Exhibit 10.38
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SUBSCRIPTION AND SHAREHOLDERS AGREEMENT
AMONG
COMBINATORX (SINGAPORE) PTE LTD
BIOMEDICAL SCIENCES INVESTMENT FUND PTE LTD AND
COMBINATORX, INCORPORATED
DATED AUGUST __, 2005
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TABLE OF CONTENTS
CONTENTS PAGE
1. DEFINITIONS..................................................................3
2. ALLOTMENT AND ISSUE OF PREFERENCE SHARES....................................10
3. NOTES.......................................................................10
4. GENERAL.....................................................................13
5. SECURITY....................................................................13
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND OF THE PARENT.............14
7. REPRESENTATIONS, WARRANTIES AND UNDERSTANDINGS OF THE INVESTOR..............20
8. CLOSING CONDITIONS..........................................................21
9. SUBSEQUENT NOTES CLOSINGS...................................................22
10. APPLICABILITY OF PROVISIONS RELATING TO SHAREHOLDERS........................23
11. GOVERNANCE OF THE COMPANY...................................................23
12. RESTRICTIONS ON TRANSFERS OF SECURITIES.....................................28
13. OPERATIONS OF THE COMPANY...................................................32
14. NON COMPETE.................................................................35
15. DEFAULT.....................................................................37
16. TERMINATION.................................................................43
17. MISCELLANEOUS PROVISIONS....................................................44
SUBSCRIPTION AND SHAREHOLDERS AGREEMENT
This
Subscription and Shareholders Agreement (the "AGREEMENT") is entered into
as of August [__], 2005 (the "EFFECTIVE DATE") by and among CombinatoRx
(Singapore) Pte. Ltd., a Singapore private limited company (the "COMPANY"),
BioMedical Sciences Investment Fund Pte Ltd, a Singapore private limited company
(the "INVESTOR"), and
CombinatoRx, Incorporated, a Delaware corporation (the
"PARENT"). The Company, the Parent and the Investor are referred to collectively
herein as the "PARTIES".
AGREEMENT:
WHEREAS, Parent has established a new company for the purpose of discovering,
developing and commercializing novel combination therapies for the treatment of
infectious disease;
WHEREAS, the Parent has formed the Company as a wholly-owned subsidiary with an
authorized, issued and paid up capital as shown in Schedule 1;
WHEREAS, the Parent and the Company wish to have the Investor invest by way of
subscribing for certain Preference Shares of the Company and certain secured
Notes of the Company, as set out in this Agreement and on the terms and
conditions of this Agreement;
WHEREAS, the Investor wishes to invest by way of subscribing for such Preference
Shares and such secured Notes of the Company, as set out in this Agreement and
on the terms and conditions of this Agreement;
WHEREAS, the Parent and the Company have entered into the Services Agreement,
providing for the Company to contract with the Parent for the Parent to provide
assay development, screening and evaluation services for the Company aimed at
the discovery and development of novel therapeutic combination therapies for
Infectious Disease, for the consideration specified therein, and with all
patent, copyright and other intellectual property rights in such combination
therapies to be owned by the Company; and
WHEREAS, the Investor, the Parent and the Company wish to provide for the
governance of the Company and for the operation and growth of the Company in
Singapore, as well as the relationship between the Investor and the Parent
interse as shareholders of the Company.
NOW, THEREFORE, in consideration of these premises, the benefits to be derived
by the Parties, and the terms, conditions, representations and covenants set
forth herein, the Parties hereby agree as follows:
This Agreement provides for:
(A) certain definitions;
(B) the issuance of the Preference Shares, and the rights, privileges,
preferences and restrictions of the Preference Shares;
(C) the commitment of the Investor to subscribe to the Notes;
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(D) the governance of the Company, including provisions regarding the
election of directors, matters requiring shareholder approval and stock
transfer restrictions;
(E) the operations of the Company, including the Parent's commitment to
locate the Company in Singapore, the exclusive provision of drug
discovery services in the field of Infectious Disease by the Parent to
the Company pursuant to the Services Agreement, and certain further
provisions regarding additional funding to be provided to the Company by
the Parent under certain circumstances;
(F) representations and warranties of the Company, the Parent and the
Investor;
(G) closing conditions and obligations of the Company, the Parent and the
Investor;
(H) default provisions applicable under this Agreement with respect to both
the Notes and the Preference Shares as well as the Parties' obligations
under the Transaction Documents; and
(I) various miscellaneous provisions.
1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the following terms
shall have the following respective meanings:
"AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common
control with, such Person. The expression "CONTROL" (including its
correlative meanings, "CONTROLLED BY", "CONTROLLING" and "UNDER COMMON
CONTROL WITH") shall mean, with respect to a corporation, the right to
exercise, directly or indirectly, more than 50 per cent. of the voting
rights attributable to the shares of the controlled corporation and, with
respect to any Person other than a corporation, the possession, directly
or indirectly, of the power to direct or cause the direction of the
management or policies of such Person;
"ANNUAL PERIOD" shall mean any one year period beginning on July 1st and
ending on the subsequent June 30th with the first Annual Period
commencing on the Initial Closing Date;
"ARTICLES" shall mean the Articles of Association of the Company, as in
effect at any time;
"AUDITORS" shall mean the auditors of the Company as in effect at any
time;
"BUDGET" shall mean the annual cash flow budget of the Company forming
part of the Business Plan;
"BUSINESS PLAN" shall mean a formal written description of the business
activities to be undertaken by the Company, including but not limited to
the Budget and the services contracted for under the Services Agreement,
for the period ending September 30, 2009,
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or for such longer period as may be agreed to in writing by the Parties,
as in effect from time to time. The initial Business Plan is attached
hereto as Exhibit B;
"COMPANIES ACT" means the Companies Act (Cap. 50) of Singapore or any
statutory modification or re-enactment thereof as then in force;
"COMPANY" shall mean CombinatoRx (Singapore) Pte Ltd, a Singapore private
limited company;
"CONNECTED PERSON" shall mean in relation to any entity, a director,
officer or employee of such entity, or a spouse, parent, child or sibling
of such director, officer or employee;
"DEBENTURE" shall have the meaning set forth in Section 5, a form of
which is attached hereto as Exhibit E;
"DEED OF RATIFICATION AND ACCESSION" shall mean the deed of ratification
and accession in the form attached hereto as Exhibit J;
"DEFAULT DATE" shall have the meaning set forth in Section 15.2;
"DESIGNATED OBSERVER" shall have the meaning set forth in Section 11.4;
"DIRECTOR" shall have the meaning set forth in Section 11.1.1;
"DOLLARS" or the sign "US$" shall mean the lawful currency of the United
States of America;
"ELIGIBLE EMPLOYEE" shall mean an employee of the Company who performs
research, clinical, pre-clinical, development or other similar functions.
For purposes of clarity, Eligible Employees shall not include any
employee whose job description is primarily administrative or financial;
"ENCUMBRANCES" shall mean any security interest of any kind including any
charge, mortgage, security, lien, option, equity, power of sale,
hypothecation, retention of title, right of pre-emption or right of first
refusal;
"EVENT OF DEFAULT" shall have the meaning set forth in Section 15.1;
"IND" shall mean an Investigational New Drug Application, as defined in
the United States Federal Food, Drug, and Cosmetics Act or an equivalent
foreign filing;
"INFECTIOUS DISEASE" shall mean any disease indication caused by a viral,
bacterial or fungal infection, other than any disease indication which
may be related to or caused by a viral, bacterial or fungal infection, or
which may have a putative infectious component, but primary treatment for
which, as of the initiation of research or development work on such
indication by Parent, is not typically anti-infective in nature,
including, without limitation and by way of example, such indications as
cervical cancer (possibly caused by HPV) or Crohn's disease (putative
cause infectious). Schedule 4 describes on a non-
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exhaustive basis the Parties' current understanding as to the scope of
the definition of Infectious Disease;
"INITIAL CLOSING" shall have the meaning set forth in Section 2.2;
"INITIAL CLOSING DATE" shall have the meaning set forth in Section 2.2;
"INTELLECTUAL PROPERTY" shall mean the Company's ownership , license or
other interest in trademark, tradename, copyright, patent, patent
application, technology, know-how, trade secret, invention and/or process
of the Company;
"INVESTOR" shall mean BioMedical Sciences Investment Fund Pte Ltd, a
Singapore private limited company;
"IPO" shall mean an underwritten initial public offering of the Parent
Common Stock pursuant to an effective registration statement filed with
the SEC under the Securities Act or any other transaction by which the
Parent Common Stock becomes registered on a United States national
securities exchange or authorized for quotation on an automated quotation
system sponsored by a United States registered securities association;
"ISSUE PRICE" shall have the meaning set forth in Section 2.2;
"ISSUE PRICE PER PREFERENCE SHARE" shall have the meaning set forth in
Section 2.2;
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
assets, condition or business of the Company;
"MATURITY DATE" shall mean December 31, 2009;
"MILESTONE" means a set of criteria to be fulfilled by the Company prior
to the Investor subscribing for the relevant series of Notes, as
described in Schedule 3;
"MILESTONE CERTIFICATE" shall have the meaning set forth in Section
3.3.1;
"NEW ARTICLES" means the new set of Articles to be adopted in replacement
of the existing Articles at Initial Closing in the form set out in
Exhibit C;
"NOTE CERTIFICATE" shall mean the Series 1 Note Certificate, the Series 2
Note Certificate, the Series 3 Note Certificate, the Series 4 Note
Certificate or the Series 5 Note Certificate, as the case may be;
"NOTE CLOSING" shall mean the closing of any issuance of Notes.
"NOTE CLOSING NOTICE" shall mean a notice delivered by the Company as
provided in Section 3.5.
"NOTE CONDITIONS" means the terms and conditions of the Notes as set out
in Exhibit D to this Agreement (as from time to time amended, modified or
supplemented) and any reference to a specified Note Condition shall be
construed accordingly;
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"NOTE CLOSING DATE" shall mean the Initial Closing Date, the Series 2
Notes Closing Date, the Series 3 Notes Closing Date, Series 4 Notes
Closing Date or the Series 5 Notes Closing Date, as the case may be;
"NOTEHOLDER" means the Investor or such other party registered as holder
of the Notes in the Register of Noteholders;
"NOTES" shall mean collectively, the Series 1 Notes, the Series 2 Notes,
the Series 3 Notes, the Series 4 Notes and the Series 5 Notes;
"NOTES ISSUE PRICE" means:
(i) in respect of the Series 1 Notes, US$5,500,000 (the "SERIES 1
NOTES ISSUE PRICE");
(ii) in respect of the Series 2 Notes, US$3,500,000 (the "SERIES 2
NOTES ISSUE PRICE");
(iii) in respect of the Series 3 Notes, US$3,500,000 (the "SERIES 3
NOTES ISSUE PRICE");
(iv) in respect of the Series 4 Notes, US$2,500,000 (the "SERIES 4
NOTES ISSUE PRICE"); and
(v) in respect of the Series 5 Notes, US$2,500,000 (the "SERIES 5
NOTES ISSUE PRICE");
"ORDINARY SHARES" means the ordinary shares of US$0.001 each in the share
capital of the Company;
"OUTSTANDING BALANCE" shall mean, with respect to each outstanding Note,
the unpaid principal amount (excluding interest) of such Note outstanding
at any time;
"PARENT" shall mean
CombinatoRx, Incorporated, a Delaware corporation;
"PARENT COMMON STOCK" shall mean the common stock, $0.001 par value per
share, of the Parent;
"PARENT NOTE" shall have the meaning set forth in Section 13.7;
"PARENT PREFERRED STOCK" shall mean, with respect to any payment or
conversion under this Agreement, the latest series or class of Preferred
Stock of the Parent issued in a financing round by the Parent prior to
such payment or conversion;
"PARENT SUBSCRIPTION AGREEMENT" shall mean the Subscription Agreement
dated August [__], 2005 between the Parent and the Company, a form of
which is attached hereto as Exhibit M;
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"PERSON" means any individual, partnership, corporation, unincorporated
organization, limited liability company, trust or joint venture, or a
governmental agency or political subdivision thereof;
"PREFERENCE SHARES" shall have the meaning set forth in Section 2.1;
"PREFERRED STOCK RIGHTS AGREEMENT" shall mean the Preferred Stock Rights
Agreement dated as of August [__], 2005 by and among the Parent, the
Investor and the stockholders of the Parent, a form of which is attached
hereto as Exhibit I;
"REGISTER OF MEMBERS" shall mean the register of members of the Company;
"REGISTER OF NOTEHOLDERS" shall mean the register of Noteholders of the
Company;
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement dated of even date herewith between the Investor and the
Parent, a form of which is attached hereto as Exhibit G;
"SCHEDULE OF EXCEPTIONS" shall have the meaning set forth in Section 6;
"SEC" shall mean the United States Securities and Exchange Commission;
"SECURITIES" shall mean the Shares and the Notes;
"SECURITIES ACT" means the United States Securities Act of 1933, as
amended;
"SERIES 1 NOTE CERTIFICATE" shall mean a certificate issued by the
Company certifying that the person named in the certificate is the holder
of the principal amount of Series 1 Notes referred to in the certificate;
"SERIES 1 NOTES" means the US$5,500,000 in aggregate principle amount of
5% notes due 2009, to be issued on the Initial Closing Date;
"SERIES 2 NOTE CERTIFICATE" shall mean a certificate issued by the
Company certifying that the person named in the certificate is the holder
of the principal amount of Series 2 Notes referred to in the certificate;
"SERIES 2 NOTES" means the US$3,500,000 in aggregate principle amount of
5% notes due 2009, to be issued on the First Notes Closing Date;
"SERIES 3 NOTE CERTIFICATE" shall mean a certificate issued by the
Company certifying that the person named in the certificate is the holder
of the principal amount of Series 3 Notes referred to in the certificate;
"SERIES 3 NOTES" means the US$3,500,000 in aggregate principle amount of
5% notes due 2009, to be issued on the Second Notes Closing Date;
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"SERIES 4 NOTE CERTIFICATE" shall mean a certificate issued by the
Company certifying that the person named in the certificate is the holder
of the principal amount of Series 4 Notes referred to in the certificate;
"SERIES 4 NOTES" means the US$2,500,000 in aggregate principle amount of
5% notes due 2009, to be issued on the Third Notes Closing Date;
"SERIES 5 NOTE CERTIFICATE" shall mean a certificate issued by the
Company certifying that the person named in the certificate is the holder
of the principal amount of Series 5 Notes referred to in the certificate;
"SERIES 5 NOTES" means the US$2,500,000 in aggregate principle amount of
5% notes due 2009, to be issued on the Third Notes Closing Date or the
Fourth Notes Closing Date, as the case may be;
"SERVICES AGREEMENT" shall mean the Services Agreement dated as of even
date herewith, between the Company and the Parent, a form of which is
attached hereto as Exhibit F;
"SHARE CHARGE" shall mean the share charge to be executed by the Parent,
a form of which is attached hereto as Exhibit L;
"SHARES" shall mean the Preference Shares and/or the Ordinary Shares, as
the case may be;
"SHAREHOLDERS" shall mean the Parent and the Investor and any other
Person in whose name any Shares are registered in the Register of Members
pursuant to and in compliance with the provisions of this Agreement and
who has executed a Deed of Ratification and Accession and "SHAREHOLDER"
shall mean any one of them;
"SHAREHOLDING PERCENTAGE" shall mean, in relation to any Shareholder and
at any time, means the total number of Ordinary Shares held by such
Shareholder at that time (with Preference Shares counted as Ordinary
Shares on a fully diluted and as-converted basis) expressed as a
percentage of all the issued Ordinary Shares as at that time (with issued
Preference Shares counted as issued Ordinary Shares on a fully diluted
and as-converted basis);
"SUBSIDIARY" with respect to any Person, means (i) any corporation of
which the outstanding capital stock having at least a majority of the
votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned or controlled, directly or
indirectly, by such Person or (ii) any other Person of which at least a
majority of the voting interest under ordinary circumstances is at the
time owned or controlled, directly or indirectly, by such Person;
"SWAP UP AGREEMENT" means the swap-up agreement to be entered into
between the Parent, the Company and the Investor on the Initial Closing
Date, a form of which is attached hereto as Exhibit H;
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"TOPICAL" shall mean delivery to the skin in a vehicle such as a cream,
an ointment, or equivalent vehicle, whereby the therapeutic action is via
a local effect on the skin, and excluding (i) other local delivery
modalities to the skin, such as transdermal, in which the primary
therapeutic purpose is to have a systemic effect, (ii) other local
delivery modalities such as ophthalmic, oral-local to the GI tract, or to
tissues or organs other than the skin, and (iii) drug-device combinations
that provide local delivery to tissues or organs other than the skin;
"TRANSACTION DOCUMENTS" shall mean, collectively, this Agreement, the
Swap Up Agreement, the Notes, the Note Conditions, the Services
Agreement, the Debenture, the Share Charge, the Preferred Stock Rights
Agreement and the Registration Rights Agreement; and
"U.S. PERSON" shall have the meaning set forth in Section 7.1.3.
1.2 OTHER DEFINED TERMS.
1.2.1 Certain other words and phrases are defined or described
elsewhere in this Agreement and/or the Schedules and Exhibits
hereto.
1.2.2 Wherever used in this Agreement:
(i) the words "INCLUDE" or "INCLUDING" shall be
construed as incorporating, also, "BUT NOT LIMITED
TO" or "WITHOUT LIMITATION";
(ii) the word "DAY" means a calendar day unless
otherwise specified;
(iii) the word "LAW" (or "LAWS") means any federal or
state statute, ordinance, resolution, regulation,
code, rule, order, decree, judgment, writ,
injunction, mandate or other legally binding
requirements of a government entity;
(iv) the word "NOTICE" shall mean notice in writing
(whether or not specifically stated) and shall
include notices, consents, approvals and any other
written communication contemplated under this
Agreement;
(v) the word "OR" shall mean either or both; and
(vi) the words "BUSINESS DAY" shall mean any day other than
Saturday, Sunday or a day on which commercial banks
located in either Singapore or New York are authorized or
required to close under the laws of Singapore, the United
States or the State of New York.
1.2.3 Unless the context otherwise requires, words in the singular number
include the plural and vice versa. All Schedules and Exhibits hereto are
hereby incorporated herein and made a part hereof.
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2. ALLOTMENT AND ISSUE OF PREFERENCE SHARES
2.1 AUTHORIZATION. The Company has duly authorized the allotment and issue,
pursuant to the terms of this Agreement, of 2,500,000 Series A Redeemable
Convertible Cumulative Preference Shares of US$0.001 par value per share
(the "PREFERENCE SHARES"), having the rights, privileges, preferences and
restrictions set forth in Exhibit A and in the Articles.
2.2 ISSUE PRICE AND CLOSING. On the Initial Closing Date and subject to the
terms and conditions of this Agreement, the Company will allot and issue
to the Investor the Preference Shares and the Investor will subscribe for
the Preference Shares for the cash subscription price of US$1.00 per
Preference Share (the "ISSUE PRICE PER PREFERENCE SHARE") for aggregate
proceeds of two million five hundred thousand dollars (US$2,500,000.00)
(the "ISSUE PRICE"). When issued, the Preference Shares shall represent,
on an as-converted basis, forty-nine percent (49%) of the Company's
outstanding issued share capital and aggregate voting rights. Subject to
the terms and conditions of this Agreement, the closing of the allotment
and issue of the Preference Shares to the Investor by the Company under
this Agreement (the "INITIAL CLOSING") shall take place at the registered
office of the Company on August [__], 2005 assuming that all of the
conditions set forth in Section 8 have been satisfied or duly waived or
at such other time and place as the Parties hereto may mutually agree in
writing (the time and date on which the Initial Closing occurs, the
"INITIAL CLOSING DATE").
3. NOTES
3.1 COMMITMENT. Subject to the terms and conditions of this Agreement, the
Company agrees to issue to the Investor, and the Investor agrees to
subscribe for, the Notes. Notwithstanding anything in this Agreement to
the contrary, the Investor's obligation to subscribe for any Notes shall
terminate on the Maturity Date.
3.2 SCHEDULE FOR SUBSCRIPTION OF NOTES.
Subject to the terms and conditions of this Agreement (including but not
limited to Section 9), the Company agrees to issue, and the Investor
agrees to subscribe for the Notes as follows:
3.2.1 the Series 1 Notes on the Initial Closing Date, in accordance
with Section 8 below;
3.2.2 subject to the Company having fulfilled the Milestone set out in
part 1 of Schedule 3; the Milestone Certificate having been
issued to the Investor; and the Investor having agreed in
writing that the Milestone has been fulfilled (such agreement
not to be unreasonably withheld) on or before the deadline for
the achievement of such Milestone specified in Schedule 3, the
Series 2 Notes on the Closing Date for such Notes specified in
accordance with Section 3.5, in accordance with Section 9 below;
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3.2.3 subject to the Company having fulfilled the Milestone set out in
part 2 of Schedule 3; the Milestone Certificate having been
issued to the Investor; and the Investor having agreed in
writing that the Milestone has been fulfilled (such agreement
not to be unreasonably withheld) on or before the deadline for
the achievement of such Milestone specified in Schedule 3, the
Series 3 Notes on the Closing for such Notes specified in
accordance with Section 3.5, in accordance with Section 9 below;
and
3.2.4 (a) subject to (i) the Board having determined that at least one
product candidate for the first therapeutic area should move
into clinical development (for human use) and (ii) the
Company having fulfilled the Milestone set out in part 3 of
Schedule 3; the Milestone Certificate having been issued to
the Investor; and the Investor having agreed in writing that
the Milestone has been fulfilled (such agreement not to be
unreasonably withheld) on or before the deadline for the
achievement of such Milestone specified in Schedule 3, the
Series 4 Notes and Series 5 Notes on the Closing Date for
such Notes specified in accordance with Section 3.5, in
accordance with Section 9 below; or
(b) in the event that the Board determines that (i) no product
candidate from the first therapeutic area shall move into
clinical development (for human use) and; (ii) research and
investigation activities in a second therapeutic area should
be initiated:
(i) subject to the Company having fulfilled the Milestone
set out in part 4a of Schedule 3; the Milestone
Certificate having been issued to the Investor; and
the Investor having agreed in writing that the
Milestone has been fulfilled (such agreement not to
be unreasonably withheld) on or before the deadline
for the achievement of such Milestone specified in
Schedule 3, the Series 4 Notes on the Closing Date
for such Notes specified in accordance with Section
3.5, in accordance with Section 9 below ; and
(ii) subject to the Company having fulfilled the Milestone
set out in part 4b of Schedule 3; the Milestone
Certificate having been issued to the Investor; and
the Investor having agreed in writing that the
Milestone has been fulfilled (such agreement not to
be unreasonably withheld) on or before the deadline
for the achievement of such Milestone specified in
Schedule 3, the Series 5 Notes on the Closing Date
for such Notes specified in accordance with Section
3.5, in accordance with Section 9 below,
Provided always that if the Investor does not deliver to the
Company a notice in writing stating that it disagrees that the
relevant Milestone has been fulfilled within 10 business days of
the Investor's receipt of the relevant Milestone
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Certificate, the Investor shall be deemed to have agreed in
writing that the Milestone has been fulfilled pursuant to this
Section 3.2.4.
3.3 CERTIFICATE OF FULFILMENT OF MILESTONE
3.3.1 Upon the fulfilment by the Company of any Milestone, the Company
shall, promptly issue and deliver to the Investor a certificate
signed by a Parent Director, certifying that such Milestone has
been fulfilled and setting out such evidence as may be necessary
in support thereof ("MILESTONE CERTIFICATE").
3.3.2 The Investor shall be entitled to require the Company to furnish
the Investor with such additional information and documents
which the Investor may reasonably require in connection with the
fulfillment by the Company of the Milestones and the Company
shall upon such request promptly furnish the Investor with such
additional information and documents.
3.4 FAILURE TO SATISFY CONDITIONS.
3.4.1 Notwithstanding anything to the contrary in Section 3.2 above,
in the event that the Company does not satisfy any Milestone or
if the Investor does not agree that any Milestone has been met,
the Investor and the Parent shall enter into discussions for a
period of 3 months ("EXTENSION PERIOD") from the relevant
deadline established in Schedule 3 for the achievement of such
Milestone, with regard to the implications of such failure to
meet conditions and whether such conditions may be waived,
extended or varied.
3.4.2 In the event that the Company fulfils any Milestone within the
Extension Period relating to such Milestone and the Investor
agrees in writing that the Company has fulfilled such Milestone
(such agreement not to be unreasonably withheld), the Investor
shall, at the end of such Extension Period, subscribe for the
relevant Notes and the Company shall, at the end of such
Extension Period, issue to the Investor the relevant Notes.
3.4.3 In the event that any Milestone is not satisfied by the Company
within the Extension Period in relation to such Milestone, the
Investor shall not be obliged to subscribe for the relevant
Notes in respect of such Milestone and neither the Company nor
the Parent shall have any claim against the Investor in this
regard.
3.5 NOTICE. Upon satisfaction by the Company of any Milestone with respect to
any Series of Notes as provided in Section 3.3 or 3.4 above, the delivery
of the Milestone Certificate with respect thereto to the Investors, and
the Investor's agreement in writing or deemed agreement that the relevant
Milestone has been fulfilled, the Company shall forthwith issue to the
Investor written notice (or telephonic notice followed by prompt
confirmation in writing) (a "NOTE CLOSING NOTICE") specifying a business
day at least five (5) business days after the date of such notice as the
date for the Note Closing (the "NOTE CLOSING DATE") for such Series of
Notes and confirming the principal amount of the Notes to be issued in
such Series. Each such notice will constitute (i) an automatic warranty
and
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representation that there does not exist any Event of Default by the
Company or the Parent, (ii) a confirmation that the Company is in
compliance with all its obligations and requirements under this Agreement
(other than obligations and requirements that are not material) including
the employment requirements set forth in Section 13.4, and (iii) a
reaffirmation as of the date thereof of all of the representations and
warranties contained in Section 6.
4. GENERAL
4.1 DISCLOSURE OF INFORMATION. The Investor believes that it has had an
opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of this Agreement and the properties,
prospects and financial condition of the Parent (the foregoing does not,
however, limit the representations and warranties of the Company and the
Parent in this Agreement or the right of the Investor to rely thereon).
4.2 EXEMPT FROM REGISTRATION; RESTRICTED SECURITIES. The Securities will be
offered and sold to the Investor without being registered under the
Securities Act in compliance with the exemption from registration
provided by Section 4(2) of the Securities Act, and in offshore
transactions in reliance on Regulation S under the Securities Act, and
may not be offered or sold in the United States or to a U.S. Person (as
defined in Regulation S under the Securities Act) absent registration
under the Securities Act or an applicable exemption from registration
requirements thereunder.
4.3 PREFERENCE SHARES LEGEND. The Parties agree that the certificate
evidencing the Preference Shares may bear the following legend:
"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. Sale or transfer of
these securities may not be effected, and hedging transactions involving
these securities may not be conducted, unless in compliance with the
Securities Act of 1933, as amended, and the
Subscription and Shareholders
Agreement dated as of August [__], 2005 by and among CombinatoRx
(Singapore) Pte Ltd, BioMedical Sciences Investment Fund Pte Ltd and
CombinatoRx, Incorporated and the Transaction Documents as defined
therein."
4.4 REGISTRATION RESTRICTIONS. The Parties agree that the Company may not
register any resales or transfers of the Securities unless such resale or
transfer is in accordance with Regulation S, the registration
requirements of the Securities Act, or pursuant to an exemption
therefrom.
5. SECURITY
DEBENTURE. As security for the Notes, the Company shall grant to the
Investor a first fixed and floating charge in respect of all of its
right, title and interest, whether now existing or hereafter arising or
acquired, in and to any and all assets other than the Company's
Intellectual Property and any of the Company's assets purchased or
financed
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pursuant to a financing arrangement. The security interest granted to the
Investor with respect to the Notes shall be as set forth in the
Debenture.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND OF THE PARENT
The Company and the Parent hereby represent and warrant to the Investor
that, except as set forth in the Schedule of Exceptions attached to this
Agreement as Schedule 2 (the "Schedule of Exceptions") as of the Initial
Closing Date and as of the date of each Note Closing Date:
6.1 DUE INCORPORATION OF THE COMPANY. The Company is a private limited
company duly incorporated under the laws of Singapore and 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 Singapore and
in any and all other jurisdictions in which it is required to be so
qualified except where the failure to so qualify would not have a
Material Adverse Effect. The Company has furnished to the Investor
complete and accurate copies of its Certificate of Incorporation and
Articles, each as amended to date and presently in effect.
6.2 ORGANIZATION, GOOD STANDING AND QUALIFICATION OF THE PARENT. The Parent
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate
power and authority to carry on its business as now conducted and as
proposed to be conducted by it. The Parent is duly qualified to transact
business and is in good standing in Delaware and in any and all other
jurisdictions in which it is required to be so qualified except where the
failure to so qualify would not have a Material Adverse Effect. The
Parent 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.
6.3 CAPITALIZATION AND VOTING RIGHTS IN THE COMPANY. The authorized share
capital of the Company is set forth in the Schedule of Exceptions. On the
Initial Closing Date, after giving effect to the issuance of the
Preference Shares, the issued share capital of the Company is owned
beneficially and legally by the Persons listed in the Schedule of
Exceptions. The issued share capital of the Company have been allotted
and issued in compliance with the laws of Singapore. Other than as set
forth in the Schedule of Exceptions, the Company does not have any
outstanding (a) rights (either preemptive or otherwise) or options to
subscribe for or purchase, or any warrants or other agreements providing
for or requiring the issuance of, any Securities or any securities
convertible into or exchangeable for its Securities, (b) obligation to
repurchase or otherwise acquire or retire any of its Securities, any
securities convertible into or exchangeable for its Securities or any
rights, options or warrants with respect thereto, (c) rights that require
it to register the offering of any of its securities under the Securities
Act and any other relevant securities laws or (d) any restrictions on
voting any of securities.
6.4 CAPITALIZATION OF THE PARENT. On the Initial Closing Date, the authorized
and issued capital stock of the Parent consists of:
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6.4.1 503,400 shares of Series A Convertible Preferred Stock, 3,364,250
shares of Series B Redeemable Convertible Preferred Stock, 10,746,666
shares of Series C Redeemable Convertible Preferred Stock and 8,292,699
shares of Series D Redeemable Convertible Preferred Stock; and
6.4.2 32,000,000 shares of Parent Common Stock with 993,032 shares
issued and outstanding.
6.5 AUTHORISED CAPITAL OF THE COMPANY. The enlarged issued ordinary share
capital of the Company (taking into account any Preference Shares
converted into Ordinary Shares in accordance with this Agreement and the
rights, privileges, preferences and restrictions of the Preference
Shares) shall not at any time exceed the authorised ordinary share
capital of the Company.
6.6 OPTIONS AND WARRANTS OF THE PARENT. On the Initial Closing Date, except
for (A) the conversion privileges of the Preference Shares and the Notes
as set forth in this Agreement, (B) 503,400 shares of Parent Series A
Convertible Preferred Stock, 3,364,250 shares of Parent Series B
Redeemable Convertible Preferred Stock, 10,746,666 shares of Parent
Series C Redeemable Convertible Preferred Stock and 8,292,699 shares of
Parent Series D Redeemable Convertible Preferred Stock, (C) rights to
purchase shares of the Parent Common Stock pursuant to the Parent's stock
option plans and employee stock purchase plans and (D) warrants to
purchase 220,089 shares of Parent Common Stock, there are no outstanding
options, warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from the Parent of any shares
of its capital stock.
6.7 COMPANY AUTHORIZATION. All corporate action on the part of the Company
and its officers and directors necessary for the authorization, execution
and delivery of this Agreement, the performance of all obligations of the
Company under this Agreement and the authorization, allotment and issue
(or reservation for issuance) of all of the Securities has been taken.
6.8 VALID ISSUANCE OF THE NOTES. Each Note, when issued, will constitute a
valid and binding obligation of the Company enforceable against the
Company in accordance with its respective terms, subject to applicable
bankruptcy, insolvency and similar laws reflecting creditors' rights and
remedies generally and equitable principles of general applicability. The
Notes, when issued in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly and validly issued, fully
paid, and will be free from restrictions on transfer and Encumbrances
other than restrictions under the Transaction Documents or applicable
securities laws.
6.9 VALID ISSUANCE OF PREFERENCE SHARES. The allotment and issue of the
Preference Shares in accordance with this Agreement, has been, or will
prior to the Initial Closing Date, be duly authorized by all necessary
corporate action on the part of the Company. The Preference Shares, when
allotted and issued in accordance with the terms of this Agreement for
the consideration expressed herein, will be duly and validly issued and
fully paid up and will be free of restrictions on transfer and
Encumbrances other than
15
restrictions on transfer under this Agreement or applicable securities
laws. The allotment and issue of the Preference Shares is not and will
not be subject to any preemptive rights that have not been properly
waived or complied with.
6.10 VALID ISSUANCE OF ORDINARY SHARES. The allotment and issue of the
Ordinary Shares upon any conversion of the Preference Shares in
accordance with the Articles shall, at the relevant time, be duly
authorized by all necessary corporate action on the part of the Company.
The Ordinary Shares, when allotted and issued, will be duly and validly
issued and fully paid up and will be free of restrictions on transfer and
Encumbrances other than restrictions on transfer under this Agreement or
applicable securities laws. The allotment and issue of such Ordinary
Shares is not and will not be subject to any preemptive rights that have
not been properly waived or complied with.
6.11 SUBSIDIARIES. Each Subsidiary of the Parent has been duly organized, is
validly existing as a corporation, limited liability company, or limited
partnership, as the case may be, in good standing under the laws of the
jurisdiction of its organization, has the requisite corporate, limited
liability company, or limited partnership power and authority, as the
case may be, to own its property and to conduct its business as now
conducted and as proposed to be conducted by it and is duly qualified to
transact business and is in good standing as a foreign entity in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect; on the Initial Closing Date, except as
disclosed in the Schedule of Exceptions, all of the issued shares of
capital stock, membership interests or partnership interests, as the case
may be, of each Subsidiary of the Parent have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly or indirectly by the Parent, free and clear of all liens,
encumbrances, equities or claims. Schedule 6 hereto sets forth the name
and jurisdiction of organization of each Subsidiary of the Parent as of
the Initial Closing Date.
6.12 PARENT AUTHORIZATION. The Parent has the requisite power and authority to
execute and deliver this Agreement and perform its obligations hereunder.
All corporate action on the part of the Parent and its officers and
directors necessary for the authorization, execution and delivery of this
Agreement and the performance of all obligations of the Parent under this
Agreement has been duly and validly taken.
6.13 PARENT STOCK. The Parent Preferred Stock, when issued, sold and delivered
in accordance with the terms of this Agreement and/or the Swap Up
Agreement upon the terms expressed herein and/or therein, will be duly
and validly issued, fully paid, and non-assessable, and will be free of
restrictions on transfer other than restrictions on transfer under this
Agreement, including, without limitation, restrictions on transfer
applicable to such stock pursuant to the terms of such stock or
agreements regarding such stock to which the Investor may become a party,
and under applicable state and federal securities laws. The Parent Common
Stock issuable upon conversion of the Parent Preferred Stock that may be
acquired by the Investor under this Agreement and/or the Swap Up
Agreement has been duly and validly reserved for issuance and, upon
issuance will be duly and validly issued, fully paid, and non-assessable
and will be free of
16
restrictions on transfer other than restrictions on transfer under this
Agreement, including, without limitation, restrictions on transfer
applicable to such stock pursuant to the terms of such stock or
agreements regarding such stock to which the Investor may become a party,
and under applicable state and federal securities laws and regulations.
6.14 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT. On the Initial Closing
Date, the financial statements, together with the related schedules and
notes, all of which are attached hereto as Schedule 7, present fairly the
financial position of the Parent and its consolidated Subsidiaries at the
dates indicated and their results of operations, stockholders' equity and
cash flows for the periods specified, and such financial statements have
been audited by Ernst & Young LLP and prepared in conformity with the
generally accepted accounting principles in the United States ("GAAP")
applied on a consistent basis throughout the periods involved. On the
Initial Closing Date, there has not occurred any change, or any
development involving a prospective change, in the condition, financial
or otherwise, or in the earnings, business or operations of the Parent
and its Subsidiaries, taken as a whole, since December 31, 2004, except
as would not have a Material Adverse Effect.
6.15 PROCEEDINGS. There are no legal or governmental proceedings or
investigations pending or, to the Parent's knowledge, threatened to which
the Parent or any of its Subsidiaries is or may reasonably expect to be a
party or to which any of the properties of the Parent or any of its
Subsidiaries is or may reasonable be expected to be subject other than
proceedings that would not reasonably be expected to have a Material
Adverse Effect or to materially impair the power or ability of the Parent
to perform its obligations under this Agreement and any other Transaction
Document.
6.16 LICENSES AND PERMITS. The Parent and each of its Subsidiaries possess all
material licenses, certificates, authorizations and permits
(collectively, "GOVERNMENTAL LICENSES") issued by, and have made all
declarations and filings with, the appropriate federal, state or foreign
regulatory agencies or bodies, including, without limitation, the United
States Food and Drug Administration and Department of Health and Human
Services, which are necessary or desirable for the ownership of their
respective properties or the conduct of their respective businesses now
operated by them, except where the failure to possess or make the same
would not, singularly or in the aggregate, reasonably be expected to have
a Material Adverse Effect; all of the Governmental Licenses are valid and
in full force and effect, except where the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be
in full force and effect would not, singularly or in the aggregate,
reasonably be expected to have a Material Adverse Effect; and none of the
Parent or any of its Subsidiaries has received notification of any
revocation or modification of any such Governmental Licenses or has any
reason to believe that any such Governmental Licenses will not be renewed
in the ordinary course, except where such revocation, modification or
nonrenewal, would not singularly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
6.17 TAX MATTERS. The Parent and each of its Subsidiaries have filed all
material federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof and have paid all
material taxes due thereon, and no tax deficiency has been
17
determined adversely to the Parent or any of its Subsidiaries which has
had (nor does the Parent or any of its Subsidiaries have any knowledge of
any tax deficiency which, if determined adversely to the Parent or any of
its Subsidiaries, would reasonably be expected to have) a Material
Adverse Effect.
6.18 INSURANCE. The Parent and each of its Subsidiaries carry, or are covered
by, insurance covering their respective properties, operations, personnel
and businesses, which insurance is in such amounts and insures against
such losses and risks as are adequate to protect the Parent and its
Subsidiaries and their respective businesses. None of the Parent or any
of its Subsidiaries has received notice of default under any such
insurance policy, nor has a written notice been received of any pending
or threatened termination or cancellation, coverage limitation or
reduction, or material premium increase with respect to any such
insurance policy.
6.19 INTELLECTUAL PROPERTY. The Parent and each of its Subsidiaries own or
possess adequate rights under all patents, trademarks, service marks,
trade names, copyrights, and know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) (collectively, "INTELLECTUAL PROPERTY RIGHTS")
known by the Parent to be necessary for the conduct of their respective
businesses, except where the failure to possess such rights would not
have a Material Adverse Effect. To the Parent's knowledge, the conduct of
business by the Parent and each of its Subsidiaries does not infringe or
conflict with any Intellectual Property Rights of others, except where
any such infringement or conflict would not have a Material Adverse
Effect. Except as described in the Schedule of Exceptions, the Parent and
its Subsidiaries have not received any written notice of any claim of
infringement or conflict with, any Intellectual Property Rights of others
that, if determined adversely to the Parent or any of its Subsidiaries,
would, individually or in the aggregate, have a Material Adverse Effect.
6.20 PROPERTY. The Parent and each of its Subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real and personal property which are material
to the business of the Parent and its Subsidiaries, in each case free and
clear of all liens, encumbrances, claims and defects and imperfections of
title except those that do not materially interfere with the use made and
proposed to be made of such property by the Parent and its Subsidiaries
or that would not be reasonably expected to have a Material Adverse
Effect.
6.21 NO INTEGRATION. None of the Parent, any of its Subsidiaries or any
affiliate (as defined in Rule 501(b) of Regulation D under the Securities
Act, an "AFFILIATE") of the Parent or any of its Subsidiaries has
directly, or through any agent, (A) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
defined in the Securities Act) which is or will be integrated with the
issuance of any security pursuant to this Agreement in a manner that
would require the registration under the Securities Act of the such
security or (B) offered, solicited offers to buy or sold any security
that is being or may be offered for sale, sold or issued pursuant to this
Agreement by any form of general solicitation or general advertising (as
those terms are used in Regulation D under
18
the Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act.
6.22 NO REGISTRATION REQUIRED. Assuming that the representations and
warranties of the Investor set forth in Section 7 hereof are true and
correct, it is not necessary in connection with the offer, sale and
delivery of the Parent Preferred Stock to the Investor, or the issuance
of the Parent Preferred Stock or Parent Common Stock to the Investor,
each in the manner contemplated by this Agreement, to register the
offering of any such security pursuant to this Agreement under the
Securities Act.
6.23 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with,
any federal, state or local governmental authority on the part of the
Company is required in connection with the consummation of the
transactions contemplated by this Agreement.
6.24 OFFERING. Subject to the truth and accuracy of the Investor's
representations set forth in Section 7 of this Agreement, the allotment
and issue of the Securities as contemplated by this Agreement will be in
compliance with applicable securities laws.
6.25 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the Company, its Parent nor
any Subsidiary of the Parent is in violation or default of any provision
of its Certificate of Incorporation, as amended, or Articles, nor is the
Company, its Parent nor any Subsidiary of the Parent in violation or
default under and no event has occurred which, with notice or lapse of
time or both, would constitute such a default under, any judgment, order,
writ or decree to which it is a party or by which it is bound, or, to the
best of its knowledge, of any provision of any law, rule or regulation
applicable to the Company or the Parent or any provision or any contract,
mortgage, deed of trust, loan or other agreement to which the Company or
the Parent is a party or to which any of its assets or property is
subject, the violation of which, in the aggregate, would have a Material
Adverse Effect. The execution, delivery and performance of the
Transaction Documents will not result in any such violation or be in
conflict with or constitute, with or without the passage of time and
giving of notice, either a default under any such provision, instrument,
judgment, order, writ, decree or contract, or an event that results in
the creation of any lien, charge or encumbrance upon any assets of either
the Company or the Parent or the suspension, revocation, impairment,
forfeiture, or non-renewal of any material permit, license,
authorization, or approval applicable to either of the Company or the
Parent.
6.26 COMPLIANCE WITH LAW. Neither the Company nor the Parent is in violation
or default of any provision of any applicable laws, rules, ordinances,
and regulations thereunder, the violation of which would have a Material
Adverse Effect.
6.27 DISCLAIMER OF ADDITIONAL REPRESENTATIONS AND WARRANTIES. Except as
expressly set forth in this Section 6 of this Agreement, neither the
Company nor the Parent makes 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 or the Parent or any of its
assets, liabilities, operations or prospects.
19
6.28 DORMANT COMPANY. Other than pursuant to the Parent Subscription Agreement
and the Services Agreement, the Company does not, and will not as at the
Initial Closing Date, own any assets, and there are no liabilities,
whether actual or contingent, of the Company other than expenses incurred
in respect of the transactions contemplated under this Agreement nor has
the Company undertaken any trading activity or entered into any
contracts, deeds, guarantees or indemnities.
The term "KNOWLEDGE" as used with respect to any person in this
Agreement, shall mean the knowledge of such person and if such person is
not a natural person, shall also mean the knowledge of each of such
person's directors and key management and officers (or similar persons)
who shall be deemed to have knowledge of all such matters as they would
have discovered, had any of them made reasonable enquiries.
7. REPRESENTATIONS, WARRANTIES AND UNDERSTANDINGS OF THE INVESTOR
7.1 The Investor represents and warrants to the Company and the Parent that,
as of the Initial Closing Date and each Note Closing Date:
7.1.1 AUTHORIZATION. The Investor has full power and authority to
enter into this Agreement, and this Agreement constitutes the
Investor's valid and legally binding obligation, enforceable
against the Investor 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, and (b) as limited
by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.
7.1.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. Each of the transactions
contemplated by this Agreement is made with the Investor in
reliance upon the Investor's representations to the Company and
the Parent, which by the Investor's execution of this Agreement,
the Investor hereby confirms that the Securities to be acquired
by the Investor hereunder will be acquired for investment for
the Investor's own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof
and that the Investor has no present intention of selling,
granting any participation in, or otherwise distributing the
same except to or for the account of affiliated entities that
are not U.S. Persons.
7.1.3 NON-U.S. INVESTOR. As of the Initial Closing Date and each Note
Closing Date, the Investor is not a "U.S. PERSON" within the
meaning of Rule 901 under the Securities Act ("U.S. PERSON") and
is not acquiring the Securities for the account or benefit of
any U.S. Person.
7.1.4 RESALE; HEDGING. The Investor will resell the Securities only in
accordance with the provisions of Regulation S under the
Securities Act, pursuant to registration under the Securities
Act, or pursuant to an available exemption from registration
under the Securities Act, and the Investor will not engage in
hedging transactions
20
involving the Securities unless in compliance with the
Securities Act and this Agreement.
7.1.5 DISCLAIMER OF ADDITIONAL REPRESENTATIONS AND WARRANTIES. Except
as expressly set forth in this Section 7 of this Agreement, the
Investor makes no other representation or warranty, express or
implied, at law or in equity.
8. CLOSING CONDITIONS
8.1 CONDITIONS OF INVESTOR'S OBLIGATIONS AT THE CLOSING.
The Investor's obligation to subscribe for the Preference Shares and the
Series 1 Notes under this Agreement at the Initial Closing Date is
subject to the fulfillment on or prior to the Initial Closing Date of
each of the following conditions:
8.1.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Parent contained in Section 6
shall be true and correct in all material respects on and as of
the Closing.
8.1.2 PERFORMANCE. Subject to Section 8.2, (i) the Company shall have
performed and complied with all obligations and conditions
contained in this Agreement that are required to be performed or
complied with by it on or before the Closing and (ii) there
shall not have been an Event of Default by the Company or the
Parent.
8.1.3 CLOSING DELIVERABLES. Subject to the terms and conditions of
this Agreement the Company shall deliver to the Investor on
Initial Closing:
(A) the Services Agreement executed by the Parent and the
Company;
(B) the adoption of the New Articles in replacement of the
existing Articles;
(C) the Debenture executed by the Company;
(D) the Swap-up Agreement executed by the Parent and the
Company;
(E) certificates, as of the most recent practicable dates, (i)
as to the corporate good standing of the Parent issued by
the Secretary of State of the State of Delaware and (ii) due
qualification of the Parent as a foreign corporation issued
by the Secretary of State of The Commonwealth of
Massachusetts;
(F) resolutions of the Board of Directors and shareholders of
the Company, authorizing and approving all matters in
connection with this Agreement and the transactions
contemplated hereby;
(G) the share certificates with respect to the Preference
Shares;
(H) the Series 1 Note Certificate;
21
(I) the waiver of the Parent of all rights of pre-emption under
any shareholders agreement, the Articles or otherwise in
respect of the issue of the Preference Shares and the Notes;
(J) the Share Charge executed by the Parent, in respect of which
the Parent shall also deliver to the Investor duly executed
blank instruments of transfer and share certificates with
respect to the Ordinary Shares it holds in the Company,
representing 51 per cent. of the issued share capital of the
Company (taking into account the issue of the Preference
Shares to the Investor);
(K) the Registration Rights Agreement executed by the Investor
and the Parent;
(L) the Preferred Stock Rights Agreement executed by the Parent,
the Investor and each of the persons listed on Schedule A
thereof; and
(M) the legal opinion from Ropes & ▇▇▇▇ LLP, U.S. counsel to the
Parent, in substantially the form attached as Exhibit N.
8.2 CONDITIONS OF THE COMPANY'S AND THE PARENT'S OBLIGATIONS AT THE INITIAL
CLOSING.
The obligations of the Company and the Parent to proceed with the Initial
Closing is subject to the fulfillment on or before the Initial Closing
Date of the following conditions by the Investor:
8.2.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investor contained in Section 7 shall be true
and correct in all material respects on and as of the date of
the First Closing.
8.2.2 PAYMENT. At Initial Closing, against the fulfillment of the
conditions and delivery of the items set out in Section 8.1.3 by
the Parent and the Company, the Investor shall pay the Issue
Price and the Series 1 Notes Issue Price to the Company by way
of a cashier's order or bankers' draft drawn on a licensed bank
in Singapore or by wire transfer.
9. SUBSEQUENT NOTES CLOSINGS
9.1 CONDITIONS OF INVESTOR'S OBLIGATIONS AT THE CLOSING.
The Investor's obligation to subscribe for relevant Notes under this
Agreement at each Note Closing Date is subject to the fulfillment on or
prior to such Note Closing Date of each of the following conditions:
9.1.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Parent contained in Section 6
shall be true and correct in all material respects on and as of
the relevant Note Closing.
22
9.1.2 PERFORMANCE. Subject to Section 9.2.1, (i) the Company shall
have performed and complied with all obligations and conditions
contained in this Agreement that are required to be performed or
complied with by it on or before such Note Closing Date
(including the employment requirements set forth in Section
13.4) and (ii) there shall not have been an Event of Default by
the Company or the Parent.
9.1.3 CLOSING DELIVERABLES. Subject to the terms and conditions of
this Agreement the Company shall deliver to the Investor on each
Note Closing the relevant Note Certificate.
9.2 CONDITIONS OF THE COMPANY'S AND THE PARENT'S AT EACH NOTE CLOSING.
The obligations of the Company and the Parent to proceed with each Note
Closing is subject to the fulfillment on or before the relevant Note
Closing Date of the following conditions by the Investor:
9.2.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investor contained in Section 7 shall be true
and correct in all material respects on and as of the date of
the relevant Note Closing.
9.2.2 PAYMENT. At the relevant Note Closing, against the fulfillment
of the conditions and delivery of the items set out in Section
9.1.3 by the Parent and the Company, the Investor shall pay the
relevant Notes Issue Price to the Company.
9.3 SURVIVAL. The Warranties and all other provisions of this Agreement
insofar as the same shall not have been performed at the Initial Closing
or any subsequent Note Closing shall not be extinguished or affected by
Initial Closing or any subsequent Note Closing, or by any other event or
matter whatsoever, except by prior specific and duly authorised written
waiver or release by the Investor.
10. APPLICABILITY OF PROVISIONS RELATING TO SHAREHOLDERS
Subject to and conditional upon Initial Closing in compliance with the
provisions of Section 8, the Parties shall be bound by the provisions of
Sections 11 to 14.
11. GOVERNANCE OF THE COMPANY
11.1 BOARD OF DIRECTORS.
11.1.1 The Board shall consist of five Directors, comprising:
(A) two persons appointed by the Investor (each, an "INVESTOR
DIRECTOR");
(B) two persons appointed by the Parent (each, a "PARENT
DIRECTOR"); and
(C) one person appointed by mutual agreement of the Investor
and the Parent (the "INDEPENDENT DIRECTOR").
23
11.1.2 The Parent hereby undertakes to procure that there remains on
the Board at all times, at least one Director (who is not an
Investor Director) who is ordinarily resident in Singapore.
11.1.3 The Investor and the Parent each shall furnish written notice of
any change in either of its appointees to the other Party at
least five days prior to any proposed appointment of such
Director and may provide in such notice that the Board shall
take no action until such appointment is effective, provided,
however, that the period during which the Board may not take
action shall not exceed ten days.
11.1.4 The right of appointment conferred on either or both parties
under Section 11.1.1 above shall include the right of the
relevant Party or Parties to remove at any time from office the
person so appointed and the right of the said Party or Parties
at any time and from time to time to determine the period during
which such person shall hold the office of Director and to
replace any such Director who ceases to be a Director for any
reason.
11.1.5 In the event that any Shareholder ceases to be a holder of
Shares in the Company, all Directors appointed by such
Shareholder shall automatically be deemed to have vacated office
forthwith.
11.1.6 A Director shall be entitled at any time and from time to time
to appoint any person to act as his alternate and to terminate
the appointment of such person and in that connection the
provisions of the Articles shall be complied with. Such
alternate director shall be entitled while holding office as
such to receive notices of meetings of the Board and to attend
any such meeting whether or not the Director who is his
appointor is present and generally to exercise all the powers,
rights, duties and authorities and to perform all functions of
the Director who is his appointor except that he shall not be
entitled to vote at any meeting at which the Director who is his
appointor is present. In the event that the Director who is his
appointor is not present at any meeting of the Board, such
alternate director shall be entitled to exercise the vote of the
Director who is his appointor at that meeting and if such
alternate director is an appointee of more than one Director,
such alternate director shall be entitled to one vote for every
Director who appointed him who is not present at such meeting.
11.1.7 Meetings of the Board shall be held no less frequently than
quarterly at such places as the Board shall determine. Not less
than 14 business days' prior written notice (or such shorter
period of notice in respect of any particular meeting as may be
agreed unanimously by all Directors) specifying the date, place
and time, of the meeting and the business to be transacted
thereat and including any materials, documents or resolutions to
be discussed at the meeting shall be given to all Directors.
11.1.8 All or any of the Directors may participate in a meeting of the
Board by means of a conference telephone or any communication
equipment which allows all
24
persons participating in the meeting to hear each other. A
person so participating shall be deemed to be present in person
at the meeting and shall be entitled to vote or be counted in a
quorum accordingly.
11.1.9 The quorum at a meeting of Directors necessary for the
transaction of any business of the Company shall be two
Directors including an Investor Director and a Parent Director.
In the event that a meeting of Directors duly convened cannot be
held for lack of a quorum, the meeting shall be adjourned to the
same time and day two weeks following the original meeting date
and at the same place. Written notice specifying the date, place
and time of the adjourned meeting shall be given to each
Director not less than five business days prior to such
adjourned meeting. The quorum at such adjourned meeting shall be
any two Directors.
11.1.10 Subject to Sections 11.3 and 11.5.4 below:
(A) all resolutions of the Directors at a meeting or adjourned
meeting of the Directors shall be adopted by a simple
majority vote of the Directors present, such majority to
include at least (i) one Investor Director and one Parent
Director, or (ii) one Investor Director and the
Independent Director, or (iii) the Independent Director
and one Parent Director; and
(B) a resolution in writing of the Directors shall be as valid
and effectual as if it had been a resolution passed at a
meeting of the Board duly convened and held if the
resolution is signed in support thereof by a majority of
the Directors as in effect at the time, including a Parent
Director and an Investor Director. Any such resolution may
consist of several documents in the like form each signed
by one or more of the Directors and any resolution bearing
the signature of any Director dispatched by facsimile
transmission shall constitute a document for this purpose.
11.2 SHAREHOLDERS' MEETINGS
11.2.1 The number of Shareholders necessary to form a quorum for the
transaction of business at a meeting of the Shareholders shall
be two Shareholders (including the Investor and the Parent)
present personally or by representative, attorney or proxy. All
matters raised at a meeting of the Shareholders shall, unless
otherwise required by the Companies Act or Section 11.3, be
decided by ordinary resolution of the Shareholders present at
the meeting.
11.2.2 If within half an hour from the time appointed for holding the
meeting a quorum is not present, the meeting shall be adjourned
to 14 days thereafter at the same time and place with the same
agenda. Written notice specifying the date, place and time of
the adjourned meeting shall be given to each Shareholder not
less than five business days prior to such adjourned meeting. If
at such adjourned meeting a quorum is not present within half an
hour from
25
the time appointed for holding the meeting, any two Shareholders
present at such adjourned meeting shall be the quorum.
11.2.3 Matters arising at any general meeting of Shareholders shall be
decided by a simple majority of votes cast, save as may
otherwise be required under the Companies Act or Sections 11.3
and 11.5.4. The number of votes of each Shareholder shall be
computed based on its Shareholding Percentage 48 hours before
the date of the relevant general meeting of the Company.
11.2.4 Subject to the Articles, the Companies Act and Sections 11.3 and
11.5.4, a resolution in writing signed by all Shareholders shall
be as valid and effectual as if it had been a resolution passed
at a general meeting of the Shareholders duly convened and held,
and may consist of several documents in the like form each
signed by one or more Shareholders. For the purposes of this
Section, "IN-WRITING" and "SIGNED" shall include approval by
telex, cable, telegram, electronic mail, wireless or facsimile
transmission. Any such resolution sent by facsimile or
electronic mail transmission shall be valid and deemed to have
been duly sent on the date of transmission provided that the
original signed copy thereof is sent by courier or by pre-paid
registered post to the Company at its registered address within
24 hours of transmission.
11.3 MATTERS REQUIRING SHAREHOLDER APPROVAL. Notwithstanding anything to the
contrary in any of the Transaction Documents, the Company shall not,
without the prior written approval of the Parent and the Investor, do any
of the matters set out in Schedule 5.
11.4 OBSERVATION RIGHTS. The Parent shall permit one representative of the
Investor (the "DESIGNATED OBSERVER") to attend (in person or by
telephone) all meetings of the Parent's board of directors as an
observer.
11.4.1 The Investor shall provide the Parent with written notice of the
identity of the Designated Observer, together with such person's
address and other contact information. The Parent shall be
entitled to rely on such notice until the Investor gives a
subsequent notice changing the identity of the Designated
Observer, and any communication sent to such Designated Observer
by the Parent shall be deemed to satisfy the requirements of
this Section 11.4.
11.4.2 The Parent shall give such Designated Observer copies of all
notices, consents, minutes and other materials, financial or
otherwise, which the Parent provides to its board of directors.
The Investor shall cause the Designated Observer to keep
confidential and not disclose or divulge any confidential,
proprietary or secret information which the Designated Observer
may obtain from the Parent pursuant to the rights conferred by
this Section 11.4 other than to the Investor, unless such
information is or becomes known to the Designated Observer from
a source other than the Parent or the holders of the Parent's
capital stock, or is or becomes publicly known, or unless the
Parent gives its written consent to the Designated Observer's
release of such information.
26
11.4.3 The Designated Observer may be excluded from access to any
material or meeting or portion thereof if the majority of the
members of the Parent's board of directors reasonably believes
in good faith (i) upon advice of counsel, that such exclusion is
reasonably necessary to preserve the attorney-client privilege,
(ii) upon advice of counsel, that such exclusion is reasonably
necessary to protect confidential information of any third party
to the extent required by agreement between the Parent and such
third party, or (iii) there exists a conflict of interest with
respect to the Designated Observer and a particular matter or
transaction under consideration by the board of directors, which
may include matters related to this Agreement, the Services
Agreement or any of the transactions contemplated under such
agreements.
11.4.4 The observation rights granted in this Section 11.4 shall
terminate upon the earlier of (i) an IPO by the Parent or (ii)
such time as the Investor no longer holds a majority of the
Notes and a majority of the Preference Shares.
11.5 CONFLICTS PROVISION.
11.5.1 If at any time the Company (1) wishes to enforce or exercise any
right of the Company against any Shareholder under or (2) has
any claim against or is the subject of a claim by any
Shareholder in respect of or (3) proposes to take any action or
withhold from taking any action with respect to any Shareholder
in respect of:
(a) this Agreement;
(b) the Services Agreement;
(c) the Notes;
(d) the Debenture;
(e) any other agreement or deed to which that Shareholder is
also a party; or
(f) any obligation owed to the Company by any Shareholder or
owed to any Shareholder by the Company,
(each, a "CLAIM") that matter shall be dealt with on
behalf of the Company by a committee of the Directors
appointed by the other Shareholder(s) not involved in the
claim. The provisions of this Section do not prejudice to
the right of any party to dispute any claim to which it
relates.
11.5.2 The committee of Directors appointed under this Section has full
authority to exercise all of the Company's rights on behalf of
the Company with respect to any such Claim.
27
11.5.3 The Shareholder involved in any such Claim shall be entitled to
attend and speak at any general meeting of the Company in
relation to such claim but shall not vote at such meeting.
11.5.4 The Directors appointed by the Shareholder involved in any such
Claim shall be entitled to attend and speak at any Board meeting
or any Board committee meeting in relation to such Claim but
shall not vote at such meeting.
11.5.5 No general meeting of the Company or Board meeting at which a
resolution in relation to such a claim proposed shall be
inquorate by virtue of the absence of the Shareholder involved
in any such Claim or of the Director(s) appointed by it.
12. RESTRICTIONS ON TRANSFERS OF SECURITIES
12.1 MORATORIUM. Notwithstanding anything contrary in this Agreement or the
Note Conditions:
12.1.1 No Shareholder may pledge, charge, mortgage or otherwise create
an encumbrance or security interest on or over any or all of its
Shares without the prior written consent of the other
Shareholder.
12.1.2 No Shareholder shall be entitled to transfer any Securities
(except for a transfer pursuant to Section 12.2.1 or Section
15), for the period commencing on the Initial Closing Date and
ending on the fourth anniversary thereof; and
12.1.3 Subject to Section 12.1.1, no Shareholder shall transfer any
Securities held by it in the capital of the Company or otherwise
sell, dispose of or deal with all or any part of its interest in
such Securities unless and until the rights conferred by Section
12.2 shall have been exhausted.
12.2 TRANSFER OF SHARES.
12.2.1 PERMITTED TRANSFER. Any Shareholder may transfer Securities to
an Affiliate, provided that where any Person who has purchased
Securities pursuant to this Section 12.2.1 ceases to be an
Affiliate of the original Shareholder who has effected such
transfer, that Affiliate shall forthwith transfer the relevant
Securities back to the said Shareholder or another of that
Shareholder's Affiliates, who shall be bound to accept such
transfer, and further provided that every Shareholder who has
transferred Securities to its Affiliates shall, notwithstanding
such transfer, continue to be liable jointly and severally with
its Affiliate for the performance of its Affiliate's obligations
under this Agreement;
12.2.2 PRE-EMPTION AND TRANSFER.
(A) Except in the case of a transfer permitted under Section
12.2.1 every Shareholder who desires to sell and transfer
any Securities (the "TRANSFEROR") shall give to the
Company notice in writing of such desire (a "TRANSFER
NOTICE"), which notice shall specify:
28
(I) the number, type and class of Securities proposed
to be sold and transferred (the "SALE
SECURITIES");
(II) the price fixed by the Transferor for the sale of
each such Security (the "TRANSFEROR'S PRICE"); and
(III) the other terms and conditions of such sale (if
any) (the "PRESCRIBED TERMS").
The Transferor may, if it so chooses, stipulate in the
Transfer Notice that all and not some of the Sale
Securities must be purchased.
(B) Subject as hereinafter mentioned and to Singapore law, a
Transfer Notice shall constitute an offer by the
Transferor for the sale of the Sale Securities first to
the Company and, if the Company does not purchase such
shares, to the Shareholders other than the Transferor (the
"OTHER SHAREHOLDERS") at the Transferor's Price and on the
Prescribed Terms (if any). Subject to paragraph (g) below,
a Transfer Notice shall not be revocable except with the
sanction of all the members of the Board.
(C) Subject to Singapore law, the Company may exercise its
right to purchase such Sale Securities under this Section
12.2.2 by giving a notice in writing to the Transferor
within ten (10) business days after receipt of the
Transfer Notice, such notice to specify the place and time
(being not earlier than 14 and not later than 28 days
after the date of the such notice) at which the purchase
of the Sale Securities so allocated shall be completed.
Subject to Singapore law, the Transferor shall be bound to
transfer the Sale Securities to the Company at the time
and place specified such notice by the delivery of such
documents as may be prescribed by Singapore law and, if it
shall fail to do so, any Director shall be deemed to have
been appointed attorney of the Transferor with full power
to execute, complete and deliver, in the name and on
behalf of the Transferor, all such documents as are
necessary to effect the transfers of the Sale Securities
to the Company against payment of the price to the
Transferor.
(D) If the Company chooses not to exercise its rights under
paragraph (c) above, it shall forthwith serve a copy of
the Transfer Notice on each of the Other Shareholders
together with a notice to the Other Shareholders
specifying a date (the "SUBMISSION DATE") by which they
must submit their application to the Company for the
purchase of the Sale Securities, such date being the 21st
business day after the date of dispatch by the Company of
a copy of the Transfer Notice to the Other Shareholders.
Each of the Other Shareholders shall be entitled to apply
in writing for such maximum number of the Sale Securities
(being all or any thereof) as it shall specify in such
application which must be served on the Company by the
Submission Date.
29
(E) If by the Submission Date, the Other Shareholders shall
have applied for all or (except where the Transfer Notice
stipulates that all and not some of the Sale Securities
must be purchased) any of the Sale Securities, the Board
shall allocate the Sale Securities (or so many of them as
shall be applied for as aforesaid) to or amongst the
applicants in accordance with the amount applied for and
where the total quantity of Sale Securities applied for by
the Other Shareholders exceed the total quantity of the
Sale Securities pro-rata (as nearly as possible) according
to the number of Shares in the Company of which they are
registered or unconditionally entitled to be registered as
holders provided that no applicant shall be obliged to
take more than the maximum number of Sale Securities
specified by it as aforesaid; and the Company shall
forthwith give notice of such allocations (an "ALLOCATION
NOTICE") to the Transferor and to the Shareholders to whom
the Sale Securities have been allocated and shall specify
in such Allocation Notice the place and time (being not
earlier than 14 and not later than 28 days after the date
of the Allocation Notice) at which the sale and purchase
of the Sale Securities so allocated shall be completed.
(F) If the Transfer Notice stipulates that all and not some of
the Sale Securities must be purchased and if the total
quantity of the Sale Securities applied for by the Other
Shareholders by the Submission Date does not equal or
exceed the total quantity of the Sale Securities, the
Transferor shall, subject to paragraph (h) below, be
entitled to sell all (but not some only) of the Sale
Securities, in accordance with, and within the 90-day
period specified in, paragraph (h) below.
(G) Subject to paragraph (f) above, the Transferor shall be
bound to transfer the Sale Securities comprised in an
Allocation Notice to the purchasers named therein at the
time and place therein specified by the delivery of duly
executed transfer forms together with the share
certificates in respect of such Sale Securities and the
Stamp Duty Documents in relation thereto and, if it shall
fail to do so, any Director shall be deemed to have been
appointed attorney of the Transferor with full power to
execute, complete and deliver, in the name and on behalf
of the Transferor, transfers of the Sale Securities to the
purchaser thereof and the Stamp Duty Documents against
payment of the price to the Company. On payment of the
price to the Company the purchaser shall be deemed to have
obtained a good quittance for such payment and on
execution and delivery of the transfer the purchaser shall
be entitled to insist upon its name being entered in the
Register of Members as the holder by transfer of the Sale
Securities. The Company shall forthwith pay the price into
a separate bank account in the Company's name and shall
hold such price in trust for the Transferor.
(H) During the 90 days following the Submission Date, and
subject to compliance with the provisions of Sections
12.2.3 and 12.2.4 below, the Transferor shall be at
liberty to transfer any Sale Share not purchased by
30
the Other Shareholders (or where paragraph (f) applies,
all of the Sale Securities) to any Person (the "BUYER")
and at any price (not being less than the Transferor's
Price) and on terms not less favourable to the Transferor
than the Prescribed Terms (if any) except that the
Transferor may provide representations, warranties,
covenants and indemnities customary for such transfer to
the Buyer.
12.2.3 TAG-ALONG RIGHT.
(A) In the event the Transferor, after having first complied
with the provisions of Section 12.2.2(a) to 12.2.2(g)
above, desires to transfer to the Buyer any Shares
pursuant to Section 12.2.2(h), the Transferor shall give
notice in writing (the "TAG-ALONG NOTICE") to the other
Shareholders (the "OTHER TAG-ALONG SHAREHOLDERS") of such
desire. The Tag-Along Notice shall specify the name of the
Buyer, the number and class of Shares proposed to be
transferred (the "TAG-ALONG SHARES"), the price and other
terms and conditions of such transfer and enclose an offer
(the "TAG-ALONG OFFER") dated the date of the Tag-Along
Notice made by the Buyer to the Other Tag-Along
Shareholders to purchase the Shares then held by the Other
Tag-Along Shareholders notwithstanding that the Other Tag
Along-Shareholders may hold a class of Shares different
from that of the Transferor, on the basis that the number
of Tag-Along Shares which the Transferor and the Other
Tag-Along Shareholders who accept the Tag-Along Offer (the
Transferor and such Other Tag-Along Shareholders hereafter
collectively called the "TAG-ALONG SELLERS") shall each
sell shall be pro-rated according to the relevant
Shareholding Percentages of the Tag-Along Sellers and on
terms and conditions (including price per Share (on an
as-converted basis)) no less favourable than those
available to the Transferor as set out in such Tag-Along
Notice. Each of the Other Shareholders (if it so desires)
may accept the Tag-Along Offer made to it by serving on
the Buyer (with a copy to the Transferor) notice in
writing of its acceptance within 30 days of the date of
the Tag-Along Offer.
(B) If any of the Other Tag-Along Shareholders accepts the
Tag-Along Offer within the said 30-day period, completion
of the sale and purchase of the relevant number of Shares
held by such Other Tag-Along Shareholders and completion
of the sale and purchase of the relevant number of Shares
held by the Transferor shall take place within 14 days
following the expiry of the said 30-day period at the
registered office of the Company and on such date as the
Transferor and the Buyer shall agree and notify in writing
to the other Tag-Along Sellers.
12.2.4 REGISTRATION OF TRANSFERS.
Any transfer of Securities in accordance with the provisions of
Sections 12.1 and 12.2 above shall be registered by the Company
Provided that the Company shall not register any transfer of any
Securities unless and until:
31
(A) all stamp duties or other transfer taxes payable in
respect of the transfer of the Securities have been paid;
and
(B) the purchaser (if not already a party to this Agreement)
executes and delivers to each of the Company and all other
Shareholders a Deed of Ratification and Accession. Upon
the delivery to the Company of such Deed of Ratification
and Accession executed by the purchaser and the
registration of the Securities in the name of the
purchaser, the purchaser shall be bound by and shall be
entitled to the rights and benefits of this Agreement, in
place of the Transferor or in the case of a transfer
pursuant to Section 12.2.1 in addition to the Transferor.
13. OPERATIONS OF THE COMPANY
13.1 BUSINESS PLAN AND BUDGET. The operations and expenditures of the Company
shall be as set forth in the Business Plan, including the Budget
contained therein.
13.1.1 ANNUAL REVIEW OF BUSINESS PLAN AND BUDGET. The Business Plan,
including the Budget contained therein, shall be reviewed by the
Directors on an annual basis on or before July 1 of each year
and may be amended or updated by the adoption by such date (with
approval in writing by at least one Investor Director and one
Parent Director) of an updated and revised Business Plan and/or
Budget including, in particular, appropriately detailed
information on the tasks to be performed in the subsequent
Annual Period and the anticipated costs associated therewith.
13.1.2 AMENDMENT OF BUSINESS PLAN. In addition to the annual review of
the Business Plan, including the Budget contained therein,
described in Section 13.1.1, the Business Plan and/or the Budget
may be amended at any time by the written consent of at least
one Investor Director and one Parent Director.
13.2 SHAREHOLDERS' OBLIGATIONS: In consideration of the mutual obligations of
the Shareholders herein contained, and except as the Shareholders may
otherwise agree in writing or save as otherwise provided or contemplated
in this Agreement, each of the Shareholders shall exercise its voting
rights and powers available to it to ensure that:
13.2.1 the Company carries on its business and conducts its affairs in
accordance with applicable law;
13.2.2 the Company, and the Directors appointed by that Shareholder
under Section 11.1.1, will comply with the provisions of this
Agreement and the Articles and will act in such manner and
achieve the full intent and purpose of this Agreement;
13.2.3 the Company shall keep full and proper accounting records in
accordance with generally accepted accounting principles
relating to its business, undertakings and affairs, which
records shall be made available at all reasonable times for
inspection by the Directors and/or the Shareholders by prior
appointment during office hours;
32
13.2.4 the Company shall prepare annual accounts, in each case in
accordance with generally accepted accounting principles and in
compliance with all applicable legislation in respect of each
accounting reference period, and shall procure that such
accounts are audited as soon as practicable and shall supply
copies of the same, both in draft and final form, to each of the
Shareholders immediately upon their issue;
13.2.5 the Company shall in good faith implement any suggestions made
by the Auditors with respect to the keeping of records and
accounts which the Company determines to be desirable or
necessary and shall provide the Auditors with all such
information and explanation that may reasonably assist the
Auditors in the performance of their auditing duties;
13.2.6 the Company shall prepare and provide to each of the Directors
monthly management accounts within 30 days after the end of each
month and operating statistics and such other trading and
financial information in such form as the Board may agree to
keep each of the Shareholders properly informed about the
business and financial services of the Company and generally to
protect their interest;
13.2.7 if the Company requires any approval, consent or license for the
carrying on of its business in the places and in the manner in
which it is then carried on or proposed to be carried on, the
Company will use its commercially reasonable efforts to maintain
the same in full force and effect;
13.2.8 the Company shall (i) maintain appropriate directors' and
officers' liability insurance for each Director; and (ii)
without prejudice to the foregoing but subject to the Companies
Act, indemnify each such Director in full for any losses,
damages, costs and expenses suffered as a result of any
liabilities (civil or criminal) incurred by such Director as a
director of such Company, whether in respect of negligence,
default, breach of duty or otherwise; and
13.2.9 the Company shall permit each Shareholder and its professional
advisors, upon the giving of reasonable notice, to visit,
inspect, examine and conduct an audit of the Company's
properties and records (including its financial records), and to
discuss the affairs of the Company with its management during
reasonable hours, provided that each Shareholder shall be
entitled to exercise this audit right not more than four times
in each financial year of the Company.
13.3 PRESENCE IN SINGAPORE. The Parent hereby commits and undertakes to remain
the holder of all the Ordinary Shares held by the Parent as of the
Initial Closing Date and to procure the continued operations of the
Company in Singapore for at least four (4) years after the Initial
Closing.
13.4 EMPLOYMENT REQUIREMENTS. The Company shall employ the following numbers
of Eligible Employees by the end of each Annual Period:
33
ANNUAL PERIOD ENDING ELIGIBLE EMPLOYEES
September 30, 2006 3
September 30, 2007 6
September 30, 2008 9
September 30, 2009 12
Provided that any employment of any Eligible Employee necessary to
satisfy the minimum employee requirements of this Section 13.4 shall be
effected by the Company in consultation with the Investor Directors and
that any employment or termination of employment with respect to senior
executive officers of the Company shall be determined by the Board.
The Investor and the Parent shall review these employment requirements as
part of their annual review of the Business Plan and may, by mutual
written agreement of the Investor and the Parent, modify or amend these
requirements.
13.5 SERVICES AGREEMENT. Simultaneously with the execution and deliver of this
agreement, the Company and the Parent have entered into the Services
Agreement.
13.6 EXCLUSIVITY. During the term of the Services Agreement, the Parent shall
provide assay development, screening and evaluation services aimed at the
discovery and development of novel therapeutic products for the treatment
of Infectious Disease in humans exclusively to the Company, except in
connection with Biodefence Applications or Permitted Topical
Applications, where:
13.6.1 Biodefence Applications means the discovery, development or
commercialization of any product(s) developed or to be developed
for biodefence application(s) pursuant to contracts between the
U.S. government and agencies thereof and the Parent engaging the
Parent to perform research directed at biological understanding
of, or the diagnosis, prevention or treatment of diseases or
conditions caused by, bio-agents, disease organisms, or
organism-produced toxins used as weapons or for other military
or terrorist purposes, including, without limitation, the
services to be performed by Parent under the Parent's current
NIAID contract or any extension of such NIAID contract; and
13.6.2 Permitted Topical Applications means the discovery, development
or commercialization of any product(s) developed or to be
developed for the treatment of acne and impetigo through Topical
application of one or more therapeutic products; provided,
however, that all of the Parent's interest in any patents,
copyright and other intellectual property rights in any systemic
application of any such therapeutic product shall be assigned or
exclusively licensed to the Company at no cost to the Company.
13.7 CONTINGENT FUNDING TO BE PROVIDED BY PARENT FOR SECOND THERAPEUTIC AREA.
In the event that the Board shall have determined that (i) no product
candidate from the Company's research and investigation activities in the
first therapeutic area should
34
proceed to clinical developments; and (ii) research and investigation
activities should be initiated in a second therapeutic area, the Parent
shall provide the Company with sufficient funding for the payment of 50
per cent of all costs of screening services that may be reasonably
necessary to be carried out in connection with such research and
investigation at the same time(s) as the Investor subscribes for the
Series 4 and /or the Series 5 Notes. Such funding, if required, shall be
provided by the Parent in the form of a loan (the "PARENT NOTE"). The
Parent Note shall be fully subordinated to the Notes on terms and
conditions reasonably acceptable to the Investor. The principal amount of
the Parent Note shall be payable after the maturity date of the Notes,
and the Parent Note shall bear interest at the same interest rate as the
Notes, which interest shall also be accrued and paid on maturity of the
Parent Note, and shall contain such other terms and conditions consistent
with the provisions of this Section as may be agreed to by the Parent,
the Company and the Investor.
13.8 ADDITIONAL FUNDING. The Parent shall further undertake that, in the event
that the proceeds from the Securities issued pursuant to this Agreement,
together with any other funds raised or generated by the Company itself,
are insufficient to fund the Company's operations in accordance with its
Business Plan and Budget for a period of four (4) years following the
Initial Closing, the Parent shall use commercially reasonable efforts to
assist the Company in raising on commercially reasonable terms the
additional funds so required, without affecting adversely the seniority
of the Notes or the security created by the Debenture.
13.9 USE OF PROCEEDS. The proceeds of the sale by the Company of the Shares
and the Notes will be used solely for the business of the Company in
accordance with the Business Plan.
14. NON COMPETE
14.1 As a further consideration for the Investor agreeing to invest in the
Company on the terms of this Agreement, the Parent hereby covenants that,
for so long as the Investor continues to hold the Preference Shares or
the Notes, the Parent shall not, without the prior written consent of the
Investor, whether directly or indirectly and whether alone or in
conjunction with, or on behalf of, any other Person and whether as
principal, shareholder, director, employee, service provider, agent,
consultant, partner or otherwise:
14.1.1 during the Non-Competition Period, compete with the Company by
carrying on the business of discovering, developing or
commercializing novel combination therapies for the treatment of
Infectious Disease anywhere in the Restricted Territory other
than pursuant to the Services Agreement or in connection with
Biodefence Applications or Permitted Topical Applications (as
defined in Section 13.6) (a "Competing Business");
14.1.2 during the Relevant Period canvass, solicit or approach, or
cause to be canvassed, solicited or approached, for orders any
person who at any time during the 12 months preceding the
Relevant Date is or was negotiating or in discussions with the
Company for the supply of any goods, rights or services or is or
was a client
35
or customer of the Company, where the orders relate to the
conduct of a Competing Business;
14.1.3 during the Relevant Period, solicit or entice, or endeavour to
solicit or entire, away from the Company or employ any person
employed in a managerial, research, pre-clinical, clinical,
technical, sales or development capacity at the Relevant Date or
at any time during the period of six months immediately
preceding the Relevant Date.
For the purposes of this Section 14:
"NON-COMPETITION PERIOD" means the period commencing on the Effective
Date and ending twelve (12) months after the Relevant Date.
"RELEVANT PERIOD" means the period of 12 months immediately following the
Relevant Date;
"RESTRICTED TERRITORY" means Singapore, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, the People's Republic of China, the United States of America,
the European Union, Switzerland, New Zealand, Philippines, Taiwan, India,
Pakistan, Sri Lanka and Africa;
"RELEVANT DATE" means the earlier of (i) four years after the Effective
Date; or (ii) the date on which the Parent ceases to hold any Shares or
any interest in any Shares.
14.2 The Parent agrees that the undertakings in this Section 14 are reasonable
and are entered into for the purpose of protecting the goodwill and
legitimate interests of the Company.
14.3 Each of the undertakings contained in this Section 14 shall be, and is, a
separate undertaking by the Parent and will be enforceable by the Company
and the Investor. If one or more of the undertakings contained in this
Section 14 is held to be against the public interest or unlawful or in
any way an unreasonable restraint of trade, the remaining undertakings
shall continue to bind the Parent.
14.4 If any of the provisions in this Section 14 should be deemed to exceed
the time or geographic limits or any other limitations permitted by
applicable law in any jurisdiction or to be void, invalid or otherwise
unenforceable, in whole or in part, then such part of the provision shall
be deemed to have been severed from this Section 14 but the remainder of
the Section shall remain in full force and effect. The Parent hereby
acknowledges that competition can be conducted across geographical
boundaries and that the foregoing restrictions are reasonable and
necessary to protect the legitimate interests of the Company and the
Investor.
14.5 The Parent acknowledges that any violation of the provisions of this
Section 14 shall result in injury to the Company and the Investor and
that damages would be an inadequate remedy and that in the event of any
such breach, the Company and the Investor shall, in addition to any other
relief available to them, be entitled to injunctive relief.
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15. DEFAULT
15.1 Upon the occurrence of any of the following events:
15.1.1 MATERIAL BREACH. If a Party breaches a material provision of any
of the Transaction Documents or fails to perform a material
obligation of such Party under any of the Transaction Documents.
15.1.2 MISREPRESENTATIONS. If any warranty, representation, statement,
or report made to the Investor by the Company and/or the Parent
or made to the Company and the Parent by the Investor in or in
connection with any of the Transaction Documents shall have been
materially false or materially misleading when made or deemed
made.
15.1.3 PAYMENT DEFAULT. If the Company fails to pay when due and
payable or when declared due and payable in accordance with the
Notes and the Note Conditions, any portion of the obligations
under the Notes and the Note Conditions or if the Parent fails
to issue to the Investor the Parent Preferred Stock and/or the
Parent Common Stock or any portion thereof in accordance with
the Swap Up Agreement.
15.1.4 CROSS DEFAULT. If an event of default occurs with respect to the
Parent in the Services Agreement.
15.1.5 BANKRUPTCY OR INSOLVENCY. In the event of (i) the appointment of
a trustee, receiver or custodian for all or substantially all of
the property of the Company, the Parent or the Investor, or for
any lesser portion of such property, if the result materially
and adversely affects the ability of the Company or Parent or
the Investor (as the case may be) to fulfill its obligations
hereunder, (ii) the determination by a court or tribunal of
competent jurisdiction that the Company or the Parent or the
Investor is insolvent such that the Company's or the Investor's
or the Parent's liabilities (as the case may be) exceed the fair
market value of its assets, (iii) the filing of a petition for
relief in bankruptcy by the Company or the Parent or the
Investor on its own behalf, or the filing of any such petition
against the Company or the Parent or the Investor, (iv) an
assignment by the Company or the Parent or the Investor for the
benefit of creditors, or (v) the dissolution or liquidation of
the Company or the Investor or the Parent,
an "EVENT OF DEFAULT" shall be deemed to have occurred upon (a) in the
case of the events set out in Sections 15.1.1 to 15.1.5 (other than
Section 15.1.5(v)), notice in writing having been delivered by a
non-defaulting Party of such event having taken place and the expiration
of a one hundred eighty (180) day opportunity to cure period; or (b) in
the case of an event referred to in Section 15.1.5(v), the non-defaulting
Party first becoming aware of such event, and each non-defaulting Party
shall be entitled to the remedies set out in Section 15.2 (where the
Investor is the non-defaulting party) or Section 15.3 (where the Parent
is the non-defaulting party) with respect to such Event of Default.
15.2 INVESTOR'S RIGHTS AND REMEDIES.
37
Without prejudice to the Investor's rights to claim for damages, upon the
occurrence of an Event of Default by the Company (save in relation to any
Event of Default by the Company arising solely as a result of any matter
dealt with on behalf of the Company by a committee of Directors appointed
by the Investor pursuant to Section 11.5.1) or by the Parent (with the
date of such occurrence being designated a "DEFAULT DATE"):
15.2.1 where the Company is, as at the Default Date, not in compliance
with its obligations under Section 13.4, the Investor shall be
entitled to immediately terminate this Agreement and
additionally:
(A) the Investor shall have the option, exercisable in writing
within 30 days of the Default Date to require the Parent to
purchase all or part of the Preference Shares held by the
Investor as at the Default Date and to allot and issue to
the Investor such number of shares in the issued and
outstanding capital of the Parent, in the manner and on the
terms and conditions set out in Section 4.2.1 of the
Swap-up Agreement;
(B) the Investor shall be immediately entitled to its rights
under Condition 9 of the Note Conditions and Section 4.2.2
of the Swap-up Agreement; and
(C) the Investor shall be entitled to exercise the Default Call
Option in the manner set out in Section 15.7, to acquire
for cash the Parent's Shares and any other securities of
the Company owned by the Parent at such time at a price per
share equal to the fair market value of such Shares or
securities.
15.2.2 where the Company is, as at the Default Date, in compliance with
its obligations under Section 13.4, the Investor shall be
entitled to the following:
(A) at the Investor's option, exercisable in writing within
thirty days of the Default Date, to acquire for cash, such
number of the Ordinary Shares held by the Parent as at the
Default Date as would be sufficient to enable the Investor
to control up to 76 per cent. of the voting rights in the
Company, at a price per share equal to the fair market
value of such Ordinary Shares or securities and in the
manner set out in Section 15.7, and upon the completion of
such acquisition:
(i) all of the Parent Directors shall be deemed to have
resigned from their office as directors;
(ii) the Parent shall no longer have the right to appoint
any Director or to approve the appointment of the
Independent Director;
(iii) the presence of the Parent Director shall not be
required to form a quorum at any Board Meeting;
(iv) the presence of the Parent or its duly appointed
corporate representative or proxy shall not be
required to form a quorum at any general meeting;
38
(v) the provisions of Section 15.2.1, together with all
references thereto in this Agreement, shall be deemed
to be deleted from this Agreement;
(vi) the approval of the Parent Director shall no longer
be required for the adoption, amendment or update of
the Business Plan and/or Budget; and
(vii) the provisions of Section 11.3 and Schedule 5
(Reserved Matters), together with all references
thereto in this Agreement, shall be deemed to be
deleted from this Agreement; or
(B) if the Investor chooses not to exercise its option provided
in Section 15.2.2(a) and, subsequent to the Default Date,
the Event of Default continues but the Company is no longer
in compliance with its obligations under Section 13.4,
then:
(i) the Investor shall be entitled to the remedies
provided for in Section 15.2.1; and
(ii) the Default Date for purposes of Section 15.2.1
shall be the date on which the Investor was
first aware that the Company was no longer in
compliance with its obligations under Section
13.4.
15.3 PARENT PUT OPTION. Upon the exercise by the Investor of the option to
acquire such number of the Parent's shares that would be sufficient to
enable the Investor to control 76 per cent. of the voting rights in the
Company pursuant to Section 15.2.2 above, the Parent shall be entitled
to, at its option, exercisable in writing within 10 business days of the
date of the Investor's notice in writing pursuant to Section 15.2.2, to
require the Investor to purchase from the Parent the remainder of the
shares held by the Parent not forming part of the said proposed
acquisition (the "REMAINDER SHARES") at a price per share equal to the
fair market value of such shares. The completion of the sale and purchase
of such shares shall take place at the same time as the relevant Default
Option Completion. On the Default Option Completion, the Parent shall
deliver to the Investor a duly executed transfer form in favour of the
Investor together with the share certificates in respect of the Remainder
Shares and the Investor shall pay the purchase price for the Remainder
Shares by way of a cashier's order or banker's draft drawn on a licensed
bank in Singapore and made out in favour of the Parent or by wire
transfer.
15.4 COMPANY'S RIGHTS AND REMEDIES. Upon the occurrence of an Event of Default
by the Parent (and for such purpose, an Event of Default by the Company
shall be deemed to be an Event of Default by the Parent unless the Event
of Default arises solely as a result of any matter dealt with on behalf
of the Company by a committee of Directors appointed by the Investor
pursuant to Section 11.5.1), the Company shall be automatically released
and discharged from all its repayment obligations under the Parent Note.
39
15.5 PARENT'S RIGHTS AND REMEDIES. Upon the occurrence of an Event of Default
(i) by the Company arising solely as a result of any matter dealt with on
behalf of the Company by a committee of Directors appointed by the
Investor pursuant to Section 11.5.1 or (ii) by the Investor, and without
prejudice to the Parent's rights to claim for damages, the Parent shall
be entitled to exercise the Default Call Option in accordance with
Section 15.7 below, to acquire for cash the Investor's Preference Shares
and any other securities of the Company owned by the Investor at such
time at a price per share equal to the fair market value of such Shares
or securities, and upon the completion of such acquisition:
(i) all of the Investor Directors shall be deemed to have
resigned from their office as directors;
(ii) the Investor shall no longer have the right to
appoint any Director or to approve the appointment of
the Independent Director;
(iii) the presence of the Investor Director shall not be
required to form a quorum at any Board Meeting;
(iv) the presence of the Investor or its duly appointed
corporate representative or proxy shall not be
required to form a quorum at any general meeting;
(v) the provisions of Section 11.3 and Schedule 5
(Reserved Matters), together with all references
thereto in this Agreement, shall be deemed to be
deleted from this Agreement;
(vi) the observation rights granted to the Investor under
Section 11.4 shall immediately terminate; and
(vii) the approval of the Investor Director shall no longer
be required for the adoption, amendment or update of
the Business Plan and/or Budget.
15.6 VALUATION. For purposes of Sections 15.2, 15.3, 15.5 and 15.7, fair
market value shall be determined as mutually agreed by the Parent and the
Investor or, in the event that no agreement can be reached, by a third
party valuer agreed between each of the Parent and the Investor within 14
days of the exercise of the Default Call Option, or failing which, a
third party valuer appointed by the President of the Singapore
International Arbitration Centre (the "VALUER").
15.6.1 The Valuer shall make their determination of the fair market
value of the Shares pursuant to this Section 15 on the following
assumptions and bases:
(A) valuing the shares to be sold as on an arms length sale
between a willing seller and a willing buyer;
(B) if the Company is then carrying on business as a going
concern, on the assumption that it will continue to do so;
40
(C) that the shares to be sold are capable of being transferred
without restriction; and
(D) that the fair market value of the Shares shall not take
into account all or any funds provided to the Company
pursuant to the Parent Note or the debt comprised
thereunder, whether as an asset or a liability.
15.6.2 The Valuer shall determine the fair market value to reflect any
other factors which the Valuer reasonably believe should be
taken into account. If any difficulty arises in applying any of
these assumptions or bases then the Valuer shall resolve that
difficulty in such manner as they shall in their absolute
discretion think fit.
15.6.3 Whether or not the Company is, as at the Default Date, in
compliance with its obligations under Section 13.4, upon the
occurrence of an Event of Default by the Company or the Parent,
the Investor shall have the first right to negotiate with the
Company for the sale, transfer, license or assignment by the
Company to the Investor or its nominee of the Company's products
and commercial rights, including all Intellectual Property of
the Company. In the event that the Investor and the Company are
unable to agree on the terms of any such sale, transfer, licence
or assignment ("PROPOSED CONVEYANCE"), the Company shall be free
to sell, transfer, license or assign such products and
commercial rights to any party (the "THIRD PARTY BUYER") at a
price and otherwise on terms and conditions which are no less
favourable to the Company than what was offered by the Investor
or its nominee.
15.6.4 Notwithstanding anything to the contrary in Section 15.6.3, in
the event that the Third Party Buyer is the Parent or its
Affiliate, the Company shall, prior to any such Proposed
Conveyance to the Third Party Buyer, deliver to the Investor a
notice setting out the terms and the price with respect to the
Proposed Conveyance (the "CONVEYANCE NOTICE"). Within 30 days
after the receipt of the Conveyance Notice, the Investor shall
have the first right of refusal to acquire such products and
commercial rights of the Company by way of a sale, transfer,
licence or assignment (as the case may be) on the same terms and
at the same price as those set out in the Conveyance Notice, by
delivering to the Company a notice stating such intention (the
"CONVEYANCE ACCEPTANCE NOTICE"). Upon receipt of the Conveyance
Acceptance Notice, the Company shall be obliged to complete the
Proposed Conveyance with the Investor or its nominee within 30
days of the date of receipt of the Conveyance Acceptance Notice.
In this connection, any Investor Director shall be deemed to
have been appointed attorney of the Company with full power to
execute, complete and deliver, in the name and on behalf of the
Company, transfers or assignments of the said products and
commercial rights to the Investor or its nominee against payment
by the Investor or its nominee of the price to the Company.
15.7 DEFAULT PROCEDURE:
41
15.7.1 Where any Event of Default occurs in relation to the Investor or
the Parent pursuant to Section 15.1 (the "DEFAULTING
SHAREHOLDER") or the Company pursuant to Section 15.1 (in which
case, the Parent shall be deemed to be the Defaulting
Shareholder for the purposes of this Section 15.7, unless the
Event of Default arises solely as a result of any matter dealt
with on behalf of the Company by a committee of Directors
appointed by the Investor pursuant to Section 11.5.1, in which
case the Investor shall be deemed to be the Defaulting
Shareholder for the purposes of this Section 15.7), the other
Shareholder (the "NON-DEFAULTING SHAREHOLDER"), shall, without
prejudice to any other rights and remedies it may have, be
entitled to a call option (the "DEFAULT CALL OPTION"), being the
right of the Non-Defaulting Shareholder to require the
Defaulting Shareholder to sell to the Non-Defaulting
Shareholder, at a price per share equal to the fair market value
of such Shares or securities, free from all liens, charges and
other encumbrances and with all rights and advantages attaching
thereto:
(i) with respect to an Event of Default of the Investor, all
or part of the shares held by the Defaulting Shareholder
for the time being in the Company;
(ii) with respect to an Event of Default of the Parent or the
Company, where the Company is not in compliance with its
obligations under Section 13.4 all or part of the shares
held by the Defaulting Shareholder, for the time being in
the capital of the Company; or
(iii) with respect to an Event of Default of the Parent or the
Company, where the Company is in compliance with its
obligations under Section 13.4, such number of shares held
by the Parent as at the Default Date as would be
sufficient to enable the Investor to control up to 76 per
cent. of the voting rights in the Company
(in each case, the "DEFAULT OPTION SHARES").
15.7.2 The Default Call Option may be exercised by the Non-Defaulting
Shareholder by serving a notice in the form of Exhibit K (the
"DEFAULT OPTION NOTICE") on the Defaulting Shareholder within a
period of 30 days from the date on which the Non-Defaulting
Shareholder first becomes aware of the Event of Default.
15.7.3 The Defaulting Shareholder shall, upon receiving a Default
Option Notice from the Non-Defaulting Shareholder, sell to the
Non-Defaulting Shareholder free from all liens, charges and
other encumbrances and with all rights and advantages attaching
thereto, the Default Option Shares.
15.7.4 Completion of the sale and purchase of the Default Option Shares
(the "DEFAULT OPTION COMPLETION") pursuant to the exercise of a
Default Call Option shall take place at the then registered
office of the Company (or such other place as the transferor and
transferee may agree in writing) on the date falling 15 days
from the date of the Default Option Notice.
42
15.7.5 On the Default Option Completion, the Transferor shall deliver
to the Transferee a duly executed transfer form in favour of the
Transferee together with the share certificates in respect of
the Default Call Option Shares.
15.7.6 On the Default Option Completion, the Transferee shall pay the
purchase price for the Default Option Shares in US Dollars by
way of a cashier's order or bankers' draft drawn on a licensed
bank in Singapore and made out in favour of the Transferor.
15.7.7 If the Defaulting Shareholder fails to transfer the Defaulting
Shareholder's Shares to the Non-Defaulting Shareholder on the
Default Option Completion in accordance with Section 15.7.4
above, any director of the Non-Defaulting Shareholder shall be
deemed to have been appointed attorney of the Defaulting
Shareholder with full power to execute, complete and deliver, in
the name and on behalf of the Defaulting Shareholder, transfers
of the Defaulting Shareholder's Shares to the Non-Defaulting
Shareholder against payment of the purchase price for the
Default Option Shares to the Company. On payment of the purchase
price to the Company, the Non-Defaulting Shareholder shall be
deemed to have obtained a good quittance for such payment and on
execution and delivery of the transfer of the Default Option
Shares the Non-Defaulting Shareholder shall be entitled to
insist upon its name and/or its nominees' names being entered in
the Register of Members as the holder by transfer of the Default
Option Shares. The Non-Defaulting Shareholder shall procure that
the Company shall forthwith pay the purchase price into a
separate bank account in the Company's name and shall hold such
price in trust for the Defaulting Shareholder.
15.7.8 The restrictions on transfer of shares contained in Section 12.2
and the Articles shall not apply to the sale and transfer of the
Default Option Shares pursuant to any exercise of a Default Call
Option.
16. TERMINATION
16.1 Subject to Sections 10, 16.3 and 16.4, this Agreement shall take effect
from the date hereof and continue thereafter without limit in point of
time.
16.2 Upon the termination of this Agreement by the Investor pursuant to
Section 15.2.1, this Agreement shall forthwith terminate and cease to be
of any effect (save for Sections 14 (unless the Investor has, at the
relevant time, ceased to be a shareholder of the Company), 15, 16 and
17).
16.3 Upon any Shareholder and its Affiliates ceasing to hold any Shares in the
capital of the Company, such Shareholder shall be released from all its
obligations hereunder (other than under Sections 3 (in the case of the
Investor), 14 (in the case of the Parent), 15, 16 and 17.
16.4 The termination of this Agreement from any cause shall not release any
Party from any liability which at the time of termination has already
accrued, or which thereafter may accrue.
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17. MISCELLANEOUS PROVISIONS
17.1 GOVERNING LAW. This Agreement shall be governed in all respects by and
construed in accordance with the laws of Singapore without regard to
provisions regarding choice of laws.
17.2 CONFLICTS. In the event of a conflict between this Agreement and any of
the other Transaction Documents, this Agreement shall prevail except in
the case in which such other Transaction Document specifically states
otherwise.
17.3 DISPUTE RESOLUTION. In the event of any dispute between the parties to
this Agreement or the Transaction Documents, the following procedures
shall apply:
17.3.1 MEDIATION. Prior to any party invoking the arbitration procedures
specified in Section 17.3.2 with respect to any matter relating to this
Agreement, the matter shall be referred to the chief executive officers
of the Investor and Parent, who shall meet in person to attempt to
resolve the dispute for at least one-half (1/2) of a day in London,
England, or at such other location or by such other means and for such
other period of time as the chief executive officers may agree to in
writing. If the parties are unable to resolve the dispute within 10 days
after the chief executive officers have met, either party may then invoke
the arbitration procedure specified in Section 17.3.2.
17.3.2 ARBITRATION. Any dispute arising out of or in connection with this
Agreement, including any question regarding its existence, validity or
termination, shall be referred to and finally resolved by binding
arbitration under the Rules (the "LCIA RULES") of the London Court of
International Arbitration (the "LCIA COURT"), which LCIA Rules are deemed
to be incorporated by reference into this clause. The parties also agree
that the arbitration shall be conducted in according to the 1999
International Bar Association Rules on the Taking of Evidence in
International Commercial Arbitration. The arbitration panel shall consist
of three members. Except where otherwise agreed by the parties or
determined by the LCIA Court, for the purposes of Article 8.1 of the LCIA
Rules the Parties agree that in the case of any dispute (i) between the
Investor and the Parent, (ii) between the Company and the Investor or
(iii) between the Company and the Parent, each of the two parties to such
a dispute shall represent separate sides for the formation of the
arbitral tribunal as claimant and respondent respectively (or vice
versa). Accordingly, each of such parties shall nominate one member of
the panel. The two members shall agree on the third member within thirty
(30) days. If the two members of the panel are unable to agree on the
third, the LCIA Court shall appoint the third member. The language to be
used in the arbitral proceeding shall be English and all arbitral
proceedings shall be conducted in London, England, which shall be the
seat of arbitration. Each party shall bear its own costs associated with
the arbitration of any dispute, and all fees and other costs of the
arbitration proceeding shall be shared equally between the parties.
Nothing in this arbitration clause shall prevent either party from
seeking a pre-award attachment of assets or preliminary relief to enforce
intellectual property rights or confidentiality obligations in a court of
competent jurisdiction prior to an award on the merits by the arbitration
panel. The award shall be final and binding on the parties and may be
entered and enforced in any court having jurisdiction.
44
17.4 RIGHTS OF THIRD PARTIES. A Person who is not a party to this Agreement
has no right under the Contracts (Rights of Third Parties) Act, Chapter
53B to enforce or enjoy the benefit of any term of this Agreement.
17.5 TRANSFER. Neither this Agreement nor any interest, benefit or obligation
in or under this Agreement may be transferred (whether by way of security
or otherwise) by any Party without the prior written consent of the other
Parties, save that the Investor shall be entitled to assign the benefit
of the warranties and representations given by the Company and the Parent
hereunder to any Affiliate to which it has transferred its Securities in
compliance with the provisions hereunder.
17.6 SURVIVAL. The representations, warranties, covenants and agreements made
herein shall survive any investigation made by any party hereto and the
closing of the transactions contemplated hereby.
17.7 ENTIRE AGREEMENT. This Agreement, the Shareholders' Agreement, the
Swap-Up Agreement, the Services Agreement and the Exhibits and the
Securities hereto and thereto constitute the entire understanding and
agreement between the Parties with regard to the subjects hereof and
thereof and supersede all prior and contemporaneous agreements, whether
written or oral.
17.8 NOTICES. All notices, requests, consents and other communications under
this Agreement shall be in writing and shall be deemed effectively given:
(a) upon personal delivery; (b) when sent by confirmed facsimile if sent
during normal business hours of the recipient, if not, then on the next
business day; (c) five days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (d) one day
after deposit with a nationally recognized overnight courier, special
next day delivery, with verification of receipt, at the address(es) set
forth or specified below, or at such other address or addresses as may
have been furnished in writing by the Company to the Investor, or by the
Investor to the Company, as applicable:
If to the Company, at:
CombinatoRx, Incorporated
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
With a copy (which shall
Not constitute notice) to:
Ropes & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the Investor, at:
BioMedical Sciences Investment Fund Pte Ltd
45
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
#▇▇-▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Attn: Chief Executive Officer
With a copy (which shall
not constitute notice) to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ #▇▇-▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Attn: Tan Su May
17.9 AMENDMENTS. Any term of this Agreement may be amended only with the
written consent of the Company, the Parent and the Investor.
17.10 DELAYS OR OMISSIONS; WAIVERS. No delay or omission to exercise any right,
power or remedy accruing to the Company, the Parent or to the Investor,
upon any breach or default of any party hereto under this Agreement,
shall impair any such right, power or remedy of the Company, the Parent
or the Investor, nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of any similar breach
of default thereafter occurring; nor shall any waiver of any other breach
or default theretofore or thereafter occurring. No waiver of any of the
provisions contained in this Agreement shall be valid unless made in
writing and executed by the Company (if it is the waiving party), the
Parent (if it is the waiving party) or by the Investor (if it is the
waiving party).
17.11 TITLES AND SUBTITLES. The titles of the paragraphs and subparagraphs of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
17.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts (including by facsimile), each of which shall be an
original, but all of which together shall constitute one instrument. Any
party may enter into this Agreement by signing any such counterpart.
Signatures may be exchanged by facsimile, with original signatures to
follow. Each party agrees that it will be bound by its own facsimile
signature and that it accepts the facsimile signature of the other party.
17.13 SEVERABILITY. Should any provision of this Agreement be determined to be
illegal or unenforceable, such determination shall not affect the
remaining provisions of this Agreement.
17.14 EXPENSES. The Company shall bear all costs and expenses incurred by the
Company, the Parent and the Investor in connection with the drafting,
negotiation and finalisation of this Agreement and the Transaction
Documents and the closing of the transactions contemplated hereby,
subject to a limit of $100,000 for each of (i) the Parent's and the
Company's expenses and (ii) the Investor's expenses.
46
17.15 CONSTRUCTION. This Agreement is the result of negotiations among, and has
been reviewed by the Company and the Investor and their respective
counsel. Accordingly, this Agreement shall be deemed to be the product of
all Parties hereto, and no ambiguity shall be construed in favor of or
against the Company or the Investor.
[SIGNATURE PAGES FOLLOW]
47
IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as
of the date first above written.
THE COMPANY: THE INVESTOR:
------------------------------------- -----------------------------------
By: By:
--------------------------------- -------------------------------
Title: Title:
------------------------------ -----------------------------
THE PARENT:
-------------------------------------
By:
---------------------------------
Title:
------------------------------
48