whether requiring the payment of royalties or
not.
The Company has taken reasonable measures in accordance with
industry standards to protect and preserve the security, confidentiality and
value of its Intellectual Property Rights, including its trade secrets and other
confidential information. All employees and consultants of the Company involved
in the design, review, evaluation or development of inventions or Intellectual
Property Rights have executed nondisclosure and assignment of inventions
agreements in the Company's customary form. To the best knowledge of the
Company, all trade secrets and other confidential information of the Company are
presently valid and protectible and are not part of the public domain or
knowledge, nor, to the best knowledge of the Company, have they been used,
divulged or appropriated for the benefit of any person other than the Company or
otherwise to the detriment of the Company. To the best of the Company's
knowledge, no employee or consultant of the Company has used any trade secrets
or other confidential or proprietary information or techniques of any other
person in the course of their work for the Company or is expected to use such
secrets or information or techniques when conducting the business which the
Company presently intends to conduct. The Company is the exclusive owner of all
right, title and interest in its Intellectual Property Rights as purported to be
owned by the Company, and such Intellectual Property Rights are valid and in
full force and effect. Neither the Company, nor any of its employees or
consultants has received notice of, and to the best of the Company's knowledge
after reasonable investigation, there are no claims that the Company's
Intellectual Property Rights or the use or ownership thereof by the Company
infringes, violates or conflicts with any such right of any third party. No
university, hospital, government agency (whether federal or state) or other
organization which sponsored research and development conducted by the Company
has any claim of right to or ownership of or other encumbrance upon the
Intellectual Property Rights of the Company except as disclosed in Exhibit 3.07.
3.08. TRANSACTIONS WITH AFFILIATES. Except as set forth in Exhibit 3.08
there are no loans, leases, royalty agreements or other continuing transactions
between (a) the Company or, to the Company's best knowledge, any of its
customers or suppliers, and (b) any officer, employee, consultant or director of
the Company or any Person owning five percent (5%) or more of the capital stock
of the Company, or to the Company's knowledge, any member of the immediate
family of such officer, employee, consultant, director or stockholder or any
corporation or other entity controlled by such officer, employee, consultant,
director or stockholder, or a member of the immediate family of such officer,
employee, consultant, director or stockholder.
3.09. INDEBTEDNESS; ASSUMPTIONS OR GUARANTIES OF INDEBTEDNESS OF OTHER
PERSONS. The Company has no Indebtedness except as set forth in Exhibit 3.09.
The Company has not assumed, guaranteed, endorsed or otherwise become directly
or contingently liable on (including, without limitation, liability by way of
agreement, contingent or otherwise, to
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purchase, to provide funds for payment, to supply funds to or otherwise invest
in the debtor or otherwise to assure the creditor against loss), any
Indebtedness of any other Person except as set forth in Exhibit 3.09.
3.10. INVESTMENTS IN OTHER PERSONS. Except as set forth in Exhibit
3.10, the Company has not made any loans or advances in excess of $10,000 in the
aggregate to any Person which is outstanding on the date of this Agreement, nor
is it committed or obligated to make any such loan or advance, nor does the
Company own any capital stock, assets comprising the business of, obligations
of, or any interest in, any Person. The Company does not have, and has not since
its incorporation had, any Subsidiaries.
3.11. SECURITIES ACT OF 1933. The Company has complied and will comply
with all applicable Federal and state securities laws in connection with the
offer, issuance and sale of the Series C Preferred Shares hereunder. Neither the
Company nor anyone authorized to act on its behalf has or will sell, offer to
sell or solicit offers to buy the Series C Preferred Shares or similar
securities to, or solicit offers with respect thereto from, or enter into any
preliminary conversations or negotiations relating thereto with, any Person, so
as to bring the issuance and sale of the Series C Preferred Shares under the
registration provisions of the Securities Act and applicable state securities
laws.
3.12. DISCLOSURE. Neither this Agreement, nor any other written
agreement or statement, furnished to any of the Purchasers or their special
counsel by or on behalf of the Company in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances in which made, not misleading.
Projections made in the Business Plan are not considered to be facts for the
purpose of this Section. Such projections were prepared in good faith on the
basis of reasonable assumptions. There is no fact within the knowledge of the
Company or any of its executive officers which has not been disclosed herein or
in writing by them to the Purchasers and which materially adversely affects, or
in the future in their opinion may, insofar as they can now foresee, materially
adversely affect the business, operations, properties, Intellectual Property
Rights, assets or condition, financial or other, of the Company. Without
limiting the foregoing, the Company has no knowledge that there exists, or that
there is pending or planned, any patent, invention, device, application or
principle or any statute, rule, law, regulation, standard or code which would
materially adversely affect the business, prospects, operations, Intellectual
Property Rights, affairs or financial condition of the Company.
3.13. CAPITALIZATION; STATUS OF CAPITAL STOCK. As of the Closing, the
Company will have a total authorized capitalization consisting of (i) 13,000,000
shares of Common Stock, $.001 par value and (ii) 8,275,000 shares of preferred
stock, $.01 par value ("Preferred Stock"), of which 6,400,000 shares will be
designated as Series A Convertible Preferred Stock, $.01 par value ("Series A
Preferred Stock"), 1,100,000 shares will be designated as Series B Convertible
Preferred Stock, $.01 par value ("Series B Preferred Stock") and 775,000 shares
will be designated as Series C Preferred Stock. As of the Closing, 1,506,000
shares of Common Stock
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will be issued and outstanding, 6,150,732 shares of Series A Preferred Stock
will be issued and outstanding and 1,063,366 shares of Series B Preferred Stock
will be issued and outstanding. A complete list of the capital stock of the
Company which has been previously issued and the names in which such capital
stock is registered on the stock transfer book of the Company is set forth in
Exhibit 3.13 hereto. All the outstanding shares of capital stock of the Company
have been duly authorized, and are validly issued, fully paid and
non-assessable. The Series C Preferred Shares when issued and delivered in
accordance with the terms hereof, and the Conversion Shares, when issued and
delivered upon conversion of the Series C Preferred Shares, will be duly
authorized, validly issued, fully-paid and non-assessable. Except for 2,112,000
shares of Common Stock that are reserved for issuance upon exercise of stock
options, 177,083 shares of Series A Preferred Stock that have been reserved for
issuance upon exercise of Warrants issued or to be issued to Comdisco, Inc. (the
"Comdisco Leasing Warrants") and the shares of Common Stock reserved for
issuance upon the conversion of the currently outstanding shares of Series A
Preferred Stock, Series B Preferred Stock, and Series A Preferred Stock which
may be issued upon exercise of the Comdisco Leasing Warrants, all as further set
forth in Exhibit 3.13, no options, warrants, subscriptions or purchase rights of
any nature to acquire from the Company, or commitments of the Company to issue,
shares of capital stock or other securities are authorized, issued or
outstanding, nor is the Company obligated in any other manner to issue shares or
rights to acquire any of its capital stock or other securities except as
contemplated by this Agreement. None of the Company's outstanding securities or
authorized capital stock, including the Series C Preferred Stock, are subject to
any rights of redemption, repurchase, rights of first refusal, preemptive rights
or other similar rights, whether contractual, statutory or otherwise, for the
benefit of the Company, any stockholder, or any other Person, except pursuant
hereto, pursuant to the Amended and Restated Voting and Co-Sale Agreement, dated
as of January 11, 1994 (the "Voting and Co-Sale Agreement") or as set forth on
Exhibit 3.13. Except as set forth in Exhibit 3.13, there are no restrictions on
the transfer of shares of capital stock of the Company other than those imposed
by relevant Federal and state securities laws and as otherwise contemplated by
this Agreement and the Voting and Co-Sale Agreement. The offer and sale of all
capital stock and other securities of the Company issued before the Closing
complied with or were exempt from all applicable Federal and state securities
laws and no stockholder has a right of rescission or damages with respect
thereto.
3.14. MATERIAL AGREEMENTS. Except as set forth in Exhibit 3.14 the
Company is not a party to any material written or oral contract, instrument,
agreement, commitment, obligation, plan or arrangement, or any other material
agreement which could adversely affect the business, assets, liabilities,
Intellectual Property Rights, financial condition or operations of the Company.
The Company, and to the best of the Company's knowledge, each other party
thereto have in all material respects performed all the obligations required to
be performed by them to date, have received no notice of default and are not in
default in any material respect under any lease, agreement or contract now in
effect to which the Company is a party or by which it or its property may be
bound. Each of the contracts or agreements listed in Exhibit 3.14 is in full
force and effect with no default, anticipated or threatened material default or
material failure of performance or observance of any obligations or conditions
contained therein, and
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none of the foregoing parties nor the Company has provided any notice of default
or of its intention to terminate these agreements.
3.15. ABSENCE OF CERTAIN DEVELOPMENTS. The Company is not a party to
any written or material oral contract or instrument or other corporate
restriction which individually or in the aggregate is reasonably likely to
adversely affect the business, prospects, financial condition, operations,
Intellectual Property Rights, property or affairs of the Company. The Company
has no liability or obligation, whether absolute, contingent, or otherwise,
except for those incurred in the ordinary course.
3.16. ENVIRONMENTAL AND SAFETY LAWS. To the best of the Company's
knowledge after due investigation, it is not in violation of any applicable
statute, law or regulation relating to the environment or occupational safety
and health in any material respect, and to the best of its knowledge after due
investigation, no material expenditures will be required in order to comply with
any such statute, law or regulation except in the ordinary course of doing
business.
3.17. U.S. REAL PROPERTY HOLDING CORPORATION. The Company is not now
and has never been a "United States Real Property Holding Corporation" as
defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service.
ARTICLE IV
COVENANTS OF THE COMPANY
The following provisions supersede and amend and restate in their
entirety the covenants of the Company set forth in Article IV of the Series A
and B Agreement. The Purchasers, in their capacity as Purchasers of Shares and
in their capacity as holders of at least 60% of the outstanding shares of Series
A Preferred Stock and Series B Preferred Stock, hereby consent to the amendment
and restatement of such covenants and agree that the following provisions shall
supersede and amend and restate in their entirety the provisions of Article IV
of the Series A and B Agreement. For purposes of this Article IV, and Article V
and Article VI, (a) the term "Purchaser" or "Purchasers" also shall mean and
include the Purchasers as defined in the Series A and B Agreement, (b) the term
"Shares" also shall mean and include the shares of Series A Preferred Stock and
Series B Preferred Stock issued pursuant to the Series A and B Agreement and
shares of Common Stock issuable upon conversion thereof and (c) the term
"Conversion Shares" also shall mean and include the shares of Common Stock
issuable upon conversion of the Series A Preferred Stock and the Series B
Preferred Stock.
4.01. AFFIRMATIVE COVENANTS OF THE COMPANY OTHER THAN REPORTING
REQUIREMENTS. Without limiting any other covenants and provisions hereof, and
except to the extent the following covenants and provisions of this Section 4.01
are waived in any instance by either (i) a majority of the Investor Directors or
(ii) the holders of at least 60% of the
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outstanding shares of Serial Preferred Stock, the Company covenants and agrees
that until the consummation of a Qualified Public Offering, it will perform and
observe the following covenants and provisions, and will cause each Subsidiary,
if and when such Subsidiary exists, to perform and observe such of the following
covenants and provisions as are applicable to such Subsidiary:
(a) MAINTENANCE OF KEY MAN INSURANCE. Maintain term
life insurance on the life of Xxxxx Xxxxxxxxx in the amount of
$1,000,000, for so long as such person remains an officer or employee
of the Company, the proceeds of which are payable to the Company. The
Company will maintain Technology Leaders L.P., Technology Leaders
Offshore C.V. and Bessemer Venture Partners III L.P. as notice parties
to such policy and shall use reasonable efforts to ensure that the
issuer of such policy provides each such party with at least twenty
(20) days' notice before such policy is modified or terminated (for
failure to pay premium or otherwise) or assigned, or before any change
is made in the designation of the beneficiary thereof.
(b) BUDGETS APPROVAL. At least thirty (30) days prior
to the commencement of each fiscal year, prepare and submit to, and
obtain in respect thereof the approval of two-thirds of the members of
the Board of Directors, a business plan and monthly operating budget in
detail for each fiscal year, monthly operating expenses and profit and
loss projections, quarterly cash flow projections and a capital
expenditure budget for the fiscal year, and including a summary of
proposed research and development activities for the forthcoming year,
the status and proposed activities for any joint venture or other
licensing arrangements with third parties, including pharmaceutical
companies, universities, hospitals and others.
(c) NEW DEVELOPMENTS. Cause all technological
developments, patentable or unpatentable inventions, discoveries or
improvements by the Company's or any Subsidiary's employees or
consultants to be documented in accordance with industry practice and,
where possible and appropriate, to file and prosecute United States and
foreign patent, copyright, trademark, or other Intellectual Property
Right applications relating to and protecting the Company's inventions,
discoveries or developments on behalf of the Company or any Subsidiary.
(d) AGREEMENTS OF OFFICERS AND EMPLOYEES. Cause each
employee of the Company or any Subsidiary now or hereafter employed to
execute and deliver nondisclosure and assignment of inventions
agreements (in the Company's customary form or agreements otherwise
approved by the Board of Directors of the Company, including a majority
of the Investor Directors) and cause each Key Employee of the Company
or any Subsidiary hereafter employed to execute and deliver
non-competition, nondisclosure and assignment of inventions agreements
(in the Company's customary form or agreements otherwise approved by
the Board of Directors of the Company, including a majority of the
Investor Directors), and use its best efforts to cause all consultants
of the Company involved in the design, review, evaluation or
development
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14
of inventions or Intellectual Property Rights to execute and deliver
nondisclosure and assignment of inventions agreements (in the Company's
customary form or agreements otherwise approved by the Board of
Directors, including a majority of the Investor Directors). The Company
shall not amend or waive any of the material provisions of such
agreements.
(e) BY-LAWS; MEETINGS AND INDEMNIFICATION. The
Company shall at all times cause its By-laws to provide that, (A)
unless otherwise required by the laws of the state of its
incorporation, (i) any two directors or (ii) any holder or holders of
at least 25% of the outstanding shares of Preferred Stock, voting as a
separate class, shall have the right to call a meeting of the Board of
Directors or stockholders, respectively, and (B) a quorum for a meeting
of the Board of Directors or any Committee hereof of which an Investor
Director is a member shall require the attendance of at least two
Investor Directors. The Company shall at all times maintain provisions
in its By-laws or Restated Certificate of Incorporation indemnifying
all directors against liability to the maximum extent permitted under
the laws of the state of its incorporation.
(f) EXPENSES OF DIRECTORS. Promptly reimburse in full
each director of the Company for all of his reasonable out-of-pocket
expenses incurred in attending each meeting of the Board of Directors
of the Company or any Committee thereof.
(g) SIZE OF BOARD. Fix and maintain the number of
Directors on the Board of Directors of the Company at no more than six
(6) members, including Xxxxx X. Xxxxxxxxx, four (4) representatives of
the holders of Serial Preferred Stock and one (1) member designated by
the chief executive officer of the Company.
(h) RULE 144A INFORMATION. At all times during which
the Company is neither subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act, nor exempt from reporting pursuant to
Rule 12g3-2(b) under the Exchange Act, the Company will provide as
promptly as practicable (in any event not later than twenty (20) days
after initial request) in written form, upon the written request of any
Purchaser or a prospective buyer of Shares from any Purchaser, all
information required by Rule 144A(d)(4)(i) of the General Regulations
promulgated by the Commission under the Securities Act ("Rule 144A
Information"). The Company further covenants, upon written request, as
promptly as practicable (in any event not later than twenty (20) days
after initial request) to cooperate with and assist any Purchaser or
any member of the National Association of Securities Dealers, Inc.
system for Private Offerings Resales and Trading through Automated
Linkage ("PORTAL") in applying to designate and thereafter maintain the
eligibility of the Shares for trading through PORTAL. The Company's
obligations under this Section 4.01(h) shall at all times be contingent
upon the relevant Purchaser's obtaining from a prospective purchaser an
agreement to take all reasonable precautions to safeguard the Rule 144A
Information from disclosure to anyone other than a person who will
assist such purchaser in evaluating the purchase of the Shares.
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15
(i) STOCK PLAN. The Company has created a stock
option plan and has reserved an aggregate of 2,112,000 options for the
purchase of Common Stock for issuance to employees, officers and
consultants of the Company and to members of the Company's Scientific
Advisory Board. All options to be granted (or stock issued directly)
under any Stock Plan or otherwise shall vest and become exercisable in
equal annual installments over either a four-year or five-year period
and be subject to a right of refusal of the Company, unless otherwise
approved by a majority of the Board of Directors including a majority
of the Investor Directors.
(j) MEETINGS OF DIRECTORS AND COMMITTEES. Hold
meetings of the Company's Board of Directors not less than on a
quarterly basis; if the Company appoints an Executive Committee of the
Board of Directors, such committee shall be composed of at least four
(4) Directors, including at least three (3) Investor Directors; and
appoint and maintain a Stock Option/Compensation Committee of the Board
of Directors composed of at least four (4) Directors, including at
least three (3) Investor Directors.
4.02. NEGATIVE COVENANTS OF THE COMPANY. The Company covenants and
agrees that until the consummation of a Qualified Public Offering, it will
comply with and observe the following negative covenants and provisions, and
will cause each Subsidiary to comply with and observe such of the following
covenants and provisions as are applicable to such Subsidiary, if and when such
Subsidiary exists, and will not without (i) the written consent or written
waiver of the holders of at least 60% of the outstanding shares of the Serial
Preferred Stock or (ii) a majority of the members of the Board of Directors
including a majority of the Investor Directors:
(a) DEALINGS WITH AFFILIATES. Enter into any
transaction, including, without limitation, any loans or extensions of
credit or other agreements with any employee, consultant, officer or
director of the Company or any Subsidiary or holder of five percent
(5%) of any class of capital stock of the Company or any Subsidiary, or
any member of their respective immediate families or any corporation or
other entity directly or indirectly controlled by one or more of such
employees, consultants, officers, directors or 5% stockholders or
members of their immediate families, on terms less favorable to the
Company or any Subsidiary than it would obtain in a transaction between
unrelated parties except in the case of any transaction or series of
transactions entered into in the ordinary course of business, so long
as these are approved by the disinterested members of Board of
Directors (including a majority of the Investor Directors). The Company
has entered into certain agreements with Xxxxx Xxxxxxxxx and with
Xxxxxxx Xxxxxxxxxx set forth on Exhibit 4.02, which are hereby
ratified.
(b) ISSUANCE OF EQUITY SECURITIES. Authorize or
issue, or obligate itself to issue, any additional shares of capital
stock of the Company of any class (including any options, warrants or
other rights to purchase capital stock), provided, however, that the
provisions of this Section 4.02(b) shall not apply to the issuance of:
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(i) the Conversion Shares; or (ii) up to 2,112,000 shares of Common
Stock or options, warrants or other rights exercisable therefor, issued
on or after the date hereof to directors, officers, employees or
consultants of the Company and any Subsidiary (including members of the
Scientific Advisory Board) pursuant to any qualified or non-qualified
stock option plan or agreement, employee stock ownership plan, employee
benefit plan, stock purchase agreement, stock plan, stock restriction
agreement, or consulting agreement or such other options, equity
arrangements, agreements or plans approved by two-thirds of the members
of the Board of Directors of the Company (including a majority of the
Investor Directors); or (iii) shares issued upon conversion of the
outstanding shares of Series A Preferred Stock and Series B Preferred
Stock; or (iv) the Comdisco Leasing Warrants, shares of Series A
Preferred Stock issued upon exercise of the Comdisco Leasing Warrants
or shares of Common Stock issued upon conversion of shares of Series A
Preferred Stock issued upon exercise thereof.
(c) TRANSFERS OF TECHNOLOGY. Transfer, sell, dispose
of, encumber, pledge, xxxxx x xxxx on or security interest in, assign,
lease, license or donate any ownership or interest in, or material
rights relating to, any of its technology, or other Intellectual
Property Rights to any person or entity which is not a member of the
"consolidated group" of the Company and its Subsidiaries; provided,
however, that this Section shall not apply to licenses of technology or
Intellectual Property Rights accomplished in the ordinary course of the
Company's business.
(d) RESTRICTIONS ON INDEBTEDNESS. The Company
covenants that it will not, and will not permit any of its Subsidiaries
to, incur, create, or assume any Indebtedness other than trade debt,
loans to employees in an annual aggregate amount not to exceed $50,000
and property leases, all as approved by the Board of Directors,
including a majority of the Investor Directors.
(e) ASSUMPTIONS OR GUARANTIES OF INDEBTEDNESS OF
OTHER PERSONS. Assume, guarantee, endorse or otherwise become directly
or contingently liable on, or permit any Subsidiary to assume,
guarantee, endorse or otherwise become directly or contingently liable
on (including, without limitation, liability by way of agreement,
contingent or otherwise, to purchase, to provide funds for payment, to
supply funds to or otherwise invest in the debtor or otherwise to
assure the creditor against loss) any Indebtedness of any other Person,
except for guaranties by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business.
(f) AMENDMENTS. Amend the Restated Certificate of
Incorporation or By-laws of the Company.
4.03. REPORTING REQUIREMENTS. Until the consummation of the Initial
Public Offering, the Company will furnish the following to each Person who is
the holder of not less than 5% of the Shares:
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(a) MONTHLY REPORTS: as soon as available and in any
event within 45 days after the end of each calendar month, balance
sheets, statements of income and retained earnings and a summary
statement of monthly cash flow and expenses of the Company and its
Subsidiaries for such month and for the period commencing at the end of
the previous fiscal year and ending with the end of such month, setting
forth in each case in comparative form the corresponding figures for
the corresponding period of the preceding fiscal year, and including
comparisons to the monthly budget or business plan and an analysis of
the variances from the budget or plan, prepared in accordance with
generally accepted accounting principles consistently applied;
(b) ANNUAL REPORTS: as soon as available and in any
event within 120 days after the end of each fiscal year of the Company,
a copy of the annual audit report for such year for the Company and its
Subsidiaries, including therein consolidated and consolidating balance
sheets of the Company and its Subsidiaries as of the end of such fiscal
year and consolidated and consolidating statements of income and
retained earnings and of changes in financial position of the Company
and its Subsidiaries for such fiscal year, setting forth in each case
in comparative form the corresponding figures for the preceding fiscal
year, all such consolidated statements to be duly certified by the
chief financial officer of the Company and an independent public
accountant of recognized national standing approved by the Board of
Directors including a majority of the Investor Directors;
(c) BUDGETS AND OPERATING PLAN: as soon as available
and in any event at least 30 days before the beginning of each fiscal
year of the Company, a business plan and monthly and quarterly
operating budgets for the forthcoming fiscal year, and as soon as
available and in any event within 30 days after the end of each
calendar month, monthly comparisons against the business plan and
monthly operating budgets (including a summary of proposed research and
development activities, and the status and proposed activities for any
joint venture or other licensing arrangements with any third party).
(d) NOTICE OF ADVERSE CHANGES: promptly after the
occurrence thereof and in any event within five (5) business days after
it becomes aware of each occurrence, notice of any material adverse
change in the business, assets, Intellectual Property Rights,
management, licensing activities, operations or financial condition of
the Company; and
(e) REPORTS AND OTHER INFORMATION: promptly upon
receipt, publication, commencement or occurrence provide to each
Purchaser copies of all material consulting reports, notices of all
material actions, suits or proceedings, copies of all accountant's
reviews, and reports to management, and such other information as the
Company shall make available to its directors or stockholders or the
Purchasers shall reasonably request.
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ARTICLE V
REGISTRATION RIGHTS
The following provisions supersede and amend and restate in their
entirety the provisions regarding registration rights set forth in Article V of
the Series A and B Agreement. The Purchasers, in their capacity as Purchasers of
Shares and in their capacity as holders of at least 60% of the outstanding
shares of Series A Preferred Stock and Series B Preferred Stock, hereby consent
to the amendment and restatement of such registration rights and agree that the
following provisions shall supersede and amend and restate in their entirety the
provisions of Article V of the Series A and B Agreement.
5.01. "PIGGY-BACK" REGISTRATIONS. If at any time the Company shall
determine to register for its own account or the account of others under the
Securities Act (including pursuant to the Qualified Public Offering, the Initial
Public Offering or a demand for registration of any stockholder of the Company
other than the Purchasers) any of its equity securities, other than on Form S-8
or Form S-4 or their then equivalents or otherwise relating to shares of Common
Stock to be issued solely in connection with any acquisition of any entity or
business or shares of Common Stock issuable in connection with stock option or
other employee benefit plans, it shall send to each holder of Registrable
Shares, including each holder who has the right to acquire Registrable Shares,
written notice of such determination and, if within ten (10) business days after
receipt of such notice, such holder shall so request in writing, the Company
shall use its best efforts to include in such registration statement all or any
part of the Registrable Shares such holder requests to be registered.
If, in connection with any offering involving an underwriting, the
managing underwriter shall impose a limitation on the number of shares of such
Common Stock which may be included in the registration statement because, in its
judgment, such limitation is necessary to effect an orderly public distribution,
then the Company shall be obligated to include in such registration statement
only such limited portion (which may be none) of the Registrable Shares with
respect to which such holder has requested inclusion pursuant hereto as may
reasonably be determined by the managing underwriters; provided, however, as
between the Company, other stockholders holding contractual registration rights,
and the holders of Registrable Shares, in no event shall the Registrable Shares
included in such offering be limited to less than twenty-five percent (25%) of
the aggregate shares offered. Any inclusion of Registrable Shares in the
offering, when the managing underwriter has so limited the number of Registrable
Shares that may be included in the offering, shall be allocated pro rata among
the holders of Registrable Shares (or their permitted assigns) seeking to
include such shares and the holders of other registration rights seeking to
include their shares, in proportion to the number of Registrable Shares (whether
or not such shares are sought to be included in such offering) held by such
persons. No incidental right under this Section 5.01 shall be construed to limit
any registration required under Section 5.02. The obligations of the Company
under this Section 5.01 may be waived at any time upon the written consent of
holders of sixty percent (60%) in interest of the Registrable Shares who are
participating in the offering and shall expire on the seventh anniversary
following the consummation of an Initial Public Offering or, if earlier, as set
forth in Section
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5.15. The Company shall have the right to withdraw any registration initiated by
it pursuant to Section 5.01.
5.02. REQUIRED REGISTRATIONS. If on any two occasions (providing the
offering is consummated) one or more holders of at least 60% of the Registrable
Shares shall notify the Company in writing that it or they desire to offer or
cause to be offered for public sale at least thirty percent (30%) of the
Registrable Shares, the Company will so notify all holders of Registrable
Shares, including all holders who have a right to acquire Registrable Shares.
Upon written request of any holder given within fifteen (15) days after the
receipt by such holder from the Company of such notification, the Company will
use its best efforts to cause such of the Registrable Shares as may be requested
by any holder thereof (including the holder or holders giving the initial notice
of intent to offer) to be registered under the Securities Act as expeditiously
as possible on Form S-1 or Form SB-2 or their respective successor registration
statement forms. The Company shall not be required to effect more than two
registrations pursuant to this Section 5.02 (providing the offering is
consummated). If the Company determines to include shares to be sold by it or by
other selling shareholders in any registration request pursuant to this Section
5.02, such registration shall be deemed to have been a "piggy back" registration
under Section 5.01, and not a "demand" registration under this Section 5.02 if
the holders of Registrable Shares are unable to include in any such registration
statement eighty-five percent (85%) of the Registrable Shares initially
requested for inclusion in such registration statement. The Company shall not be
required to effect a registration pursuant to this Section 5.02 unless the
minimum market value of any offering and registration of Registrable Shares made
pursuant thereto is at least $3,000,000, before calculation of underwriting
discounts and commissions. The holders of Registrable Shares may not exercise
their rights under this Section 5.02 until the earlier to occur of (i) twenty
(20) months following the date of the Closing or (ii) 180 days after the
effectiveness of any registration statement covering the Initial Public
Offering. No request for registration under this Section 5.02 may be made within
the one hundred and eighty day period after the effective date of a registration
statement filed by the Company or while the Company is in the process of
preparing a registration statement. The Company shall have the right to delay
any registration under this section for up to 90 days if the Company's Board of
Directors reasonably determines such delay is necessary in view of the Company's
current circumstances.
5.03. REGISTRATIONS ON FORMS S-2 OR S-3. In addition to the rights
provided the holder of Registrable Shares in Sections 5.01 and 5.02 above, if
the registration of Registrable Shares under the Securities Act can be effected
on Forms S-2 or S-3 (or any similar form promulgated by the Commission), then
upon the written request of one or more holders of a majority of the Registrable
Shares, the Company will so notify each holder of Registrable Shares, including
each holder who has a right to acquire Registrable Shares, and then will, as
expeditiously as possible, use its best efforts to effect qualification and
registration under the Securities Act on Forms S-2 or S-3 of all or such portion
of the Registrable Shares as the holder or holders shall specify; provided,
however, the Company shall not be required to effect a registration pursuant to
this Section 5.03 unless the market value of the Registrable Shares to be sold
in any such registration shall be estimated to be at least $1,000,000 at the
time of filing
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such registration statement, and further provided that the Company shall not be
required to effect more than two (2) registrations during any twelve (12) month
period pursuant to this Section 5.03 and six (6) registrations in the aggregate
under this Section 5.03. No request for registration under this Section 5.03 may
be made within the one hundred and eighty day period after the effective date of
a registration statement filed by the Company or while the Company is in the
process of preparing a registration statement.
5.04. EFFECTIVENESS. The Company will use its best efforts to
maintain the effectiveness for up to 90 days (or such shorter period of time as
the underwriters need to complete the distribution of the registered offering,
or six months in the case of any registration relating to Registrable Shares
pursuant to Section 5.02 or 5.03) of any registration statement pursuant to
which any of the Registrable Shares are being offered, and from time to time
will amend or supplement such registration statement and the prospectus
contained therein to the extent necessary to comply with the Securities Act and
any applicable state securities statute or regulation. The Company will also
provide each holder of Registrable Shares with as many copies of the prospectus
contained in any such registration statement as it may reasonably request. For a
period not to exceed 60 days, the Company shall not be obligated to prepare and
file, or be prevented from delaying or abandoning, a registration statement
pursuant to this Agreement at any time when the Company, in its good faith
judgment with advice of counsel, reasonably believes
(a) that the filing thereof at the time requested, or
the offering of Registrable Shares pursuant thereto, would materially
and adversely affect (a) a pending or scheduled public offering of the
Company's securities, (b) an acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction by or of the
Company, (c) pre-existing and continuing negotiations, discussions or
pending proposals with respect to any of the foregoing transactions, or
(d) the financial condition of the Company in view of the disclosure of
any pending or threatened litigation, claim, assessment or governmental
investigation which may be required thereby; and
(b) that the failure to disclose any material
information with respect to the foregoing would cause a violation of
the Securities Act or the Exchange Act.
5.05. INDEMNIFICATION OF HOLDER OF REGISTRABLE SHARES. In the event
that the Company registers any of the Registrable Shares under the Securities
Act, the Company will indemnify and hold harmless each holder and each
underwriter of Registrable Shares (including their officers, directors,
affiliates and partners and including any broker or dealer through whom
Registrable Shares may be sold in such registration) and each Person, if any,
who controls such holder or any such underwriter within the meaning of Section
15 of the Securities Act from and against any and all losses, claims, damages,
expenses or liabilities, joint or several, to which they or any of them become
subject under the Securities Act, applicable state securities laws or under any
other statute or at common law or otherwise, as incurred, and, except as
hereinafter provided, will reimburse each such holder, each such underwriter and
each such controlling Person, if any, for any legal or other expenses reasonably
incurred by them or any of them in
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connection with investigating or defending any actions whether or not resulting
in any liability, as incurred, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement, in any preliminary or amended preliminary prospectus or
in the final prospectus (or the registration statement or prospectus as from
time to time amended or supplemented by the Company) or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act or any state securities laws
applicable to the Company and relating to action or inaction required of the
Company in connection with such registration, unless (i) such untrue statement
or alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary or amended preliminary prospectus or final
prospectus in reliance upon and in conformity with information furnished in
writing to the Company in connection therewith by any such holder of Registrable
Shares (in the case of indemnification of such holder), any such underwriter (in
the case of indemnification of such underwriter) or any such controlling Person
(in the case of indemnification of such controlling person) expressly for use
therein, or unless (ii) in the case of a sale directly by such holder of
Registrable Shares (including a sale of such Registrable Shares through any
underwriter retained by such holder of Registrable Shares to engage in a
distribution solely on behalf of such holder of Registrable Shares), such untrue
statement or alleged untrue statement or omission or alleged omission was
contained in a preliminary prospectus and corrected in a final or amended
prospectus copies of which were delivered to such holder of Registrable Shares
or such underwriter on a timely basis, and such holder of Registrable Shares
failed to deliver a copy of the final or amended prospectus at or prior to the
confirmation of the sale of the Registrable Shares to the person asserting any
such loss, claim, damage or liability in any case where such delivery is
required by the Securities Act.
Promptly after receipt by any holder of Registrable Shares,
any underwriter or any controlling Person of notice of the commencement of any
action in respect of which indemnity may be sought against the Company, such
holder of Registrable Shares, or such underwriter or such controlling person, as
the case may be, shall notify the Company in writing of the commencement thereof
(provided, that failure to so notify the Company shall not relieve the Company
from any liability it may have hereunder, except to the extent prejudiced by
such failure) and, subject to the provisions hereinafter stated, the Company
shall be entitled to assume the defense of such action (including the employment
of counsel, who shall be counsel reasonably satisfactory to such holder of
Registrable Shares, such underwriter or such controlling Person, as the case may
be) and the payment of expenses insofar as such action shall relate to any
alleged liability in respect of which indemnity may be sought against the
Company.
Such holder of Registrable Shares, any such underwriter or any
such controlling Person shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel subsequent to any assumption of the defense by the Company shall
not be at the expense of the Company unless the employment of such counsel has
been specifically authorized in writing by the Company; provided, however,
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that, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party or if
the interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, the indemnified party shall have the
right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred. At any time, any holder
of Registrable Shares may select separate counsel and assume its own legal
defense with the expenses and fees of such separate counsel and other expenses
related to such separate counsel to be borne by such holder electing separate
counsel. The Company shall not be liable to indemnify any Person for any
settlement of any such action effected without the Company's written consent.
The Company shall not, except with the approval of each party being indemnified
under this Section 5.05, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to the parties being so indemnified of a release from
all liability in respect to such claim or litigation.
In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which any holder of
Registrable Shares exercising rights under this Article V, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 5.05 but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that this Section 5.05
provides for indemnification in such case, then, the Company and such holder
will contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and of
the holder of Registrable Shares on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of the holder of Registrable Shares on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company on the one
hand or by the holder of Registrable Shares on the other, and each party's
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, however, that, in any such case,
(A) no such holder will be required to contribute any amount in excess of the
public offering price of all such Registrable Shares offered by it pursuant to
such registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
The indemnities provided in this Section 5.05 shall survive the
transfer of any Registrable Shares by such holder.
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5.06. INDEMNIFICATION OF COMPANY. In the event that the Company
registers any of the Registrable Shares under the Securities Act, each holder of
the Registrable Shares so registered will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed or
otherwise participated in the preparation of the registration statement, each
underwriter of the Registrable Shares so registered (including any broker or
dealer through whom such of the shares may be sold) and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act from
and against any and all losses, claims, damages, expenses or liabilities, joint
or several, to which they or any of them may become subject under the Securities
Act, applicable state securities laws or under any other statute or at common
law or otherwise, and, except as hereinafter provided, will reimburse the
Company and each such director, officer, underwriter or controlling Person for
any legal or other expenses reasonably incurred by them or any of them in
connection with investigating or defending any actions whether or not resulting
in any liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, in any
preliminary or amended preliminary prospectus or in the final prospectus (or in
the registration statement or prospectus as from time to time amended or
supplemented) or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, but only insofar as any
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company in connection therewith by such
holder of Registrable Shares expressly for use therein; provided, however, that
such holder's obligations hereunder shall be limited to an amount equal to the
proceeds received by such holder of Registrable Shares sold in such
registration.
Promptly after receipt of notice of the commencement of any
action in respect of which indemnity may be sought against such holder of
Registrable Shares, the Company shall notify such holder of Registrable Shares
in writing of the commencement thereof (provided, that failure to so notify such
holder shall not relieve such holder from any liability it may have hereunder,
except to the extent prejudiced by such failure), and such holder of Registrable
Shares shall, subject to the provisions hereinafter stated, be entitled to
assume the defense of such action (including the employment of counsel, who
shall be counsel reasonably satisfactory to the Company) and the payment of
expenses insofar as such action shall relate to the alleged liability in respect
of which indemnity may be sought against such holder of Registrable Shares. The
Company and each such director, officer, underwriter or controlling Person shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof, but the fees and expenses of such counsel subsequent to
any assumption of the defense by such holder of Registrable Shares shall not be
at the expense of such holder of Registrable Shares unless employment of such
counsel has been specifically authorized in writing by such holder of
Registrable Shares. Such holder of Registrable Shares shall not be liable to
indemnify any Person for any settlement of any such action effected without such
holder's written consent.
In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which the Company, its
officers, directors or controlling persons
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("Company Indemnitees") exercising its rights under this Article V, makes a
claim for indemnification pursuant to this Section 5.06, but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding that this Section 5.06 provides for indemnification, in such
case, then, the Company Indemnitees and such holder will contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion as is appropriate to reflect
the relative fault of the Company Indemnitees on the one hand and of the holder
of Registrable Shares on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Company Indemnitees on the one hand and of the holder of Registrable Shares on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
Indemnitees on the one hand or by the holder of Registrable Shares on the other,
and each party's relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission; provided, however,
that, in any such case, (A) no such holder will be required to contribute any
amount in excess of the public offering price of all such Registrable Shares
offered by it pursuant to such registration statement; and (B) no person or
entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
5.07. EXCHANGE ACT REGISTRATION. If the Company at any time shall
list any class of equity securities of the type which may be issued upon the
conversion of the Series C Preferred Stock on any national securities exchange
and shall register such class of equity securities under the Exchange Act, the
Company will, at its expense, simultaneously list on such exchange and maintain
such listing of, the Common Stock. If the Company becomes subject to the
reporting requirements of either Section 13 or Section 15(d) of the Exchange
Act, the Company will use its best efforts to timely file with the Commission
such information as the Commission may require under either of said Sections ;
and in such event, the Company shall use its best efforts to take all action as
may be required as a condition to the availability of Rule 144 or Rule 144A
under the Securities Act (or any successor exemptive rule hereinafter in effect)
with respect to such Common Stock. The Company shall furnish to any holder of
Registrable Shares forthwith upon request (i) a written statement by the Company
as to its compliance with the reporting requirements of Rule 144, (ii) a copy of
the most recent annual or quarterly report of the Company as filed with the
Commission, and (iii) such other reports and documents as a holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a holder to sell any such Registrable Securities without
registration. After the occurrence of the Initial Public Offering, the Company
agrees to use its best efforts to facilitate and expedite transfers of the
Shares pursuant to Rule 144 under the Securities Act, which efforts shall
include timely notice to its transfer agent to expedite such transfers of
Shares.
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5.08. DAMAGES. The Company recognizes and agrees that the holder of
Registrable Shares will not have an adequate remedy if the Company fails to
comply with this Article V and that damages may not be readily ascertainable,
and the Company expressly agrees that, in the event of such failure, it shall
not oppose an application by the holder of Registrable Shares or any other
Person entitled to the benefits of this Article V requiring specific performance
of any and all provisions hereof or enjoining the Company from continuing to
commit any such breach of this Article V.
5.09. FURTHER OBLIGATIONS OF THE COMPANY. Whenever under the preceding
Sections of this Article V, the Company is required hereunder to register
Registrable Shares, it agrees that it shall also do the following:
(a) Furnish to each selling holder such copies of
each preliminary and final prospectus and such other documents as said
holder may reasonably request to facilitate the public offering of its
Registrable Shares;
(b) Use its best efforts to register or qualify the
Registrable Shares covered by said registration statement under the
applicable securities or "blue sky" laws of such jurisdictions as any
selling holder may reasonably request; provided, however, that the
Company shall not be obligated to qualify to do business in any
jurisdictions where it is not then so qualified or to take any action
which would subject it to the service of process in suits other than
those arising out of the offer or sale of the securities covered by the
registration statement in any jurisdiction where it is not then so
subject;
(c) Furnish to each selling holder a signed
counterpart, addressed to the selling holders, of
(i) opinions of counsel for the Company, dated
the effective date of the registration statement, and
covering such matters as are required by the
Securities Act and such matters as may reasonably be
requested by the underwriters, and
(ii) "comfort" letters signed by the Company's
independent public accountants who have examined and
reported on the Company's financial statements
included in the registration statement, to the extent
permitted by the standards of the American Institute
of Certified Public Accountants, as the Company is
required to deliver or cause the delivery of to the
underwriters in an underwritten public offering of
securities;
(d) Permit each selling holder of Registrable Shares
who holds not less than 5% of the Registrable Shares or his counsel or
other representatives to inspect and copy such corporate documents and
records as may reasonably be requested by them, after reasonable
advance notice and without undue interference with the operation of the
Company's business;
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26
(e) Furnish to each selling holder of Registrable
Shares a copy of all documents filed with and all correspondence from
or to the Commission in connection with any such offering of
securities;
(f) Use its best efforts to insure the obtaining of
all necessary approvals from the National Association of Securities
Dealers, Inc; and
(g) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earning
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first month after the
effective date of the registration statement covering the Initial
Public Offering, which earning statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder.
Whenever under the preceding Sections of this Article V the
holders of Registrable Shares are registering such shares pursuant to any
registration statement, each such holder agrees to (i) timely provide to the
Company, at its request, such information and materials as it may reasonably
request in order to effect the registration of such Registrable Shares, (ii)
convert all shares of Series C Preferred Stock included in any registration
statement to shares of Common Stock, such conversion to be effective at the
closing of such offering pursuant to such registration statement, and (iii) if
the offering is underwritten, execute an underwriting agreement containing
customary conditions.
5.10. EXPENSES. In the case of each registration effected under
Section 5.01, 5.02 or 5.03, the Company shall bear all reasonable costs and
expenses of each such registration on behalf of the selling holders of
Registrable Shares, including, but not limited to, the Company's printing, legal
and accounting fees and expenses, Commission and NASD filing fees and "Blue Sky"
fees and expenses and the reasonable fees and disbursements (such fees not to
exceed $25,000 for any registration) of one counsel for the selling holders of
Registrable Shares in connection with the registration of their Registrable
Shares; provided, however, that the Company shall have no obligation to pay or
otherwise bear any portion of the underwriters' commissions or discounts or
transfer taxes attributable to the Registrable Shares being offered and sold by
the holders of Registrable Shares, or the fees and expenses of more than one
counsel for the selling holders of Registrable Shares in connection with the
registration of the Registrable Shares. The Company shall pay all expenses of
the holders of the Registrable Shares in connection with any registration
initiated pursuant to this Article V which is withdrawn, delayed or abandoned by
the Company, except if such withdrawal, delay or abandonment is caused by the
fraud, material misstatement or omission of a material fact by a holder of
Registrable Shares to be included in such registration.
5.11. APPROVAL OF UNDERWRITER. Any managing underwriter engaged in
any registration made pursuant to Section 5.02 shall be a nationally recognized
firm requiring the approval in writing of the holders of 60% of the Registrable
Shares requesting such registration.
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5.12. TRANSFERABILITY. For all purposes of Article V of this Agreement,
the holder of Registrable Shares shall include not only the Purchasers but (i)
any assignee or transferee of the Registrable Shares who acquires at least ten
percent (10%) of the Registrable Shares and who is not a competitor of the
Company, or (ii) any general or limited partner or any officer or director of
any Purchaser or their affiliates, including, but not limited to, their
immediate family, irrevocable trusts for estate planning purposes and personal
representatives; provided, however, that such assignee or transferee agrees in
writing at the time it acquires such shares to be bound by all of the provisions
of this Agreement, including, without limitation, Section 5.13 hereof.
5.13. "LOCK-UP" AGREEMENT. Each holder of Registrable Shares agrees, if
so requested by the Company and an underwriter of Common Stock or other
securities of the Company, not to sell, grant any option or right to buy or
sell, or otherwise transfer or dispose of in any manner, whether in
privately-negotiated or open-market transactions, any Common Stock or other
securities of the Company held by it during the 180-day period following the
effective date of a registration statement filed pursuant to the Initial Public
Offering, provided that:
(a) Such agreement shall apply only to the Initial
Public Offering; and
(b) All holders of Registrable Shares, any other
security holders whose securities are included in such registration
statement, and all officers, directors and Key Employees of the Company
shall also enter into similar agreements.
Such "lock-up" agreement shall be in writing and in form and substance
satisfactory to the Company and such underwriter. The Company may impose
stop-transfer instructions with respect to the Shares (or securities) subject to
the foregoing restrictions until the end of said 180-day period. No holder of
Registrable Shares shall be so restricted unless all holders are similarly and
proportionately restricted.
5.14. MERGERS, ETC. The Company shall not, directly or indirectly,
enter into any merger, consolidation or reorganization in which the Company
shall not be the surviving corporation unless the proposed surviving corporation
shall, prior to such merger, consolidation or reorganization, agree in writing
to assume the obligations of the Company under Article V of this Agreement, and
for that purpose references hereunder to Registrable Shares shall be deemed to
be references to the securities which the Purchasers would be entitled to
receive in exchange for Registrable Shares under any such merger, consolidation
or reorganization; provided, however, that the provisions of this Section 5.14
shall not apply in the event of any merger, consolidation, or reorganization in
which the Company is not the surviving corporation if all stockholders are
entitled to receive in exchange for their Registrable Shares consideration
consisting solely of (i) cash, (ii) securities of the acquiring corporation
which may be immediately sold to the public without registration under the
Securities Act, or (iii) securities of the acquiring corporation which the
acquiring corporation has agreed to register within 90 days of completion of the
transaction for resale to the public pursuant to the Securities Act.
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5.15. TERMINATION; FURTHER REGISTRATION RIGHTS. Notwithstanding any
other term or provision of this Article V, at such time as any Purchaser or
transferee owning less than 2% of the outstanding Common Stock of the Company
(on an as-converted basis) is free to sell the Registrable Shares without
registration pursuant to Rule 144(k) of the Securities Act, all rights of such
Purchaser as to such Registrable Shares under Sections 5.01, 5.02 and 5.03 of
this Article V shall terminate. The Company shall not grant to any third party
any registration rights so long as any of the registration rights under this
Agreement remains in effect without the consent of the holders of 60% of the
then outstanding Registrable Shares.
ARTICLE VI
RIGHT OF FIRST REFUSAL
The following provisions supersede and amend and restate in their
entirety the provisions regarding rights or first refusal set forth in Article
VI of the Series A and B Agreement. The Purchasers, in their capacity as
Purchasers of Shares and in their capacity as holders of at least 60% of the
outstanding shares of Series A Preferred Stock and Series B Preferred Stock,
hereby consent to the amendment and restatement of such rights of first refusal
and agree that the following provisions shall supersede and amend and restate in
their entirety the provisions of Article VI of the Series A and B Agreement. In
addition, the Purchasers, other than the Purchasers pursuant to this Agreement,
in their capacity as holders of shares of Series A Preferred Stock and Series B
Preferred Stock, hereby consent to the transactions contemplated by this
Agreement, and waive their respective rights to purchase shares of Series C
Preferred Stock on the terms set forth in this Agreement.
6.01. RIGHT OF FIRST REFUSAL. Before the Company shall issue, sell or
exchange, agree or obligate itself to issue, sell or exchange, or reserve or set
aside for issuance, sale or exchange, any (i) shares of Common Stock, (ii) any
other equity security of the Company, including without limitation, shares of
Preferred Stock, (iii) any convertible debt security of the Company, including
without limitation, any debt security which by its terms is convertible into or
exchangeable for any equity security of the Company, (iv) any security of the
Company that is a combination of debt and equity, or (v) any option, warrant or
other right to subscribe for, purchase or otherwise acquire any interest
relating to such equity or debt security of the Company, the Company shall, in
each case, first offer to sell such securities (the "Offered Securities") to
those Purchasers then holding capital stock of the Company as follows: The
Company shall offer to sell to each Purchaser (a) that portion of the Offered
Securities as the number of shares of Preferred Stock (on an as-converted basis)
and Conversion Shares then held by a Purchaser bears to the total number of
outstanding shares of capital stock of the Company including the shares issuable
upon conversion of the Preferred Stock (the "Basic Amount"), and (b) such
additional portion of the Offered Securities as such Purchaser shall indicate it
will purchase should the other Purchasers subscribe for less than their Basic
Amounts (the "Undersubscription Amount"), at a price and on such other terms as
shall have been specified by the Company in writing delivered to the Purchasers
(the "Offer"), which Offer by its terms
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shall remain open and irrevocable for a period of twenty (20) days from receipt
of the Offer. This right of first refusal shall only apply to Purchasers who
hold at least 5% of the then total outstanding shares of Preferred Stock or
Conversion Shares, to the Company Friends provided that they continue to own the
shares of Preferred Stock owned by them after giving effect to the transactions
contemplated by this Agreement and to the Bessemer Purchasers holding in the
aggregate at least 5% of the then outstanding shares of Preferred Stock or
Conversion Shares.
6.02. NOTICE OF ACCEPTANCE. Notice of each Purchaser's intention to
accept, in whole or in part, any Offer made pursuant to Section 6.01 shall be
evidenced by a writing signed by such Purchaser and delivered to the Company
prior to the end of the 20-day period of such offer, setting forth such of the
Purchaser's Basic Amount as such Purchaser elects to purchase and, if such
Purchaser shall elect to purchase all of its Basic Amount, such
Undersubscription Amount as such Purchaser shall elect to purchase (the "Notice
of Acceptance"). If the Basic Amounts subscribed for by all Purchasers are less
than the total Offered Securities, then each Purchaser who has set forth
Undersubscription Amounts in its Notice of Acceptance shall purchase, in
addition to the Basic Amounts subscribed for, all Undersubscription Amounts it
has subscribed for; provided, however, that should the Undersubscription Amounts
subscribed for exceed the difference between the Offered Securities and the
Basic Amounts subscribed for (the "Available Undersubscription Amount"), each
Purchaser who has subscribed for any Undersubscription Amount shall purchase
only that portion of the Available Undersubscription Amount as the
Undersubscription Amount subscribed for by such Purchaser bears to the total
Undersubscription Amounts subscribed for by all Purchasers, subject to rounding
by the Board of Directors to the extent it reasonably deems necessary.
6.03. CONDITIONS TO ACCEPTANCES AND PURCHASE.
(a) PERMITTED SALES OF REFUSED SECURITIES. In the
event that Notices of Acceptance are not given by the Purchasers in
respect of all the Offered Securities, the Company shall have ninety
(90) days from the end of said 20-day period to sell any such Offered
Securities as to which a Notice of Acceptance has not been given by the
Purchasers (the "Refused Securities") to the Person or Persons
specified in the Offer, but only for cash and otherwise in all respects
upon terms and conditions, including, without limitation, unit price
and interest rates, which are no more favorable, in the aggregate, to
such other Person or Persons or less favorable to the Company than
those set forth in the Offer.
(b) REDUCTION IN AMOUNT OF OFFERED SECURITIES. In the
event the Company shall propose to sell less than all of the Refused
Securities (any such sale to be in the manner and on the terms
specified in Section 6.03(a) above), then each Purchaser shall reduce
the number of shares or other units of the Offered Securities specified
in its respective Notices of Acceptance to an amount which shall be not
less than the amount of the Offered Securities which the Purchaser
elected to purchase pursuant to Section 6.02 multiplied by a fraction,
(i) the numerator of which shall be the amount of Offered Securities
which the Company actually proposes to sell, and (ii) the
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denominator of which shall be the amount of all Offered Securities. In
the event that any Purchaser so elects to reduce the number or amount
of Offered Securities specified in its respective Notices of
Acceptance, the Company may not sell or otherwise dispose of more than
the reduced amount of the Offered Securities until such securities have
again been offered to the Purchasers in accordance with Section 6.01.
(c) CLOSING. Upon the closing, which shall include
full payment to the Company, of the sale to such other Person or
Persons of all or less than all the Refused Securities, the Purchasers
shall purchase from the Company, and the Company shall sell to the
Purchasers, the number of Offered Securities specified in the Notices
of Acceptance, as reduced pursuant to Section 6.03(b) if the Purchasers
have so elected, upon the terms and conditions specified in the Offer.
The purchase by the Purchasers of any Offered Securities is subject in
all cases to the preparation, execution and delivery by the Company and
the Purchasers of a purchase agreement relating to such Offered
Securities reasonably satisfactory in form and substance to the
Purchasers and their respective counsel.
6.04. FURTHER SALE. In each case, any Offered Securities not purchased
by the Purchasers or other Person or Persons in accordance with Section 6.03 may
not be sold or otherwise disposed of until they are again offered to the
Purchasers under the procedures specified in Sections 6.01, 6.02 and 6.03.
6.05. TERMINATION AND WAIVER OF RIGHT OF FIRST REFUSAL. The rights of
the Purchasers under this Article VI may be waived only upon the prior written
consent of the holders of 60% of the outstanding shares of Preferred Stock and
shall terminate immediately prior to the effectiveness of the registration
statement with respect to the Initial Public Offering, but expressly conditioned
on the consummation of the Initial Public Offering.
6.06. EXCEPTION. The rights of the Purchasers under this Article VI
shall not apply to:
(a) Common Stock issued as a stock dividend to
holders of Common Stock or upon any subdivision or combination of
shares of Common Stock;
(b) Preferred Stock issued as a dividend to holders
of Preferred Stock upon any subdivision or combination of shares of
Preferred Stock;
(c) Conversion Shares;
(d) up to 2,112,000 shares of Common Stock, or
options or warrants exercisable therefor (including 1,364,700 granted
prior to the date hereof), issued on or after the date hereof to
directors, officers, employees or consultants of the Company and any
Subsidiary (including members of the Scientific Advisory Board)
pursuant to any qualified or non-qualified stock option plan or
agreement, employee stock ownership
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plan, employee benefit plan, stock purchase agreement, stock plan,
stock restriction agreement, or consulting agreement or such other
options, warrants, equity arrangements, agreements or plans approved by
two-thirds of the members of the Board of Directors of the Company
(including a majority of the Investor Directors);
(e) up to 177,083 shares of Series A Preferred Stock
issued pursuant to the Comdisco Leasing Warrants, and shares of Common
Stock issued upon conversion of such shares; or
(f) shares of capital stock or options or warrants
therefor, to be issued to equipment leasing organizations in connection
with any equipment leasing arrangements to which the Company is a party
and which have been approved by the Board of Directors including a
majority of the Investor Directors; or
(g) shares of capital stock issued in connection with
a merger or acquisition approved by the Board of Directors including a
majority of the Investor Directors.
Each of the foregoing numbers shall be subject to equitable
adjustment in the event of any stock dividend, stock split, combination,
reorganization, recapitalization, reclassification or other similar event.
In addition to amendments pursuant to Section 8.02, the
provisions regarding Notice of Offer, Notice of Acceptance and all other
provisions provided for in Section 6.01 through 6.03 and 6.06 may be waived or
amended by those Purchasers holding at least 60% of the outstanding shares of
Serial Preferred Stock who have elected to exercise their rights under this
Article VI to participate in any financing with respect to a transaction
effected under this Article for the purpose of effecting a transaction on a more
expeditious basis.
ARTICLE VII
DEFINITIONS AND ACCOUNTING TERMS
7.01. CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"ACCREDITED INVESTOR" shall have the meaning assigned to that
term in Rule 501 under the Securities Act.
"AGREEMENT" means this Series C Preferred Stock Purchase
Agreement as from time to time amended and in effect between the parties,
including all Exhibits hereto.
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"XXXXX XXXXXX" shall have the meaning assigned to that term in
Section 6.01.
"BESSEMER PURCHASERS" shall mean those Purchasers other than
Technology Leaders L.P., Technology Leaders Offshore C.V., Bessemer Venture
Partners III L.P., Xxxxxx Xxxxxxx Fund II L.P., Gilde Investment Fund B.V.,
Comdisco, Inc., and the Company Friends.
"BOARD OF DIRECTORS" means the board of directors of the
Company as constituted from time to time.
"CLOSING" shall have the meaning assigned to that term in
Section 1.03.
"COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act or Exchange
Act.
"COMMON STOCK" includes (a) the Company's Common Stock, $.001
par value, as authorized on the date of this Agreement, (b) any other capital
stock of any class or classes (however designated) (except for Preferred Stock)
of the Company, authorized on or after the date hereof, the holders of which
shall have the right, without limitation as to amount, either to all or to a
share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference, and
the holders of which shall ordinarily, in the absence of contingencies or in the
absence of any provision to the contrary in the Company's Restated Certificate
of Incorporation, be entitled to vote for the election of directors of the
Company (even though the right so to vote has been suspended by the happening of
such a contingency or provision), and (c) any other securities into which or for
which any of the securities described in (a) or (b) may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.
"COMPANY" means Myco Pharmaceuticals Inc., a Delaware
corporation, and its successors and assigns.
"COMPANY FRIENDS" means Xxxxx X. Xxxxxxxxx, Xxxxxx Xxxxxx,
Xxxx Xxxxxx and J. Xxxxxx Xxxxx, Inc. in their capacity as Purchasers under this
Agreement.
"CONSOLIDATED" and "CONSOLIDATING" when used with reference to
any term defined herein mean that term as applied to the accounts of the Company
and its Subsidiaries consolidated in accordance with generally accepted
accounting principles consistently applied throughout reporting periods.
"CONVERSION SHARES" shall have the meaning assigned to that
term in Section 1.02 of this Agreement (except as otherwise provided in Article
IV hereto).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
- 00 -
00
"XXXXXXXX XXX" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission (or of any other Federal agency then administering the Exchange Act)
thereunder, all as the same shall be in effect at the time.
"INDEBTEDNESS" means (i) any liability for borrowed money or
evidenced by a note or similar obligation given in connection with the
acquisition of any property or other assets (other than trade accounts payable
incurred in the ordinary course of business); (ii) all guaranties, endorsements
and other contingent obligations, in respect of Indebtedness of others, whether
or not the same are or should be reflected in the Company's balance sheet (or
the notes thereto), except guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business, and (iii) the present value of any lease payments due under leases
required to be capitalized in accordance with applicable Statements of Financial
Accounting Standards, determined by discounting all such payments at the
interest rate determined in accordance with applicable Statements of Financial
Accounting Standards.
"INITIAL PUBLIC OFFERING" means the first underwritten public
offering of Common Stock of the Company and offered on a "firm commitment" basis
pursuant to an offering registered under the Securities Act with the Commission
on Form S-1, Form S-18 or their then equivalents.
"INTELLECTUAL PROPERTY RIGHTS" means any and all, whether
domestic or foreign, patents, patent applications, patent rights, trade secrets,
confidential business information, formula, biological or chemical processes,
compounds, cell lines, fungi, yeast, laboratory notebooks, algorithms,
copyrights, mask works, claims of infringement against third parties, licenses,
permits, license rights to or of technologies, contract rights with employees,
consultants or third parties, trademarks, trademark rights, inventions and
discoveries, and other such rights generally classified as intangible,
intellectual property assets in accordance with generally accepted accounting
principles.
"INVESTOR DIRECTORS" mean those directors of the Company who
are representatives of the Purchasers, initially Xx. Xxxxxx Xxxxxxxxxx,
Xxxxxxxxxxx F.O. Gabrieli, Xx. Xxxx X. Xxxxxxxx and Xxxxx X. Xxxxx.
"KEY EMPLOYEE" means and includes the Chairman, President,
Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, any
Vice President or Director of any functional area such as research and
development, engineering, technology, sales and marketing, finance and
administration or any other individual so designated by the Board of Directors
of the Company or by including a majority of the Investor Directors.
"NOTICE OF ACCEPTANCE" shall have the meaning assigned to that
term in Section 6.02.
"OFFER" shall have the meaning assigned to that term in
Section 6.01.
- 33 -
34
"OFFERED SECURITIES" shall have the meaning assigned to that
term in Section 6.01.
"PERSON" means an individual, corporation, partnership, joint
venture, trust, university, or unincorporated organization, or a government or
any agency or political subdivision thereof.
"PREFERRED STOCK" shall have the meaning assigned to that term
in Section 3.13.
"PURCHASER" and "PURCHASERS" shall have the meaning assigned
to that term in Section 1.01 of this Agreement (except as otherwise provided in
Article IV hereto) and shall include the original Purchasers and also any other
permitted transferee.
"QUALIFIED PUBLIC OFFERING" means a fully underwritten, firm
commitment public offering pursuant to an effective registration under the
Securities Act covering the offer and sale by the Company of its Common Stock in
which the aggregate gross proceeds to the Company exceed $9,000,000 and in which
the price per share of such Common Stock equals or exceeds $4.50 (such price
subject to equitable adjustment in the event of any stock split, stock dividend,
combination, reorganization, reclassification or other similar event).
"REFUSED SECURITIES" shall have the meaning assigned to that
term in Section 6.03.
"REGISTRABLE SHARES" shall mean and include (i) the Conversion
Shares; (ii) shares of Common Stock which are or may be acquired by any
Purchaser upon conversion of Series A Preferred Stock and Series B Preferred
Stock currently held by the Purchasers and (iii) the shares of capital stock of
the Company acquired by the Purchasers pursuant to Article VI hereof or any
shares of capital stock of the Company acquired after the date hereof by any
such Purchaser, including shares of Common Stock issuable on the conversion of
other securities acquired by the Purchasers pursuant to Article VI hereof or
otherwise; provided, however, that shares of Common Stock which are Registrable
Shares shall cease to be Registrable Shares upon the consummation of any sale
pursuant to a registration statement, Section 4(1) of the Securities Act or Rule
144 under the Securities Act or upon any transfer other than as permitted under
Section 5.12 hereof. Wherever reference is made in this Agreement to a request
or consent of holders of a certain percentage of Registrable Shares, the
determination of such percentage shall include the Conversion Shares even if
such conversion has not yet been effected.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
(or of any other Federal agency then administering the Securities Act)
thereunder, all as the same shall be in effect at the time.
"SERIAL PREFERRED STOCK" means the Series A Preferred Stock,
the Series B Preferred Stock and the Series C Preferred Stock, voting together
as a single class.
- 34 -
35
"SERIES A AND B AGREEMENT" mean the Series A and Series B
Preferred Stock Purchase Agreement, dated as of January 11, 1994, between the
Company and certain stockholders of the Company.
"SERIES C PREFERRED SHARES" shall have the meaning assigned to
that term in Section 1.02.
"SERIES A PREFERRED STOCK" shall have the meaning assigned to
that term in Section 3.13.
"SERIES B PREFERRED STOCK" shall have the meaning assigned to
that term in Section 3.13.
"SERIES C PREFERRED STOCK" means the Series C Preferred Stock
of the Company, $.01 par value, having the rights, powers, privileges and
preferences set forth in Exhibit A hereto.
"SHARES" means, collectively, the Series C Preferred Shares
and the Conversion Shares (except as otherwise provided in Article IV hereto).
"SUBSIDIARY" or "SUBSIDIARIES" means any Person of which the
Company and/or any of its other Subsidiaries (as herein defined) directly or
indirectly owns at the time at least fifty percent (50%) of the outstanding
voting shares of every class of such corporation or trust other than directors'
qualifying shares.
"UNDERSUBSCRIPTION AMOUNT" shall have the meaning assigned to
that term in Section 6.01.
"VOTING AND CO-SALE AGREEMENT" means the Amended and Restated
Voting and Co-Sale Agreement, dated as of January 11, 1994, between the Company
and certain stockholders of the Company.
7.02. ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistently applied, and all financial data submitted pursuant to
this Agreement shall be prepared in accordance with such principles.
ARTICLE VIII
MISCELLANEOUS
8.01. NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part
of any party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy
- 35 -
36
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy hereunder. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
8.02. AMENDMENTS, WAIVERS AND CONSENTS. Any provision in the
Agreement to the contrary notwithstanding, and except as hereinafter provided,
changes in, termination or amendments of or additions to this Agreement may be
made, and compliance with any covenant or provision set forth herein may be
omitted or waived, if the Company (i) shall obtain consent thereto in writing
from the holder or holders of at least 60% of the outstanding shares of Series C
Preferred Stock and/or Conversion Shares issued upon conversion thereof and (ii)
shall deliver copies of such consent in writing to any holders who did not
execute such consent; provided, (a) that the consent in writing from the holder
or holders of at least 60% of the outstanding shares of Serial Preferred Stock
and/or shares of Common Stock issued upon conversion thereof (including, but not
limited to, the Conversion Shares) shall be required to change, terminate, amend
or add to the provisions of Articles IV, V and VI hereto, and (b) that no
change, amendment or addition to the provisions of Section 5.13 hereto shall be
binding upon any holder of shares of Serial Preferred Stock and/or shares of
Common Stock issued upon conversion thereof (including, but not limited to, the
Conversion Shares), unless such holder consents in writing to such change,
amendment or addition; and, provided, further, that no consents shall be
effective to reduce the percentage in interest of the Shares the consent of the
holders of which is required under this Section 8.02. Any waiver or consent may
be given subject to satisfaction of conditions stated therein and any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
8.03. ADDRESSES FOR NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing (including telegraphic
communication) and delivered to each applicable party at the address set forth
in Exhibit 1.01 hereto or at such other address as to which such party may
inform the other parties in writing in compliance with the terms of this
Section , it being understood only one notice is required to be provided to the
Bessemer Purchasers at the following address or at such other address as to
which such party may inform the other parties in writing in compliance with the
terms of this Section:
Xx. Xxxxxx X. Xxxxxxxx
Bessemer Venture Partners
0000 Xxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
with a copy to: Xx. Xxxxxxxxxxx F.O. Gabrieli
Bessemer Venture Partners
00 Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxx, XX 00000
- 36 -
37
If to any other holder of the Shares: at such holder's address
for notice as set forth in the register maintained by the Company, or, as to
each of the foregoing, at the addresses set forth in Exhibit 1.01 hereto or at
such other address as shall be designated by such Person in a written notice to
the other parties complying as to delivery with the terms of this Section .
If to the Company: at the address set forth on page 1 hereof,
or at such other address as shall be designated by the Company in a written
notice to the other parties complying as to delivery with the terms of this
Section.
All such notices, requests, demands and other communications
shall be considered to be delivered when actually delivered at the foregoing
address of the party to be notified.
8.04. COSTS, EXPENSES AND TAXES. As a condition precedent to the
closing, the Company agrees to pay at the Closing in connection with the
preparation, execution and delivery of this Agreement and the issuance of the
Series C Preferred Shares at the Closing, the reasonable legal fees, not to
exceed $5,000 (unless any increase thereto is agreed to by the Company), and
other reasonable out-of-pocket expenses of Messrs. Xxxxx, Xxxxxxx & Xxxxxxxxx,
special counsel for the Purchasers. In addition, the Company shall pay any and
all stamp, or other similar taxes payable or determined to be payable in
connection with the execution and delivery of this Agreement, the issuance of
the Series C Preferred Shares and the other instruments and documents to be
delivered hereunder or thereunder, and agrees to save the Purchasers harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes.
8.05. BINDING EFFECT; ASSIGNMENT. Except as provided in Section 5.12,
this Agreement shall be binding upon and inure to the benefit of the Company and
the Purchasers and their respective heirs, successors and assigns, except that
the Company shall not have the right to delegate its obligations hereunder or to
assign its rights hereunder or any interest herein without the prior written
consent of the holders of at least 60% of the outstanding shares of Series C
Preferred Stock.
8.06. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in this Agreement, the Shares, or any other instrument or
document delivered in connection herewith or therewith, shall survive the
execution and delivery hereof or thereof.
8.07. PRIOR AGREEMENTS. This Agreement, the terms of the Series C
Preferred Stock, and the other agreements executed and delivered herewith
constitute the entire agreement between the parties and supersedes any prior
understandings or agreements concerning the subject matter hereof, other than
the Series A and B Agreement, the terms of the Series A Preferred Stock and the
Series B Preferred Stock, and the Voting and Co-Sale Agreement, each of which,
except as modified by the terms of this Agreement, shall remain in full force
and effect.
- 37 -
38
8.08. SEVERABILITY. The provisions of this Agreement, the Series A and
B Agreement, the Voting and Co-Sale Agreement and the terms of the Preferred
Stock are severable and, in the event that any court of competent jurisdiction
shall determine that any one or more of the provisions or part of a provision
contained in this Agreement, the Series A and B Agreement, the Voting and
Co-Sale Agreement, or the terms of the Preferred Stock shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part of a
provision of this Agreement, the Series A and B Agreement, the Voting and
Co-Sale Agreement, or the terms of the Preferred Stock; but this Agreement, the
Series A and B Agreement, the Voting and Co-Sale Agreement, and the terms of the
Preferred Stock shall be reformed and construed as if such invalid or illegal or
unenforceable provision, or part of a provision, had never been contained
herein, and such provisions or part reformed so that it would be valid, legal
and enforceable to the maximum extent possible.
8.09. CONFIDENTIALITY. Each Purchaser agrees that it will keep
confidential and will not disclose or divulge any confidential, proprietary or
secret information which such Purchaser may obtain from the Company pursuant to
financial statements, reports and other materials submitted by the Company to
such Purchaser pursuant to this Agreement, or pursuant to visitation or
inspection rights granted hereunder, unless such information is known, or until
such information becomes known through no fault of such Purchaser, to the
public; provided, however, that a Purchaser may disclose such information (i) on
a confidential basis to its attorneys, accountants, consultants and other
professionals to the extent necessary to obtain their services in connection
with its investment in the Company, (ii) to any prospective purchaser of any
Series C Preferred Shares or Conversion Shares from such Purchaser as long as
such prospective purchaser agrees in writing to be bound by the provisions of
this Section 8.09, (iii) to any affiliate or partner of such Purchaser on a
"need to know basis" and (iv) as required by applicable law. If a Purchaser is
required in any legal or administrative or other governmental proceeding to
disclose any of such information, such Purchaser shall give the Company timely
notice of the pending requirement and use its best efforts to provide the
Company an opportunity to obtain protective provisions against further
disclosure.
8.10. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with the General Corporation Law of the State of Delaware as to
matters within the scope thereof and as to all other matters shall be governed
by and construed in accordance with the internal laws of The Commonwealth of
Massachusetts, without giving effect to choice of laws provisions.
8.11. HEADINGS. Article, section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
8.12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
- 38 -
39
8.13. FURTHER ASSURANCES. From and after the date of this Agreement,
upon the request of any Purchaser or the Company, the Company and the Purchasers
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the Shares.
* * * * * * *
[Remainder of Page Intentionally Left Blank]
[Signature Pages Immediately Follow]
- 39 -
40
IN WITNESS WHEREOF, the parties hereto have caused this Series C
Preferred Stock Purchase Agreement to be executed as of the date first above
written.
MYCO PHARMACEUTICALS INC.
By:
----------------------------------
President
TECHNOLOGY LEADERS L.P.
By: Technology Leaders Management,
Inc. (General Partner)
By:
----------------------------------
Title:
TECHNOLOGY LEADERS OFFSHORE C.V.
By: Technology Leaders Management,
Inc. (General Partner)
By:
----------------------------------
Title:
BESSEMER VENTURE PARTNERS III L.P.
By:
----------------------------------
General Partner
- 40 -
41
XXXXXX XXXXXXX FUND II L.P.
By: its general partner,
Xxxxxx Xxxxxxx Partners II L.P.
By:
----------------------------------
Name: Xxxxx X. Xxxxx, Xx.
Title: General Partner
GILDE INVESTMENT FUND B.V.
By:
----------------------------------
Name: Xxxxx X. Xxxxx Xx. general
partner of Xxxxxx Xxxxxxx
Partners II L.P.
COMDISCO, INC.
By:
----------------------------------
Title:
J. XXXXXX XXXXX, INC.
By:
----------------------------------
Title:
-------------------------------
BRIMSTONE ISLAND CO., L.P.
By:*
----------------------------------
Title:
*
----------------------------------
Xxxxxxx X. Xxxxxx
- 41 -
42
*
----------------------------------
Neill X. Xxxxxxxxxx
*
----------------------------------
Xxxxxx X. Xxxxxxxx
*
----------------------------------
G. Xxxxx Xxxxxxxx
*
----------------------------------
Xxxxxxxxxxx Xxxxxxxx
*
----------------------------------
Xxxxxxx X. Xxxxxx
*
----------------------------------
Xxxxxx X. Xxxxxx
*
----------------------------------
Xxxxxxx X. Xxxxx
*
----------------------------------
Xxxxxxx X. Xxxxxxx
*
----------------------------------
Xxxxxx X. Xxxx
*
----------------------------------
Xxxx X. Xxxxx, Xx.
*
----------------------------------
Xxxxxxxx X. Xxxxxx
- 42 -
43
*
-------------------------------------
Xxxxxx X. Xxxxxxx
*
-------------------------------------
Xxxxxxx X. Xxxxxxx
*
-------------------------------------
Xxxxxx X. Xxxxxxxx, signing
as Attorney-in-Fact for each
of the individuals beside whose
name an asterisk appears
-------------------------------------
Xxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxx Xxxxxx
-------------------------------------
Xxxx Xxxxxx
[NOTE: A AND B PURCHASERS, EVEN THOSE WHO ARE NOT
PURCHASERS UNDER THIS AGREEMENT, SHOULD SIGN THIS AGREEMENT
WITH RESPECT TO ARTICLES IV, V AND VI OF THIS AGREEMENT.]
- 43 -
44
EXHIBITS TO MYCO PHARMACEUTICALS INC. SERIES C
PREFERRED STOCK PURCHASE AGREEMENT
Exhibit A
Restated Certificate of Incorporation
Exhibit 1.01
Purchasers' Ownership of Series C Preferred Stock at Closing
Exhibit 2.02(b)
Opinion of Counsel to Company
45
EXHIBIT 1.01
SCHEDULE OF PURCHASERS - SERIES C PREFERRED STOCK
Aggregate
Purchase Number of
Price of Shares of
Series C Series C
Preferred Preferred
Name and Address Shares Stock
---------------- ------ -----
Technology Leaders L.P. $420,210 140,070
800 The Safeguard Building
000 Xxxxx Xxxx Xxxxx
Xxxxx, XX 00000
Technology Leaders Offshore C.V $479,790 159,930
x/x XXX Xxxxx Xxxxxxx
00 Xxxxxxxxxx
Xxxxxxx, Xxxxxxxxxxx Antilles
Bessemer Venture Partners III L.P. $849,072 283,024
00 Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxx, XX 00000
Xxxxxx Xxxxxxx Fund II, L.P. $445,500 148,500
Xxx Xxxxxxx Xxxxxx - Xxxxx 000
Xxxxxx, XX 00000
Gilde Investment Fund B.V $ 4,500 1,500
x/x Xxxxxx Xxxxxxx Xxxx XX, X.X.
Xxx Xxxxxxx Xxxxxx - Xxxxx 000
Xxxxxx, XX 00000
Comdisco, Inc. $ 50,001 16,667
Xxx Xxxxxx Xxxxxxxxx Xxxx
Xxxxxx Xxxxx Xxxxx, XX 00000
Xxxxxx X. Xxxxxxxx $ 2,700 900
Bessemer Venture Partners
0000 Xxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Xxxxxxxxxxx F.O. Gabrieli $ 28,800 9,600
c/o Xxxxxx X. Xxxxxxxx
Bessemer Venture Partners
0000 Xxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
- 44 -
46
EXHIBIT 1.01
SCHEDULE OF PURCHASERS - SERIES C PREFERRED STOCK
Aggregate
Purchase Number of
Price of Shares of
Series C Series C
Preferred Preferred
Name and Address Shares Stock
---------------- ------ -----
Xxxxxxx X. Xxxxx $3,003 1,001
c/o Xxxxxx X. Xxxxxxxx
Bessemer Venture Partners
0000 Xxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Xxxxxx X. Xxxx $ 675 225
c/o Xxxxxx X. Xxxxxxxx
Bessemer Venture Partners
0000 Xxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Xxxx X. Xxxxx, Xx $4,500 1,500
c/o Xxxxxx X. Xxxxxxxx
Bessemer Venture Partners
0000 Xxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Xxxxxxxx X. Xxxxxx $ 450 150
c/o Xxxxxx X. Xxxxxxxx
Bessemer Venture Partners
0000 Xxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxx $1,800 600
c/o Xxxxxx X. Xxxxxxxx
Bessemer Venture Partners
0000 Xxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
- 45 -
47
EXHIBIT 1.01
SCHEDULE OF PURCHASERS - SERIES C PREFERRED STOCK
Aggregate
Purchase Number of
Price of Shares of
Series C Series C
Preferred Preferred
Name and Address Shares Stock
G. Xxxxx Xxxxxxxx $ 9,000 3,000
c/o Xxxxxx X. Xxxxxxxx
Bessemer Venture Partners
0000 Xxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Xxxxx X. Xxxxxxxxx $ 3,216 1,072
Xxx Xxxxxxx Xxxxxx
Xxxxxxxx 000
Xxxxxxxxx, XX 00000
$2,303,217 767,739
- 46 -
48
Exhibit 3.07
At May 31, 1994, the Company has title to tangible assets in these
approximate amounts:
Leasehold improvements $ 567,000
Laboratory Equipment 977,000
Office Equipment and Computers 178,000
Office Furniture 38,000
----------
Purchase Price $1,760,000
Book Depreciation 267,000
----------
$1,493,000
The Company also has the right to use intangible property pursuant to
and subject to the terms of the agreements listed in Exhibit 3.14.
The Company has acquired most of the above furnishings, equipment and
leasehold improvements subject to an equipment lease with Comdisco Venture
Group. The original principal balance of the lease related to the above Purchase
Price of the assets was $1,500,000 against which principal payments
approximating $161,000 have subsequently been made.
See Exhibit 3.14.
Exhibit 3.08
Transactions with Affiliates
The Company has entered into the following agreements with Xxxxx
Xxxxxxxxx: (i) Employment and Noncompetition Agreement; (ii) Confidentiality
Agreement, and (iii) Stock Purchase and Repurchase Agreement. The Company has
also entered into Stock Option Agreements, an Employment Agreement and
Noncompetition and Confidentiality Agreement with Xx. Xxxxxxx Xxxxxxxxxx.
Pursuant to the Employment Agreement, the Company loaned Xx. Xxxxxxxxxx the
principal amount of $100,000, of which $86,738 is currently outstanding, and the
Company has a second mortgage on certain real property held by Xx. Xxxxxxxxxx.
Interest on the loan is charged at the prime rate, and any bonus awarded may be
used to pay this loan. In any year in which Xx. Xxxxxxxxxx is not awarded a
bonus, no principal payment is due.
See Exhibit 3.10
49
Exhibit 3.09
Guaranties of Indebtedness
The Company has leased 12,500 square feet of space from
MYCORT, Inc., a sublessee of Old Cambridge Realty Trust. The sub-lessor
has financed $576,310 improvement work for office and laboratory at
these facilities.
As described in Exhibit 3.07, the Company has acquired assets
subject to an equipment lease with Comdisco. The lease provides a total
commitment of up to $4,500,000. The first tranche of $1,500,000 was
fully drawn down during May 1994. The second tranche of $1,000,000
became available June 1, 1994. The lease provides for a term for each
tranche of forty-eight months at an 10% interest rate, plus warrants to
be issued to Comdisco (See Exhibit 3.13). Copies of the lease
documentation are available at the offices of the Company.
Exhibit 3.10
Investments
As described in Exhibit 3.08, the Company has an outstanding
loan of $86,738 to Xx. Xxxxxxx Xxxxxxxxxx.
Exhibit 3.13
Capitalization/Restrictions on Transfer
Outstanding Capital Stock
As of the date hereof the Company has 1,506,000 issued and
outstanding shares of Common Stock, 6,150,732 issued and outstanding
shares of Series A Preferred Stock and 1,063,366 issued and outstanding
shares of Series B Preferred Stock which are issued to the persons set
forth on Attachment A to Exhibit 3.13. 860,000 shares of Common Stock
issued to Xxxxx X. Xxxxxxxxx, Ph.D, are subject to a vesting
arrangement.
Options to Purchase Capital Stock
The Company has granted options to purchase a total of
1,364,700 shares of Common Stock of the Company to the persons listed
in the Attachment to this Exhibit 3.13.
The Company has issued a warrant to Comdisco, Inc. for the
purchase of up to 177,083 shares of the Company's Series A Preferred
Stock in connection with certain equipment leasing transactions.
50
MYCO PHARMACEUTICALS INC.
STOCKHOLDERS LIST
COMMON STOCK
NAME CERTIFICATE DATE NUMBER OF
---- ----
NUMBER SHARES
------ ------
Xx. Xxxxx Xxxxxxxxx C001 1-13-92 336,000
Xx. Xxxxx Xxxxxxxxx C0002 2-19-92 860,000
Xx. Xxxxx Xxxxxx C0003 2-20-92 60,000
Dr. Xxxx Xxxxxx C0004 2-20-92 60,000
Xx. Xxxxx Xxxxxxxx, Ph.D. C0005 2-20-92 30,000
Xx. Xxxx Xxxxxxxxxx C0006 2-20-92 20,000
Xx. Xxxxxxxx Xxxxxxx C0007 2-20-92 20,000
N. Xxx Xxxxxx C0008 2-20-92 5,000
Xx. Xxxx X. Xxxxxxx C0009 2-20-92 5,000
Dr. Xxxxxxx Xxxxxxx C0010 2-20-92 5,000
Xx. Xxxx Xxxxxxxxx C0011 2-20-92 5,000
Xx. Xxxxx Xxxx C0012 2-20-92 100,000
TOTAL COMMON 1,506,000
51
SERIES A PREFERRED STOCK
NAME CERTIFICATE DATE NUMBER OF
---- ----
NUMBER SHARES
------ ------
Technology Leaders, L.P. SP0001 2-25-92 370,000
Technology Leaders Offshore SP0002 2-25-92 630,000
C.V.
Xxxxxxx X. Xxxxxx SP0004 2-25-92 15,000
Brimstone Island Co., L.P. SP0005 2-25-92 15,000
Neill X. Xxxxxxxxxx SP0006 2-25-92 10,000
Xxxxxx X. Xxxxxxxx SP0007 2-25-92 3,000
G. Xxxxx Xxxxxxxx SP0008 2-25-92 10,000
Xxxxxxxxxxx Xxxxxxxx SP0009 2-25-92 32,000
Xxxxxxx X. Xxxxxx SP0010 2-25-92 2,500
Xxxxxx X. Xxxxxx SP0011 2-25-92 2,000
Xxxxxxx X. Xxxxx SP0012 2-25-92 3,334
Xxxxxx X. Xxxx SP0013 2-25-92 750
Xxxx X. Xxxxx, Xx. SP0014 2-25-92 5,000
Xxxxxxxx X. Xxxxxx SP0015 2-25-92 500
Xxxxxx X. Xxxxxxx SP0016 2-25-92 2,000
Xxxxxxx X. Xxxxxxx SP0017 2-25-92 2,000
Xxxxxxx X. Xxxxxxx SP0018 2-25-92 3,000
Technology Leaders, L.P. SP0019 1-27-93 370,000
Technology Leaders Offshore SP0020 1-27-93 630,000
C.V.
Xxxxxxx X. Xxxxxx SP0022 1-27-93 15,000
Brimstone Island Co., L.P. SP0023 1-27-93 15,000
Neill X. Xxxxxxxxxx SP0024 1-27-93 10,000
Xxxxxx X. Xxxxxxxx SP0025 1-27-93 3,000
G. Xxxxx Xxxxxxxx SP0026 1-27-93 10,000
Xxxxxxxxxxx Xxxxxxxx SP0027 1-27-93 32,000
52
SERIES A PREFERRED STOCK
NAME CERTIFICATE DATE NUMBER OF
---- ----
NUMBER SHARES
------ ------
Xxxxxxx X. Xxxxxx SP0028 1-27-93 2,500
Xxxxxx X. Xxxxxx SP0029 1-27-93 2,000
Xxxxxxx X. Xxxxx SP0030 1-27-93 3,334
Xxxxxx X. Xxxx SP0031 1-27-93 750
Xxxx X. Xxxxx, Xx. SP0032 1-27-93 5,000
Xxxxxxxx X. Xxxxxx SP0033 1-27-93 500
Xxxxxx X. Xxxxxxx SP0034 1-27-93 2,000
Xxxxxxx X. Xxxxxxx SP0035 1-27-93 2,000
Xxxxxxx X. Xxxxxxx SP0036 1-27-93 3,000
Xxxx Xxxxxx XX0000 1-29-93 12,000
Xxxxxx X. Xxxxxx, CPA SP0038 1-29-93 12,000
Profit Sharing Plan
Xxxxxxx X. Xxxxxx SP0039 1/11/94 8,752
Brimstone Island Co., L.P. SP0040 1/11/94 8,572
Neill X. Xxxxxxxxxx SP0041 1/11/94 5,714
Xxxxxx X. Xxxxxxxx SP0042 1/11/94 1,714
G. Xxxxx Xxxxxxxx SP0043 1/11/94 5,714
Xxxxxxxxxxx Xxxxxxxx SP0044 1/11/94 18,286
Xxxxxxx X. Xxxxxx SP0045 1/11/94 1,428
Xxxxxx X. Xxxxxx SP0046 1/11/94 1,142
Xxxxxxx X. Xxxxx SP0047 1/11/94 1,906
Xxxxxx X. Xxxx SP0048 1/11/94 428
Xxxx X. Xxxxx, Xx. SP0049 1/11/94 2,858
Xxxxxxxx X. Xxxxxx SP0050 1/11/94 286
Xxxxxx X. Xxxxxxx SP0051 1/11/94 1,142
Xxxxxxx X. Xxxxxxx SP0052 1/11/94 1,142
Xxxxxxx X. Xxxxxxx SP0053 1/11/94 1,714
-2-
53
SERIES A PREFERRED STOCK
NAME CERTIFICATE DATE NUMBER OF
---- ----
NUMBER SHARES
------ ------
Xxxxxx Xxxxxx SP0054 1/11/94 3,428
Xxxx Xxxxxx SP0055 1/11/94 3,428
J. Xxxxxx Xxxxx, Inc. SP0056 1/11/94 8,572
Technology Leaders L.P. SP0057 1/11/94 266,800
Technology Leaders SP0058 1/11/94 304,628
Offshore C.V.
Xxxxxx Xxxxxxx SP0060 1/11/94 707,142
Fund II, X.X.
Xxxxx Investment Fund B.V. SP0061 1/11/94 7,142
Comdisco, Inc. SP0062 1/11/94 57,142
Xxxxx X. Xxxxxxxxx SP0063 1/11/94 22,858
Bessemer SP0065 2/24/94 893,916
Venture Partners III, L.P.
Bessemer SP0067 2/24/94 510,810
Venture Partners III, L.P.
Bessemer SP0069 2/24/94 893,916
Venture Partners III, L.P.
Comdisco, Inc. SP0070 7/13/94 30,286
Xxxxxx Xxxxxxx Fund II, SP0071 7/13/94 141,430
X.X.
Xxxxx Investment Fund, B.V. SP0072 7/13/94 1,428
Xxxxx X. Xxxxxxxxx SP0073 7/13/94 1,020
TOTAL ISSUED 6,150,732
-3-
54
SERIES B PREFERRED
NAME CERTIFICATE DATE NUMBER OF
---- ----
NUMBER SHARES
------ ------
Xxxxxxx X. Xxxxxx PB0001 1/11/94 4,286
Brimstone Island Co. L.P. PB0002 1/11/94 4,286
Neill X. Xxxxxxxxxx PB0003 1/11/94 2,857
Xxxxxx X. Xxxxxxxx PB0004 1/11/94 857
G. Xxxxx Xxxxxxxx PB0005 1/11/94 2,857
Xxxxxxxxxxx Xxxxxxxx PB0006 1/11/94 9,143
Xxxxxxx X. Xxxxxx PB0007 1/11/94 000
Xxxxxx X. Xxxxxx XX0000 1/11/94 571
Xxxxxxx X. Xxxxx PB0009 1/11/94 953
Xxxxxx X. Xxxx PB0010 1/11/94 214
Xxxx X. Xxxxx, Xx. PB0011 1/11/94 1,429
Xxxxxxxx X. Xxxxxx PB0012 1/11/94 143
Xxxxxx X. Xxxxxxx PB0013 1/11/94 571
Xxxxxxx X. Xxxxxxx PB0014 1/11/94 571
Xxxxxxx X. Xxxxxxx PB0015 1/11/94 857
Xxxxxx Xxxxxx PB0016 1/11/94 1,714
Xxxx Xxxxxx XX0000 1/11/94 1,714
Technology Leaders L.P. PB0018 1/11/94 133,400
Technology Leaders PB0019 1/11/94 152,314
Offshore C.V.
Xxxxxx Xxxxxxx PB0021 1/11/94 353,571
Fund II, X.X.
Xxxxx Investment PB0022 1/11/94 3,571
Fund B.V.
Comdisco, Inc. PB0023 1/11/94 28,571
J. Xxxxxx Xxxxx, Inc. PB0024 1/11/94 4,286
Xxxxx X. Xxxxxxxxx PB0025 1/11/94 11,429
Bessemer Venture Partners PB0027 2/24/94 255,405
III, L.P.
Comdisco, Inc. PB0028 7/13/94 15,143
55
SERIES B PREFERRED
NAME CERTIFICATE DATE NUMBER OF
---- ----
NUMBER SHARES
------ ------
Xxxxxx Xxxxxxx Xxxx XX, XX0000 7/13/94 70,715
X.X.
Xxxxx Investment Fund, PB0030 7/13/94 714
B.V.
Xxxxx X. Xxxxxxxxx PB0031 7/13/94 510
TOTAL ISSUED 1,063,366
-2-
56
Myco Pharmaceuticals Inc.
Stock Options Granted
June 1, 1994
INDIVIDUAL HOLDER
Option Employee # of Option Vesting % of Options
Date SAB/Consultant Shares Price Schedule Awarded
----------------------------------------------------------------------------------------
1/1/92 Xxxx 200,000 $0.20 * 14.66%
1/1/92 Koltin 120,000 $0.20 * 8.79%
1/1/92 Xxxxxx 120,000 $0.20 * 8.79%
1/1/92 Xxxxxxxx 60,000 $0.20 * 4.40%
1/1/92 Timberlake 40,000 $0.20 * 2.93%
1/1/92 Xxxxxxx 40,000 $0.20 * 2.93%
1/1/92 Xxxxxx 10,000 $0.20 * 0.73%
6/14/93 Xxxxxx 2,500 $0.20 # 0.18%
1/1/92 Xxxxxxx 10,000 $0.20 * 0.73%
6/14/93 Xxxxxxx 2,500 $0.20 # 0.18%
3/4/94 Xxxxxxx 12,500 $0.23 # 0.92%
1/1/92 Diamond 10,000 $0.20 * 0.73%
6/14/93 Diamond 2,500 $0.20 # 0.18%
1/1/92 Nakanishi 10,000 $0.20 * 0.73%
1/2/92 Xxxxxx, X.X. 8,000 $0.20 ** 0.59%
6/22/92 Xxxxxx 3,750 $0.20 * 0.27%
6/14/93 Xxxxxx 1,875 $0.20 # 0.14%
6/14/93 Xxxxxx 1,875 $0.20 ? 0.14%
3/4/94 Xxxxxx 5,000 $0.23 # 0.37%
10/19/92 X'Xxxxxx 50,000 $0.20 # 3.66%
1/1/93 Xxxxxxx 15,000 $0.20 * 1.10%
1/1/93 Stankis 1,000 $0.20 # 0.07%
6/14/93 Stankis 4,000 $0.20 # 0.29%
6/13/94 Stankis 5,000 $0.30 # 0.37%
3/1/93 Tlmberlake 240,000 $0.20 ## 17.59%
3/1/93 Timberlake 200,000 $0.20 ## 14.66%
6/13/94 Timberlake 50,000 $0.30 # 3.66%
6/14/93 Xxxxxx,T.V. 15,000 $0.20 # 1.10%
6/14/93 Xxx, Xxxxxx 1,000 $0.20 # 0.07%
6/14/93 Xxxxxxxxx, Xxxxx 15,000 $0.20 # 1.10%
6/14/93 Xxxxxx, Xxxxx 30,000 $0.20 # 2.20%
6/14/93 Xxxxxx, Xxxxxxx 750 $0.20 # 0.05%
6/21/93 Xxxxxx, Xxxxxx 1,000 $0.20 # 0.07%
6/23/93 Xxxxx, Xxxxxxx 1,000 $0.20 # 0.07%
7/7/93 Xxxxxx, Xxxxx 1,000 $0.20 # 0.07%
8/2/93 Jiang, Weldong 10,000 $0.20 # 0.73%
8/11/93 Xxxxxx, Xxxxxxxx 750 $0.20 # 0.05%
8/23/93 Shu, Nyngi 500 $0.20 # 0.04%
12/1/93 Chen, Yanni 750 $0.20 # 0.05%
1/2/93 Xxxxxx, X. X. & Chvisuk, T.A. 8,000 $0.20 ** 0.59%
1/31/94 Xxxxxx, Xxxxxxxxx 750 $0.20 # 0.05%
2/1/94 Xxxxxxxx, Xxxxx 1,200 $0.23 # 0.09%
3/7/94 Poland, Anna 500 $0.23 # 0.04%
3/28/94 Xxxxx, Xxxxxxx 1,000 $0.23 # 0.07%
4/4/94 Xxxxxxxxx, Xxxxxxx 1,000 $0.23 # 0.07%
6/1/94 Xxxxxxxx, Xxx 50,000 $0.23 # 3.66%
--------- -----
Stock Option Plan-Grants 1,364,700 1
Stock Option Plan-Available 747,300
---------
Stock Option Plan-Total Auth. 2,112,000
=========
----------
* Options vest at 25% per year
** Options vested 12/31/92
# Option vest at 20% per year
? Options vest based on attainment of a milestone to be agreed upon by employee
and supervisor within 6 months.
## Options vest at the rate of 100,000 for each event for (1) approval of an IND
and the launch of clinical trials in humans for a Myco compound, and/or (2)
demonstration of safety and efficacy of a Myco compound in Phase II clinical
trials. Option expires 12/31/95.
@ Options vest over 5 years based on attainment of yearly milestones for
division. Milestones to be agreed upon by the Company and YK prior to the
start of each year.
57
Exhibit 3.14
Material Agreements
See Exhibits 3.08, 3.13 and the Attachment to this Exhibit 3.14.
Exhibit 4.02
See Exhibit 3.08.
58
EXHIBIT
Attachment to Exhibit 3.14
In addition to the matters discussed in Exhibits 3.08 and 3.13, at May 31, 1994,
the Company has entered into the following agreements:
Approximate
Annual
Description Contract Term Amount
----------- ------------- -----------
CFO Services (Xxxxxx/Chvisuk) 1/01/94-12/31/94 $ 24,000
Comdisco Venture Group equipment lease 6/93-5/97 $ 561,000
MYOCRT, Inc. real estate lease 7/93-6/2004 $ 350,000
LICENSE/RESEARCH AGREEMENTS
[ See Attachment to Exhibit 3.14 in Exhibit 10.5 ]
LICENSES:
