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EXHIBIT 10.1
NOVARTIS PHARMA AG
TREGA BIOSCIENCES, INC.
STOCK PURCHASE AGREEMENT
MAY 26, 1998
CONFIDENTIAL
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CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED: PAGES WHERE CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED ARE MARKED "CONFIDENTIAL TREATMENT REQUESTED" AND APPROPRIATE
SECTIONS, WHERE TEXT HAS BEEN OMITTED, ARE NOTED WITH "[CONFIDENTIAL TREATMENT
REQUESTED]." AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as of the 26th
day of May, 1998 (the "EFFECTIVE DATE"), by and between Novartis Pharma AG
("NOVARTIS" or the "INVESTOR"), a corporation organized under the laws of
Switzerland, with its principal place of business at Xxxxxxxxxxxx 00, XX-0000,
Xxxxx, Xxxxxxxxxxx, and Trega Biosciences, Inc. (the "COMPANY"), a Delaware
corporation with its principal place of business at 0000 Xxxxxxx Xxxxxxx Xx.,
Xxx Xxxxx, Xxxxxxxxxx, 00000, X.X.X.
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF COMMON STOCK. Subject to the terms and conditions
hereof, the Company will issue and sell shares (the "SHARES") of Common Stock,
par value $.001 per share, of the Company ("COMMON STOCK") to the Investor, and
the Investor will buy the Shares from the Company, as follows:
1.1 PUT OPTION INVESTMENT.
(a) At anytime prior to the date which is nineteen (19) months
after the Effective Date, upon thirty (30) days' prior notice made pursuant to
Section 10.10 of this Agreement (the "PUT OPTION NOTICE"), the Company, at the
Company's option, may issue and sell Shares to the Investor, and the Investor
will buy such Shares, for a purchase price of [CONFIDENTIAL TREATMENT REQUESTED]
in cash in U.S. dollars. The date upon which such Shares will be sold (the
"OPTION DATE") shall be the date thirty (30) days after the Company provides the
Investor with the Put Option Notice. The number of Shares which the Company
shall issue and sell to the Investor pursuant to this Section 1.1 shall equal
[CONFIDENTIAL TREATMENT REQUESTED] divided by the "Share Price". The "SHARE
PRICE" shall mean the average closing price per share of the Common Stock (if so
quoted, then as quoted in the Wall Street Journal) for the twenty (20)
consecutive trading day period prior to the Option Date (the "PUT OPTION
MEASUREMENT PERIOD"); provided, however, that (i) if such average closing price
exceeds [CONFIDENTIAL TREATMENT REQUESTED] per share, then the Share Price shall
be [CONFIDENTIAL TREATMENT REQUESTED](the "CAP"), and (ii) if such average
closing price is less than [CONFIDENTIAL TREATMENT REQUESTED] per share, then
the Share Price shall be [CONFIDENTIAL TREATMENT REQUESTED] (the "FLOOR"). The
closing of the purchase and sale of the Shares to be sold and purchased pursuant
to this Section 1.1 (the "PUT OPTION CLOSING") shall occur on the Option Date or
on such date thereafter as is mutually
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CONFIDENTIAL TREATMENT REQUESTED
agreeable to the parties hereto.
(b) If after the Effective Date and on or prior to the Option
Date the outstanding shares of Common Stock shall be changed into a different
number of shares by reason of any reclassification, recapitalization, split-up,
combination or exchange of shares, or any dividend payable in stock or other
securities shall be declared thereon with a record date within such period, or
any similar event shall occur (any such action, an "ADJUSTMENT EVENT"), then the
per share closing prices of Common Stock during the Put Option Measurement
Period, the Cap and the Floor shall be adjusted accordingly to provide to the
Investor the same economic effect as contemplated by this Agreement prior to
such Adjustment Event.
(c) If the Company does not exercise its option pursuant to
this Section 1.1, then the Investor shall not be required to pay to the Company
the related purchase price of [CONFIDENTIAL TREATMENT REQUESTED].
(d) Notwithstanding the other provisions of this Section 1.1,
at the time of the delivery to the Investor by the Company of the Put Option
Notice, the Company (in the Company's sole discretion) may advise the Investor,
as part of the Put Option Notice, of the Company's election to decrease the size
of the Investor's purchase price (i.e., to a figure of less than [CONFIDENTIAL
TREATMENT REQUESTED]). In such event, the Put Option Notice will set forth the
revised purchase price and the provisions of this Section 1.1 shall be deemed
modified, to the extent necessary, to reflect such revised purchase price.
However, the Investor shall only be required to participate in one Put Option
Closing (and, as a result, the Investor's obligation to purchase Shares
represented by the amount of the decrease in purchase price from [CONFIDENTIAL
TREATMENT REQUESTED] will be extinguished).
1.2 MILESTONE INVESTMENTS.
(a) Pursuant to Section 4.1 of the Research, Development and
License Agreement between the Company and the Investor of even date, a copy of
which is attached hereto as Exhibit A (the "LICENSE AGREEMENT"), the Company
will issue and sell Shares to the Investor, and the Investor will buy such
Shares from the Company, for [CONFIDENTIAL TREATMENT REQUESTED] in cash in U.S.
dollars upon the Investor's "EARLY DEVELOPMENT PROPOSAL DECISION" (as defined in
the License Agreement). The closing of the purchase and sale of the Shares to be
sold and purchased pursuant to this Section 1.2 (the "MILESTONE CLOSING") shall
occur within 30 days of the Investor's Early Development Proposal Decision, or
on such later date as the Company and the Investor may reasonably agree.
(b) On the Milestone Closing, the Company shall issue and sell
to the Investor, and the Investor shall purchase and receive from the Company,
that number of Shares equal to [CONFIDENTIAL TREATMENT REQUESTED] divided by the
average closing price per share of the Common Stock (if so quoted, then as
quoted in the Wall Street Journal) for the twenty (20) consecutive trading day
period prior to the Investor's Early Development Proposal Decision (the
"MILESTONE MEASUREMENT PERIOD").
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CONFIDENTIAL TREATMENT REQUESTED
(c) If an Adjustment Event occurs after the Effective Date and
on or prior to the Milestone Closing, then the per share closing prices of
Common Stock during the Milestone Measurement Period shall be adjusted
accordingly to provide to the Investor the same economic effect as contemplated
by this Agreement prior to such Adjustment Event.
(d) In order to facilitate the purchase of the Shares, the
Company shall furnish to the Investor written confirmation of the date of the
Milestone Closing seven (7) days prior to such date (the "CLOSING
VERIFICATION").
(e) Notwithstanding the other provisions of this Section 1.2,
prior to delivery to the Investor by the Company of the Closing Verification,
the Company (in the Company's sole discretion) may advise the Investor in
writing of the Company's election to terminate the obligations of the parties
with respect to the Milestone Closing. In such event, without limitation, the
Company shall not be required to issue and deliver to the Investor the Shares
otherwise called for at the Milestone Closing and the Investor shall not be
required to pay to the Company the related purchase price of [CONFIDENTIAL
TREATMENT REQUESTED].
1.3 NOVARTIS AFFILIATE. Subject to compliance with applicable state
and federal securities laws, the parties agree that Novartis may assign the
right and obligation to purchase the Shares (as specified and for the
consideration set forth in Sections 1.1 and 1.2 above) and all of its other
rights and obligations under this Agreement to an "AFFILIATE" (as such term is
defined in the License Agreement), in which event the term "Investor" shall
refer herein to such Affiliate; provided, however, that no such assignment shall
relieve Novartis of the obligation to pay for the Shares in the event that the
Affiliate fails to perform as provided herein.
2. CLOSING DATE, DELIVERY.
2.1 ISSUANCE OF SHARES. At the Put Option Closing and the Milestone
Closing, the Company will deliver to the Investor stock certificates, issued in
the Investor's name, representing the Shares issuable at the Put Option Closing
or the Milestone Closing, as the case may be, against payment as specified in
Sections 1.1 and 1.2 (as applicable) by check payable to the Company or by wire
transfer of same day funds per the Company's wiring instructions.
2.2 FURTHER ASSURANCES. The Company and the Investor hereby covenant
and agree, without the necessity of any further consideration, to execute,
acknowledge and deliver any and all such other documents and to take any such
other action as may be reasonably necessary to carry out the intent and purposes
of this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investor, as of the Effective Date, as follows:
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3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite corporate power and
corporate authority to own and operate its properties and assets, to carry on
its business as now conducted and as proposed to be conducted, to enter into
this Agreement, to sell the Shares and to carry out the other transactions
contemplated hereunder. The Company, and each of its subsidiaries, is qualified
to transact business and is in good standing in each jurisdiction in which the
failure to qualify would be reasonably likely to have a material adverse effect
on the business, properties, financial condition or results of operations of the
Company and its subsidiaries taken as a whole (a "MATERIAL ADVERSE EFFECT"). The
Company has made available to the Investor true, correct and complete copies of
the Company's Amended and Restated Certificate of Incorporation (the "RESTATED
CERTIFICATE") and the Company's By-laws (the "BY-LAWS"), each in the form as is
in effect on the Effective Date.
3.2 CAPITALIZATION AND VOTING RIGHTS.
(a) The authorized capital of the Company as of the Effective
Date consists of:
(i) 40,000,000 shares of Common Stock, of which
13,937,620 shares were issued and outstanding as of March 31, 1998; and
(ii) 5,000,000 shares of preferred stock, $.001 par
value per share, of which no shares were issued and outstanding as of the
Effective Date.
(b) As of March 31, 1998, and except as set forth in the
Schedule of Exceptions attached hereto as Exhibit B (the "SCHEDULE OF
EXCEPTIONS"), there are: (i) no outstanding options, warrants, rights (including
conversion or preemptive rights) or agreements pursuant to which the Company is
or may become obligated to issue, sell or repurchase any shares of its capital
stock or any other securities of the Company; (ii) no restrictions on the
transfer of capital stock of the Company imposed by the Restated Certificate,
the By-laws, any agreement to which the Company is a party, any order of any
court or any governmental agency to which the Company is subject or any statute
(other than those imposed by relevant state and federal securities laws); (iii)
no cumulative voting rights for any of the Company's capital stock; (iv) no
registration rights under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), with respect to shares of the Company's capital stock; and
(v) to the actual knowledge of the Company's executive officers (the "COMPANY'S
ACTUAL KNOWLEDGE"), no options or other rights to purchase shares of capital
stock from stockholders of the Company granted by such stockholders. The Company
has reserved (i) up to 2,960,465 shares of Common Stock for issuances pursuant
to the Company's 1996 Stock Incentive Plan and (ii) up to 100,000 shares of
Common Stock for issuances pursuant to the Company's 1996 Employee Stock
Purchase Plan.
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(c) Except as set forth in the Schedule of Exceptions, the
Company is not a party to or is not subject to any agreement or understanding
relating to, and to the Company's Actual Knowledge there is no agreement or
understanding between any persons and/or entities which affects or relates to,
the voting of shares of capital stock of the Company or the giving of written
consents by a stockholder or director of the Company.
3.3 SUBSIDIARIES. Each of the Company's subsidiaries is duly
organized and existing under the laws of its jurisdiction of organization and is
in good standing under such laws.
3.4 AUTHORIZATION. All corporate action on the part of the Company
and its stockholders necessary for the authorization, execution and delivery of
this Agreement, the performance of all obligations of the Company hereunder and
the authorization, issuance and delivery of the Shares to be sold hereunder has
been taken or will be taken prior to the Put Option Closing and the Milestone
Closing, respectively. This Agreement has been duly executed and delivered by
the Company and constitutes a valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms (except as
such enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and (ii) rules of law governing
specific performance, injunctive relief and other equitable remedies). The
execution, delivery and performance of this Agreement and compliance with the
provisions hereof by the Company will not:
(a) violate any provision of law, statute, ordinance, rule or
regulation or any ruling, writ, injunction, order, judgment or decree of any
court, administrative agency or other governmental body to which the Company or
its material assets are subject, the violation of which would have a Material
Adverse Effect.
(b) conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute (with due notice or lapse of time, or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under (i) any material agreement, document, instrument, contract,
understanding, arrangement, note, indenture, mortgage or lease to which the
Company is a party or under which the Company or any of its assets is bound or
affected, (ii) the Restated Certificate or (iii) the By-laws; or
(c) result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company where
the same would have a Material Adverse Effect.
3.5 VALID ISSUANCE OF COMMON STOCK.
(a) When issued, sold and delivered in accordance with the
terms hereof for the consideration expressed herein, the Shares will be validly
issued and outstanding, fully paid and nonassessable and not subject to any
preemptive rights, rights of first refusal or other similar rights imposed by
the Company.
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(b) The outstanding shares of Common Stock are all duly
authorized and validly issued, fully paid and nonassessable, and were issued in
compliance with all applicable federal and state securities laws.
3.6 [RESERVED].
3.7 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the issuance and delivery to Novartis
of the Shares, other than filing pursuant to the Xxxx-Xxxxx-Xxxxxx Premerger
Notification Act ("HSR ACT"), if applicable.
3.8 LITIGATION. Except as set forth in the Schedule of Exceptions,
there is no action, suit, proceeding or investigation pending or, to the actual
knowledge of the Company's officers after reasonable investigation and inquiry
(the "COMPANY'S REASONABLE KNOWLEDGE"), currently threatened against the Company
which questions the validity of this Agreement or the right of the Company to
enter into it, or to consummate the transactions contemplated hereby, or which
would be reasonably likely to have, either individually or in the aggregate, a
Material Adverse Effect, or result in any change in the current equity ownership
of the Company, nor, to the Company's Reasonable Knowledge, is there any basis
for the foregoing. Except as set forth in the Schedule of Exceptions, to the
Company's Reasonable Knowledge there are no legal actions or investigations
pending or threatened involving the employment by or with the Company of any of
the Company's current or former employees, their use in connection with the
Company's business of any information or techniques allegedly proprietary to any
of their former employers, or their obligations under any agreements with prior
employers or alleging a violation of any federal, state or local statute or
common law relationship with the Company, in all events which would be
reasonably likely to have, either individually or in the aggregate, a Material
Adverse Effect. Except as set forth in the Schedule of Exceptions, the Company
is not a party to any order, writ, injunction, judgment or decree of any court
which would be reasonably likely to have, either individually or in the
aggregate, a Material Adverse Effect.
3.9 EMPLOYEES AND CONSULTANTS. Except as set forth in the Schedule of
Exceptions, or where the same would not be reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect:
(a) To the Company's Reasonable Knowledge, none of its
employees is obligated under any contract (including licenses, covenants or
contracts of any nature) or other agreement, or subject to any judgment, decree
or order of any court or administrative agency, that would interfere with the
use of his or her commercially reasonable best efforts to promote the interests
of the Company or that would conflict with the Company's business as proposed to
be conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company's business by the employees of the Company, nor the
conduct of the Company's business as proposed, will, to the Company's Reasonable
Knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any material contract, covenant or
instrument under which any of such employees is now obligated.
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(b) Each employee of, or consultant to, the Company who has or
is proposed to have access to confidential or proprietary information of the
Company is a signatory to, and is bound by, an agreement with the Company
relating to nondisclosure, proprietary information and assignment of patent,
copyright and other intellectual property rights.
(c) To the Company's Reasonable Knowledge, no employee of, or
consultant to, the Company is in violation of any material term of any
employment contract, patent disclosure agreement or any other contract or
agreement including, but not limited to, those matters relating to (i) the
relationship of any such employee with the Company or to any other party as a
result of the nature of the Company's business as currently conducted or (ii)
unfair competition, trade secrets or proprietary information.
3.10 PATENTS AND TRADEMARKS. Except as set forth in the Schedule of
Exceptions or where the same reasonably would not be reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect, (i) since
January 1, 1997 the Company has not received any written communications alleging
that the Company has violated or, by conducting its business as proposed, would
violate any of the patents, service marks, trademarks, copyrights, trade
secrets, proprietary rights or other intellectual property (hereinafter
collectively "INTELLECTUAL PROPERTY") of any other person or entity and (ii) to
the Company's Reasonable Knowledge, all of its Intellectual Property has been
validly obtained.
3.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of any provisions of the Restated Certificate or the
By-laws or, where the same would have a Material Adverse Effect, of any
instrument, judgment, order, writ or decree.
3.12 AGREEMENTS; ACTION.
(a) Except for agreements explicitly contemplated hereby or as
set forth in the Schedule of Exceptions, (i) there are no agreements,
understandings, transactions or proposed transactions between the Company and
any of its officers, directors or affiliates, or any affiliate thereof, of a
nature required to be disclosed pursuant to the provisions of Item 404 of
Regulation S-K, and (ii) to the Company's Reasonable Knowledge none of any such
individuals or entities has any interest in any party to any such agreement,
understanding, transaction or proposed transaction.
(b) Except as set forth in the Schedule of Exceptions, since
January 1, 1997 the Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) made any loans or advances to any person, other than
ordinary advances to employees and officers for travel expenses, or (iii) sold,
exchanged or otherwise disposed of any of its material assets or rights, other
than in the ordinary course of business.
(c) The Company has not admitted in writing its inability to
pay its debts generally as they become due, filed or consented to the filing
against it of a petition in bankruptcy or a petition to take advantage of any
insolvency act, made an assignment for the
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benefit of creditors, consented to the appointment of a receiver for itself or
for the whole or any substantial part of its property, or had a petition in
bankruptcy filed against it, been adjudicated a bankrupt, or filed a petition or
answer seeking reorganization or arrangement under the federal bankruptcy laws
or any other laws of the United States or any other jurisdiction.
(d) Except as set forth in the Schedule of Exceptions, the
Company is in compliance with all obligations, agreements and conditions
contained in any evidence of indebtedness or any loan agreement or other
contract or agreement (whether or not relating to indebtedness) to which the
Company is a party or is subject (collectively, the "OBLIGATIONS"), the lack of
compliance with which could afford to any person the right to (i) accelerate any
material indebtedness or (ii) terminate any right or agreement of the Company,
the termination of which would have a Material Adverse Effect. Except as set
forth in the Schedule of Exceptions, to the Company's Actual Knowledge all other
parties to such Obligations are in compliance with the terms and conditions of
such Obligations to the extent that any noncompliance would be reasonably likely
to have a Material Adverse Effect.
3.13 [RESERVED].
3.14 [RESERVED].
3.15 FINANCIAL STATEMENTS.
(a) The Company has made available to the Investor the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 (the
"10-K") containing its audited financial statements (Balance Sheets, Statements
of Operations, Statements of Stockholders' Equity and Statements of Cash Flow)
at December 31, 1996 and 1997 and for the fiscal years then ended (the "AUDITED
FINANCIAL STATEMENTS"). The Audited Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated and fairly present the financial
condition and consistent operating results of the Company as of the dates, and
for the periods, indicated therein. The Company maintains and consistently
applies and will continue to maintain and consistently apply a standard system
of accounting established and administered in accordance with generally accepted
accounting principles.
(b) Except as set forth in Section 3.15 of the Schedule of
Exceptions, from December 31, 1997 through the Effective Date, the Company
conducted its business in the ordinary course.
(c) Since December 31, 1997, there has not been any material
adverse change in the financial condition or operations of the Company.
(d) Since April 1, 1996, the Company has filed all required
reports, schedules, forms, statements and other documents (including exhibits
and all other information incorporated therein) with the SEC (the "COMPANY SEC
DOCUMENTS"). As of their respective dates (or if amended, then as of the date of
the most recent amendment for each respective Company SEC Document), the Company
SEC Documents complied in all material respects with the
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requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "SECURITIES EXCHANGE ACT"), as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Company SEC
Documents, and no Company SEC Document when filed (or if amended, then as of the
date of the most recent amendment for each respective Company SEC Document)
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in Company SEC
Documents complied as to form, as of their respective dates of filing with the
SEC (or if amended, then as of the date of the most recent amendment for each
respective Company SEC Document), in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared (as amended, if applicable) in accordance
with GAAP (except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present (as
amended, if applicable) the consolidated financial position of the Company and
its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments).
3.16 EMPLOYEE BENEFIT PLANS. Except as set forth in the Schedule of
Exceptions, to the Company's Reasonable Knowledge the Company is in compliance
with applicable laws governing the Company's "employee benefit plans" as such
term is defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, except where such failure to comply would not have a Material Adverse
Effect.
3.17 TAX RETURNS, PAYMENTS AND ELECTIONS. Except as set forth in the
Schedule of Exceptions, (i) the Company has filed all tax returns and reports as
required, and within the time prescribed, by law, including without limitation,
all federal, state and local income, excise or franchise tax returns, real
estate and personal property tax returns, sales and use tax returns, payroll tax
returns and other tax returns or reports required to be filed by it, (ii) these
returns and reports are true and correct in all material respects, (iii) the
Company has paid or made provision for the payment of all accrued and unpaid
taxes and other charges to which the Company is subject and which are not
currently due and payable, (iv) the federal income tax returns of the Company
have never been audited by the Internal Revenue Service, and the Company has not
agreed to an extension of the statute of limitations with respect to any of its
tax years, (v) neither the Internal Revenue Service nor any other taxing
authority is now asserting, nor to the Company's Actual Knowledge is threatening
to assert, against the Company any deficiency or claim for additional taxes or
interest thereon or penalties in connection therewith, nor does such deficiency
or claim or basis for such deficiency or claim exist, and (vi) the Company has
not made any elections pursuant to the Code (other than elections which relate
solely to methods of accounting, depreciation or amortization) which would have
a Material Adverse Effect as the Company's business is presently conducted.
3.18 INSURANCE. Except as set forth in the Schedule of Exceptions, the
Company has in full force and effect fire, casualty and liability insurance
policies, with coverage, in the case of property insurance, sufficient in amount
(subject to reasonable deductibles) to allow it to
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replace any of its material properties that might be damaged or destroyed, and
in the case of casualty and liability insurance, in amounts customary and
adequate for businesses similar to the business of the Company.
3.19 LABOR AGREEMENTS AND ACTIONS. Except as set forth in the Schedule
of Exceptions, the Company does not have any collective bargaining agreements
covering any of its employees, nor is the Company bound by or subject to (and
none of its assets or properties is bound by or subject to) any written or oral,
express or implied, contract, commitment or arrangement with any labor union,
and no labor union has requested of the Company or, to the Company's Reasonable
Knowledge, has sought to represent any of the employees, representatives or
agents of the Company, and (ii) there is no strike or other labor dispute
involving the Company pending, or to the Company's Reasonable Knowledge
threatened, which could have a Material Adverse Effect as the Company's business
is presently conducted and as it is proposed to be conducted, nor is there, to
the Company's Reasonable Knowledge, any labor organization activity involving
its employees.
3.20 REAL PROPERTY HOLDING CORPORATION. The Company is not, and has
not been at any time, a "United States real property holding corporation" as
defined in Section 897 of the Code.
3.21 OFFERING. Subject to the accuracy of the Investor's
representations set forth in Section 4 of this Agreement, the offer, sale and
issuance of the Shares to be issued in conformity with the terms of this
Agreement constitute transactions which are exempt from the registration
requirements of the Securities Act and from all applicable state registration or
qualification requirements, other than those with which the Company has complied
or will comply.
3.22 ENVIRONMENTAL MATTERS.
(a) To the Company's Reasonable Knowledge, (i) the Company is
not in violation of any Environmental Law (as hereinafter defined) and (ii) no
material expenditures are or will be required in order for the Company to comply
with any Environmental Law. As used in this Agreement, "ENVIRONMENTAL LAW" shall
mean any applicable federal, state and local law, ordinance, rule or regulation
that regulates, fixes liability for, or otherwise relates to the handling, use
(including use in industrial processes, in construction, as building materials,
or otherwise), treatment, storage and disposal of hazardous and toxic wastes and
substances, and to the discharge, leakage, presence, migration, actual Release
(as hereinafter defined) or threatened Release (whether by disposal, a discharge
into any water source or system or into the air, or otherwise) of any pollutant
or effluent.
(b) The Company has not used, generated, manufactured,
refined, treated, transported, stored, handled, disposed, transferred, produced,
processed or released (hereinafter together defined as "RELEASE") any Hazardous
Materials (as hereinafter defined) on, from or affecting any Property (as
hereinafter defined) in any manner or by any means in violation of any
Environmental Laws and, to the Company's Reasonable Knowledge, there is no
threat of such Release. As used herein, the term "PROPERTY" shall include,
without limitation, land, buildings and laboratory facilities owned or leased by
the Company or as to which the Company now has
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any duties, responsibilities (for cleanup, remedy or otherwise) or liabilities
under any Environmental Laws, or as to which the Company or any subsidiary of
the Company may have such duties, responsibilities or liabilities because of
past acts or omissions of the Company or any such subsidiary or their
predecessors, or because the Company or any such subsidiary or their
predecessors in the past was such an owner or operator of, or bore some other
relationship with, such land, buildings or laboratory facilities. The term
"HAZARDOUS MATERIALS" shall include, without limitation, any flammable
explosives, petroleum products, petroleum by-products, radioactive materials,
hazardous wastes, hazardous substances, toxic substances or related materials as
defined by Environmental Laws.
(c) Except as set forth in Section 3.22 of the Schedule of
Exceptions, (i) the Company has not received written notice that the Company is
a party potentially responsible for costs incurred at a cleanup site or
corrective action under any Environmental Laws and (ii) the Company has not
received any written requests for information in connection with any inquiry by
any Governmental Authority (as hereinafter defined) concerning disposal sites or
other environmental matters. As used herein, "GOVERNMENTAL AUTHORITY" shall mean
any nation or government, any federal, state, municipal, local, provincial,
regional or other political subdivision thereof, and any entity or person
exercising executive, legislative, judicial regulatory or administrative
functions of or pertaining to government.
(d) The stockholders of the Company, in their capacities as
such, have had no control over, or authority with respect to, the waste disposal
operations of the Company.
3.23 SECURITIES LAWS. Neither the Company nor anyone acting on its
behalf has offered securities of the Company for sale to, or solicited any
offers to buy the same from, or sold securities of the Company to, any person or
organization, in any case so as to subject the Company or its promoters,
directors or officers to any liability under the Securities Act, the Securities
Exchange Act or any state securities or blue sky law (collectively, the
"SECURITIES LAWS").
3.24 NASDAQ NATIONAL MARKET. Quotations for trading in shares of
Common Stock are presently included in the National Market System of The Nasdaq
Stock Market, Inc. ("NASDAQ") (or shares of Common Stock are traded on the New
York Stock Exchange (the "NYSE")) and the Company has not received any notice
from Nasdaq (or, if applicable, the NYSE) with respect to any pending action or
intent by Nasdaq (or, if applicable, the NYSE) to delist the Common Stock.
3.25 LICENSES AND OTHER RIGHTS; COMPLIANCE WITH LAWS. Except as set
forth in the Schedule of Exceptions or where the same would not be reasonably
likely to result in a Material Adverse Effect, (i) the Company has all
franchises, permits, licenses and other rights and privileges necessary to
permit it to own its properties and to conduct its business as presently
conducted and is in compliance in all material respects thereunder, (ii) the
Company is in compliance in all material respects with all laws and governmental
rules and regulations applicable to its business, properties and assets, and to
the products and services sold by it, including, without limitation, all such
rules, laws and regulations relating to fair employment practices, occupational
safety and health and public safety, and (iii) the Company is in
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compliance with the applicable provisions, if any, of the Clinical Laboratories
Improvement Act of 1967, as amended.
3.26 RELIANCE. The Company understands that the foregoing
representations and warranties shall be deemed material and to have been relied
upon by the Investor. No representation or warranty by the Company in this
Agreement, and no written statement contained in or incorporated into any
document, certificate or other writing delivered or made available by the
Company to the Investor, when considered in the aggregate, contains any untrue
statement of material fact or omits to state any material fact necessary to make
the statements herein or therein, in light of the circumstances under which they
were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. Novartis hereby
represents and warrants the following:
4.1 AUTHORIZATION, GOVERNMENTAL CONSENTS AND COMPLIANCE WITH OTHER
INSTRUMENTS. All corporate action on the part of the Investor necessary for the
authorization, execution and delivery of this Agreement and the performance of
all obligations of the Investor hereunder has been taken or will be taken prior
to the Put Option Closing and the Milestone Closing, as the case may be. This
Agreement has been duly executed and delivered by the Investor and constitutes a
valid and legally binding obligation of the Investor, enforceable in accordance
with its terms (except as such enforcement is limited by (i) bankruptcy,
insolvency and similar laws affecting creditor rights and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies).
No consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
governmental authority on the part of the Investor is required in connection
with the consummation of the transactions contemplated by this Agreement, except
as may be required by the HSR Act. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby will
not result in any violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
provision of the Investor's corporate charter or By-laws or any instrument,
judgment, order, writ, decree or contract to which the Investor is a party or by
which it is bound.
4.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. By the Investor's execution of
this Agreement, the Investor hereby confirms that the Shares will be acquired
for investment for the Investor's own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof, and the
Investor has no present intention of selling, granting any participation or
otherwise distributing the Shares. By executing this Agreement, the Investor
further represents that the Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant any
participation to such person or to any third person, with respect to any of the
Shares. The Investor represents that it has full power and authority to enter
into this Agreement.
4.3 DISCLOSURE OF INFORMATION. The Investor has received all the
information from the Company and its management that the Investor considers
necessary or appropriate for deciding whether to purchase the Shares hereunder.
The Investor further represents that it has had an opportunity to ask questions
and receive answers from the Company regarding the terms
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and conditions of the offering of the Shares. The foregoing, however, does not
limit or modify the representations and warranties of the Company in Section 3
of this Agreement.
4.4 INVESTMENT EXPERIENCE AND ACCREDITED INVESTOR STATUS. The
Investor is an "ACCREDITED INVESTOR" (as defined in Regulation D promulgated
under the Securities Act). The Investor is an investor in securities of
companies in the development stage and acknowledges that it is able to fend for
itself and bear the economic risk of its investment. The Investor has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Shares hereunder.
4.5 RESTRICTED SECURITIES. The Investor understands that the Shares,
when issued, will be "RESTRICTED SECURITIES" (as defined in Rule 144 under the
Securities Act ("RULE 144")) under the federal securities laws inasmuch as they
are being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such securities may
be resold without registration under the Securities Act only in certain limited
circumstances. In this connection, the Investor represents that it is familiar
with Rule 144, as presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act.
4.6 FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting
the representations set forth above, the Investor further represents, warrants
and agrees that it will not make any disposition of all or any portion of the
Shares unless:
(a) There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
(b) The disposition is made pursuant to Rule 144 or similar
provisions of federal securities laws as in effect from time to time; or
(c) (i) The Investor shall have notified the Company of the
proposed disposition; and (ii) if requested by the Company, the Investor shall
have furnished the Company with an opinion of counsel, reasonably satisfactory
to the Company, that such disposition will not require registration of such
Shares under the Securities Act.
4.7 LEGENDS. It is understood that the certificates evidencing the
Shares will bear substantially the following legends:
(a) "These securities have not been registered under the
Securities Act of 1933. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with respect
to the securities under such Act or an opinion of counsel reasonably
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
(b) Any legend required by applicable state securities laws.
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5. CONDITIONS TO CLOSING OF INVESTOR. The Investor's obligation to purchase
the Shares at each of the Put Option Closing and the Milestone Closing is
subject to the fulfillment as of each of the Closing dates of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct in
all material respects as of the date of each respective Closing with the same
force and effect as though such representations and warranties had been made on
and as of each such date, except that:
(a) there shall be delivered at each such Closing a
certificate, signed by an officer of the Company, which contains the
representations and warranties set forth in Sections 3.2(a) and (b) but
substituting updated numbers for the numbers set forth in Sections 3.2(a) and
(b) (or the related portions of the Schedule of Exceptions);
(b) there shall be delivered at each such Closing a
certificate, signed by an officer of the Company, which contains the
representations and warranties set forth in Section 3.15(a), but substituting
the most recent audited financial statements then available (which shall have
been made available to the Investor at least three (3) business days prior to
such Closing) for the financial statements referred to in Section 3.15(a); and
(c) the Schedule of Exceptions may be updated to reflect
events occurring or arising after the Effective Date by a new schedule (the
"UPDATED SCHEDULE") prepared by the Company and made available to the Investor
at least ten (10) business days prior to such Closing (to be updated, if
applicable, prior to the Closing for any events occurring or arising after
delivery of the Updated Schedule to the Investor and prior to Closing) together
with a certificate, signed by an officer of the Company, as to the Updated
Schedule, and the representations and warranties made by the Company in Section
3 hereof, to the extent qualified by the Schedule of Exceptions, shall be
qualified by the Updated Schedule for all purposes under this Agreement
(including this Section 5.1) as though it were fully incorporated herein.
5.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to each respective
Closing shall have been performed or complied with in all material respects.
5.3 PROCEEDINGS. All proceedings to have been taken and all waivers
and consents to be obtained in connection with the transactions contemplated by
this Agreement, insofar as the Company is concerned, shall have been taken or
obtained, and all documents incidental thereto shall be satisfactory to the
Investor and its counsel, and the Investor and its counsel shall have received
copies (executed or certified, as may be appropriate) of all documents which the
Investor or its counsel may reasonably have requested in connection with such
transactions.
5.4 COMPLIANCE CERTIFICATE. At each respective Closing, the Company
shall have delivered to the Investor a certificate of the Company in the form of
Exhibit C hereto, executed by the President and Chief Executive Officer of the
Company, certifying to the fulfillment of the conditions specified in Sections
5.1 and 5.2 of this Agreement.
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5.5 LEGAL OPINION. At each respective Closing, all legal matters
incident to the purchase of the Shares shall be satisfactory to the Investor's
counsel and the Investor shall have received from the Company's counsel (which
shall be reasonably satisfactory to the Investor) such counsel's opinion,
addressed to the Investor and dated the date of each such Closing, in
substantially the form of Exhibit D hereto.
5.6 CERTIFICATION OF RESOLUTIONS AND OFFICERS. The Company shall
deliver to the Investor, on and as of each respective Closing, a certificate or
certificates of the Secretary of the Company certifying as to (a) the
resolutions of the Company's Board of Directors (and the vote of the
stockholders, if necessary) authorizing the execution and delivery of this
Agreement, the issuance to the Investor of the Shares, the execution and
delivery of such other documents and instruments as may be required by this
Agreement, and the consummation of the transactions contemplated hereby, and
certifying that such resolutions were duly adopted and have not been rescinded
or amended as of said date, (b) the name and the signature of the officers of
the Company authorized to sign, as appropriate, this Agreement and the other
documents and certificates to be delivered pursuant to this Agreement by either
the Company or any of its officers, and (c) a specimen certificate representing
the Common Stock.
5.7 CERTIFICATION OF NO UNDISCUSSED MATERIAL ADVERSE EFFECT. The
Company shall have delivered to the Investor a certificate, dated the date of
each respective Closing, of the Chief Financial Officer or the Chief Executive
Officer of the Company certifying that, except for circumstances or events which
would not be reasonably likely to have a Material Adverse Effect, the Updated
Schedule does not include any item of disclosure which has not been made
publicly available (whether as part of a report or registration statement filed
under the Securities Exchange Act or the Securities Act, as part of a press
release or otherwise).
6. CONDITIONS TO CLOSING OF THE COMPANY. The Company's obligation to sell
the Shares at each of the respective Closings is subject to the fulfillment as
of the date of each such respective Closing of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Investor in Section 4 hereof shall be true and correct in
all material respects as of the date of each respective Closing with the same
force and effect as though such representations and warranties had been made on
each such date.
6.2 COMPLIANCE CERTIFICATE. At each respective Closing, if requested
by the Company, the Investor shall have delivered to the Company a certificate
of the Investor executed by an officer of the Investor and certifying to the
fulfillment of the conditions specified in Section 6.1 of this Agreement.
7. MUTUAL CONDITIONS OF CLOSING. The obligations of each of the Investor
and the Company to consummate each respective Closing are subject to the
fulfillment as of the date of each respective Closing of the following
conditions:
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CONFIDENTIAL TREATMENT REQUESTED
7.1 QUALIFICATIONS. All consents, permits, approvals, qualifications
and registrations to be obtained or effected with any governmental authority,
including, without limitation, necessary blue sky law permits and qualifications
required by any state for the offer and sale to the Investor of the Shares,
shall have been obtained or effected, and any filings required under the HSR Act
shall have been made and the required waiting period shall have elapsed.
7.2 ABSENCE OF LITIGATION. There shall be no injunction, actions,
suits, proceedings or investigations pending or currently threatened against the
Company or the Investor which questions the validity of this Agreement or the
right of the Company or the Investor to enter into it, or to consummate the
transactions contemplated hereby.
7.3 LICENSE AGREEMENT. The Company and the Investor shall have
entered into the License Agreement.
8. ADDITIONAL COVENANTS AND AGREEMENTS.
8.1 BOARD OF DIRECTORS. If, pursuant to the terms of this Agreement,
the Investor shall have purchased Shares comprising at least [CONFIDENTIAL
TREATMENT REQUESTED] of the issued and outstanding shares of Common Stock, and
thereafter for so long as the Investor shall retain such Shares which shall
continue to represent at least a [CONFIDENTIAL TREATMENT REQUESTED] interest in
the outstanding shares of Common Stock, the Company shall, at the request of the
Investor, elect to the Company's Board of Directors and nominate and recommend
for election to the Board of Directors at successive annual meetings of the
stockholders of the Company a representative of Novartis who is approved by the
Company (such approval not to be unreasonably withheld). At any such time as the
Investor shall reduce the Investor's interest in Shares and thereafter no longer
hold Shares representing a [CONFIDENTIAL TREATMENT REQUESTED] interest in the
outstanding shares of Common Stock, then the representative of Novartis shall
tender his or her resignation as a member of the Company's Board of Directors
within sixty (60) days after receipt of the written request of the Company
unless, at the end of such 60-day period, the Investor's interest in shares of
Common Stock is at least equal to [CONFIDENTIAL TREATMENT REQUESTED] of the
outstanding shares of Common Stock.
8.2 INSPECTION OF BOOKS AND RECORDS. The Company shall permit the
Investor, from time to time and at the Investor's expense, to visit and inspect
the Company's properties, to examine its books of account and records and to
discuss the Company's affairs, finances and
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CONFIDENTIAL TREATMENT REQUESTED
accounts with its officers, all at such reasonable times as may be requested by
the Investor; provided, however, that (i) the Company shall not be obligated
pursuant to this Section 8.2 to provide access to any information which it
reasonably considers to be a trade secret or similar confidential information
and (ii) the obligations of the Company under this Section 8.2 shall terminate
at such time as the Investor no longer owns Shares.
8.3 HSR FILING. The parties shall each take any and all actions
reasonably necessary to effect any appropriate filings required under the HSR
Act as promptly as possible. Notwithstanding any other provision in this
Agreement, in the event that appropriate filings required under the HSR Act have
not been made or the termination of any related waiting period has not yet
occurred as of the scheduled date of any Closing, or any other process
associated with required compliance under the HSR Act has not as of then been
completed, then the Closing shall be delayed (without affecting the related
calculation for such Closing of the per Share purchase price as determined
pursuant to Sections 1.1 or 1.2 above, as applicable) until promptly following
such termination or completion.
8.4 NASDAQ LISTING. With respect to the Shares issued in any Closing,
the Company shall take all actions reasonably necessary for quotations for
trading in such Shares to be included in the Nasdaq National Market (or for such
Shares to be listed on the NYSE)[CONFIDENTIAL TREATMENT REQUESTED].
9. REGISTRATION RIGHTS; COMPLIANCE WITH THE ACT. The Company covenants and
agrees as follows:
9.1 DEFINITIONS. For purposes of this Section 9:
(a) The term "REGISTER," "REGISTERED," and "REGISTRATION"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement or
document;
(b) The term "REGISTRABLE SECURITIES" means the Shares,
excluding in all cases, however, (i) any Registrable Securities after they have
been sold in a transaction in which registration rights are not assigned or (ii)
any Registrable Securities sold pursuant to a registration, pursuant to Rule 144
or to or through a broker or dealer or underwriter in a public distribution or a
public securities transaction;
(c) The term "HOLDER" means the Investor and any person to
whom the Investor transfers at least [CONFIDENTIAL TREATMENT REQUESTED] Shares
and the Investor's related rights under this Section 9 pursuant to, and as
permitted by, the terms of this Agreement;
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CONFIDENTIAL TREATMENT REQUESTED
(d) The term "FORM S-3" means such form under the Securities
Act as in effect on the date hereof or any registration form under the
Securities Act subsequently adopted by the Securities and Exchange Commission
("SEC") which permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC; and
(e) The term "EXISTING RIGHTS" means the rights with respect
to registration which have been granted by the Company to persons or entities
other than pursuant to this Section 9 and which are referenced on the Schedule
of Exceptions or any Updated Schedule (including, without limitation, the
priority rights of certain holders of the Company's securities to have their
securities registered or included in registration statements and certain
protective restrictions relating to the exercise of registration rights by
others).
9.2 FORM S-3 REGISTRATION. At any time after one year after the
issuance of Shares by the Company to the Investor pursuant to Section 1.1 or 1.2
above, if the registration of Registrable Securities under the Securities Act
can be effected on Form S-3 (or any successor short-form registration
promulgated by the SEC), then subject to the provisions of this Section 9.2 and
the Existing Rights the Company will, upon written demand of the Investor,
promptly file with the SEC a registration statement under the Securities Act on
Form S-3 of all or such portion of the Registrable Securities as the Investor
(or other Holder(s)) shall specify by written notice given to the Company;
provided, however, that the market value of the Registrable Securities to be
sold in any such registration shall be estimated to be at least [CONFIDENTIAL
TREATMENT REQUESTED] at the time of filing of such registration statement; and
provided, further, that the Company shall not be required to effect more than
[CONFIDENTIAL TREATMENT REQUESTED] such [CONFIDENTIAL TREATMENT REQUESTED] (or
[CONFIDENTIAL TREATMENT REQUESTED] such registrations, in the aggregate, if
Shares with a purchase price of more than [CONFIDENTIAL TREATMENT REQUESTED], in
the aggregate, are issued pursuant to Sections 1.1 and 1.2 above) pursuant to
this Section 9.2. The Company shall maintain the effectiveness of the Form S-3
registration until the earlier of (i) the sale of all of the Registrable
Securities included in such registration statement; (ii) seven (7) months
following the effectiveness of such registration statement; or (iii) such time
as all of the Registrable Securities included in such registration statement are
eligible for resale pursuant to Rule 144(k) of the Securities Act.
In case the Company shall receive from the Investor a written request or
requests that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to shares of Registrable Securities the
reasonably anticipated aggregate price to the public of which, net of
underwriting discounts and commissions, would exceed [CONFIDENTIAL TREATMENT
REQUESTED], then subject to the provisions of this Section 9.2 and the Existing
Rights, the Company will:
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CONFIDENTIAL TREATMENT REQUESTED
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all Holders;
(b) use its best efforts to effect such registration as soon
after its receipt of the Investor's written request therefor as is practicable;
and
(c) as soon as practicable, effect all such qualifications and
compliance as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of the Investor's Registrable Securities as
are specified in such request, together with all or such portion of the
Registrable Securities of any other Holder or Holders joining in such request as
are specified in a written request given within 15 days after receipt of such
written notice from the Company; provided, however, that the Company shall not
be obligated to effect any such registration, qualification or compliance,
pursuant to this Section 9.2: (1) if Form S-3 is not available for such offering
by the Holders; (2) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public (net of any underwriters discounts or commissions) of less
than [CONFIDENTIAL TREATMENT REQUESTED]; or (3) if the Company shall furnish to
the Investor a certificate signed by the President and Chief Executive Officer
of the Company stating that, in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its stockholders for such Form S-3 registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than 90 days after receipt of
the request of the Investor under this Section 9.2; provided, however, that the
Company shall have this right to defer the filing of the Form S-3 registration
statement only once in connection with each written request of the Investor.
(d) All reasonable expenses incurred in connection with any
registration, qualifications and compliance requested pursuant to Section 9.2
(exclusive of underwriting discounts and commissions and any fees and expenses
of counsel to any Holder(s)) shall be paid by the Company.
9.3 COMPANY REGISTRATION. If at any time after one year from the
Effective Date (but without any obligation hereunder to do so) the Company
proposes to register (including for this purpose a registration effected by the
Company for stockholders other than the Holder(s)) any of its stock or other
securities under the Securities Act in connection with the public offering of
such securities (other than (i) a registration relating solely to the sale of
securities to or by current or former employees, officers, advisors, consultants
or directors of the Company or any subsidiary of the Company pursuant to a stock
purchase plan or stock option plan or stock awards approved by the Board of
Directors of the Company, (ii) a registration on Form S-4 or any similar
successor form, (iii) a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities or (iv) a
registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities which are also being
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registered), the Company shall, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given
within twenty (20) days after the giving of such notice by the Company in
accordance with Section 10.10, the Company shall, subject to the provisions of
this Section 9.3, Section 9.4 below and the Existing Rights, cause to be
registered under the Securities Act the Registrable Securities that each such
Holder has requested to be registered. All expenses incurred in connection with
the inclusion of the Holder's securities in the Company's underwritten offering
pursuant to this Section 9.3 shall be borne by the Company (exclusive of
underwriting discounts and commissions and any fees and expenses of counsel to
any Holder(s)). The Company shall not be obligated to effect, or to take any
action to effect, any registration pursuant to this Section 9.3 if (i) a
registration statement on Form S-3 covering any Registrable Securities is in
effect, (ii) at the time such registration would otherwise be required, the
Registrable Securities requested to be registered may then be sold pursuant to
Rule 144(k) of the Securities Act or (iii) the managing underwriter advises
that, in its sole discretion, inclusion of the Registrable Securities would
adversely affect the marketing of the offering; provided, however, that if the
managing underwriter determines that the total amount of Registrable Securities
requested by the Holders to be included in such offering exceeds the amount of
securities of such Holders that the managing underwriter determines in its sole
discretion is compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of such
Registrable Securities owned by such Holders which the managing underwriter
determines in its sole discretion will not jeopardize the success of the
offering (subject to the provisions of the Existing Rights, the securities so
included to be apportioned pro rata among the Holders and the holders of other
securities entitled to be included in such underwriting under the terms of any
registration rights agreement with the Company).
9.4 OBLIGATIONS OF THE COMPANY. Whenever required under this
Section 9 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities sought to be included therein and
use its best efforts to cause such registration statement to become effective as
promptly as practicable.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them and covered by such registration statement.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in
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connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement (and the obligations of the Company under
this Section 9 are expressly conditioned on the satisfaction of this condition).
(f) Promptly notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement or any offering memorandum or other offering document includes an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing.
9.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 9 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
9.6 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 9:
(a) The Company will indemnify and hold harmless each Holder
registering Registrable Securities for resale, any underwriter (as defined in
the Securities Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the Securities
Exchange Act, against any and all losses, claims, damages, or liabilities (joint
or several) to which they may become subject under any Securities Laws or any
other statute or common law of the United States of America or any political
subdivision thereof, including the amount paid in settlement of any litigation
commenced or threatened (including any amounts paid pursuant to or in settlement
of claims made under the indemnification or contribution provisions of any
underwriting or similar agreement entered into by the Investor in connection
with any offering or sale of securities covered by this Agreement), and shall
promptly reimburse them, as and when incurred, for any reasonable legal or other
expenses incurred by them in connection with investigating any claims and
defending any actions, insofar as any such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"VIOLATION"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, or in any offering memorandum or other offering document
relating to the offering and sale of such securities, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of
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any Securities Law or any rule or regulation promulgated under any Securities
Law; provided, however, that the Company shall not be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any Holder; and, provided, further, that the indemnity
agreement contained in this subsection 9.6(a) shall not apply to amounts paid in
settlement of any loss, claim, damage, liability or action if such settlement is
effected without consent of the Company, which consent shall not be unreasonably
withheld.
(b) Each selling Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the Company within the
meaning of the Securities Act or the Securities Exchange Act, any underwriter,
any other Holder selling securities in such registration statement and any
controlling person of the Company, any such underwriter or other Holder, against
any losses, claims, damages or liabilities (joint or several) to which any of
the foregoing persons may become subject under any Securities Laws or any other
statute or common law of the United States of America or any political
subdivision thereof, including the amount paid in settlement of any litigation
commenced or threatened (including any amounts paid pursuant to or in settlement
of claims made under the indemnification or contribution provisions of any
underwriting or similar agreement entered into by the Company in connection with
any offering or sale of securities covered by this Agreement), and shall
promptly reimburse them, as and when incurred, for any reasonable legal or other
expenses incurred by them in connection with investigating any claims and
defending any actions, insofar as any such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
provided, however, that the indemnity agreement contained in this subsection
9.6(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without consent of
the Holder, which consent shall not be unreasonably withheld; and provided,
further, that, in no event shall any indemnity under this subsection 9.6(b)
exceed the gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 9.6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 9.6, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section
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CONFIDENTIAL TREATMENT REQUESTED
9.6, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 9.6.
(d) The obligations of the Company and Holders under this
Section 9.6 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 9 and otherwise.
9.7 REPORTS UNDER SECURITIES EXCHANGE ACT. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to
use its commercially reasonable best efforts to:
(a) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
Exchange Act; and
(b) furnish to any Holder, to the extent true (as applicable)
and for so long as the Holder owns any Registrable Securities, forthwith upon
request (i) a written statement by the Company that it has complied with the
reporting requirements of SEC Rule 144, the Securities Act and the Securities
Exchange Act, or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested in availing any Holder of any rule or regulation of the
SEC (exclusive of Rule 144A) which permits the selling of any such securities
without registration or pursuant to such form.
9.8 DELAY OF REGISTRATION. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 9.
9.9 "MARKET STAND-OFF" AGREEMENT. Each Holder agrees that it shall
not, to the extent requested by the Company and an underwriter of Common Stock
(or other securities) of the Company, sell or otherwise transfer or dispose
(other than to donees and authorized transferees who agree to be similarly
bound) of any Registrable Securities during a reasonable and customary period of
time (but not to exceed [CONFIDENTIAL TREATMENT REQUESTED]) following the
effective date of any registration statement of the Company filed under the
Securities Act; provided, however, that all officers and directors of the
Company enter into similar agreements.
9.10 TERMINATION OF REGISTRATION RIGHTS. The Company's obligations
pursuant to this Section 9 shall terminate as to any Holder of Registrable
Securities (as well as with respect to such Registrable Securities) when the
Holder can sell all of such Holder's Registrable Securities pursuant to Rule 144
during any 95-day period.
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CONFIDENTIAL TREATMENT REQUESTED
9.11 AMENDMENT OF REGISTRATION RIGHTS. The provisions of this
Section 9 may be amended or waived by the agreement of the Company, on the one
hand, and the Holders of a majority of the Registrable Securities, on the other
hand; provided, however, that no provision of this Section 9 may be amended or
waived with respect to the Investor without the express written consent of the
Investor.
9.12 PRIORITY REGISTRATION RIGHTS. Notwithstanding any provision to
the contrary in this Agreement, but subject to Section 9.6 hereof relating to
indemnification, if the Put Option Closing has occurred, the Investor continues
to hold Registrable Securities as to which the registration rights granted under
this Section 9 have not terminated or been waived and the Company grants
registration rights to any person or entity which are materially more favorable
than the registration rights set forth in this Section 9 (in the reasonable
estimation of the Company), then the Company shall offer to the Investor such
registration rights (to the extent possible) with respect to the Investor's
Registrable Securities; provided, however, that the provisions of this Section
9.12 shall not apply to (i) the grant of any registration rights in connection
with the acquisition of any company or business or (ii) rights which differ as
to the timing, frequency or quantity/volume of any exercise thereof. Following
the Put Option Closing, the Company shall provide the Investor with prompt
notice regarding the grant of any registration rights which are (in the
reasonable estimation of the Company) more favorable than the registration
rights set forth in this Section 9 (but only if the Investor would be eligible
to benefit from such rights as provided in this Section 9.12).
10. MISCELLANEOUS.
10.1 SURVIVAL OF WARRANTIES. [CONFIDENTIAL TREATMENT REQUESTED].
10.2 INDEMNIFICATION. [CONFIDENTIAL TREATMENT REQUESTED].
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10.3 REMEDIES. In case any one or more of the covenants or agreements
set forth in this Agreement shall have been breached by any party hereto, the
party or parties entitled to the benefit of such covenants or agreements may
proceed to protect and enforce their rights either by suit in equity or action
at law, including, but not limited to, an action for damages as a result of any
such breach or an action for specific performance of any such covenant or
agreement contained in this Agreement. The rights, powers and remedies of the
parties under this Agreement are cumulative and not exclusive of any other
right, power or remedy which such parties may have under any other agreement or
law. No single or partial assertion or exercise of any right, power or remedy of
a party hereunder shall preclude any other or further assertion or exercise
thereof.
10.4 SUCCESSORS AND ASSIGNS. Subject to compliance with applicable
securities laws, this Agreement and the rights and duties of the parties set
forth herein may be assigned, in whole or in part, upon the written consent of
the other party, which consent may not be unreasonably withheld (so long as the
assignee agrees in writing to be bound by all of the terms of this Agreement);
provided, however, that (i) Novartis may assign this Agreement to an Affiliate
(in which event the written consent of the Company shall not be required) and
(ii) no such assignment shall relieve Novartis of the obligation to pay for the
Shares in the event that the Affiliate fails to perform as provided herein.
Notwithstanding the foregoing sentence, the Company may assign this Agreement,
and the rights and the duties of the Company set forth herein, to an entity or
person which purchases or otherwise acquires all or substantially all of its
assets or voting securities, so long as the successor agrees in writing to be
bound by all of the terms of this Agreement. In case of any consolidation or
merger of the Company with or into any other corporation, entity or person, or
any other corporate reorganization, in which the Company shall not be the
continuing or surviving entity of such consolidation, merger or reorganization,
or any sale of all or substantially all of the assets of the Company (any such
transaction being hereinafter referred to as a "REORGANIZATION"), then, in each
case, in lieu of any Shares issuable hereunder following the effectiveness of
such Reorganization, there shall be issued as and when called for by this
Agreement such stock and other securities and property to which a holder of
Shares would have been entitled as part of such Reorganization.
10.5 ENTIRE AGREEMENT. This Agreement and the other writings referred
to herein or delivered pursuant hereto which form a part hereof contain the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior and contemporaneous arrangements or understandings, whether
written or oral, with respect thereto; provided, however, that this Agreement is
not intended to supersede the License Agreement of even date herewith between
the Company and the Investor.
10.6 GOVERNING LAW AND CONSENT TO JURISDICTION. This Agreement shall
be governed by and construed under the laws of the State of Delaware (without
regard to the conflict of law principles thereof).
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CONFIDENTIAL TREATMENT REQUESTED
10.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.8 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
10.9 NOUNS AND PRONOUNS. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice-versa.
10.10 NOTICES. Unless otherwise provided, all notices, requests,
consents and other communications hereunder to any party shall be given in
writing and shall be deemed effectively given upon personal delivery to the
party to be notified or duly sent by first class registered or certified mail,
or other courier service, postage prepaid, or telecopied with a confirmation
copy by regular mail, and addressed or telecopied to the party to be notified at
the address or telecopier number indicated for such party at the address or
telecopier number, as the case may be, set forth below or such other address or
telecopier number, as the case may be, as may hereafter be designated in writing
by the addressees to the addressor listing all parties:
To the Company: Trega Biosciences, Inc.
0000 Xxxxxxx Xxxxxxx Xx.
Xxx Xxxxx, XX 00000
[CONFIDENTIAL TREATMENT REQUESTED]
With a copy (which
shall not constitute
notice) to: Pillsbury Madison & Sutro LLP
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
[CONFIDENTIAL TREATMENT REQUESTED]
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CONFIDENTIAL TREATMENT REQUESTED
To the Investor: Novartis Pharma AG
Xxxxxxxxxxxx 00
XX-0000 Xxxxx
Xxxxxxxxxxx
[CONFIDENTIAL TREATMENT REQUESTED]
With a copy to: [CONFIDENTIAL TREATMENT REQUESTED]
General Counsel
Novartis Corporation
000 Xxxxxx Xxxxxx
[CONFIDENTIAL TREATMENT REQUESTED]
All such notices, requests, consents and other communications
shall be deemed to have been received: (a) in the case of personal delivery, on
the date of such delivery; (b) in the case of mailing, on the seventh business
day following the date of such mailing; and (c) in the case of facsimile
transmission, when confirmed by facsimile machine report.
10.11 FINDER'S FEE. The Investor agrees to indemnify and to hold
harmless the Company from any liability for any commission or compensation in
the nature of a finder's fee (and the reasonable costs and expenses of defending
against such liability or asserted liability) for which the Investor or any of
its officers, partners, employees, or representatives is responsible. The
Company agrees to indemnify and hold harmless the Investor from any liability
for any commission or compensation in the nature of a finder's fee (and the
reasonable costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
10.12 EXPENSES. Each party shall pay its own fees and expenses with
respect to this Agreement. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement or the Articles, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
10.13 AMENDMENTS AND WAIVERS. Except as otherwise provided in
Section 9, any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the Investor.
10.14 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, in any jurisdiction, such
provision shall be ineffective, as to such jurisdiction, and the balance of the
Agreement shall be interpreted as if such provision were so excluded, without
invalidating the remaining provisions of this Agreement; and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
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29
10.15 CONFIDENTIALITY AND PUBLICITY. Neither the Company nor the
Investor will disclose to any person (other than its attorneys, accountants,
employees, officers, and directors and, in the case of the Company, any entity
that proposes to acquire substantially all of the assets of the Company, a
controlling block of voting securities of the Company or some other strategic
transaction with similar effect) the existence or terms of this Agreement or any
of the transactions contemplated hereby without the prior written consent of the
other party, except as may, in the reasonable opinion of such party's counsel,
be required by law (in which event the disclosing party will first consult with
the other party with respect to such disclosure). If the Company is required to
provide a copy of this Agreement or any related document to any third party, the
Company shall ensure that such document is redacted, to the extent permitted by
law, to eliminate all confidential information. The Investor shall have the
right to review and approve each such document prior to its submission to a
third party. A period of ten business days will be provided for such review
unless not permitted by law, in which case the maximum period allowable shall be
provided. The Company and the Investor will consult and reach agreement with one
another as to the form and substance of any press release or any other public
disclosure of the existence or terms of this Agreement or the transactions
contemplated hereby prior to issuing any such press release or making any such
public disclosure.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the Effective Date.
NOVARTIS PHARMA AG
By: /s/ XXXXXX X. XXXXX
----------------------------------------
Title: Head Financial Evaluation and
M&A Sector Pharma
------------------------------------
By: /s/ XXXXX XXXXXXX
----------------------------------------
Title: Legal Counsel
------------------------------------
TREGA BIOSCIENCES, INC.
By: /s/ XXXXXX X. XXXXXXXXX
----------------------------------------
Title: Chairman and Chief Executive Officer
------------------------------------
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Exhibit A
Research, Development and License Agreement
[not filed]
31
Exhibit B
Schedule of Exceptions
[not filed]
32
Exhibit C
Compliance Certificate
[not filed]
33
Exhibit D
Form of Closing Opinion
[not filed]
