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EXHIBIT 10.4
STOCK PURCHASE AGREEMENT
SERIES B PREFERRED
By and Between
COMBICHEM, INC.,
a California corporation
and
SEQUOIA CAPITAL VI,
a California limited partnership
SEQUOIA TECHNOLOGY PARTNERS VI,
a California limited partnership
SEQUOIA XXIV,
a California limited partnership
FORWARD VENTURES II, L.P.,
a Delaware limited partnership
November 29, 1994
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TABLE OF CONTENTS
Page
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1. Sale of Series B Preferred Stock . . . . . . . . . . . . . . . . . . . . . . 1
2. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Representations and Warranties of the Company . . . . . . . . . . . . . . . 2
(a) Organization and Standing; Articles and Bylaws . . . . . . . . . . . 2
(b) Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(c) Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(d) Validity of the Shares . . . . . . . . . . . . . . . . . . . . . . . 3
(e) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(f) Stockholders, Directors and Officers; Indebtedness . . . . . . . . . 3
(g) Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(i) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(j) Title to Properties; Liens and Encumbrances . . . . . . . . . . . . 3
(k) Franchises, Licenses, Trademarks, Patents and Other Rights . . . . . 4
(1) Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(m) Compliance With Other Instruments . . . . . . . . . . . . . . . . . 4
(n) Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(o) Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 5
(p) Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 5
(q) Stock Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. Representations and Warranties of the Purchaser . . . . . . . . . . . . . . 5
(a) Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) Reliance Upon the Purchasers Representations . . . . . . . . . . . . 5
(d) Restricted Securities . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Receipt of Information . . . . . . . . . . . . . . . . . . . . . . . 6
(f) Investment Experience . . . . . . . . . . . . . . . . . . . . . . . 6
(g) Limitations on Disposition . . . . . . . . . . . . . . . . . . . . . 6
(h) Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5. Market Standoff Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 7
6. Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Delivery of Financial Statements . . . . . . . . . . . . . . . . . 8
(b) Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(e) Termination of Covenants . . . . . . . . . . . . . . . . . . . . . . 8
(d) Stock Registration . . . . . . . . . . . . . . . . . . . . . . . . . 8
(e) Prompt Payment of Taxes, etc . . . . . . . . . . . . . . . . . . . . 9
(f) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(g) Key Person Life Insurance . . . . . . . . . . . . . . . . . . . . . 9
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(h) Approval of Expenditures . . . . . . . . . . . . . . . . . . . . . . 9
(j) Maintenance of Corporate Existence, etc. . . . . . . . . . . . . . . 9
7. The Purchasers' Rights to Purchase Additional Shares . . . . . . . . . . . . 10
8. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(a) Further Instruments and Actions . . . . . . . . . . . . . . . . . . 12
(b) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(c) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(e) Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . 13
(f) Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . 13
(g) Counsel to the Company . . . . . . . . . . . . . . . . . . . . . . . 13
EXHIBITS
Exhibit A Schedule of Shares Purchased by Purchasers
Exhibit B Schedule of Exceptions
Exhibit C Schedule of Current Shareholders
Exhibit D Schedule of Patent, Trademark and Copyright Rights
Exhibit E Schedule of Material Contracts
Exhibit F Employee Agreement Regarding Confidentiality and Assignment of
Inventions
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STOCK PURCHASE AGREEMENT
SERIES B PREFERRED
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made as of November 29,
1994, by and between CombiChem, Inc., a California corporation (the "Company"),
and SEQUOIA CAPITAL VI, a California limited partnership SEQUOIA TECHNOLOGY
PARTNERS VI, a California limited partnership, SEQUOIA XXIV, a California
limited partnership, and FORWARD VENTURES II, L.P., a Delaware limited
partnership (collectively, the "Purchasers"), which term includes any permitted
successors and assigns.
WHEREAS, the Purchasers desire to make a cash payment to the Company
as consideration for obtaining a fixed number of preferred shares of the
Company's capital stock; and
WHEREAS, the Company desires to sell a fixed number of preferred
shares of the Company's capital stock to the Purchasers; and
WHEREAS, certain defined terms used in this Agreement are referenced
in Section 9 hereof.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Purchasers
hereby agree as follows:
1. Sale of Series B Preferred Stock. Subject to the terms and
conditions of this Agreement, the Purchasers hereby purchase from the Company,
and the Company hereby agrees to issue and sell to the Purchasers at the
Closing, that number of shares of the Company's Series B Preferred Stock
indicated opposite each Purchaser's name on the Schedule of Purchasers,
attached hereto as Exhibit A and incorporated by reference herein, at a
purchase price of seventy-five cents ($0.75) per share (collectively, the
"Shares").
2. Closing. The purchase and sale of the Shares shall take place
at the offices of ▇▇▇▇, ▇▇▇▇, ▇▇▇▇ & Freidenrich at 2:00 p.m. on November 29,
1994, and/or at such other place and time as the Company and any of the
Purchasers shall mutually agree, either orally or in writing (the "Closing").
At the Closing, subject to the terms and conditions hereof, the Company shall
deliver to the Purchasers certificates, registered in the name the Purchasers
designate by notice to the Company, representing the Shares purchased by the
Purchasers, dated the date of the Closing, and the Purchasers shall pay the
Purchase Price to the Company by check, wire transfer, or such other form of
payment as shall be mutually agreed upon by the Purchasers and the Company. At
the discretion of the Company, sale of the Shares to the Purchasers may occur
in multiple, separate closings up to December 15, 1994.
3. Representations and Warranties of the Company. Except as
specifically disclosed in this Agreement, in the schedule of exceptions
attached hereto as Exhibit B and incorporated by reference, or as otherwise
learned by the Purchaser, the Company hereby represents and warrants to the
Purchasers as follows:
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(a) Organization and Standing, Articles and Bylaws. The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of the State of California, and has all requisite corporate
power and authority to own and operate its properties and assets and to carry
on its business as presently conducted. The Company is duly qualified to do
business as a foreign corporation in each jurisdiction in which the conduct of
its business requires such qualification, except where the failure to so
qualify would not have a material adverse effect on the Company's business.
The Company has furnished the Purchasers or their special counsel with copies
of its Articles of Incorporation and its Bylaws. Said copies are true,
correct, and complete and contain all amendments through the date of the
Closing.
(b) Capitalization. The authorized capital stock of the
Company, consists of 30,000,000 shares of no par value common stock and
10,000,000 shares of no par value preferred stock. The first series of
preferred stock is comprised of 1,000,000 shares designated "Series A Preferred
Stock". The second series of preferred stock is comprised of 1,500,000 shares
designated "Series Z Preferred Stock." The third series of preferred stock is
comprised of 2,226,667 shares designated "Series B Preferred Stock."
Immediately prior to the Closing, there are issued and outstanding 1,547,500
shares of the Company's Common Stock, 1,000,000 shares of Series A Preferred
Stock, and 200,000 shares of Series Z Preferred Stock. All issued and
outstanding shares of the Company's capital stock are represented on Exhibit C
hereto, have been duly authorized and validly issued by the Company in
compliance with applicable federal and state securities laws, and are fully
paid and nonassessable.
(c) Authorization. All corporate action on the part of
the Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, the performance of all
the Company's obligations under this Agreement and the Stock Registration
Rights Agreement, and for the authorization, issuance, sale and delivery of the
Shares and the shares of Common Stock issuable upon conversion thereof
("Underlying Common Shares") has been taken prior to the Closing. This
Agreement, when executed and delivered by the Company and the Purchasers, and
the Stock Registration Rights Agreement shall constitute valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors. The execution, delivery and
performance by the Company of this Agreement and compliance herewith and the
sale and issuance of the Shares and Common Stock issuable upon conversion of
the Shares will not result in any violation of and will not conflict with, or
result in a breach of any of the terms of, or constitute a default under, any
provision of state or federal law to which the Company is subject, the
Company's Articles of Incorporation or Bylaws, each as amended, or any
provision of any mortgage, indenture, agreement, instrument, judgment, decree,
order, rule or regulation or other restriction to which the Company is a party
or by which it is bound, the breach of or default under which would have a
material adverse effect upon the business or operations of the Company, or
result in the creation of any mortgage, pledge, lien, encumbrance or charge
upon any of the properties or assets of the Company pursuant to any such term.
The Shares, when issued in compliance with the provisions of this Agreement
will be
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validly issued, fully paid and nonassessable and will be free of any liens or
encumbrances; provided, however, that the Shares (and the Common Stock issuable
upon conversion thereof) may be subject to restrictions on transfer under state
and/or federal securities laws. The shares of Common Stock issuable upon
conversion of the Shares have been duly and validly reserved and are not
subject to any preemptive rights or rights of first refusal, and upon issuance,
will be validly issued, fully paid and nonassessable.
(d) Validity of the Shares. The Shares and the
Underlying Common Shares will be validly issued, fully paid and nonassessable.
(e) Subsidiaries. The Company has no subsidiaries and
does not own of record or beneficially any capital stock or equity interest or
investment in any corporation, association or business entity.
(f) Stockholders, Directors and Officers; Indebtedness.
The Company is not currently indebted to its officers, directors or
stockholders or any of their respective relatives, other than travel,
relocation, normal compensation and other expenses which are advanced and
reimbursed in the ordinary course of business. To the best of the Company's
knowledge, none of the officers or directors or significant employees or
consultants of the Company, has, individually or collectively, a material
interest in any entity which is a competitor, customer or supplier of (or has
any existing contractual relationship with) the Company.
(g) Disclosure. This Agreement and the Exhibits hereto
do not contain any untrue statement of a material fact and do not omit to state
a material fact necessary in order to make the statements contained herein or
therein not misleading. The Company has provided the Purchasers with all the
information which the Purchasers have requested for deciding whether to
purchase the Shares and all information which the Company believes is
reasonably necessary to enable the Purchasers to make such a decision.
(h) Litigation. There are no actions, suits, proceedings
or investigations pending, or to the Company's knowledge, claims asserted, to
which the Company is a party or its property is subject, which might result in
any material adverse change in the business or financial condition of the
Company or any of its properties or assets, or in any material impairment of
the right or ability of the Company to carry on its business as now conducted,
or in any material liability on the part of the Company, and none which
question the validity of this Agreement or any action taken or to be taken in
connection herewith.
(i) Consents. No consent, approval, qualification, order
or authorization of, or filing with, any governmental authority, is required in
connection with the Company's valid execution, delivery or performance of this
Agreement, or the offer, sale or issuance of the Shares by the Company, the
conversion of the Shares, the issuance of Common Stock upon conversion of the
Shares, or the consummation of any other transaction contemplated on the part
of the Company hereby, except filings required pursuant to the applicable
federal and state securities
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laws and blue sky laws, which filings, the Company covenants to complete within
fifteen (15) days of the Closing.
(j) Title to Properties; Liens and Encumbrances. The
Company has good and marketable title to its properties and assets and has good
title to all its leasehold interests, in each case subject to no mortgage,
pledge, lien, security interest, conditional sale agreement, encumbrance or
charge, except (i) tax, materialmen's or like liens for obligations not yet due
or payable or being contested in good faith by appropriate proceedings, or (ii)
possible minor liens or encumbrances which do not in any case materially
detract from the value of the property subject thereto or materially impair the
operations of the Company and which have not arisen otherwise then in the
ordinary course of business.
(k) Franchises, Licenses, Trademarks, Patents and Other
Rights. To the best of the Company's knowledge, it has all franchises,
permits, licenses and other similar authority necessary for the conduct of its
business, the lack of which could materially and adversely affect the
operations or condition, financial or otherwise, of the Company, and it is not
in default in any material respect under any of such franchises, permits, liens
or other similar authority. To the best of Company's knowledge, the Company
possesses certain patent, trademark, trade name and copyright rights as set
forth on Exhibit D. To the best of Company's knowledge, the Company's
intellectual property rights are sufficient to allow Company to proceed with
its business as planned and Company is not aware of any infringements of its
intellectual property rights. Reasonable security measures have been taken by
the Company to protect the secrecy, confidentiality and value of the Company's
trade secrets, confidential information, and intellectual property rights
referred to in this Section 3(k).
(l) Offering. Subject to the truth and accuracy of the
Purchasers' representations set forth in this Agreement, the offer, sale and
issuance of the Shares as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Act"), and from any applicable blue sky requirements of the State of
California.
(m) Compliance With Other Instruments. The Company is
not in violation of any term of its Articles of Incorporation or Bylaws nor any
material term of any mortgage, indenture, contract, agreement, instrument,
judgment, decree, order, statute, rule or regulation to which the Company is
subject and a violation of which would have a material adverse effect on the
condition, financial or otherwise, or operations of the Company.
(n) Employees. To the best of the Company's knowledge
and belief, no employee of the Company is in violation of any term of any
employment contract, patent disclosure agreement, non-competition agreement, or
any restrictive covenant to a former employer relating to the right of any such
employee to be employed by the Company because of the nature of the business
conducted or presently proposed to be conducted by the Company or to the use of
trade secrets or proprietary information of others. There is neither pending
nor, to
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the Company's knowledge and belief, threatened any actions, suits, proceedings
or claims, or to its knowledge any basis therefor or threat thereof with
respect to any contract, agreement, covenant or obligation referred to in the
preceding sentence. The Company does not have any collective bargaining
agreement covering any of its employees.
(o) Material Contracts. A true and complete list of all
contracts, agreements and investments with respect to which the Company is
party and has an obligation in excess of Twenty Thousand Dollars ($20,000) is
set forth on Exhibit E.
(p) Board of Directors. The Company's Board of Directors
consists of ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇.
(q) Stock Option Plan. Commencing on November 1, 1994,
the Company has agreed not to issue, sell or otherwise transfer in excess of
one million three hundred thousand (1,300,000) shares of the Company's Common
Stock to employees, directors, officers or consultants of the Company pursuant
to any stock option plan or other arrangement approved by the Board of
Directors, which number may be increased by the approval of not less than
seventy-five percent (75%) of the Board of Directors; provided, however, that
this one million three hundred thousand (1,300,000) share limitation shall not
include any shares of Common Stock issued prior to November 1, 1994.
4. Representations and Warranties of the Purchaser. The
Purchasers hereby represent and warrant to the Company as follows:
(a) Authorization. The Purchasers have the requisite
legal power and authority to enter into this Agreement and that this Agreement
when executed shall constitute a valid and legally binding obligation of the
Purchaser.
(b) Investment Intent. This Agreement is made with the
Purchasers in reliance upon their representation to the Company, which by their
execution hereof they confirm, that the Shares have been acquired with their
own funds for investment for an indefinite period for its own account, not as a
nominee or agent, and not with a view to the sale or distribution of any part
thereof, and that they have no present intention of selling, granting
participation in, or otherwise distributing the same. By executing this
Agreement, the Purchasers further represent that they do not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer, or
grant participation, to such person or to any third person, with respect to any
of the Shares.
(c) Reliance Upon the Purchasers' Representations. The
Purchasers understand (i) that the Shares are not, and the Underlying Common
Shares acquired on conversion thereof at the time of issuance may not be,
registered under the Securities Act or qualified under the California Corporate
Securities Law of 1968, as amended (the "Law"), and (ii) that the Shares are
being issued to the Purchasers on the ground that the sale provided for in this
Agreement and
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the issuance of securities hereunder is exempt from registration under the
Securities Act pursuant to Section 4(2) thereof and/or Regulation D promulgated
thereunder and the exemption from qualification provided by Section 25102(f) of
the Law, and (iii) that the Company's reliance on such exemptions is predicated
on the Purchasers' representations set forth herein. The Purchasers realize
that the basis for the exemptions may not be present if, notwithstanding such
representations, the Purchasers have in mind merely acquiring the Shares for a
fixed or determinable period in the future, or for a market rise, or for sale
if the market does not rise. The Purchasers do not have any such intention.
These exemptions only exempt the issuance of the Shares to the Purchasers and
not any sale or other disposition of the Shares or any interest therein by the
Purchasers.
(d) Restricted Securities. The Purchasers hereby confirm
that they have been informed that the Shares are restricted securities under
the Securities Act and may not be resold or transferred unless the Shares are
first registered under the Federal securities laws or unless an exemption from
such registration is available. In addition, the Purchasers understand that
any resale or transfer must comply with applicable state securities laws.
Accordingly, the Purchasers hereby acknowledge that they are prepared to hold
the Shares for an indefinite period, and that the Purchasers are familiar with
the provisions of Rule 144 of the Securities and Exchange Commission issued
under the Securities Act, and are aware that Rule 144 is not presently
available to exempt the sale of the Shares from the registration requirements
of the Securities Act.
(e) Receipt of Information. The Purchasers acknowledge
that they have received all the information they consider necessary or
appropriate for deciding whether to purchase the Shares. The Purchasers
further represent that they have had an opportunity to ask questions and
receive answers from the Company regarding the terms and conditions of the
offering of the Shares and the business, properties, prospects, and financial
condition of the Company, and to obtain additional information (to the extent
the Company possessed such information or could acquire it without unreasonable
effort or expense) necessary to verify the accuracy or any information
furnished to them or to which they had access.
(f) Investment Experience. In connection with the
investment representations made herein, the Purchasers represent that each of
them; is an "accredited investor" as defined in Section 501 of Regulation D,
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of its investment, has the ability
to bear the economic risks of its investment and has been furnished with and
has had access to all of the information it considers necessary or appropriate
to evaluate the risks and merits of an investment in the Shares, and has had an
opportunity to discuss the Company's business, management and financial affairs
with the Company's management.
(g) Limitations on Disposition. The Purchasers agree
that in no event will they make a disposition of any of the Shares, unless and
until (a) they shall have notified the Company of the proposed disposition and
shall have furnished the Company with a statement of the circumstances
surrounding the proposed disposition, and (b) they shall have furnished the
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Company with an opinion of counsel satisfactory to the Company to the effect
that (i) such disposition will not require registration of such Shares under
the Securities Act, or (ii) that appropriate action necessary for compliance
with the Securities Act has been taken, or (c) the Company shall have waived,
expressly and in writing, its rights under clauses (a) and (b) of this
subparagraph. The opinion shall also indicate that the disposition is exempt
from, in compliance with, or qualified under all applicable state securities
laws.
(h) Legends. All certificates representing any shares of
Shares of the Company subject to the provisions of this Agreement shall have
endorsed thereon customary legends regarding:
(1) Restrictions on transfer under the Federal
Securities Act of 1933.
(2) Market Stand-Off Agreements pursuant to
Section 5 hereof.
(3) Any legend required by state securities laws.
5. Market Stand-off Agreement.
(a) In connection with any underwritten public offering
by the Company of its equity securities pursuant to an effective registration
statement filed under the Securities Act, including the Company's initial
public offering, the Purchasers shall not sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose
or transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to the Shares without the prior written consent of
the Company or its underwriters. Such limitations shall be in effect for one
hundred eighty (180) days from and after the effective date of such
registration statement or such longer time as may be required by the Company's
underwriters. The limitations of this Section 5 shall remain in effect for the
two-year period immediately following the effective date of the Company's
initial public offering and shall thereafter terminate and cease to have any
force or effect.
(b) In the event any stock dividend, stock split,
recapitalization or other change affecting the Company's outstanding common
shares is effected without receipt of consideration, then any new, substituted
or additional securities distributed with respect to the Shares shall be
immediately subject to the provisions of this Section 5 to the same extent the
Shares are at such time covered by such provisions.
(c) In order to enforce the limitations of this Section
5, the Company may impose stop-transfer instructions with respect to the Shares
until the end of the applicable stand-off period.
(d) The obligations in this Section 5 shall not apply to
a registration relating solely to employee benefit plan shares or to a Rule 145
transaction registered on Form S-4.
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6. Covenants of the Company.
(a) Delivery of Financial Statements. The Company shall
deliver to the Purchasers:
(1) as soon as practicable after the end of each
fiscal year of the Company, audited financial statements for such fiscal year,
prepared in accordance with generally accepted accounting principles ("GAAP")
together with an annual report of the Company, all in reasonable detail and
certified by an independent public accountant of recognized national standing
selected by the Company;
(2) as soon as practicable after the end of each
month of each fiscal year of the Company, unaudited financial statements for
such month, prepared in accordance with generally accepted accounting
principles consistently applied, subject to changes resulting from year-end
audit adjustments and the absence of notes, all in reasonable detail and
certified by the principal financial or accounting officer of the Company;
(3) such other information relating to the
financial condition, business, prospects or corporate affairs of the Company as
the Purchasers or any assignee of the Purchasers may from time to time
reasonably request, provided, however, that the Company shall not be obligated
under provision of this Agreement to provide information which it deems in good
faith to be a trade secret or similar confidential information.
(b) Inspection. The Company shall permit the Purchasers,
at their 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 the Purchaser; provided, however, that the Company shall not be
obligated pursuant to this section to provide access to any information which
it reasonably considers to be a trade secret or similar confidential
information.
(c) Termination of Covenants. The covenants set forth in
this Section 6 shall terminate and be of no further force or effect upon the
consummation of the sale of securities pursuant to a registration statement
filed by the Company under the Securities Act in connection with the firm
commitment underwritten offering of its securities to the general public where
the gross proceeds to the Company are at least five million dollars
($5,000,000).
(d) Stock Registration. Simultaneous with entering into
this Agreement, the Company and the Purchasers are entering into a Amendment to
the Series A Amended and Restated Stock Registration Rights Agreement (the
"Amendment"), to amend the definition of "Shares" under that certain Series A
Amended and Restated Stock Registration Rights Agreement, dated November 1,
1994 (the "Stock Registration Agreement"), to include the shares of Series B
Preferred Stock purchased pursuant to this Agreement.
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(e) Prompt Payment of Taxes, etc. The Company will
promptly pay and discharge, or cause to be paid and discharged, when due and
payable, all lawful taxes, assessments and governmental charges or levies
imposed upon the income, profits, property or business of the Company or any
subsidiary; provided, however, that any such tax, assessment, charge or levy
need not be paid if the validity thereof shall currently be contested in good
faith by appropriate proceedings and if the Company shall have set aside on its
books adequate reserves with respect thereto, and provided further, that the
Company will pay all such taxes, assessments, charges or levies forthwith upon
the commencement of proceedings to foreclose any lien which may have attached
as security therefor.
(f) Insurance. The Company will keep its assets and
those of its subsidiaries which are of an insurable character insured by
financially sound and reputable insurers against loss or damage by fire,
explosion and other risks customarily insured against by companies in the
Company's line of business, in amounts sufficient to allow it to replace any of
its properties which might be damaged or destroyed. The Company will maintain
with financially sound and reputable insurers, insurance against other hazards
and risks and liability to persons and property to the extent and in the manner
customary for companies in similar businesses similarly situated.
(g) Key Person Life Insurance. The Company shall use
reasonable efforts to obtain and maintain with financially sound and reputable
insurers, an annually renewable key person term life insurance policy in the
amount of $1,000,000 on the life of its chief executive officer. Such policy
shall name the company as loss payee and shall be maintained by the Company
with financially sound and reputable insurers. The Board of Directors shall
decide whether to renew this policy on an annual basis, in its sole discretion.
(h) Approval of Expenditures. Until the Company obtains
an aggregate cash investment of three million dollars ($3,000,000) in the
Company's capital stock, (i) the Company shall submit each year's proposed
annual budget to the Company's Board of Directors prior to year-end and such
budget must be approved by not less than seventy-five percent (75%) of the
Company's Board of Directors; (ii) the Company shall not make any expenditure
in excess of $50,000 (which is not provided for in the Company's approved
annual budget) unless such expenditure is approved by an affirmative vote of
not less than seventy-five percent (75%) of the Company's Board of Directors;
and (iii) the Company shall not liquidate or otherwise dispose of any assets
with a value in excess of $50,000 without an affirmative vote of not less than
seventy-five percent (75%) of the Company's Board of Directors.
(i) Accounts and Records. The Company will keep true
records and books of account in which full, true and correct entries will be
made of all dealings or transactions in relation to its business and affairs in
accordance with generally accepted accounting principles applied on a
consistent basis.
(j) Maintenance of Corporate Existence, etc. The Company
shall maintain in full force and effect its corporate existence, rights and
franchises and all licenses and other rights
9
13
to use patents, processes, licenses, trademarks, trade names or copyrights
owned or possessed by it or any subsidiary and deemed by the Company to be
material to the conduct of their business.
(k) Availability of Common Stock for Conversion. The
Company will from time to time, in accordance with the laws of the State of
California, increase the authorized amount of Common Stock if at any time the
number of shares of Common Stock remaining unissued and available for issuance
shall be insufficient to permit conversion of all the then outstanding shares
of Series B Preferred Stock.
(l) Employee Invention and Proprietary Rights Assignment
Agreement. The Company and each person now or hereafter employed in any
technical capacity by it or any subsidiary with access to confidential
information will enter into an Employee Agreement Regarding Confidentiality and
Assignment of Inventions substantially in the form attached hereto as Exhibit F
hereto, or an alternative agreement which provides substantially similar
protection to the Company.
7. The Purchasers' Rights to Purchase Additional Shares.
(a) Subject to the terms and conditions specified in this
Section 7, the Company hereby grants to the Purchasers a right to purchase a
pro rata share of New Securities (as hereinafter defined) equal to the ratio of
(i) the aggregate number of shares of the Company's Common Stock owned by the
Purchasers immediately prior to the issuance of New Securities (assuming full
conversion of all owned convertible securities into shares of Common, Stock
of), and (ii) to the total number of shares of Common Stock outstanding on a
fully diluted basis immediately prior to the issuance of New Securities (the
"Pro Rata Share"). For purposes of this Section 7, Purchasers include any
general partners and affiliates of a Purchaser. Purchasers shall be entitled
to apportion the right to purchase additional Shares hereby granted them among
themselves and their partners and affiliates in such proportions as they deem
appropriate.
Not later than thirty calendar days after the Company sells
any shares solely for cash (excluding however securities described in Section
7(e) hereof), including any common shares, preferred shares, or securities
convertible into any shares ("New Securities"), the Company shall make an
offering of some of the New Securities to the Purchasers in accordance with the
following provisions:
(b) The Company shall deliver a notice by certified mail
("Notice") to the Purchasers stating (i) the number of New Securities sold and
available for sale, (ii) the number of such New Securities the Purchasers are
entitled to purchase, as the Purchasers' Pro Rata Shares, and (iii) the price
and terms upon which the New Securities were sold or are to be sold.
(c) Within 20 calendar days after the Company provides
such Notice, each Purchaser may elect to purchase or obtain, at the price and
on the terms specified in the Notice, up to the Purchasers' Pro Rata Share of
the New Securities.
10
14
(d) If any party elects not to obtain its Pro Rata Share
of the New Securities, the Company may, during the 90-day period following the
expiration of the period provided in subsection 7(c) hereof, assign the right
to purchase the remaining unsubscribed portion of such New Securities to any
person or persons at a price not less than, and upon terms no more favorable to
the offeree than those specified in the Notice without offering any of such
unsubscribed New Securities to the Purchaser. If the Company does not enter
into an agreement for the sale of the New Securities within such period, or if
such agreement is not consummated within such 90-day period, the Company's
right to assign the right to purchase the New Securities provided hereunder
shall be deemed to be revoked and such New Securities shall not be offered to
any third party unless first re-offered to the Purchasers in accordance
herewith.
(e) Notwithstanding any other provision to the contrary,
the right to purchase New Securities contained in this Section 7 shall not be
applicable (i) to the issuance or sale of up to one million three hundred
thousand (1,300,000) shares of the Company's Common Stock (or related options),
issued after November 1, 1994, to employees, directors, officers or consultants
of the Company pursuant to any stock option plan or other arrangement approved
by the Board of Directors which number may be increased by the approval of not
less than seventy-five percent (75%) of the Board of Directors, provided,
however, that only a majority approval of the Company's Board of Directors
shall be required after the Company has obtained an aggregate cash investment
of Three Million Dollars ($3,000,000) in its capital stock; (ii) to or after
the consummation of a bona fide, firmly underwritten public offering of shares
of common stock, registered under the Securities Act pursuant to a registration
statement; (iii) the issuance of securities pursuant to the conversion or
exercise of convertible or exercisable securities; (iv) the issuance of
securities in connection with a bona fide business acquisition of or by the
Company, whether by merger, consolidation, sale of assets, sale or exchange of
shares or otherwise; (v) to securities issued in connection with obtaining real
estate lease financing, whether issued to a lessor, guarantor or other person;
(vi) to securities issued in connection with any borrowings, direct or
indirect, from financial institutions by the Company, including without
limitation, equipment lease financing arrangements approved by the Board of
Directors; (vii) to securities issued pursuant to the acquisition of license or
other rights, assets or technology with third parties or in connection with
corporate partnering arrangements with third parties, provided that such
arrangements are approved by not less than seventy-five percent (75%) of the
Company's Board of Directors; and (viii) to securities issued in connection
with any stock split, stock dividend or recapitalization of the Company.
(f) The right to purchase New Securities set forth in
this Section 7 may not be assigned or transferred except that (i) such right is
assignable by the Purchasers to any wholly owned subsidiary or parent of, or to
any corporation or entity that is, within the meaning of the Act, controlling,
controlled by or under common control with, any such Purchaser, and (ii) such
right is assignable between and among, any of the Purchasers of the Company's
preferred stock.
(g) With respect to rights to purchase additional shares,
substantially similar to the rights provided in Section 7 of this Agreement
which were previously granted to the
11
15
Purchasers, the Purchasers hereby waive all rights to notice from the Company
and to purchase any additional shares arising from the Company's sale of the
Shares pursuant to this Agreement, and from the Company's sale, prior to
January 16, 1995, of up to 26,667 Shares of Series B stock to be offered for
sale to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
8. Defined Terms. When used herein the following defined terms
shall have the respective definitions as set forth below:
Accredited Investor shall have the meaning set forth in Section 4(f).
Agreement shall have the meaning set forth in the first paragraph.
Closing shall have the meaning set forth in Section 2.
Company shall have the meaning set forth in first paragraph.
GAAP shall have the meaning set forth in Section 6(a)(1).
Law shall have the meaning set forth in Section 4(c).
New Securities shall have the meaning set forth in Section 7(a).
Notice shall have the meaning set forth in Section 7(b).
Pro Rata Shares shall have the meaning set forth in Section 7(a).
Purchase Price shall have the meaning set forth in Section 1.
Purchasers shall have the meaning set forth in the first paragraph.
Shares shall have the meaning set forth in Section 1.
Underlying Common Shares shall have the meaning set forth in Section
3(c).
9. Miscellaneous.
(a) Further Instruments and Actions. The parties agree
to execute such further instruments and to take such further action as may
reasonably be necessary to carry out the intent of this Agreement.
(b) Notices. Any notice required or permitted hereunder
shall be given in writing and shall be deemed effectively given upon personal
delivery or upon deposit in the United States Post Office, by registered or
certified mail with postage and fees prepaid, addressed
12
16
to the other party hereto at its address hereinafter shown below its signature
or at such other address as such party may designate by advance written notice
to the other party hereto.
(c) Expenses. The Company and the Purchasers shall bear
their own expenses and legal fees incurred with respect to this Agreement and
the transactions contemplated hereby; provided, however, that the Company will
pay the reasonable legal fees of Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, as special
counsel to some of the Purchasers, in an amount not to exceed $4,000, plus
reasonable out-of-pocket expenses.
(d) Governing Law. This Agreement has been negotiated,
executed and delivered in the State of California. The parties hereto agree
that all questions pertaining to the validity and interpretation of this
Agreement shall be determined in accordance with the laws of the State of
California.
(e) Successors and Assigns. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit
of the successors and assigns of the Company and, subject to the restrictions
on transfer herein set forth, be binding upon the Purchaser, its successors and
assigns.
(f) Amendments and Waivers. This Agreement represents
the entire understanding of the parties with respect to the subject matter
hereof and supersedes all previous understandings, written or oral. This
Agreement may only be amended with the written consent of the parties hereto,
or the successors or assigns of the foregoing, and no oral waiver or amendment
shall be effective under any circumstances whatsoever.
(g) Counsel to the Company. The Purchasers acknowledge
and agree that this Agreement has been prepared by ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ &
Freidenrich, counsel to the Company, which counsel has represented the
interests of the Company and not those of the Purchasers with respect to the
transactions documented by this Agreement. The Purchasers further acknowledge
and agree that the Purchasers have been provided the opportunity and encouraged
to consult with counsel of the Purchasers' own choosing with respect to this
Agreement. The Purchasers certify and acknowledge that the Purchasers have
carefully read all of the provisions of this Agreement and that the Purchasers
fully understand and shall fully and faithfully comply with such provisions.
13
17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
COMPANY:
COMBICHEM, INC.,
a California corporation Address:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
PURCHASERS:
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
-----------------------------------
In the Capacity indicated for each
of the following entities:
SEQUOIA CAPITAL VI, Address:
a California Limited Partnership ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
a General Partner ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇
▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SEQUOIA TECHNOLOGY PARTNERS Address:
VI, a California Limited Partnership ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
a General Partner ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇
▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SEQUOIA XXIV Address:
a California Limited Partnership ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
a General Partner ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇
▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
[Signature Page to Series B Stock Purchase Agreement]
14
18
FORWARD VENTURES II, L.P., Address:
a Delaware limited partnership ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By: Forward II Associates, L.P.,
a Delaware limited partnership,
its General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, a General Partner
[Signature Page to Series B Stock Purchase Agreement]
15
19
EXHIBIT A
SCHEDULE OF SHARES PURCHASED BY PURCHASER
Number of Shares
Purchaser of Preferred Purchase Price
--------- ------------ --------------
SEQUOIA CAPITAL VI 1,213,334 910,000.50
SEQUOIA TECHNOLOGY
PARTNERS VI 66,667 50,000.25
SEQUOIA XXIV 53,333 39,999.75
FORWARD VENTURES II, L.P. 866,666 649,999.50
Total 2,200,000 1,650,000.00
20
EXHIBIT B
SCHEDULE OF EXCEPTIONS
1. Capitalization (Section 3(b))
175,000 shares of Common Stock have been committed for issuance in
that certain Employment Offer to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ dated November 8, 1994;
10,000 shares of Common Stock have been committed for issuance in that
certain Employment Offer Letter Agreement with ▇▇▇▇▇▇ ▇▇▇▇▇▇ dated November 18,
1994.
325,000 to 400,000 shares of Series Z Preferred are reserved for
issuance to The Scripps Research Institute ("Scripps") in that certain Scripps
Research Institute Licensing Letter of Understanding dated August 23, 1994;
Up to 150,000 shares of Series Z Preferred are presently committed for
issuance pursuant to that certain Warrant Commitment Letter with Comdisco, Inc.
dated November 23, 1994 and this number could increase due to anti-dilution
protection given pursuant to the proposed warrant agreement; and
26,667 shares of Series B Preferred have been offered for sale to ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ in that certain Employment Offer to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ dated November
8, 1994.
2. Employees (Section 3(f))
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ owns stock in and is a former officer of Pharmacopeia
which is a competitor of the Company; and
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ owns stock in and is a former employee of Merck.
3. Litigation (Section (3h))
Affymax and Company have independent patent rights which may be
blocking. Affymax currently utilizes the name CombiChem in its presentations.
4. Intellectual Property (Section 3(k))
The Company is a start up entity which is in the process of
negotiating with The Scripps Research Institute and ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ to
secure licensing rights to certain patents and other intellectual property
which may be important to the operation of the Company's current and future
business. The Company is not aware of any competing intellectual property
rights held by third parties which adversely affect the Company's right to
utilize its intellectual property or the conduct of the Company's current or
future business endeavors.
21
EXHIBIT C
SCHEDULE OF STOCK HOLDERS
(Common and Preferred)
22
COMBICHEM, INC.
COMMON STOCK LEDGER
=======================================================================================================
Cert # No. of Shares Shareholder Date issued
-------------------------------------------------------------------------------------------------------
1 175,000 ▇▇▇ ▇. ▇▇▇▇▇ September 28th, 1994
-------------------------------------------------------------------------------------------------------
2 150,000 CHI-▇▇▇▇ ▇▇▇▇ September 28th, 1994
-------------------------------------------------------------------------------------------------------
3 150,000 ▇▇▇▇ ▇. ▇▇▇▇▇ September 28th, 1994
-------------------------------------------------------------------------------------------------------
4 10,000 ▇▇▇▇ ▇▇▇ September 28th, 1994
-------------------------------------------------------------------------------------------------------
5 37,500 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ September 28th, 1994
-------------------------------------------------------------------------------------------------------
6 37,500 ROYSTON FAMILY TRUST September 28th, 1994
-------------------------------------------------------------------------------------------------------
7 150,000 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ September 28th, 1994
-------------------------------------------------------------------------------------------------------
8 225,000 FORWARD VENTURES II, L.P. September 28th, 1994
-------------------------------------------------------------------------------------------------------
9 10,000 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ September 28th, 1994
-------------------------------------------------------------------------------------------------------
10 500,000 ▇▇▇▇▇▇ ▇▇▇▇▇▇ October 18, 1994
-------------------------------------------------------------------------------------------------------
11 2,500 ▇▇▇▇ ▇▇▇▇▇ October 28, 1994
-------------------------------------------------------------------------------------------------------
12 91,000 SEQUOIA CAPITAL VI November 1, 1994
-------------------------------------------------------------------------------------------------------
13 5,000 SEQUOIA TECHNOLOGY PARTNERS VI November 1, 1994
-------------------------------------------------------------------------------------------------------
14 4,000 SEQUOIA XXIV November 1, 1994
-------------------------------------------------------------------------------------------------------
15 10,000 ▇▇▇▇▇▇ ▇▇▇▇▇▇ November 18, 1994*
-------------------------------------------------------------------------------------------------------
16 175,000 ▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ November 8, 1994*
-------------------------------------------------------------------------------------------------------
TOTAL 1,732,500
=======================================================================================================
* Shares contractually committed as of the date hereof pursuant
to offer letters executed as of the dates indicated, but
issuances have not yet been completed.
23
PREFERRED STOCK LEDGER
=======================================================================================================
Cert # No. of Shares Shareholder Date issued
-------------------------------------------------------------------------------------------------------
PA1 600,000 FORWARD VENTURES II, L.P. August 26th, 1994
-------------------------------------------------------------------------------------------------------
PA2 364,000 SEQUOIA CAPITAL VI November 1, 1994
-------------------------------------------------------------------------------------------------------
PA3 20,000 SEQUOIA TECHNOLOGY PARTNERS VI November 1, 1994
-------------------------------------------------------------------------------------------------------
PA4 16,000 SEQUOIA XXIV November 1, 1994
=======================================================================================================
TOTAL 1,000,000
Series A
=======================================================================================================
PZ1 200,000 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ October 12th, 1994
=======================================================================================================
TOTAL 1,200,000
Preferred
=======================================================================================================
24
EXHIBIT D
SCHEDULE OF PATENT, TRADEMARK AND COPYRIGHT RIGHTS
1. PATENTS
(a) The Company has been assigned rights to the following patents:
(1) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, "Combinatorial libraries and methods
for their use," US Patent Application Serial No. 07/978,646, filed November 19,
1992.
(2) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, "Combinatorial libraries and methods
for their use," US Patent Application Serial No. 08/168,966, filed December 15,
1993 (continuation in part of 07/978,646).
(3) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, "Combinatorial libraries and methods
for their use," US Patent Application Serial No. 08/281,195, filed July 26,
1994 (continuation in part of 08/168,966).
(4) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, "Multidimensional conduit
combinatorial library synthesis device," US Patent Application Serial No.
08/281,194, filed July 26, 1994.
(b) The Company is in the process of negotiating licenses to use
the following patents from The Scripps Research Institute and ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇:
See attached TSRI Technology License Letter of Understanding
Known Issues
Affymax Corporation's Patent Application (International Application
No. PCT/US92/07815) may prove to be blocking on the ▇▇▇▇▇▇▇/▇▇▇▇▇/▇▇▇▇▇ Patent
Applications (U.S. Serial No. 07/860,445 or International Application No. PCT
US93/20243).
The Company does not have a licensing agreement with ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
and does not have a definitive written agreement with Scripps Research
Institute beyond the Letter of Understanding.
2. TRADEMARKS
The Company has been assigned the following intent to use trademark
applications:
COMBICHEM Serial No. 74/363,514
COMBICHEM Serial No. 74/363,515
25
Known Issues
Affymax Corporation has attempted to register the CombiChem trademark
in the United States and such attempt was rejected. To the Company's
knowledge, Affymax has not registered the CombiChem trademark in Europe. The
Company has not registered the CombiChem trademark outside of the United
States.
3. COPYRIGHTS
The Company does not possess any registered copyrights.
26
EXHIBIT E
SCHEDULE OF MATERIAL CONTRACTS
1. Asset Purchase Agreement with CombiChem, Inc., a Delaware corporation
dated September 28, 1994;
2. Promissory Note to CombiChem, Inc., a Delaware corporation dated
September 28, 1994;
3. Series A Stock Purchase Agreement with Forward Ventures II, L.P.,a
Delaware limited partnership dated August 26, 1994; (plus supplement)
4. Series Z Stock Purchase Agreement with Dr. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ dated
October 12, 1994;
5. Series Z Stock Registration Rights Agreement with Dr. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
dated October 12, 1994;
6. Employment Agreements with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ dated October 18, 1994,
▇▇▇▇ ▇▇▇ dated August 16, 1994 and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ dated June 23,
1994;
7. Consulting Agreements with Dr. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ dated August 10, 1994,
▇▇▇▇ ▇. ▇▇▇▇▇ dated July 25, 1994, ▇▇▇ ▇. ▇▇▇▇▇ dated August 9, 1994,
and Chi-▇▇▇▇ ▇▇▇▇ dated August 11, 1994;
8. Termination Agreement dated October 20, 1994 with ▇▇▇▇▇ ▇▇▇▇▇▇▇ dba
BioScience Ventures; Company currently owes ▇▇. ▇▇▇▇▇▇▇ $25,000;
9. Sublease of Research Space from Science Applications International
Corporation dated September 1, 1994;
10. $175,000 Purchase Order for NMR Equipment
11 $25,000 Purchase Order for Ionized Water Purifier
12. Tenant Improvement Contract(s) and change orders thereto aggregating
to $25,000;
13. The Scripps Research Institute Licensing Letter of Understanding dated
August 23, 1994;
14. Equipment Master Lease and VL-1 Schedule Agreement dated November 16,
1994 with Comdisco, Inc. and Warrant Commitment Letter dated November
23, 1994;
15. Stock Purchase Agreement Preferred and Common with Sequoia Capital
dated November 1, 1994;
16. Amended and Restated Series A Registration Rights Agreement dated
November 1, 1994;
17. Employment Offer to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ dated November 8, 1994; and
18. Employment Offer Letter Agreement with ▇▇▇▇▇▇ ▇▇▇▇▇▇ dated November
18, 1994.
27
EXHIBIT F
COMBICHEM, INC.
EMPLOYEE AGREEMENT REGARDING
CONFIDENTIALITY AND ASSIGNMENT OF INVENTIONS
This Agreement is intended to formalize in writing certain
understandings and procedures which have been in effect since the time I was
initially, employed by CombiChem, Inc., a California corporation (the
"Company"). In return for my new or continued employment by the Company, I
acknowledge and agree that:
1. No Conflict. I will perform for the Company such duties as
may be designated by the Company from time to time. During my period of
employment by the Company, I will devote my best efforts to the interests of
the Company and will not engage in other employment or in any activities
determined by the Company to be detrimental to the best interests of the
Company without the prior written consent of the Company.
2. Period of Employment. As used herein. the period of my
employment includes any time in which I may be retained by the Company as a
consultant.
3. Prior Work. All previous work done by me for the Company
relating in any way to the conception, design, development or support of
products for the Company is the property of the Company.
4. Proprietary Information. My employment creates a relationship
of confidence and trust between the Company and me with respect to any
information:
(a) Applicable to the business of the Company; or
(b) Applicable to the business of any client or customer of the
Company, which may be made known to me by the company or by any client or
customer of the Company, or learned by me in such context during the period of
my employment.
All of such information has commercial value in the business in which
Company is engaged and is hereinafter called "Proprietary Information." By way
of illustration, but not limitation, Proprietary Information includes any and
all technical and non-technical information including patent, copyright, trade
secret, and proprietary information, techniques, sketches, drawings, models,
inventions, know-how, processes, apparatus, equipment, algorithms, software
programs, software source documents, and formulae related to the current,
future and proposed products and services of Company, and includes, without
limitation, its respective information concerning research, experimental work,
development, design details and specifications, engineering, financial
information, procurement
28
requirements, purchasing manufacturing, customer lists, business forecasts,
sales and merchandising and marketing plans and information.
5. Nondisclosure of Proprietary Information. All Proprietary
Information is the sole property of the Company, its assigns, and its customers
and the Company, its assigns and its customers shall be the sole owner of all
patents, copyrights, maskworks, trade secrets and other rights in connection
therewith. I hereby assign to the Company any rights I may have or acquire in
such Proprietary Information. At all times, both during my employment by the
Company and after its termination, I will keep in confidence and trust all
Proprietary Information, and I will not use or disclose any Proprietary
Information or anything directly relating to it without the written consent of
the Company, except as may be necessary in the ordinary course of performing my
duties as an employee of the Company. Notwithstanding the foregoing, it is
understood that, at all such times, I am free to use information which is
generally known in the trade or industry not as a result of a breach of this
Agreement and my own skill, knowledge, know-how and experience to whatever
extent and in whatever way I wish.
6. Return of Materials. Upon termination of my employment or at
the request of the Company before termination, I will deliver to the Company
all written and tangible material in my possession incorporating the
Proprietary Information or otherwise relating to the Company's business.
7. Inventions. As used in this Agreement, the term "Inventions"
means any and all new or useful art, discovery, improvement, technical
development, or invention whether or not patentable, and all related know-how,
designs, maskworks, trademarks, formulae, processes, manufacturing techniques,
trade secrets, ideas, artwork, software or other copyrightable or patentable
works.
8. No Adverse Use. I will not at any time during the Period of
Employment or thereafter use the Company's Proprietary Information or
Inventions in any manner which may directly or indirectly have an adverse
effect upon the Company's business, nor will I perform any acts which would
tend to reduce the Company's proprietary value in the Company's Proprietary
Information or Inventions.
9. Disclosure of Prior Inventions. I have identified on Exhibit
A ("Prior Inventions') attached hereto all Inventions relating in any way to
the Company's business or demonstrably anticipated research and development
which were made by me prior to my employment with the Company ("Prior
Inventions"), and I represent that such list is complete. I represent that I
have no rights in any such Inventions other than those Prior Inventions
specified in Exhibit A ("Prior Inventions"). If there is no such list on
Exhibit A ("Prior Inventions"), I represent that I have made no such Prior
Inventions at the time of signing this Agreement.
10. Ownership of Company Inventions; License of Prior Inventions.
I hereby agree promptly to disclose and describe to the Company, and I hereby
assign and agree to assign to the Company or its designee, my entire right,
title, and interest in and to all Inventions and
29
any associated intellectual property rights which I may solely or jointly
conceive, develop or reduce to practice during the period of my employment with
the Company (a) which relate at the time of conception or reduction to practice
of the invention to the Company's business or actual or demonstrably
anticipated research or development, or (b) which were developed on any amount
of the Company's time or with the use of any of the Company's equipment,
supplies, facilities or trade secret information, or (c) which resulted from
any work I performed for the Company ("Company Inventions"). I agree to grant
the Company or its designees a royalty free, irrevocable, worldwide license
(with rights to sublicense through multiple tiers of distribution) to practice
all applicable patent, copyright and other intellectual rights relating to any
Prior Inventions which I incorporate, or permit to be incorporated, in any
Company Inventions. Notwithstanding the foregoing, I agree that I will not
incorporate, or permit to be incorporated, such Prior Inventions in any Company
Inventions without the Company's prior written consent.
11. Future Inventions. I recognize that Inventions or Proprietary
Information relating to my activities while working for the Company and
conceived or made by me, alone or with others, within one (1) year after
termination of my employment may have been conceived in significant part while
employed by the Company. Accordingly, I agree that such Inventions and
Proprietary Information shall be presumed to have been conceived during my
employment with the Company and are to be assigned to the Company unless and
until I have established the contrary.
12. Nonassignable Inventions. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under the
provisions of Section 2870 of the California Labor Code. I have reviewed the
notification in Exhibit B ("Limited Exclusion Notification") and agree that my
signature acknowledges receipt of the notification. However, I agree to
disclose promptly in writing to the company all Inventions made or conceived by
me during the term of my employment and for one (1) year thereafter, whether or
not I believe such Inventions are subject to this Agreement, to permit a
determination by the Company as to whether or not the Inventions should be the
property of the Company. Any such information will be received in confidence
by the Company.
13. Disclosure and Prior Review of Articles. I agree that, while
an employee of the Company and for three years following the termination, for
any reason, of my employment with the Company, at least fifteen days prior to
submission for publication of any article or contribution from or by me, which
article or contribution deals with or makes reference to the Company's field of
endeavors, any Inventions, any Proprietary Information or any other subject
pertaining to the Company, I shall deliver a copy of such article or
publication to the Company and shall request the Company's permission to
publish such articles which consent shall not be unreasonably withheld.
14. Cooperation in Perfecting Rights to Inventions.
(a) I agree to perform, during and after my employment,
all acts deemed necessary or desirable by the Company to permit and assist it,
at its expense, in obtaining and enforcing the full benefits, enjoyment, rights
and title throughout the world in the Inventions
30
hereby assigned to the Company. Such acts may include, but are not limited to,
execution of documents and assistance or cooperation in the registration and
enforcement of applicable patents, copyrights, maskworks or other legal
proceedings.
(b) In the event that the Company is unable for any
reason to secure my signature to any document required to apply for or execute
any patent, copyright, mask work or other applications with respect to any
Inventions (including improvements, renewals, extensions, continuations,
divisions or continuations in part thereof), I hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents as my agents
and attorneys-in-fact to act for and on my behalf and instead of me, to execute
and file any such application and to do all other lawfully permitted acts to
further the prosecution and issuance of patents, copyrights, maskworks or other
rights thereon with the same legal force and effect as if executed by me.
15. No Violation of Rights of Third Parties. My performance of
all the terms of this Agreement and as an employee of the Company does not and
will not breach any agreement to keep in confidence proprietary information,
knowledge or data acquired by me prior to my employment with the Company, and I
will not disclose to the Company, or induce the Company to use, any
confidential or proprietary information or material belonging to any previous
employer or others. I am not a party to any other agreement which will
interfere with my full compliance with this Agreement. I agree not to enter
into any agreement, whether written or oral, in conflict with the provisions of
this Agreement. To my knowledge, no former employer has claimed or could claim
that my activities under this Agreement violate any previous employment
agreement with or infringe upon the intellectual property rights of any former
employer except as disclosed on Exhibit C ("Possible Violations of Former
Employment Agreements") attached hereto.
16. Survival. This Agreement (a) shall survive my employment by
the Company, (b) does not in any way restrict my right or the right of the
Company to terminate my employment at any time, for any reason or for no
reason, (c) inures to the benefit of successors and assigns of the Company, and
(d) is binding upon my heirs and legal representatives.
17. No Solicitation. During the term of my employment with the
Company and for a period of two (2) years thereafter, I will not solicit,
encourage, or cause others to solicit or encourage any employees of the Company
to terminate their employment with the Company.
18. Injunctive Relief. A breach of any of the promises or
agreements contained herein will result in irreparable and continuing damage to
the Company for which there will be no adequate remedy at law, and the Company
shall be entitled to injunctive relief and/or a decree for specific
performance, and such other relief as may be proper (including monetary damages
if appropriate).
19. Notices. Any notice required or permitted by this Agreement
shall be in writing and shall be delivered as follows with notice deemed given
as indicated: (i) by personal delivery when delivered personally; (ii) by
overnight courier upon written
31
verification of receipt; (iii) by telecopy or facsimile transmission upon
acknowledgement of receipt of electronic transmission; or (iv) by certified or
registered mail, return receipt requested, upon verification of receipt.
Notice shall be sent to the addresses set forth above or such other address as
either party may specify in writing.
20. Governing Law. This Agreement shall be governed in all
respects by the laws of the United States of America and by the laws of the
State of California, as such laws are applied to agreements entered into and to
be performed entirely within California between California residents.
21. Severability. Should any provisions of this Agreement be held
by a court of law to be illegal, invalid or unenforceable, the legality,
validity and enforceability of the remaining provisions of this Agreement shall
not be affected or impaired thereby.
22. Waiver. The waiver by the Company of a breach of any
provision of this Agreement by me shall not operate or be construed as a waiver
of any other or subsequent breach by me.
23. Entire Agreement. This Agreement represents my entire
understanding with the Company with respect to the subject matter of this
Agreement and supersedes all previous understandings, written or oral. This
Agreement may be amended or modified only with the written consent of both me
and the Company. No oral waiver, amendment or modification shall be effective
under any circumstances whatsoever.
32
I certify and acknowledge that I have carefully read all of
the provisions of this Agreement and that I understand and will fully and
faithfully comply with such provisions.
COMPANY: EMPLOYEE:
COMBICHEM, INC.,
a California corporation
By: __________________________ By: _____________________________
Title: __________________________ Printed Name:____________________
Dated: ________________________ Dated: ________________________
33
Exhibit A
PRIOR INVENTIONS
________ Yes, I claim an ownership interest in the following inventions.
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
_________ No, I do not claim an ownership interest in any inventions.
By:___________________________________
______________________________________
(Printed Name of Employee)
Date:_________________________________
Witnessed by:
___________________________________
___________________________________
(Printed Name of Representative)
Dated:_____________________________
34
Exhibit B
LIMITED EXCLUSION NOTIFICATION
THIS IS TO NOTIFY you in accordance with Section 2872 of the
California Labor Code that the foregoing Agreement between you and the Company
does not require you to assign or offer to assign to the Company any invention
that you developed entirely on your own time without using the Company's
equipment, supplies, facilities or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of
the invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company.
(2) Result from any work performed by you for the Company.
To the extent a provision in the foregoing Agreement purports to
require you to assign an invention otherwise excluded from the preceding
paragraph, the provision is against the public policy of this state and is
unenforceable.
This limited exclusion does not apply to any patent or invention
covered by a contract between the Company and the United States or any of its
agencies requiring full title to such patent or invention to be in the United
States.
I ACKNOWLEDGE RECEIPT of a copy of this notification.
By:___________________________________
Dated:________________________________
Witnessed by:
___________________________________
___________________________________
(Printed Name of Representative)
Dated:_____________________________
35
Exhibit C
POSSIBLE VIOLATIONS OF FORMER EMPLOYMENT AGREEMENTS OR
FORMER EMPLOYER'S INTELLECTUAL PROPERTY RIGHTS
_________ I am aware of the following potential violations of former
employment agreements, or infringements upon the intellectual
property rights of former employer(s) which could occur due to
my contemplated activities under the Employee Agreement or
that have occurred due to my previous activities on behalf of
the Company.
Describe in detail any potential violations or infringements:
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
_________ I am unaware of any potential violations of former employment
agreements, or infringements upon the intellectual property
rights of former employer(s) which could occur due to my
contemplated activities under the Employee Agreement or that
have occurred due to my previous activities on behalf of the
Company.
By:___________________________________
___________________________________
___________________________________
(Printed Name of Employee)
Date:_________________________________
Witnessed by:
____________________________________
____________________________________
(Printed Name of Representative)
Dated:______________________________