EXHIBIT 10.47
COMBINATORX, INCORPORATED
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SERIES E CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
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DATED AS OF OCTOBER 3, 2005
EXHIBITS
Exhibit A: Fifth Amended and Restated Certificate of Incorporation
Exhibit B: Legal Opinion of Ropes & ▇▇▇▇ LLP
COMBINATORX, INCORPORATED
SERIES E CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
This Series E Convertible Preferred Stock Purchase Agreement (the
"Agreement") is made as of the 3rd day of October, 2005 by and among
CombinatoRx, Incorporated, a Delaware corporation (the "Company"), and Angiotech
Pharmaceuticals, Inc., a corporation organized under the laws of British
Columbia, Canada (the "Investor"). In consideration of the mutual promises and
covenants contained in this Agreement, the parties hereto agree as follows:
1. AUTHORIZATION; PURCHASE AND SALE OF SHARES
1.1 AUTHORIZATION OF STOCK. The Company has, or before the Closing Date (as
defined below) will have, duly authorized the issuance, pursuant to the terms of
this Agreement of up to 1,363,636 shares of Series E Convertible Preferred
Stock, $0.001 par value per share (the "Series E Preferred Stock"), having the
rights, privileges, preferences and restrictions set forth in the Fifth Amended
and Restated Certificate of Incorporation attached hereto as EXHIBIT A (the
"Amendment"). The 1,363,636 shares of Series E Preferred Stock to be issued to
the Investor are sometimes referred to herein as the "Shares." The Company has,
or before the Closing, will have, adopted and filed the Amendment with the
Secretary of State of the State of Delaware.
1.2 PURCHASE PRICE AND CLOSING. At the Closing (as defined below) and
subject to the terms and conditions of this Agreement, the Company will issue
and sell to the Investor the Shares and the Investor will purchase the Shares
for the aggregate cash purchase price of Fifteen Million Dollars ($15,000,000)
(the "Purchase Price"). Subject to the terms and conditions of this Agreement,
the closing of the purchase and sale of the Shares to be acquired by the
Investor from the Company under this Agreement (the "Closing") shall take place
at the offices of Ropes & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
at 10:00 a.m. local time on October 5, 2005 assuming that all of the
conditions set forth in Section 4 have been satisfied or duly waived or at such
other time and place as the parties hereto may mutually agree (the "Closing
Date"). At the Closing, the Company shall deliver to the Investor duly executed
certificates representing the Shares and the Investor shall deliver payment of
the Purchase Price therefor to the Company by check or wire transfer in
immediately available funds.
1.3 CLOSING DELIVERABLES. Subject to the terms and conditions of this
Agreement, at the Closing:
(A) the Company shall deliver to the Investor certificates, as of the
most recent practicable dates, (i) as to the corporate good standing of the
Company issued by the Secretary of State of the State of Delaware and (ii)
as to the due qualification of the Company as a foreign corporation issued
by the Secretary of State of The Commonwealth of Massachusetts and any
other states where a failure to be so qualified would result in a Company
Material Adverse Effect (as defined below);
(B) the Company shall deliver to the Investor the Certificate of
Incorporation of the Company, as amended and in effect as of the Closing
Date, certified by the Secretary of State of the State of Delaware;
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(C) the Company shall deliver to the Investor a Certificate of the
Secretary of the Company attesting as to (i) the By-laws of the Company;
(ii) the Certificate of Incorporation of the Company; (iii) the signatures
and titles of the officers of the Company executing this Agreement or any
of the other agreements to be executed and delivered by the Company at the
Closing; and (iv) resolutions of the Board of Directors and stockholders of
the Company, authorizing and approving all matters in connection with this
Agreement and the transactions contemplated hereby; and
(D) Ropes & ▇▇▇▇ LLP, counsel for the Company, shall deliver to the
Investor an opinion, dated the Closing Date, in substantially the form
attached hereto as EXHIBIT B.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investor that as of the Closing Date, except as
set forth on the Schedule of Exceptions attached to this Agreement and updated
prior to the Closing (the "Schedule of Exceptions"), which Schedule of
Exceptions shall correspond to the numbered and lettered sections and
subsections of this Section 2 and shall only qualify those representations or
warranties contained in the sections and subsections of this Section 2:
2.1 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, and each of the Company's subsidiaries is duly
organized and validly existing under the laws of its state or jurisdiction of
formation. The Company and each of its subsidiaries has all requisite corporate
power and authority to carry on its business as now conducted and as proposed to
be conducted by it. The Company is duly qualified to transact business and is in
good standing in the State of Delaware and The Commonwealth of Massachusetts.
The Company is duly qualified to transact business and is in good standing, and
each of the Company's subsidiaries is duly qualified to transact business, in
any and all other jurisdictions which it is required to be so qualified except
where the failure to so qualify would not have a material adverse effect on its
business, prospects, condition (financial or otherwise), assets or properties of
the Company and its subsidiaries taken together (a "Company Material Adverse
Effect"). The Company has furnished to the Investor complete and accurate copies
of its Certificate of Incorporation and By-Laws, each as amended to date and
presently in effect. The Company has at all times complied with all provisions
of its Certificate of Incorporation and By-laws and is not in default under, or
in violation of any such provision.
2.2 CAPITALIZATION AND VOTING RIGHTS.
(A) Immediately prior to the Closing, the authorized capital of the
Company consists of:
(x) 22,703,152 shares of Preferred Stock (the "Preferred Stock"),
of which 503,400 shares have been designated Series A Preferred Stock,
$0.001 par value per share, (the "Series A Preferred Stock"), all of
which are issued and outstanding, 3,364,250 shares have been
designated Series B Preferred Stock, $0.001 par value per share, (the
"Series B Preferred Stock") all of which are issued and outstanding,
10,795,666 shares have been designated Series C Preferred Stock,
$0.001 par value per share (the "Series C Preferred
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Stock") 10,746,666 of which are issued and outstanding, 8,483,320
shares have been designated Series D Preferred Stock, $0.001 par value
per share (the "Series D Preferred Stock"), 8,292,699 of which are
issued and outstanding and 1,363,636 shares have been designated as
Series E Preferred Stock, none of which are issued and outstanding.
The number of shares of Common Stock issuable upon conversion of the
outstanding shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock is
13,366,644, of which 346,738 shares are reserved for issuance upon
conversion of the Series A Preferred Stock, 2,140,269 shares are
reserved for issuance upon conversion of the Series B Preferred Stock,
6,140,954 shares are reserved for issuance upon conversion of the
Series C Preferred Stock and 4,738,683 shares are reserved for
issuance upon conversion of the Series D Preferred Stock. Pursuant to
the Swap Up Agreement among CombinatoRx (Singapore) Pte Ltd ("CRx
SG"), BioMedical Sciences Investment Fund Pte Ltd ("BMSIF") and the
Company dated August 30, 2005, assuming a conversion on or prior to
December 31, 2009 and each note subject to conversion is funded on its
targeted milestone date (as set forth in Schedule 3 of the
Subscription and Shareholders Agreement among CRx SG, BMSIF and the
Company dated August 19, 2005), BMSIF may acquire up to 2,465,000
shares of Series E Preferred Stock. The consummation of the
transactions contemplated hereby will not result in a "Deemed
Liquidation Event" or similar transaction under the Company's
Certificate of Incorporation. The rights, privileges and preferences
of the Preferred Stock are as stated in the Amendment. The Schedule of
Exceptions includes a complete and accurate list of all of the holders
of Preferred Stock of the Company, showing the number of shares of
Preferred Stock, the series of such Preferred Stock held by each
holder of Preferred Stock and the number of shares of Common Stock
into which such Preferred Stock are convertible, both immediately
prior to and immediately after the Closing.
(y) 30,373,908 shares of common stock, $0.001 par value per
share, ("Common Stock"), of which 1,006,180 shares are issued and
outstanding. The Schedule of Exceptions includes a complete and
accurate list of all of the holders of Common Stock of the Company,
showing the number of shares of Common Stock held by each stockholder
and all Common Stock which is subject to restrictions on transfer or
that are otherwise subject to a repurchase or redemption right
(including any vesting schedule for such Common Stock and the
repurchase price payable by the Company).
(B) The Schedule of Exceptions includes a complete and accurate list,
as of the date of this Agreement and the Closing Date of: (i) all stock
option plans and other stock or equity-related plans of the Company (the
"Company Stock Plans"), indicating for each Company Stock Plan the number
of shares of Common Stock issued to date under such Plan, the number of
shares subject to outstanding options under such Plan (such stock issued to
date and shares subject to outstanding options, the "Company Stock
Options") and the number of shares reserved for future issuance under such
Plan and (ii) all holders of convertible notes, warrants or other rights
(other than Company Stock Options and convertible preferred stock) to
purchase or acquire shares of capital stock of the Company ("Company
Warrants"), indicating with respect to each Company Warrant the number of
shares of capital stock, and the class or series of such shares, subject to
such Company Warrant and the exercise price thereof. Each Company Stock
Plan and all Company Warrants are filed as exhibits to the Company's
Registration Statement on Form S-1 (Registration No. 333-121173), as
amended up to and including Amendment 6 thereto
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(the "IPO Registration Statement"). All of the shares of capital stock of
the Company subject to Company Stock Options and Company Warrants will be,
upon issuance pursuant to the exercise of such instruments, duly
authorized, validly issued, fully paid and nonassessable. The consummation
of the transactions contemplated hereby will not result in any acceleration
of, vesting or lapse of any repurchase option of any Company Stock Options
held by any of ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, R. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇.
(C) Except as described in the IPO Registration Statement, (i) no
subscription, warrant, option, convertible security or other right
(contingent or otherwise) to purchase or acquire any shares of capital
stock of the Company is authorized or outstanding, (ii) the Company has no
obligation (contingent or otherwise) to issue any subscription, warrant,
option, convertible security or other such right, or to issue or distribute
to holders of any shares of its capital stock any evidences of indebtedness
or assets of the Company, (iii) the Company has no obligation (contingent
or otherwise) to purchase, redeem or otherwise acquire any shares of its
capital stock or any interest therein or to pay any dividend or to make any
other distribution in respect thereof, and (iv) there are no outstanding or
authorized stock appreciation, phantom stock or similar rights with respect
to the Company.
(D) The issued and outstanding shares of Common Stock, Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock are all duly and validly authorized and issued,
fully paid and nonassessable, and all issued and outstanding shares of
Common Stock, Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock were offered, issued and sold
by the Company in accordance with, and pursuant to valid exemptions from,
the registration or qualification provisions of the Securities Act of 1933,
as amended (the "Act"), and any other relevant federal and state securities
laws.
2.3 SUBSIDIARIES. All subsidiaries of the Company are identified in Exhibit
21.1 to the IPO Registration Statement.
2.4 AUTHORIZATION. All necessary corporate action on the part of the
Company, its officers, directors and stockholders necessary for the due and
valid authorization, execution and delivery by the Company of this Agreement,
the performance of all obligations of the Company hereunder and the
authorization, issuance (or reservation for issuance), sale and delivery of the
Shares being sold hereunder, and the shares of Common Stock issuable upon
conversion of the Series E Preferred Stock, has been taken or will be taken
prior to the Closing, and this Agreement constitutes a valid and legally binding
obligation of the Company, enforceable in accordance with its terms, except (a)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally, (b) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and (c) to the
extent the indemnification provisions contained herein may be limited by
applicable federal or state securities laws. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and the
compliance with their respective provisions by the Company will not (a) conflict
with or violate any provision of the Certificate of Incorporation or By-laws of
the Company, (b) require on the part of the Company any filing with, or any
permit, order, authorization, consent or approval of, any court, arbitrational
tribunal, administrative
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agency or commission or other governmental or regulatory authority or agency
(each of the foregoing is hereafter referred to as a "Governmental Entity"), (c)
conflict with, result in a breach of, constitute (with or without due notice or
lapse of time or both) a default under, result in the acceleration of
obligations under, create in any party the right to accelerate, terminate,
modify or cancel, or require any notice, consent or waiver under, any contract,
lease, sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest (as
defined below) or other arrangement to which the Company is a party or by which
the Company is bound or to which its assets are subject, (d) result in the
imposition of any Security Interest upon any assets of the Company or (e)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or any of its properties or assets. For purposes of
this Agreement, "Security Interest" means any mortgage, pledge, security
interest, encumbrance, charge, or other lien (whether arising by contract or by
operation of law).
2.5 VALID ISSUANCE OF PREFERRED AND COMMON STOCK. The issuance, sale and
delivery of the Shares in accordance with this Agreement and the issuance and
delivery of the Common Stock issuable upon conversion of the Shares, have been,
or will be prior to the Closing, duly authorized by all necessary corporate
action on the part of the Company, and all such shares have been duly reserved
for issuance as applicable. The Shares, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid, and nonassessable, and will
be free of restrictions on transfer other than restrictions on transfer under
applicable state and federal securities laws. The Common Stock issuable upon
conversion of the Shares has been duly and validly reserved for issuance and,
upon issuance in accordance with the terms of the Amendment, will be duly and
validly issued, fully paid, and nonassessable and will be free of restrictions
on transfer other than restrictions on transfer under applicable state and
federal securities laws. The sale and issuance of the Shares and the subsequent
conversion of the Shares into Common Stock, as applicable, are not and will not
be subject to any preemptive rights that have not been properly waived or
complied with.
2.6 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state or local Governmental Entity on the part of the Company is
required in connection with the execution and delivery of this Agreement, the
offer, issuance and delivery of the Shares (excepting such filings as shall have
been made prior to and shall be effective on and as of the Closing and such
filings required to be made after the Closing under applicable federal and state
securities laws, all of which filings are set forth on the Schedule of
Exceptions) or the consummation of the transactions contemplated by this
Agreement.
2.7 OFFERING. Subject to the truth and accuracy of the Investor's
representations set forth in Section 3 of this Agreement, the offer, sale,
issuance and delivery of the Shares as contemplated by this Agreement will be in
compliance with applicable federal and state securities laws and the Shares are
exempt from the registration requirements of the Act and applicable state
securities laws, and neither the Company nor any authorized agent acting on its
behalf will take any action hereafter that would cause the loss of such
exemption. The Common Stock issuable upon conversion of the Series E Preferred
Stock when issued will be issued in compliance with applicable federal and state
securities laws and such shares of Common Stock
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will be exempt from the registration requirements of the Act and applicable
state securities laws, and neither the Company nor any authorized agent acting
on its behalf will take any action hereafter that would cause the loss of such
exemption.
2.8 LITIGATION. There is no action, suit, proceeding, governmental inquiry
or investigation pending or, to the Company's knowledge, any such action, suit,
proceeding, inquiry or investigation currently threatened against the Company or
any basis therefore, that questions the validity of this Agreement, or the right
of the Company to enter into, such agreements, or to consummate the transactions
contemplated hereby or thereby, or that is required to be disclosed in the IPO
Registration Statement that is not so disclosed. The Company is not a party or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or that the Company
intends to initiate.
2.9 PROPRIETARY INFORMATION AND INVENTION ASSIGNMENT AGREEMENTS. Each
employee, officer, consultant and advisor (other than external legal counsel and
accountants) of the Company has executed a proprietary information, invention
assignment and non-competition agreement substantially in the form customarily
used by the Company, a copy of which has been provided to the Investor prior to
the Closing (a "Proprietary Agreement"). No employee, officer, consultant or
advisor of the Company has taken any exception to his or her Proprietary
Agreement with the Company with respect to any Proprietary Right (as defined
below) used by the Company in the conduct of its business as it is currently
conducted and as proposed to be conducted. The Company, after reasonable
investigation, is not aware that any of the Company's employees, officers,
consultants or advisors is in violation thereof and the Company will use its
best efforts to prevent any such violation. In addition, the Company will cause
each employee, officer, consultant and advisor of the Company hired or engaged
at any time after the date hereof to sign a Proprietary Agreement.
2.10 PROPRIETARY RIGHTS.
(A) The Schedule of Exceptions sets forth a true, correct and complete
list of all patents, patent applications, trademarks, trademark
applications, mask work registrations or applications therefore, service
marks, service ▇▇▇▇ applications, trade names, copyright registration or
any applications therefor, domain name registration or application
therefor, copyrights, information, proprietary rights and processes
(collectively, "Proprietary Rights") owned by the Company or licensed to
the Company pursuant to an enforceable license. Any Proprietary Rights not
owned by the Company used by the Company is being used pursuant to a valid
and enforceable license. The Schedule of Exceptions sets forth a true,
correct and complete list of all agreements pursuant to which the Company
licenses, distributes and grants any and all other rights with respect to
any Proprietary Right to any third party, and except as set forth therein,
no other person or entity has any rights to any Proprietary Rights and
except as further set forth therein, the Company has not agreed to
indemnify any person or entity against any infringement, violation or
misappropriation of any Proprietary Rights. The Company owns, free and
clear of any lien, encumbrance or other restriction, or licenses (pursuant
to a valid and enforceable license) all of the Intellectual Property Rights
(as defined below) necessary to conduct its business as it is currently
conducted and as proposed to be conducted without any conflict with, or
infringement of, the rights of others. There are no outstanding options,
licenses,
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or agreements of any kind relating to the foregoing, nor is the
Company bound by or a party to any options, licenses or agreements of any
kind with respect to the Intellectual Property Rights and processes of any
other person or entity. The Company has not violated, infringed, or, by
conducting its business as proposed to be conducted, would violate or
infringe any of the Intellectual Property Rights of any other person or
entity. The Company has the exclusive right to file, prosecute and maintain
all applications and registrations with respect to its Proprietary Rights
(other than those subject to a license from a third party which is included
in the Schedule of Exceptions). There is neither pending nor, to the best
of the Company's knowledge, any basis for or any threatened claim, action
or litigation against the Company asserting the invalidity, misuse,
unenforceability or the lack of ownership of any Proprietary Right or
Intellectual Property Rights of the Company or the invalidity, misuse or
unenforceability of any license pursuant to which the Company uses the
Proprietary Rights or Intellectual Property Rights of another person or
entity, nor is the Company aware of any basis therefor and the Company has
not received any notice of infringement upon or conflict with any asserted
right of others. To the best of the Company's knowledge, no person or
entity is infringing or violating any of the Company's Proprietary Rights
or Intellectual Property Rights or breaching any agreement pursuant to
which the Company granted a license with respect to the Proprietary Rights
or Intellectual Property. The Company has taken all reasonably necessary
and desirable actions to maintain and protect each Proprietary Right and
Intellectual Property Right that it owns or uses. There is not pending or
threatened any loss or expiration of any Proprietary Right or Intellectual
Property Right owned or used by the Company.
(B) The Company has taken in the past and will take in the future
reasonable security measures to protect the secrecy, confidentiality and
value of all of its Proprietary Rights and Intellectual Property Rights.
The Company is not aware that any of its employees, consultants or advisors
is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere
with the use of his or her 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 as it is currently conducted, nor the
conduct of the Company's business as proposed to be conducted, will, to the
Company's knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any employee, consultant or advisor is
now obligated. The Company does not believe it is or will be necessary to
utilize any inventions of any of its employees, consultants or advisors (or
people it currently intends to hire) made prior to their relationship with
the Company other than Proprietary Rights or Intellectual Property Rights
which have been duly transferred to the Company and which transfers have
vested legal right, title and interest to such Proprietary Rights or
Intellectual Property Rights in the Company.
(C) All of the patentable and copyrightable materials incorporated in
or bundled with any product created and manufactured by the Company have
been created by employees of the Company within the scope of their
employment by the Company and are owned by, and are the exclusive property
of, the Company or by independent contractors of the Company who have
executed agreements expressly assigning all right, title and interest in
such patentable or copyrightable materials to the Company. No portion of
such patentable or copyrightable materials was jointly developed with any
third party.
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(D) All of the Company's products distributed for use are free from
significant defects or errors and conform in all material respects to the
written documentation and specifications therefor.
(E) "Intellectual Property" shall mean all: (i) patents, patent
applications, patent disclosures and all related continuation,
continuation-in-part, divisional, reissue, reexamination, utility model,
certificate of invention and design patents, patent applications,
registrations and applications for registrations; (ii) trademarks, service
marks, trade dress, Internet domain names, logos, trade names and corporate
names and registrations and applications for registration thereof; (iii)
copyrights and registrations and applications for registration thereof;
(iv) mask works and registrations and applications for registration
thereof; (v) computer software, data and documentation; (vi) inventions,
trade secrets and confidential business information, whether patentable or
nonpatentable and whether or not reduced to practice, know-how,
manufacturing and product processes and techniques, research and
development information, copyrightable works, financial, marketing and
business data, pricing and cost information, business and marketing plans
and customer and supplier lists and information; (vii) other proprietary
rights relating to any of the foregoing (including remedies against
infringements thereof and rights of protection of interest therein under
the laws of all jurisdictions); and (viii) copies and tangible embodiments
thereof.
2.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in material
violation or default of any provision of the Certificate of Incorporation or its
Bylaws, or of any instrument, judgment, order, writ, decree or contract to which
it is a party or by which it is bound, or of any provision of any federal or
state statute, rule or regulation applicable to the Company.
2.12 AGREEMENTS; ACTION.
(A) Except for agreements explicitly contemplated hereby, and as set
forth on the Schedule of Exceptions or in the IPO Registration Statement,
there are no agreements, understandings or proposed transactions between
the Company and any of its officers, directors, affiliates or any affiliate
thereof.
(B) All agreements to which the Company is a party and which are
required to be filed as an exhibit to the IPO Registration Statement have
been so filed. To the Company's knowledge, all of such agreements and
contracts are valid, binding and in full force and effect. Neither the
Company, nor, to the best of the Company's knowledge, any other party
thereto, is in default of any of its obligations under any of such
agreements or contracts filed as an exhibit to the IPO Registration
Statement.
(C) The Company has not (i) declared or paid any dividends or
authorized or made any distribution upon or with respect to any class or
series of its capital stock (other than a stock dividend declared on
September 17, 2001 of forty-nine (49) shares for each share then
outstanding on all classes and series of the Company's capital stock), (ii)
declared or authorized any stock split with respect to any class or series
of its capital stock (other than a four-for-seven reverse split of the
Common Stock effected on February 11, 2005), (iii) incurred any
indebtedness for money borrowed or any other liabilities individually in
excess of $25,000 or, in the case of indebtedness and/or liabilities
individually less than $25,000, in excess of $50,000 in
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the aggregate that is not disclosed in the IPO Registration Statement, (iv)
made any loans or advances to any person, other than ordinary advances for
travel expenses, or (v) sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary
course of business.
(D) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments,
contracts and proposed transactions involving the same person or entity
(including persons or entities the Company has reason to believe are
affiliated therewith) shall be aggregated for the purpose of meeting the
individual minimum dollar amounts of such subsections.
(E) The Company has not engaged in the past six (6) months in any
discussion (i) with any representative of any corporation or other entity
regarding the consolidation or merger of the Company with or into any such
corporation or other entity, (ii) with any corporation, partnership,
association or other entity or any individual regarding the sale,
conveyance or disposition of all or substantially all of the assets of the
Company or a transaction or series of related transactions in which more
than fifty percent (50%) of the voting power of the Company is disposed of,
or (iii) regarding any other form of acquisition, liquidation, dissolution
or winding up of the Company.
2.13 RELATED-PARTY TRANSACTIONS. No employee, officer, or director of the
Company or member of his or her immediate family is indebted to the Company, nor
is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them. To the best of the Company's knowledge, none of such
persons has any direct or indirect ownership interest in any firm or corporation
with which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation that competes with the Company, except
that employees, officers, or directors of the Company and members of their
immediate families may be passive investors in publicly traded companies that
may compete with the Company. Except as set forth on the Schedule of Exceptions,
no member of the immediate family of any officer or director of the Company is
directly or indirectly interested in any material contract with the Company.
2.14 PERMITS. The Schedule of Exceptions lists all franchises, permits,
licenses, registrations, certificates, orders, approvals held by the Company
(the "Permits"). Such Permits are the only Permits necessary for the Company to
conduct its business as now being conducted by it, the lack of which could have
a Company Material Adverse Effect, and the Company believes it can obtain,
without undue burden or expense, any similar authority for the conduct of its
business as planned to be conducted. The Company is not in default under any of
such Permits.
2.15 ENVIRONMENTAL AND SAFETY LAWS.
(A) The Company, to its knowledge after due inquiry, has complied with
all applicable Environmental Laws (as defined below) and occupational
health and safety laws. There is no pending or, to the best of the
Company's knowledge, threatened civil or criminal litigation, written
notice of violation, formal administrative proceeding, or investigation,
inquiry or information request by any Governmental Entity, relating to any
Environmental Law or
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occupational health and safety law involving the Company. For purposes of
this Agreement, "Environmental Law" shall mean any federal, state or local
law, statute, rule or regulation or the common law relating to the
environment or occupational health and safety, including any statute,
regulation, administrative decision or order pertaining to (i) treatment,
storage, disposal, generation and transportation of industrial, toxic or
hazardous materials or substances or solid or hazardous waste; (ii) air,
water and noise pollution; (iii) groundwater and soil contamination; (iv)
the release or threatened release into the environment of industrial, toxic
or hazardous materials or substances, or solid or hazardous waste,
including emissions, discharges, injections, spills, escapes or dumping of
pollutants, contaminants or chemicals; (v) the protection of wild life,
marine life and wetlands, including all endangered and threatened species;
(vi) storage tanks, vessels, containers, abandoned or discarded barrels and
other closed receptacles; (vii) health and safety of employees and other
persons; and (viii) manufacturing, processing, using, distributing,
treating, storing, disposing, transporting or handling of materials
regulated under any law as pollutants, contaminants, toxic or hazardous
materials or substances or oil or petroleum products or solid or hazardous
waste. As used above, the terms "release" and "environment" shall have the
meaning set forth in the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA").
(B) The Company has no liabilities or obligations arising from the
release of any Materials of Environmental Concern (as defined below) into
the environment. For purposes of this Agreement, "Materials of
Environmental Concern" shall mean any chemicals, pollutants or
contaminants, hazardous substances (as such term is defined under CERCLA),
solid wastes and hazardous wastes (as such terms are defined under the
Resource Conservation and Recovery Act), toxic materials, oil or petroleum
and petroleum products or any other material subject to regulation under
any Environmental Law.
(C) The Company is not a party to or bound by any court order,
administrative order, consent order or other agreement between the Company
and any Governmental Entity entered into in connection with any legal
obligation or liability arising under any Environmental Law.
(D) The Company is not aware of any material environmental liability
of any solid or hazardous waste transporter or treatment, storage or
disposal facility that has been used by the Company.
(E) Set forth in the Schedule of Exceptions is a list of all documents
(whether in hard copy or electronic form) that contain any environmental
reports, investigations and audits relating to premises currently or
previously owned or operated by the Company (whether conducted by or on
behalf of the Company or a third party, and whether done at the initiative
of the Company or directed by a Governmental Entity or other third party)
which the Company has possession of or access to. A complete and accurate
copy of each such document has been provided to the Investor.
2.16 MANUFACTURING AND MARKETING RIGHTS. The Company has not granted rights
to manufacture, produce assemble, license, market or sell its products to any
other person and is not bound by any agreement that affects the Company's
exclusive right to develop, manufacture, assemble, distribute, market or sell
its products currently being sold. Any materials used by the
10
Company (or approved by the Company for another party's use) to market any
products currently sold or licensed by the Company do not infringe or violate
any rights, including Intellectual Property Rights of any other party.
2.17 DISCLOSURE. Neither this Agreement (nor any Exhibit hereto) nor any
other statements or certificates made or delivered in connection herewith or
therewith, when read individually or together, contains or will contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements herein or therein not misleading.
2.18 REGISTRATION RIGHTS. Except as provided in the Second Amended and
Restated Investors' Rights Agreement, dated as of February 18, 2004, by and
between the Company and the investors named therein, as amended, and the
Registration Rights Agreement dated as of August 30, 2005 by and among the
Company and BioMedical Sciences Investment Fund Pte Ltd., the Company has not
granted or agreed to grant any registration rights, including but not limited to
piggyback rights, to any person or entity.
2.19 TITLE TO PROPERTY AND ASSETS. The Company owns all its property and
assets, including but not limited to all properties and assets reflected in the
most recent balance sheet of the Company included in the IPO Registration
Statement, free and clear of all mortgages, liens, loans and encumbrances,
except such encumbrances and liens that arise in the ordinary course of
business. With respect to the property and assets it leases, the Company is in
compliance with such leases and holds a valid leasehold interest free of any
liens, claims or encumbrances.
2.20 MINUTE BOOKS. The minute books of the Company provided to the Investor
contain an accurate summary of all matters that have been voted upon by the
directors and stockholders since the time of incorporation. The stock ledger of
the Company provided to the Investor is complete and accurate and reflects all
issuances, transfers, repurchases and cancellations of shares of capital stock
of the Company as of the Closing Date.
2.21 LABOR AGREEMENTS AND ACTIONS. The Company is not 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 or, to the best of the Company's
knowledge, has sought to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute involving the
Company pending, or to the best of the Company's knowledge, threatened, that
could have an adverse effect on the assets, properties, financial condition,
operating results, or business of the Company (as such business is presently
conducted and as it is proposed to be conducted), nor is the Company aware of
any labor organization activity involving its employees. The Company is not
aware that any officer, employee, consultant or advisor intends to terminate his
or her relationship with the Company, nor does the Company have a present
intention to terminate the relationship of any of the foregoing. Except as set
forth on the Schedule of Exceptions, the employment of each officer, employee,
consultant or advisor of the Company is terminable at the will of the Company
and no severance or other similar payment would be required in connection with
any termination of such relationship. To the best of the Company's knowledge,
the Company has complied with all applicable state and federal equal employment
opportunity and other laws related to employment.
11
2.22 FINANCIAL STATEMENTS. The Financial Statements contained in the IPO
Registration Statement (the "Financial Statements") are in accordance with the
books and records of the Company, present fairly the financial condition and
results of operations of the Company, at the dates and for the periods
indicated, and have been prepared in accordance with U.S. generally accepted
accounting principles ("GAAP") consistently applied, except that the unaudited
Financial Statements may not be in accordance with GAAP because of the absence
of footnotes normally contained therein and are subject to normal year-end audit
adjustments which in the aggregate will not be material.
2.23 ABSENCE OF CHANGES. Except as contemplated by this Agreement or as
described in the IPO Registration Statement, since June 30, 2005 (the "Balance
Sheet Date"): (a) the Company has not entered into any transaction which was not
in the ordinary course of business, (b) there has been no material adverse
change in the condition (financial or otherwise) of the business, prospects,
property, assets or liabilities of the Company, (c) there has been no material
damage to, destruction of or loss of physical property (whether or not covered
by insurance) adversely affecting the assets, financial condition, operating
results, business, prospects or operations of the Company, (d) the Company has
not declared or paid any dividend or made any distribution on its stock, or
redeemed, purchased or otherwise acquired any of its stock, (e) the Company has
not changed any compensation arrangement or agreement with any of its key
employees or executive officers, or changed the rate of pay of its employees as
a group, (f) the Company has not received notice that there has been a
cancellation of an order for the Company's products or a loss of a customer of
the Company, the cancellation or loss of which would result in a Company
Material Adverse Effect, (g) the Company has not changed or amended any contract
filed as an exhibit to the IPO Registration Statement, (h) there has been no
resignation or termination of employment of any key officer or key employee of
the Company and the Company does not know of any impending resignation or
termination of employment of any such officer or employee that if consummated
would result in a Company Material Adverse Effect, (i) there has been no labor
dispute involving the Company or its employees and none is pending or, to the
best of the Company's knowledge, threatened, (j) there has been no change,
except in the ordinary course of business, in the material contingent
obligations of the Company by way of guaranty, endorsement, indemnity, warranty
or otherwise, (k) there have been no loans made by the Company to any of its
employees, officers or directors other than travel advances and other advances
made in the ordinary course of business, (l) there has been no waiver by the
Company of a valuable right or of a debt owing to it, and (m) there has not been
any satisfaction or discharge of any lien, claims or encumbrance or any payment
of any obligation by the Company, except in the ordinary course of business and
which is not material to the assets, properties, financial condition, operating
results or business of the Company.
2.24 LIABILITIES. The Company has no liabilities or obligations, absolute
or contingent (whether known or unknown and whether absolute or contingent) not
disclosed in the Financial Statements or the IPO Registration Statement, except
current liabilities incurred in the ordinary course of business subsequent to
the Balance Sheet Date, the aggregate of which does not exceed $50,000.
2.25 TAXES. The Company has filed all tax returns and reports that are
required to have been filed with appropriate federal, state, county and local
governmental agencies or instrumentalities, except where the failure to do so
would not have a Company Material Adverse
12
Effect. The Company has paid or established reserves (which are reflected in the
Financial Statements) for all material income, franchise and other taxes,
assessments, governmental charges, penalties, interest and fines due and payable
by them on or before the Closing. The Company has not elected pursuant to the
Internal Revenue Code of 1986, as amended (the "Code"), to be treated as an S
Corporation or a collapsible corporation pursuant to Section 341(f) or Section
1362(a) of the Code, nor has it made any other elections pursuant to the Code
(other than elections which relate solely to methods of accounting, depreciation
or amortization) which would have a Company Material Adverse Effect. There is no
pending dispute with any taxing authority relating to any of such returns and
the Company has no knowledge of any proposed liability for any tax to be imposed
upon the properties or assets of the Company for which there is not an adequate
reserve reflected in the Financial Statements or, which if adversely determined
against the Company, would have a Company Material Adverse Effect. The Company
has never had any tax deficiency proposed or assessed against it and has not
executed any waiver of any statute of limitations on the assessment or
collection of any tax or governmental charge. The Company has withheld or
collected from each payment made to each of its employees, the amount of all
taxes (including, but not limited to, federal income taxes, Federal Insurance
Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be
withheld or collected therefrom, and has paid the same to the proper tax
receiving officers or authorized depositories. The Company has filed or has
obtained presently effective extensions with respect to all federal, state,
county, local and foreign tax returns which are required to be filed by it, such
returns are complete and accurate and all taxes shown thereon to be due have
been timely paid with exceptions not material to the Company. Federal income tax
returns of the Company have not been audited by the Internal Revenue Service.
2.26 INSURANCE. The Company has valid general commercial, fire, workers
compensation, public liability, theft insurance policies and insurance policies
with respect to its property and business of the kinds and in the amounts
customary for companies similarly situated to the Company. The Company shall
maintain in effect, a directors' and officers' insurance policy with coverage
satisfactory to the member of the Company's board of directors representing the
Series D Preferred Stock who is elected pursuant to the Voting Agreement.
2.27 COMPLIANCE. The Company has, in all material respects, complied with
all laws, regulations and orders applicable to its present and proposed business
and has all material permits and licenses required thereby. There is no term or
provision of any mortgage, indenture, contract, agreement or instrument to which
the Company is a party or by which it is bound, or, to the best of the Company's
knowledge, of any provision of any state or federal judgment, decree, order,
statute, rule or regulation applicable to or binding upon the Company, which
materially adversely affects or, so far as the Company may now foresee, in the
future is reasonably likely to result in or have a Company Material Adverse
Effect. To the best of the Company's knowledge, after reasonable inquiry, no
employee of the Company is in violation of any term of any contract or covenant
(either with the Company or with another entity) relating to employment,
patents, assignment of inventions, proprietary information disclosure,
non-competition or non-solicitation.
2.28 ERISA. The Company does not have or otherwise contribute to or
participate in any employee benefit plan subject to the Employee Retirement
Income Security Act of 1974, as amended.
13
2.29 REAL PROPERTY HOLDING CORPORATION. The Company is not a real property
holding corporation within the meaning of Code Section 897(c)(2) and any
regulations promulgated thereunder.
2.30 REGULATORY MATTERS. All preclinical and clinical studies undertaken by
or on behalf of the Company have been and are being conducted by the Company, or
to the Company's knowledge by third parties, in compliance in all material
respects with all applicable federal, state or foreign laws, rules, orders or
regulations. No filing or submission to the United States Food and Drug
Administration (the "FDA") or any other federal, state or foreign regulatory
body contains any material omission or material false information. The studies,
tests and preclinical or clinical trials, if any, conducted by or on behalf of
the Company that are described in the IPO Registration Statement were and, if
still pending, are being, conducted in all material respects in accordance with
experimental protocols, procedures and controls pursuant to, where applicable,
accepted professional scientific standards; the descriptions of the results of
such studies, tests and trials contained in the IPO Registration Statement are
accurate in all material respects; and the Company has not received any notices
or correspondence from the FDA or any foreign, state or local governmental body
exercising comparable authority requiring the termination, suspension or
material modification of any studies, tests, or preclinical or clinical trials
conducted by or on behalf of the Company.
2.31 DISCLAIMER OF ADDITIONAL REPRESENTATIONS AND WARRANTIES. Except as
expressly set forth in this Section 2 of this Agreement but without limiting the
representations and warranties herein (including, without limitation, those
contained in Section 2.17), the Company does not make any representation or
warranty, express or implied, at law or in equity, in respect of the Company or
any of its assets, liabilities, operations or prospects.
2.32 KNOWLEDGE. The term "knowledge," as used in this Agreement, shall mean
the actual knowledge of the persons listed as executive officers of the Company
in the IPO Registration Statement after reasonable investigation with regard to
the matter relating thereto.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
3.1 AUTHORIZATION. The Investor hereby represents and warrants, as of the
Closing, to the Company that the Investor has full power and authority to enter
into this Agreement, and this Agreement constitutes its valid and legally
binding obligation, enforceable in accordance with its terms except (a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally, (b) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and (c) to the
extent the indemnification provisions contained herein may be limited by
applicable federal or state securities laws.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Investor hereby represents and
warrants, as of the Closing, to the Company that this Agreement is made with the
Investor in reliance upon the Investor's representation to the Company, which by
the Investor's execution of this Agreement the Investor hereby confirms, that
the Shares to be received by the Investor and the Common Stock issuable upon
conversion thereof, as applicable, (collectively, the "Securities") will be
acquired for investment for the Investor's own account, not as a nominee or
14
agent, and not with a view to the resale or distribution of any part thereof,
and that the Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same. 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 participations to such person or to any third person, with
respect to any of the Securities.
3.3 INVESTMENT EXPERIENCE. The Investor hereby represents and warrants, as
of the Closing, to the Company that the Investor is an investor in securities of
companies in the development stage and acknowledges that it is able to bear the
economic risk of full loss of the value of the Shares, and 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. The Investor also
represents it has not been organized for the purpose of acquiring the Shares.
3.4 ACCREDITED INVESTOR. The Investor hereby represents and warrants, as of
the Closing, to the Company that the Investor is an "accredited investor" within
the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation
D, as presently in effect.
3.5 LEGENDS. It is understood that the certificates evidencing the Shares
may bear one or all of the following legends:
(A) "These securities have not been registered under the Securities
Act of 1933, as amended. 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
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 law or applicable securities laws,
including, without limitation, any legend required by the General
Corporation Law of the State of Delaware.
3.6 NON-U.S. INVESTOR. The Investor hereby represents and warrants, as of
the Closing, to the Company that the Investor is not a "U.S. Person" within the
meaning of SEC Rule 902(k) of Regulation S ("U.S. Person") and is not acquiring
the Shares for the account or benefit of any U.S. Person who purchased
securities in a transaction that did not require registration under the Act.
3.7 FOREIGN INVESTOR LEGENDS. It is understood that the certificates
evidencing the Shares issued to the Investor may bear the following legends:
(A) "These securities may not be sold, offered for sale, pledged,
hypothecated or otherwise transferred except in accordance with the
provisions of Regulation S under the Securities Act of 1933, as amended,
pursuant to registration under the Securities Act of 1933, as amended, or
pursuant to an available exemption from registration. Hedging transactions
involving these securities may not be conducted unless in compliance with
the Securities Act of 1933, as amended."
15
4. CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING. The obligations of the
Investor to purchase the Shares are subject to the fulfillment or waiver on or
before the Closing of each of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained in Section 2 shall be true, correct and complete on and as
of the Closing.
4.2 PERFORMANCE. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
4.3 COMPLIANCE CERTIFICATE. The President of the Company shall deliver to
the Investor at the Closing a certificate stating that the conditions specified
in Sections 4.1 and 4.2 have been fulfilled. The Company shall deliver to the
Investor copies of the following:
(A) The Certificate of Incorporation of the Company, as in effect as
of the Closing, certified by the Secretary of State of the State of
Delaware;
(B) Certificates, as of the most recent practicable dates prior to the
Closing, as to the corporate good standing of the Company issued by the
Secretary of State of the State of Delaware and the Secretary of State of
the Commonwealth of Massachusetts;
(C) By-laws of the Company, as amended to date, certified by the
Secretary of the Company as of the Closing Date; and
(D) Resolutions of the Board of Directors and stockholders of the
Company, authorizing and approving all matters in connection with this
Agreement and the transactions contemplated hereby, certified by the
Secretary of the Company as of the Closing Date.
4.4 QUALIFICATIONS. All authorizations, consents, approvals, and permits,
if any, of any governmental authority or regulatory body of the United States,
of any state or of any other person or entity that are required in connection
with the execution and delivery of this Agreement, and the performance of the
Company's obligations hereunder and the issuance and sale of the Shares pursuant
to this Agreement and the shares of Common Stock upon conversion of the Shares
shall be duly obtained and effective.
4.5 OPINION OF COUNSEL. The Investor shall have received an opinion from
the Company's legal counsel, dated the date of the Closing, in the form attached
hereto as EXHIBIT B.
4.6 PROCEEDINGS SATISFACTORY. All proceedings taken in connection with the
issuance and sale of the Shares and all documents and papers relating thereto
shall be satisfactory in form and substance to Investor. The Investor shall have
received copies of such documents and papers as the Investor may reasonably
request in connection with this Agreement.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations of the
Company to the Investor under this Agreement are subject to the fulfillment on
or before the Closing of each of the following conditions by the Investor:
16
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Investor contained in Section 3 shall be true, correct and complete on and
as of the Closing.
5.2 PAYMENT OF PURCHASE PRICE. The Investor shall have delivered the
Purchase Price specified in Section 1.2 by check or wire transfer.
6. REGISTRATION RIGHTS.
6.1 DEMAND RIGHTS. The Company shall, as promptly as possible upon request
by the Investor on the first day after (the "Eligible Filing Date") the period
ending (i) nine months after the closing of the Company's initial public
offering of its Common Stock under the Act (the "IPO"), if the Company has
closed the IPO on or before March 31, 2006, or (ii) six months after the closing
of the IPO, if the Company has closed the IPO after March 31, 2006:
(A) prepare and file with the SEC a registration statement on Form S-3
(the "Registration Statement"), to enable, subject to the limitations of
Section 7.3, the resale of the shares of Common Stock issuable upon
conversion of the Shares (the "Registrable Shares") held by the Investor
from time to time and use commercially reasonable efforts to cause such
Registration Statement to be declared effective as promptly as possible
after filing, but in any event, within ninety (90) days following the such
filing or, in the event of a review of the Registration Statement by the
SEC, within one hundred twenty (120) days following such filing (such date
as is applicable the "Required Registration Date"), and to remain
continuously effective until the earlier of (1) the second anniversary of
the effective date of the Registration Statement (subject to Section
6.5(h)), (2) the date on which all Registrable Shares have been sold
thereunder or (3) the date on which all of the Registrable Shares can be
sold by the Investor pursuant to Rule 144(k) promulgated under the Act (the
"REGISTRATION PERIOD"). In the event the Registration Statement cannot be
kept effective for such period, the Company shall use best efforts to
prepare and file with the SEC and have declared effective as promptly as
possible another registration statement on the same terms as the initial
Registration Statement and such registration statement shall be considered
the Registration Statement for the purposes hereof. In the event that the
Company does not meet the requirements for the use of Form S-3, the Company
shall use such other form as is available for such a registration, and
shall convert such other form to Form S-3, or file a replacement
registration statement on Form S-3, as promptly as practicable after the
first date on which it meets such requirements;
(B) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement
and the prospectus included in the Registration Statement (the
"PROSPECTUS", as amended or supplemented by any prospectus supplement and
by all other amendments thereto and all material incorporated by reference
in such Prospectus) used in connection therewith as may be necessary to
keep the Registration Statement effective and to comply with the provisions
of the Act with respect to the disposition of all securities covered by
such Registration Statement at all times until the end of the Registration
Period;
(C) furnish to the Investor with respect to the Registrable Shares
registered under the Registration Statement such reasonable number of
copies of such Registration Statement and any Prospectus in conformity with
the requirements of the Act, each amendment
17
and supplement thereto and any documents incorporated by reference therein
and such other documents as the Investor may reasonably request in order to
facilitate the public sale or other disposition of all or any of the
Registrable Shares (and the Company hereby consents to the Investor's use
of the Prospectus in such sale or other disposition);
(D) use its commercially reasonable efforts to register or qualify the
Registrable Shares under such other securities or blue sky laws is such
jurisdictions as are specified in writing by the Investor; use its
commercially reasonable efforts to keep each such registration or
qualification (or exemption therefrom) effective during the Registration
Period and take any other action that may be reasonably necessary to enable
the Investor to consummate the disposition in such jurisdiction of the
Registrable Shares; provided, however, that the Company shall not be
required to qualify to do business or consent to service of process in any
jurisdiction in which it is not now so qualified or has not so consented;
(E) take all such action as is required of it to cause the Registrable
Shares to be listed on the national securities exchange or automated
quotation system on which the Common Stock is then traded;
(F) promptly notify the Investor in writing (i) when the Registration
Statement, a Prospectus or any supplement or amendment to either of them
has been filed and, with respect to the Registration Statement or any
post-effective amendment thereto, when the same has been declared effective
and (ii) of the issuance by any state securities or other regulatory
authority of any order suspending the qualification or exemption from
qualification of any of the Registrable Shares under state securities or
"blue sky" laws or the initiation of any proceedings for that purpose;
(G) promptly notify the Investor in writing of the existence of any
fact or the happening of any event, during the Registration Period (but not
as to the substance of any such fact or event), that makes any statement of
a material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes
in the Registration Statement or the Prospectus in order to make the
statements therein not misleading (PROVIDED, HOWEVER, that no notice by the
Company shall be required pursuant to this subsection (g) in the event that
the Company either contemporaneously files a prospectus supplement to
update the Prospectus or a Form 8-K or other appropriate Securities
Exchange Act of 1934 (the "Exchange Act") report that is incorporated by
reference into the Registration Statement, which, in either case, contains
the requisite information with respect to such material event that results
in such Registration Statement no longer containing any such untrue or
misleading statements). Any such notification shall be subject to the
obligations set forth in Sections 6.5(b) and 6.5(c);
(H) furnish to the Investor upon written request, from the date of
this Agreement until the end of the Registration Period, one copy of its
periodic reports filed with the SEC pursuant to the Exchange Act and the
rules and regulations promulgated thereunder;
(I) cooperate with the Investor to facilitate the timely preparation
and delivery of certificates (which shall not bear any restrictive legends
unless required under applicable law) representing securities sold under
any Registration Statement, and enable such securities to be in
18
such denominations and registered in such names as the Investor may request
and keep available and make available to the Company's transfer agent prior
to the effectiveness of such registration statement a supply of such
certificates;
(J) provide a transfer agent and registrar for all Registrable Shares
registered hereunder and provide a CUSIP number for the Registrable Shares
included in any Registration Statement not later than the effective date of
such Registration Statement;
(K) cooperate with the Investor and its counsel in connection with any
filings required to be made with the National Association of Securities
Dealers, Inc.;
(L) promptly file all documents required to be filed with the SEC
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act;
(M) following the effectiveness of such Registration Statement, notify
the Investor promptly of any request by the SEC for the amending or
supplementing of such Registration Statement or Prospectus or for
additional information;
(N) prepare and file with the SEC promptly any amendments or
supplements to such Registration Statement or Prospectus which, in the
reasonable opinion of counsel for the Company, is required in connection
with the distribution of the Registrable Shares;
(O) if the Investor intends to distribute the Registrable Securities
covered by its request by means of an underwriting, it shall so advise the
Company as a part of its request made pursuant to this Section, and the
underwriter will be selected by the Investor and shall be subject to the
approval of the Company, which approval shall be in the reasonable
discretion of the Company, and the Company shall enter into and perform its
obligations under an underwriting agreement, in usual and customary form,
with the managing underwriter of such offering. The Investor shall also
enter into and perform its obligations under such an agreement;
(P) obtain a "cold comfort" letter from the Company's independent
public accountants in customary form and covering such matters of the type
customarily covered by "cold comfort" letters and obtain a customary
opinion of legal counsel for the Company, as the Investor may reasonably
request;
(Q) Make available for inspection by the Investor, any managing
underwriter participating in any disposition pursuant to such registration
statement, and any attorney or accountant or other agent retained by any
such underwriter or selected by the Investor , all financial and other
records, pertinent corporate documents and properties of the Company and
cause the Company's officers, directors, employees and independent accounts
to supply all information reasonably requested by the Investor,
underwriter, attorney, accountant or agent in connection with such
registration statement;
(R) advise the Investor, promptly after the Company shall receive
notice or obtain knowledge thereof, of the issuance of any stop order by
the SEC suspending the effectiveness of such Registration Statement or the
initiation or threatening of any proceeding for such purpose and promptly
use its commercially reasonable efforts to prevent the issuance of any
19
stop order or to obtain its withdrawal at the earliest possible moment if
such stop order should be issued; and
(S) bear all expenses in connection with the procedures described in
paragraphs (a) through (r) of this Section 6.1 and the registration of the
Registrable Shares pursuant to the Registration Statement other than fees
and expenses, if any, of legal counsel or other advisers to the Investor or
underwriting discounts, brokerage fees and commissions incurred by the
Investor, if any.
6.2 PIGGYBACK OFFERINGS.
(A) In the event that the Company shall seek to undertake an offering
of registered shares of Common Stock of the Company (whether for the
account of the Company or the account of any securityholder of the Company
other than an offering pursuant to the Registration Rights Agreement dated
as of August 30, 2005 by and among the Company and BMSIF) after the
Eligible Filing Date and on or before the third anniversary of the Eligible
Filing Date, except in the case of an offering registered on Form S-4 or
S-8 (or any successor form) for the registration of securities to be
offered in a transaction of the type referred to in Rule 145 promulgated
under the Act or to be offered to employees of and/or consultants to the
Company or subsidiaries thereof, the Company shall first give written
notice thereof (the "Company Notice") to the Investor, which Company Notice
shall be given not less than fifteen (15) Business Days prior to the
anticipated initiation of the registration statement related to such
offering and shall offer the Investor the opportunity to include any or all
of its Registrable Shares in the registration statement related to such
offering, subject to the limitations contained in Section 6.2(c) hereof.
(B) The Investor shall advise the Company in writing within ten (10)
business days after the date of receipt of the Company Notice, specifying
the number of Registrable Shares, if any, the Investor seeks to include in
the registration statement related to such offering The Company shall
thereupon include in the registration statement related to such offering
the number of Registrable Shares so requested by the Investor to be
included, subject to Section 6.2(c) hereof, and, if required shall use
commercially reasonable efforts to effect registration of such Registrable
Shares under the Act; provided, however, that the Company may at any time
withdraw or cease proceeding with the registration statement related to
such offering of the Investor's Registrable Shares if it shall at the same
time withdraw or cease proceeding with the registration statement related
to the offering of all other shares of Common Stock of the Company
originally proposed to be registered.
(C) If the managing underwriter of an underwritten offering pursuant
to which Registrable Shares are included pursuant to this Section 6.2 shall
advise the Investor and the Company in writing that, in its opinion, the
number of securities requested to be included in such underwritten offering
(including securities to be sold by the Company or by other persons not
holding Registrable Shares) exceeds the number which can be sold in such
underwritten offering within an acceptable price range, the Company will
include in such underwritten offering, to the extent of the number which
the Company is so advised can be sold in such underwritten offering, (i)
first, securities of the Company that the Company proposes to sell and (ii)
second, securities of the Company held by other persons having registration
rights proposed to be included in such
20
registration by the holders thereof and the Registrable Shares proposed to
be included in such registration by the Investor shall be included pro rata
based on the number of shares sought to be included in such registration
statement by the holders with rights to include shares in such registration
statement.
(D) The Company shall bear all expenses in connection with the
procedures described in paragraphs (a) through (c) of this Section 6.2 and
the registration of the Registrable Shares pursuant to Section 6.2(b) other
than fees and expenses, if any, of legal counsel or other advisers to the
Investor or underwriting discounts, brokerage fees and commissions incurred
by the Investor, if any.
6.3 CONDITIONS TO REGISTRATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 6 with
respect to Registrable Shares held by the Investor that:
(A) the Investor shall timely furnish to the Company a completed
Registration Statement questionnaire on or before the Eligible Filing Date
and such other written information regarding itself, the Registrable Shares
and the intended method of disposition of the Registrable Shares as shall
reasonably be required to effect the registration of the Registrable Shares
and as shall be reasonably be requested by the Company in advance or from
time to time; and
(B) the Investor is unable otherwise to sell in a single transaction
the Registrable Shares eligible to be sold without registration of such
Registrable Shares. For purposes of this Section 6.3, the sale of
Registrable Shares without registration shall mean that the Registrable
Shares may be sold by the Investor pursuant to Regulation S or Rule 144
under the Act or any other applicable provisions of the Act pursuant to
which the subsequent sale by the purchaser of such securities would not be
subject to registration. In the event of a disagreement as to the
salability of the Registrable Shares without registration as described in
this Section 6.3(b), or as to the salability of the Registrable Shares by
nonaffiliates of the Company pursuant to Rule 144(k) promulgated under the
Act as described in Section 6.1(a), the Company shall be entitled to rely
on the opinion of Ropes & ▇▇▇▇ LLP or any other recognized United States
securities law counsel, provided, however, that if, in the opinion of a
recognized United States securities law counsel to the Investor such
Registrable Shares are not so salable without registration, the Parties
shall resolve such dispute on the basis of a legal opinion of a mutually
acceptable recognized United States securities law counsel.
6.4 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. The Company acknowledges
and agrees that the Company will not grant or allow any other persons any
registration rights with respect to any securities of the Company which conflict
with or violate the provisions of this Agreement.
6.5 TRANSFER OF REGISTRABLE SHARES AFTER REGISTRATION; SUSPENSION.
(A) The Investor agrees that it will not offer to sell or make any
sale, assignment, pledge, hypothecation or other transfer with respect to
the Registrable Shares that would constitute a sale within the meaning of
the Act except pursuant to an effective registration statement under the
Act or pursuant to an available exemption therefrom.
21
(B) In addition to any suspension rights under subsection (c) below,
if (i) an event has occurred and is continuing as a result of which any
such Registration Statement or Prospectus would, in the Company's
reasonable judgment, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading or (ii) if the Company notifies the
Investor that any filing of any Registration Statement pursuant to this
Agreement, any filing of any amendment thereto, any furnishing of any
supplement to a Prospectus included in a Registration Statement pursuant to
Section 6.1(g) hereof, any other filing with the SEC, the effectiveness of
any Registration Statement or other filing with the SEC, or any similar
action would, in the good faith judgment of outside counsel to the Company,
require the disclosure of material non-public information which the Company
has a bona fide business purpose for preserving as confidential and which
the Company would not otherwise be required to disclose, then the Company
may, on not more than two (2) non-consecutive occasions for not more than
thirty (30) days on each such occasion, (x) refrain from filing any
Registration Statement pursuant to this Agreement, filing any amendment
thereto, furnishing any supplement to a Prospectus included in a
Registration Statement pursuant to Section 6.1(g) hereof, making any other
filing with the SEC otherwise required by this Agreement, causing the
effectiveness of any Registration Statement or other filing with the SEC,
or taking any similar action and (y) suspend use of the Prospectus, on
written notice to the Investor (which notice will not disclose the content
of any material non-public information and will indicate the date of the
beginning and end of the intended period of suspension, if known), in which
case the Investor shall discontinue disposition of Registrable Shares
covered by the Registration Statement or Prospectus until copies of a
supplemented or amended Prospectus are distributed to the Investor or until
the Investor are advised in writing by the Company that sales of
Registrable Shares under the applicable Prospectus may be resumed and have
received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in any such Prospectus.
The suspension and notice thereof described in clause (y) of this
subsection (b) shall be held in strictest confidence and shall not be
disclosed by the Investor.
(C) Subject to subsection (d) below, in the event of: (1) any request
by the SEC or any other federal or state governmental authority during the
period of effectiveness of the Registration Statement for amendments or
supplements to a Registration Statement or related prospectus or for
additional information, (2) the issuance by the SEC or any other federal or
state governmental authority of any stop order suspending the effectiveness
of a Registration Statement or the initiation of any proceedings for that
purpose, (3) the receipt by the Company of any notification suspending the
qualification or exemption from qualification of any of the Registrable
Shares for sale in any jurisdiction or the initiation of any proceeding for
such purpose, or (4) any event or circumstance which necessitates the
making of any changes in the Registration Statement or Prospectus, or any
document incorporated or deemed to be incorporated therein by reference, so
that, in the case of the Registration Statement, it will not contain any
untrue statement of a material fact or any omission to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will not
contain any untrue statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, then the Company shall deliver a certificate in
writing to the Investor (the "Suspension Notice") to the effect of the
foregoing (which notice will not disclose the content of any material
non-public information and
22
will indicate the date of the beginning and end of the intended period of
suspension, if known), and, upon receipt of such Suspension Notice, the
Investor will discontinue disposition of Registrable Shares covered by to
the Registration Statement or Prospectus (a "Suspension") until the
Investor's receipt of copies of a supplemented or amended Prospectus
prepared and filed by the Company, or until the Investor are advised in
writing by the Company that the current Prospectus may be used, and have
received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in any such prospectus. In
the event of any Suspension, the Company will use its reasonable best
efforts to cause the use of the Prospectus so suspended to be resumed as
soon as possible after delivery of a Suspension Notice to the Investor.
(D) Provided that a suspension is not then in effect, the Investor may
sell Registrable Shares under the Registration Statement, provided that the
selling Investor arranges for delivery of a current Prospectus to the
transferee of such Registrable Shares to the extent such delivery is
required by applicable law.
(E) In the event of a sale of Registrable Shares by the Investor, the
Investor must also deliver to the Company's transfer agent, with a copy to
the Company, a certificate of subsequent sale reasonably satisfactory to
the Company, so that ownership of the Registrable Shares may be properly
transferred. The Company will cooperate to facilitate the timely
preparation and delivery of certificates (unless otherwise required by
applicable law) representing Registrable Shares sold.
(F) For the purpose of determining the Registration Period pursuant to
Section 6.1, the occurrence of any Suspension pursuant to subsection (c) or
the non-effectiveness of the Registration Statement during any period
during which such effectiveness is required pursuant to the terms of
Section 6.1(a) shall cause the second anniversary of the effective date of
the Registration Statement to be deemed extended by a number of days
equivalent to the duration of any Suspension or the number of days of such
non-effectiveness.
6.6 INDEMNIFICATION.
For the purpose of this Section 6.6, the term "REGISTRATION STATEMENT"
shall include any preliminary or final Prospectus, exhibit, supplement or
amendment included in or relating to the Registration Statement referred to in
Section 6.1, together with any document incorporated by reference into any of
the same.
(A) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless each of the Investor, and each of its employees,
advisors, agents, representatives, partners, officers and directors, and
each person, if any, who controls the Investor within the meaning of the
Act or the Exchange Act (all such persons together, the "Investor
Indemnitees"), to the fullest extent permitted by law, against any and all
losses, claims, damages, liabilities or expenses, joint or several to which
the Investor or such controlling person may become subject, under the Act,
the Exchange Act or any other federal or state statutory law or regulation,
or at common law or otherwise (including in settlement of any litigation,
if such settlement is effected with the written consent of the Company,
which consent shall not be unreasonably withheld) (including, without
limitation, attorneys' fees and disbursements), insofar
23
as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof as contemplated below) arise out of, are based upon, relate
to or result from any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any preliminary
prospectus, the Prospectus, or any amendment or supplement thereto, or
arise out of, are based upon, relate to or result from the omission or
alleged omission to state in any of them a material fact required to be
stated therein or necessary to make the statements in any of them, in light
of the circumstances under which they were made, not misleading, and will
reimburse the Investor Indemnitees for any reasonable legal and other
expenses as such reasonable expenses are incurred by the Investor
Indemnitees in connection with investigating, defending (or preparing to
defend), settling, compromising or paying any such loss, claim, damage,
liability, expense or action; PROVIDED, HOWEVER, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage,
liability, expense or action arises out of, is based upon, relates to or
results from (1) an untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement, the
Prospectus or any amendment to or supplement of the Registration Statement
or Prospectus made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Investor in writing
expressly for use in the Registration Statement or the Prospectus, (2) the
failure of the Investor to comply with the covenants and agreements
contained in this Agreement respecting sale of the Registrable Shares, or
(3) any untrue statement or omission of a material fact required to make
such statement not misleading in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to the Investor before the
pertinent sale or sales by the Investor.
(B) INDEMNIFICATION BY THE INVESTOR. The Investor will indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Act, against any losses, claims, damages,
liabilities or expenses to which the Company, its directors, its officers
who signed the Registration Statement and any controlling persons may
become subject, under the Act, the Exchange Act, or any other federal or
state statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the
written consent of the Investor, which consent shall not be unreasonably
withheld) insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof as contemplated below) arise out of, are
based upon, relate to or result from any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
preliminary prospectus, the Prospectus, or any amendment or supplement to
the Registration Statement or Prospectus, or arise out of, are based upon,
relate to or result from 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, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement, any
preliminary prospectus, the Prospectus, or any amendment or supplement
thereto, solely in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Investor expressly for use
therein, and the Investor will reimburse the Company, each of its
directors, each of its officers who signed the Registration Statement, and
any controlling persons for any reasonable legal and other expense incurred
by the Company, its directors, its officers who signed the Registration
Statement, and any controlling persons, in connection with investigating,
defending (or preparing to defend), settling, compromising or paying any
such loss, claim, damage, liability, expense or action; PROVIDED, HOWEVER,
that the Investor shall not be liable for any such untrue statement or
24
alleged untrue statement or omission or alleged omission with respect to
which the Investor has delivered to the Company in writing a correction
before the occurrence of the event from which such loss was incurred.
Notwithstanding the provisions of this Section 6.6, the Investor shall not
be liable for any indemnification obligation under this Agreement in excess
of the aggregate amount of net proceeds received by the Investor from the
sale of the Registrable Shares pursuant to the Registration Statement.
(C) INDEMNIFICATION PROCEDURE. Promptly after receipt by an
indemnified party under this Section 4 of notice of the threat or
commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party under this
Section 6.6, promptly notify the indemnifying party in writing of the
claim; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party
for contribution or otherwise under the indemnity agreement contained in
this Section 4 or otherwise, to the extent it is not prejudiced as a result
of such failure. The reasonable fees and expenses of counsel for the
indemnified party shall be at the expense of the indemnifying party. The
indemnified party shall be entitled to select its own counsel.
6.7 RULE 144 INFORMATION.
Until the expiration of the Registration Period, the Company shall (i) make
and keep public information available, as those terms are defined in Rule 144
under the Act, at all times after the effective date that the Company becomes
subject to the reporting requirements of the Act or the Exchange Act; (ii) file
in a timely manner all reports required to be filed by it under the Act and the
Exchange Act and the rules and regulations promulgated thereunder; (iii) furnish
to Investor, so long as Investor owns any Registrable Shares upon request by
Investor, (a) a written statement by the Company that it has complied with the
reporting requirements of Rule 144 and of the Act and the Exchange Act, (b) a
copy of the most recent annual or quarterly report of the Company and (c) such
other publicly available reports and documents of the Company and other publicly
available information in the possession of or reasonably obtainable by the
Company as the Investor may reasonably request in availing itself of any rule or
regulation of the SEC allowing the Investor to sell any such securities without
registration; and (iv) take such further action to the extent required to enable
the Investor to sell the Registrable Shares pursuant to Rule 144 under the Act
(as such rule may be amended from time to time).
7. MISCELLANEOUS.
7.1 SURVIVAL OF WARRANTIES. Section 7.2 of this Agreement and the
warranties and representations of the Company and Investor contained in or made
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing of the transactions contemplated hereby.
7.2 INDEMNIFICATION. The Company agrees to indemnify and save harmless the
Investor (and its directors, officers, affiliates, successors and assigns) from
and against any and all losses, liabilities, deficiencies, costs, damages and
expenses (including, without limitation, reasonable attorneys' fees, charges and
disbursements) incurred by the Investor as a result of any inaccuracy in or
breach of the representations, warranties or covenants made by the Company
herein.
25
7.3 TRANSFER OF SHARES; ACQUISITION OF SHARES.
(A) Investor hereby agrees that for the period beginning on the
Closing Date and ending on March 31, 2006 (the "Initial Lock-up Period"),
the Investor will not offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, any Shares purchased pursuant to this
Agreement or any securities convertible into or exchangeable or exercisable
for any such Shares, enter into a transaction which would have the same
effect, or enter into any swap, hedge or other arrangement that transfers,
in whole or in part, any of the economic consequences of ownership of the
Shares, whether any such aforementioned transaction is to be settled by
delivery of the Shares or such other securities, in cash or otherwise, or
publicly disclose the intention to make any such offer, sale, pledge or
disposition, or to enter into any such transaction, swap, hedge or other
arrangement (a "Disposition"), without, in each case, the prior written
consent of the Company, except (a) to corporations, partnerships, limited
liability companies or other entities to the extent that such entities are
wholly owned by the Investor, or (b) by distribution to partners, members
or stockholders of the Investor (each, a "Permitted Disposition");
provided, however, that in the case of any Permitted Disposition, it shall
be a condition to the Permitted Disposition that such Permitted Disposition
shall not involve a disposition for value and that the transferee agrees to
be bound in writing by the terms of this Section 7.3 prior to such
transfer.
(B) If the IPO closes on or before March 31, 2006, then for the period
beginning on the effective date of such registration statement and ending
on the first anniversary of the closing of the Company's initial public
offering (the "Second Lock-up Period"), the Investor agrees that it will
not engage in any Disposition other than a Permitted Disposition; provided,
however, that in the case of any Permitted Disposition, it shall be a
condition to the Permitted Disposition that such Permitted Disposition
shall not involve a disposition for value and that the transferee agrees to
be bound in writing by the terms of this Section 7.3 prior to such
transfer.
(C) If the IPO closes on or before March 31, 2006, then for a period
beginning upon the expiration of the Second Lock-up Period and ending on
the second anniversary of the expiration of the Second Lock-up Period, the
Investor agrees that it will not engage in any Disposition or series of
Dispositions other than (1) through a nationally recognized brokerage or
underwriting firm, (2) through a brokerage or underwriting with recognized
experience in working with biotechnology companies, (3) any brokerage or
underwriting firm currently serving as a "market maker" or serving in a
similar capacity for the Company's Common Stock, or (4) in a private,
non-brokered transaction subject to compliance with applicable securities
laws; PROVIDED, HOWEVER, that in the case of a Disposition pursuant to
clause (4), the transferee agrees in writing, in form reasonably
satisfactory to the Company, to be bound by the terms of this Section 7.3,
a copy of which will be delivered to the Company. Any brokerage or
underwriting firm to be used pursuant to clauses (1) through (3) in the
prior sentence shall be subject to the reasonable, good faith approval of
the Company, with such approval not to be unreasonably withheld or delayed.
If the Investor provides notice to the Company of Investor's intent to use
one or more brokerage or underwriting firms, the Company's approval shall
be deemed granted
26
if the Company does not respond within five business days of such notice
being provided. Such approval shall only be required once with respect to
any particular underwriting or brokerage firm(s) and NOT on a transaction
by transaction basis (i.e., an approval permits sales through such firm(s)
at any time and from time to time as determined by Investor, and approval
is not required before any particular Disposition); provided, however, that
the Company's approval with respect to any brokerage or underwriting firm
shall expire three months after the Company approves or is deemed to have
approved such brokerage or underwriting firm.
(D) If the IPO does NOT close on or before March 31, 2006, then
Investor agrees that in connection with the initial public offering of the
Company's equity securities under the Act effected after such date and upon
request of the Company or the underwriters managing such offering of the
Company's securities, shall agree not to consummate a Disposition of the
Registrable Shares without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed
180 days, but subject to such extension or extensions as may be required by
the underwriters in order to publish research reports while complying with
the Rule 2711 of the National Association of Securities Dealers, Inc.) from
the effective date of such registration as may be requested by the Company
or such managing underwriters and to execute an agreement reflecting the
foregoing as may be requested by the underwriters at the time of such
initial public offering.
(E) For the Initial Lock-up Period and, if the IPO closes on or before
March 31, 2006, for the Second Lock-up Period, unless specifically invited
in writing by the Company to do so, neither the Investor nor any of its
directors, officers, employees or subsidiaries shall, directly or
indirectly: (i) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase, exchange or otherwise, any securities (including
beneficial ownership thereof) or direct or indirect rights to acquire
securities (including beneficial ownership thereof) of the Company or any
of its assets; (ii) make, or in any way participate, directly or
indirectly, in any "solicitation" of "proxies" to vote (as such terms are
used in the rules of the Securities and Exchange Commission), or seek to
advise or influence any person or entity with respect to the voting of, any
securities of the Company, or otherwise seek to control or influence (other
than in the normal and usual course of business) the management, Board of
Directors or policies of the Company; (iii) seek to effect, or participate
in, any recapitalization, restructuring, liquidation, dissolution or other
extraordinary transaction with respect to the Company; (iv) make any public
announcement with respect to, or submit a proposal for, or offer to engage
in, in each case, with or without conditions, any business combination
transaction (including, without limitation, any transaction of the nature
described in clause (i), (ii) or (iii) above) involving the Company or any
of its securities or assets, or take any action that might require the
Company to make a public announcement regarding any of the transactions
prohibited hereby; (v) form, join or in any way participate in a "group" as
defined in Section 13(d)(3) of the Exchange Act in connection with any of
the foregoing; or (vi) request the Company directly or indirectly to amend
or waive any provision of this Section. The foregoing restrictions shall
not apply, however, if during the Initial Lock-up Period or Second Lock-up
Period, a third party shall have publicly offered to purchase substantially
all of the equity securities or assets of the other party or to enter into
a merger or other business combination transaction or restructuring,
exchange offer or similar extraordinary transaction with the other party,
or a third party shall have solicited proxies to vote (or seeks to advise
or influence any person or entity with respect to the voting of) any voting
securities of the Company with respect to a change of control transaction
or similar extraordinary
27
transaction (including, without limitation, transactions of a type
described in clauses (i) through (iv) by any party other than the Investor)
with the Company. Notwithstanding anything to the contrary in the
foregoing, nothing in this Agreement shall prohibit the Investor and its
directors, officers, employees and subsidiaries from acquiring, offering to
acquire, or agreeing to acquire, directly or indirectly, by purchase,
exchange or otherwise, any debt and up to an aggregate not in excess of
15.0% of the outstanding shares of Common Stock following the IPO (unless
Investor owns in excess of such 15.0% threshold solely as a result of
conversion of the Shares into Common Stock in the IPO). If the IPO does not
close on or before March 31, 2006, then this Section 7.3(c) shall
automatically expire. During the thirty days prior to March 31, 2006, the
Chief Financial Officers of both the Company and the Investor agree to
confer regarding the potential extension of the applicability of
provisions of Section 7.3(e) if the IPO closes after March 31, 2006, but if
no agreement regarding extension of the applicability of the provisions of
Section 7.3(e) is agreed in writing on or prior to March 31, 2006, then
this provision shall automatically expire; provided, however, this
sentence. shall not create an express or implied obligation to negotiate
about or to agree to any such extension beyond March 31, 2006 and the
parties sole obligation shall be to confer as provided herein.
7.4 VOTING OF SHARES. Until the termination of the Second Amended and
Restated Voting Agreement dated as of February 18, 2004 among the Company and
the other parties thereto (as such Agreement may be amended from time to time,
the "Voting Agreement"), the Investor agrees to hold all shares of voting
capital stock of the Company registered in its name or beneficially owned by it
as of the date hereof and any and all other securities of the Company legally or
beneficially acquired by the Investor after the date hereof (collectively, the
"Subject Shares") subject to, and to vote all such shares in accordance with,
the provisions of the Voting Agreement related solely to the election of
directors. The Investor agrees that all certificates representing the Subject
Shares shall, until the termination of the Voting Agreement, bear the following
restrictive legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS OF CERTAIN PROVISIONS OF A VOTING AGREEMENT WHICH PLACES CERTAIN
RESTRICTIONS ON THE VOTING OF THE SHARES REPRESENTED HEREBY. ANY PERSON
ACCEPTING ANY INTEREST IN SUCH SHARES SHALL BE DEEMED TO AGREE TO AND SHALL
BECOME BOUND BY ALL OF THE RELEVANT PROVISIONS OF SUCH AGREEMENT. A COPY OF SUCH
VOTING AGREEMENT WILL BE FURNISHED TO THE RECORD HOLDER OF THIS CERTIFICATE
WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF
BUSINESS.
7.5 DELIVERY OF FINANCIAL STATEMENTS AND OTHER INFORMATION. So long as the
Investor continues to hold not less than 50% of the Shares acquired pursuant to
this Agreement, the Company shall deliver to the Investor:
(A) as soon as practicable, but in any event within ninety (90)
days after the end of each fiscal year of the Company, a cash flow
statement for such fiscal year, an income statement for such fiscal
year, a balance sheet of the Company and statement of stockholder's
equity as of the end of such year (all on a consolidated basis), and a
schedule as to the sources and applications of funds for such year,
such year-end financial reports to be in reasonable detail,
28
prepared in accordance with U.S. generally accepted accounting
principles ("GAAP") consistently applied, including all footnotes, and
audited and certified by independent public accountants of nationally
recognized standing selected by the Company, together with a
capitalization table and a list of the Company's stockholders and all
holders of the Company's outstanding options, warrants, notes and/or
other securities as of the end of such fiscal year;
(B) within 30 days after the end of each month (other than the
last month of any fiscal year), an unaudited balance sheet of the
Company as at the end of such month and unaudited statements of income
and of cash flows of the Company for such month and for the current
fiscal year to the end of such month, setting forth in comparative
form the Company's projected financial statements for the
corresponding periods for the current fiscal year prepared in
accordance with U.S. generally accepted accounting principles,
consistently applied; and
(C) as soon as practicable, but in any event thirty (30) days
prior to the end of each fiscal year, a budget for the next fiscal
year (prepared on a monthly basis) approved by the Company's Board of
Directors and, as soon as prepared, any other budgets or revised
budgets prepared by the Company.
(D) The Company shall provide such other information relating to
the financial condition, business, prospects or corporate affairs of
the Company as such Investor may from time to time reasonably request,
including, without limitation, a capitalization table and a list of
the Company's stockholders and all holders of the Company's
outstanding options, warrants or other securities. The Company shall
permit Investor, at such 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 accounts with its
officers, all at such reasonable times as may be requested by such
Investor for purposes solely of monitoring its investment in the
Company and meeting U.S. GAAP accounting requirements with respect to
Investor's investment in the Company.
(E) All rights of the Investor under this Section 7.5 shall
terminate upon an initial public offering of the Company's Common
Stock that results in the conversion of all outstanding shares of
Preferred Stock of the Company.
7.6 SUCCESSORS. Except as otherwise provided herein, this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the Investor and such successors and assigns shall be deemed to be an
"Investor" for the purposes of this Agreement. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
7.7 GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State of New York without regard to the principles of conflicts
of law.
7.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument.
7.9 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.
29
7.10 NOTICES. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be deemed delivered (i) three
business days after being sent by registered or certified mail, return receipt
requested, postage prepaid, (ii) one business day after being sent via a
reputable nationwide overnight courier service guaranteeing next business day
delivery or (iii) in the case of the Investor with an address located outside
the United States, three business days after being sent via a reputable
international courier service guaranteeing three business day delivery, in each
case to the intended recipient as set forth below:
If to the Company, at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: President,
or at such other address as may have been furnished in writing by the Company to
the other parties hereto, with a copy to Ropes & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.; or
If to the Investor, at Angiotech Pharmaceuticals, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇, ▇▇▇ ▇▇▇, Attention: Vice President of Business
Development, with a copy to Angiotech Pharmaceuticals, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇, ▇▇▇ ▇▇▇, Attention: General Counsel or at such
other address as may have been furnished in writing by the Investor to the other
parties hereto, provided, however, that registered or certified mail shall not
be used to provide notice to any the Investor with an address located outside of
the United States.
Any party may change the address to which notices, requests, consents or
other communications hereunder are to be delivered by giving the other parties
notice in the manner set forth in this Section 7.10.
7.11 FINDER'S FEE. Except as set forth in the Schedule of Exceptions, each
party represents that it neither is nor will be obligated for any finders' fee
or commission in connection with this transaction. The Investor agrees to
indemnify and to hold harmless the Company from any liability for any commission
or compensation in the nature of a finders' fee (and the 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 finders' fee
(and the 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.
7.12 EXPENSES. Each party hereto shall be responsible for all expenses
incurred by such party in connection with the negotiation, execution, delivery
and performance of this Agreement.
7.13 AMENDMENTS OR WAIVERS. Any provision of this Agreement may be amended
or the observance thereof may be waived (either generally or specifically and
either retroactively or prospectively) or terminated, only by an instrument in
writing executed by (a) the Company and the Investor. No waivers of or
exceptions to any term, condition or provision of this Agreement, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
30
7.14 SEVERABILITY. In the event that one or more of the provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
7.15 WAIVER. No waivers of any breach of this Agreement extended by any
party hereto to any other party shall be construed as a waiver of any rights or
remedies of any other party hereto or with respect to any subsequent breach.
7.16 ENTIRE AGREEMENT. This Agreement (and exhibits hereto) and the
documents referred to herein constitute the entire agreement among the parties
regarding the subject matters hereof and thereof and supersedes all prior
agreements and understandings relating to such subject matter.
7.17 SPECIFIC PERFORMANCE. In addition to any and all other remedies that
may be available at law in the event of any breach of this Agreement, the
Investor shall be entitled to specific performance of the agreements and
obligations of the Company hereunder and to such other injunctive or other
equitable relief as may be granted by a court of competent jurisdiction.
7.18 DISPUTE RESOLUTION. In any action between the parties arising out of
or relating to this Agreement or any of the transactions contemplated by this
Agreement: (a) each of the parties irrevocably and unconditionally consents and
submits to the exclusive jurisdiction and venue of the state and federal courts
located in New York, New York; (b) if any such action is commenced in a state
court, then, subject to applicable law, no party shall object to the removal of
such action to any federal court located in the Southern District of New York;
(c) each of the parties irrevocably waives the right to trial by jury; and (d)
each of the parties irrevocably consents to service of process by first class
certified mail, return receipt requested, postage prepaid, to the address at
which such party is to receive notice in accordance with Section 7.10.
7.19 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, and
all of which shall constitute one and the same document. This Agreement may be
executed by facsimile signatures.
[Remainder of the page intentionally left blank.]
31
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COMPANY:
COMBINATORX, INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief
Executive Officer,
hereunder duly
authorized
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
INVESTOR:
ANGIOTECH PHARMACEUTICALS, INC.
By: /s/ K. ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: K. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President of
Business Development
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
[SIGNATURE PAGE TO SERIES E CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT]
