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EXHIBIT 10.53
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
This Convertible Preferred Stock Purchase Agreement (the "Agreement")
dated as of November 11, 1996 is entered into by and between ILEX Oncology,
Inc., a Delaware corporation (the "Company"), and Xxxxxxx & Xxxxxxx Development
Corporation (the "Purchaser"), whose mailing address and principal office is
set forth on Exhibit A.
W I T N E S S E T H:
WHEREAS, the Company desires to sell 199,601 shares of Series D
Convertible Preferred Stock, $.01 par value per share, having the rights,
preferences, privileges and restrictions described herein and in the Exhibits
and Schedules hereto (the "Series D Preferred"); the purchase price for such
shares of Series D Preferred shall be $5.01 per share.
WHEREAS, the Purchaser desires to enter into this Agreement pursuant
to which the Purchaser will purchase shares of Series D Preferred on the terms
set forth herein and in the amount and for the aggregate consideration set
forth in Exhibit A.
NOW, THEREFORE, the Company and the Purchaser agree as follows:
1. Purchase and Sale. Subject to the provisions of this
Agreement (including the last sentence of this SECTION 1) and on the basis of
the representations and warranties contained herein, on the Closing Date (as
hereinafter defined), the Company will sell to the Purchaser and the Purchaser
will purchase from the Company that number of shares of the Series D Preferred
set forth adjacent to the Purchaser's name on Exhibit A. The purchase price to
be paid by the Purchaser for such shares of Series D Preferred shall be equal
to the product of $5.01 per share times the number of shares of Series D
Preferred purchased at the Closing by the Purchaser (the "Purchase Price").
2. Closing of Purchase and Sale.
2.1 Closing; Closing Date. The purchase and sale of the Series D
Preferred (the "Closing") shall occur at the offices of Fulbright & Xxxxxxxx
L.L.P., 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxx 00000, and shall
occur at 10:00 a.m. local time on November 11, 1996 or such other time and date
as may be agreed upon by the Company and the Purchaser (the "Closing Date").
2.2 Transactions at Closing. The Closing of the purchase and sale
of shares of Series D Preferred to be made to the Purchaser shall be effected
on the Closing Date. On the Closing Date (a) the Company and the Purchaser
shall execute and deliver each agreement included as an exhibit hereto to which
they are a party, (b) the Company shall deliver to the Purchaser a
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stock certificate for the Series D Preferred to be issued and sold to the
Purchaser, duly registered in the Purchaser's name, and (c) the Purchaser shall
deposit by wire transfer of immediately available funds or bank certified or
cashier's check the aggregate Purchase Price called for in SECTION 1 of this
Agreement into one or more bank accounts of the Company as shall be designated
by the Company prior to the Closing.
3. Representations and Warranties of Company. The Company
represents and warrants to the Purchaser as follows:
3.1 Organization, Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has full power and authority to own, lease
and operate its properties and assets and to conduct its business as presently
conducted and as proposed to be conducted, and to enter into this Agreement and
the Registration Rights Agreement (as defined in SECTION 5.7) and to carry out
the transactions contemplated by such agreements. The Company is duly
qualified to do business as a foreign corporation and is in good standing in
the State of Texas and in every other jurisdiction in which the failure to so
qualify would have a material adverse effect on the business, assets,
operations or financial condition of the Company.
3.2 Capitalization. The authorized capital stock of the Company
consists of (a) 20,000,000 shares of preferred stock, $.01 par value per share
("Preferred Stock"), of which (i) 5,239,900 shares have been designated as
Series A Convertible Preferred Stock, $.01 par value per share (the "Series A
Preferred"), all of which are issued and outstanding, (ii) 5,432,500 shares
have been designated as Series B Convertible Preferred Stock, $.01 par value
per share (the "Series B Preferred"), all of which are issued and outstanding,
(iii) 2,293,578 shares have been designated as Series C Convertible Preferred
Stock, $.01 par value per shared (the "Series C Preferred"), all of which are
issued and outstanding, (iv) 199,601 shares have been designated as the Series
D Preferred, to be issued pursuant to the terms of this Agreement and (b)
40,000,000 shares of Common Stock, $.01 par value per share ("Common Stock") of
which (i) 2,080,100 shares are issued and outstanding, (ii) 5,239,900 shares
are reserved for issuance on conversion of the Series A Preferred, (iii)
5,432,500 shares are reserved for issuance on conversion of the Series B
Preferred, (iv) 2,293,578 shares are reserved for issuance on conversion of the
Series C Preferred, (v) 199,601 shares are reserved for issuance on conversion
of the Series D Preferred, (vi) 2,300,000 shares are reserved for issuance on
exercise of options issued or to be issued to employees, advisors, officers,
directors and consultants of, and other persons performing services for, the
Company pursuant to stock option plans approved by the Board of Directors of
the Company, (vii) 170,000 shares are reserved for issuance on exercise of
outstanding warrants issued to Vector Securities International, Inc., (viii)
50,000 shares are reserved for issuance on exercise of warrants to be issued to
Chestnut Partners, Inc. and (ix) 573,395 shares are reserved for issuance on
exercise of warrants issued to the holders of the Series C Preferred (the
"Investor Warrants") (the reserved shares referred to in (ii) through (ix) are
collectively referred to as the "Reserved Shares"). The record owners of the
Company's issued and outstanding Common Stock and the holders of all options
and warrants to purchase
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Common Stock are set forth on Schedule 3.2 hereto. The issued and outstanding
shares of the Company's capital stock have been duly authorized and validly
issued and are fully paid and non-assessable. Holders of shares of the
Company's capital stock have no preemptive rights and, except as set forth in
SECTION 7.6 of this Agreement, SECTION 7.6 of the Series B Convertible
Preferred Stock Purchase Agreement dated September 29, 1995 (the "Series B
Purchase Agreement"), among the Company and the persons identified on Exhibit A
thereto and SECTION 7.6 of the Series C Convertible Preferred Stock Purchase
Agreement dated July 22, 1996 (the "Series C Purchase Agreement"), among the
Company and the persons identified on Exhibit A thereto, no holder of shares of
the Company's capital stock has any right of first refusal to purchase
securities sold by the Company. Except for the shares of Common Stock to be
issued upon the conversion of the Series A Preferred, the Series B Preferred,
the Series C Preferred and the transactions contemplated by this Agreement
(including the exhibits hereto) and except for the shares reserved for issuance
as set forth in this section, there are no outstanding warrants, options,
convertible securities or rights (contingent or otherwise) to subscribe for or
purchase any capital stock or other securities from the Company. The Company
is not required to register any of its equity securities under Section 12(a) or
12(g) of the Securities Exchange Act of 1934. The designations, powers,
preferences, rights, qualifications, limitations and restrictions in respect of
each class and series of authorized capital stock of the Company are as set
forth in the Certificate of Incorporation (as defined in SECTION 3.3), and of
the Series D Preferred will be set forth in the Certificate of Incorporation
prior to the Closing, and, all such designations, powers, preferences, rights,
qualifications, limitations and restrictions are valid, binding and enforceable
and in accordance with all applicable laws. Except as contemplated by this
Agreement, Section 7.6 of the Series B Purchase Agreement, Section 7.6 of the
Series C Purchase Agreement, the Second Amended and Restated Preferred
Stockholders' Sales Agreement among the Company, CTRC Research Foundation, and
the holders of the Series B Preferred, the holders of the Series C Preferred
and the holders of the Series D Preferred executed herewith, as amended (the
"Preferred Stockholders' Sales Agreement"), the Second Amended and Restated
Founders' Sales Agreement among Xxxxxxx X. Love, Xxxxxx X. Xxx Xxxx, Xxxxxxxxx
X. Xxxx, Xxxxxxx X. Xxxxxxx, Xx., the holders of the Series B Preferred, the
holders of the Series C Preferred and the holders of the Series D Preferred
(the "Founders' Sales Agreement"), or set forth in Schedule 3.2, (x) there are
no restrictions on the transfer of shares of capital stock of the Company other
than those imposed by relevant state and federal securities laws, (y) there are
no agreements, understandings, proxies, trusts or other collaborative
arrangements concerning the voting, pledge or purchase and sale of the capital
stock of the Company to which the Company is a party or, to the Company's
knowledge, to which any other Person is a party, (z) no holder of any security
of the Company is entitled to preemptive, first refusal or similar statutory or
contractual rights, either arising pursuant to any agreement or instrument to
which the Company is a party, or which are otherwise binding upon the Company,
or, to the Company's knowledge, to which any other Person is a party. Except
as provided for in the Certificate of Incorporation, the Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any of its equity securities or any interest therein or to pay any dividend or
make any other distribution in respect thereof. Other than pursuant to the
terms of the Registration Rights Agreement, no Person has demand or other
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rights to cause the Company to file any registration statement under the
Securities Act of 1933, as amended, relating to any securities of the Company
or any right to participate in any such registration.
3.3 Validity of Stock. Prior to the Closing, the Certificate of
Designation, Preferences and Rights of Series D Convertible Preferred Stock in
the form attached hereto as Exhibit 3.3(A) will have been duly filed with the
Delaware Secretary of State. On the Closing Date, the Series D Preferred will
be duly authorized and, when issued and sold in accordance with the terms of
this Agreement, will be duly and validly issued, and fully paid and
non-assessable and will be free and clear of all liens, charges, encumbrances
or restrictions imposed by or through the Company except as set forth in this
Agreement, the Registration Rights Agreement or applicable securities laws. On
the Closing Date, the Common Stock issuable upon conversion of the Series D
Preferred will be duly authorized and reserved for issuance by all necessary
action and when issued and sold upon such conversion in accordance with the
terms of this Agreement and the Company's Certificate of Incorporation, as
amended (including the Certificate of Designation, Preferences and Rights of
Series D Convertible Preferred Stock), in the form of Exhibit 3.3(B) (the
"Certificate of Incorporation") will be duly and validly issued, fully paid and
non-assessable.
3.4 Subsidiaries. The Company has no subsidiaries and does not
own or control, directly or indirectly, any other corporation, partnership,
association, joint venture or entity.
3.5 Financial Statements. The Company has furnished the Purchaser
with the Company's (a) consolidated audited balance sheet (the "Audited Balance
Sheet") as of December 31, 1995 (the "Audited Balance Sheet Date") and
consolidated audited statements of operations for the year ended December 31,
1995 ("Audited Income Statement") and (b) consolidated unaudited balance sheet
(the "Unaudited Balance Sheet") as of June 30, 1996 (the "Unaudited Balance
Sheet Date") and consolidated unaudited statements of operations for the six
months ended June 30, 1996 ("Unaudited Income Statement") (each of which in (a)
and (b) above are collectively referred to as the "Financial Statements" and
are attached hereto as Schedule 3.5). The Financial Statements are true and
correct in all material respects, are in accordance with the books and records
of the Company, have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied, and fairly and accurately
present in all material respects the financial position of the Company as of
such dates and the results of its operations for the periods then ended,
provided that the Unaudited Financial Statements may not contain all footnotes
required by GAAP and the Unaudited Balance Sheet and the Unaudited Income
Statement are subject to normal year-end audit adjustments, none of which will
be material. Since the Unaudited Balance Sheet Date, the Company has not
incurred or otherwise become subject to any liabilities, debts or obligations
other than in the ordinary course of business consistent with past practice,
except for those listed on Schedule 3.5 attached hereto and those that would
not individually or in the aggregate have a material adverse effect on the
financial condition of the Company.
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3.6 Insurance. Schedule 3.6 contains a list of all insurance
policies (specifying (a) the Insurer, (b) the amount of coverage and (c) the
type of insurance) maintained by or on behalf of the Company on the properties,
assets, business or personnel of the Company, all of which are (and pending
Closing will continue to be) in full force and effect.
3.7 Authorization; Approvals. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and the
Registration Rights Agreement, to perform its obligations hereunder and
thereunder and to engage in the transactions contemplated hereby and thereby.
The execution, delivery and performance by the Company of this Agreement and
the Registration Rights Agreement, have been duly authorized by all necessary
corporate action, and this Agreement has been, and at the Closing the
Registration Rights Agreement will have been, duly executed and delivered by
the Company. This Agreement constitutes, and at the Closing the Registration
Rights Agreement will constitute, the legal, valid and binding obligation of
the Company legally enforceable against the Company in accordance with their
respective terms. The Company has obtained all material consents,
authorizations and approvals of, and has made or will make all material
declarations and filings with, all federal and state governmental authorities
required on the part of the Company in connection with the consummation of the
transactions contemplated by this Agreement, except to the extent any failure
by the Company to comply with the foregoing is due to misrepresentations or
nondisclosure of the Purchaser.
3.8 No Conflict with Other Instruments and Laws. Except as set
forth on Schedule 3.8 or any other Schedules hereto, the execution of and
performance by the Company of its obligations under this Agreement and the
Registration Rights Agreement will not violate any provision of law or
governmental rule or regulation and will not conflict with or result in any
breach of any of the terms, conditions or provisions of, or constitute a
default (with notice, lapse of time or both) under (a) the Certificate of
Incorporation, (b) the Company's by-laws as currently in effect which are
attached hereto as Exhibit 3.8 (the "By-laws"), (c) any statute, law, rule,
regulation, judgment, decree or order to which the Company is bound or
applicable to the Company or its assets or (d) any agreement, contract, lease,
indenture or other instrument to which the Company is a party.
3.9 Absence of Undisclosed Liabilities; Changes. Except as
otherwise described in Schedule 3.9 or any other Schedule hereto, the Company
does not have any liability or obligation (whether accrued, contingent or
otherwise), which individually or in the aggregate exceeds $100,000 (including,
without limiting the generality of the foregoing, any tax liabilities due or to
become due to the extent they relate to the conduct of the business of the
Company through the date hereof) not reflected in the Financial Statements,
except (a) obligations and liabilities incurred after the Unaudited Balance
Sheet Date in the ordinary course of business consistent with past practice;
(b) obligations under contracts made in the ordinary course of business
consistent with past practice that would not be required to be reflected or
disclosed in financial statements prepared in accordance with GAAP; and (c)
obligations under or
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contemplated by this Agreement. The Company has not become directly or
contingently liable on any indebtedness, liability or obligations of any other
Person.
Since the Unaudited Balance Sheet Date there has been no occurrence or
development that has had or is reasonably likely to have a material adverse
effect on the Company's business, assets, operations or financial condition or
prospects, and there has been no material adverse change in the business,
assets, operations or financial condition or prospects of the Company.
3.10 Labor Agreement and Actions. The Company is not bound by or
subject to any contract with any labor union and, to the knowledge of the
Company, no labor union has requested or has sought to organize or represent
any of the employees of the Company. There is no strike or other labor dispute
involving the Company pending, or to the knowledge of the Company threatened,
which could reasonably be expected to have a material adverse effect on the
business, assets, operations or financial condition of the Company, nor is the
Company aware of any labor organization activity involving its employees.
3.11 Compliance with Law and Other Instruments. The Company has
complied with and is not in violation of (with due notice or lapse of time or
both) any agreement, instrument, statute or governmental rule or regulation
(including, without limitation, its Certificate of Incorporation and By-laws)
or any governmental order, judgment, decree, writ, injunction or award of any
arbitration, court or governmental authority applicable to it or its business,
operations, assets or services, applicable to it or its assets that has or
could reasonably be expected to have a material adverse effect on the business,
assets, operations or financial condition of the Company. To the knowledge of
the Company, no employee of the Company is in violation of any term of any
employment contract or any other contract or agreement relating to the
employment of such employee with the Company, as applicable, the violation of
which could reasonably be expected to have a material adverse effect on the
business, assets, operations or financial condition of the Company. Except for
governmental licenses, permits, approvals and consents, the failure to obtain
any of which alone or in the aggregate could not reasonably be expected to have
a material adverse effect on the business, assets, operations or financial
condition of the Company, Schedule 3.11 hereto lists all governmental licenses,
permits, franchises, approvals and consents required to be received or obtained
by the Company to conduct its business as presently conducted, all of which the
Company currently possesses.
3.12 Proprietary Rights. Schedule 3.12 contains a list of all
patents, trademarks, trade names and service marks (and all applications
therefor), whether or not registered ("Proprietary Rights"), used by the
Company in the conduct of its business. The Company owns or has the right to
use without the payment of royalties or fees or other consideration (except as
disclosed on Schedule 3.12 or any other Schedules hereto), all Proprietary
Rights (as defined below) and Intellectual Property Rights necessary for or
used by it in the conduct of its business as now conducted, and with respect to
Mitoguazone, Crisnatol Mesylate, Dihydro-5-Azacytide, piritrexim, oxypurinol
and difluoromethylornithine as proposed to be conducted. Except as set forth
on Schedule 3.12 or any other Schedules hereto, none of the Proprietary Rights
or
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Intellectual Property Rights has been declared invalid, been limited by order
of any court or by agreement, or is the subject of any infringement,
interference or similar proceeding or challenge. The Company has not
infringed, and is not infringing, on the Proprietary Rights or Intellectual
Property Rights of others which could have a material adverse effect on the
business, assets, operations or financial condition of the Company. The
conduct of the Company's business as proposed to be operated is not expected to
conflict with or infringe upon the Proprietary Rights and Intellectual Property
Rights of others. Except as set forth on Schedule 3.12 or any other Schedules
hereto, the Company has no obligation to compensate any Person for the use of
any such Proprietary Rights or other Intellectual Property Rights and the
Company has not granted to or assigned to any Person any license or other right
to use any of the Proprietary Rights or other Intellectual Property Rights of
the Company. The consummation of the transactions contemplated by this
Agreement will not terminate or alter the ability of the Company to utilize the
Proprietary Rights or the terms of such use. Listed on Schedule 3.12 are all
corporate, trade and fictitious names under which the Company or its business
is operated. The Company has taken all reasonable measures to protect and
preserve the security, confidentiality and value of its Proprietary Rights or
other Intellectual Property Rights. All key employees and consultants of the
Company have executed Employment Provision Agreements in the form attached
hereto as Exhibit 3.12(a) and all members of the Company's Scientific Advisory
Board who have not entered into Consulting Agreements with the Company have
executed Non-Disclosure Confidentiality Agreements in the form attached hereto
as Exhibit 3.12(b). To the Company's knowledge, all trade secrets and other
confidential information of the Company are presently protectable and are not
part of the public domain or knowledge, nor, to the Company's knowledge, have
they been used, divulged or appropriated for the benefit of any Person other
than the Company or otherwise to the detriment of the Company. The Company is
the exclusive owner of all rights, titles and interests in its Proprietary
Rights and other Intellectual Property Rights as purported to be exclusively
owned by the Company and insofar as such Proprietary Rights and other
Intellectual Property Rights involve patents, copyrights, licenses, permits,
license rights, contract rights, tradenames or trademarks, such Proprietary
Rights and other Intellectual Property Rights are valid and in full force and
effect. Neither the Company nor, to the Company's knowledge, any of its
officers, employees or consultants, has received notice of, and to the
Company's knowledge there are no claims pending or threatened that the
Proprietary Rights or other Intellectual Property Rights owned or licensed by
the Company or the use or ownership thereof by the Company infringes, violates
or conflicts with any such right of any third party or, with respect to
Proprietary Rights or other Intellectual Property Rights which involved
patents, copyrights, licenses, permits, license rights, contract rights,
tradenames or trademarks, that such Proprietary Rights or other Intellectual
Property Rights are invalid or unenforceable.
"Intellectual Property Rights" shall mean, in addition to Proprietary
Rights, any and all intellectual property rights relating to trade secrets,
confidential business information, formula, biological or chemical processes,
compounds, cell lines, fungi, yeast, laboratory notebooks, algorithms,
copyrights, claims of infringement against third parties, licenses, permits,
license rights to or of technologies, contract rights with employees,
consultants or third parties,
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inventions and discoveries, and other such rights generally classified as
intangible, intellectual property assets in accordance with GAAP.
To the Company's knowledge, no third party has claimed or has reason
to claim that any Person employed by or affiliated with the Company has in the
course of such Person's employment by or affiliation with the Company (a)
violated or may be violating any of the terms or conditions of his or her
employment, non-competition, non-disclosure or inventions agreement with such
third party, (b) disclosed or may be disclosing or utilized or may be utilizing
any trade secret or proprietary information or documentation of such third
party or (c) interfered or may be interfering in the employment relationship
between such third party and any of its present or former employees. To the
Company's knowledge, no third party has requested information from the Company
which suggests that such a claim might be contemplated. To the Company's
knowledge, no Person employed by or affiliated with the Company has employed or
proposes to employ any trade secret or any information or documentation
proprietary to any former employer, and to the Company's knowledge, no Person
employed by or affiliated with the Company has violated any confidential
relationship which such Person may have had with any third party, in connection
with the development, manufacture or sale of any product or proposed product or
the development or sale of any service or proposed service of the Company, and
the Company has no reason to believe there will be any such employment or
violation. To the Company's knowledge, none of the execution or delivery of
this Agreement or the Registration Rights Agreement, or the carrying on of the
business of the Company as officers, employees or agents by any officer,
director or key employee of the Company, or the conduct or proposed conduct of
the business of the Company, will conflict with or result in a breach of the
terms, conditions or provisions of or constitute a default under any contract,
covenant or instrument under which any such Person is obligated.
3.13 Taxes. Except where the failure to do so would not have a
material adverse effect on the Company's business, the Company has accurately
prepared and timely filed all federal income tax returns and all state and
municipal tax returns that are required to be filed by it and has paid or made
provision for the payment of all amounts due pursuant to such returns, which
are not reflected nor reserved for on the Financial Statements and of all other
taxes, assessments and other governmental charges imposed upon it or upon any
of its assets, income, other than any such charges that are currently payable
without penalty or interest, including, without limitation, all taxes which the
Company is obligated to withhold from amounts owing to employees, creditors and
third parties. There is no tax lien outstanding against the assets of the
Company, except for liens for taxes not yet due and payable. The federal
income tax returns of the Company have not been audited by the Internal Revenue
Service, and there are no waivers in effect of the applicable statute of
limitations for any period. No deficiency, assessment or proposed adjustment
of federal income taxes or state or local taxes of the Company is pending, and
the Company has no knowledge of any proposed liability for any tax to be
imposed.
3.14 Contracts. Except as set forth in Schedule 3.14 or any other
Schedule hereto, the Company is not a party to any contract and has no
obligation or commitment (a) involving
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aggregate future payments by the Company of more than $25,000, which is not
cancelable on 60 days' notice by the Company or (b) that is otherwise material
to the business of the Company (collectively, the "Material Agreements").
Except as set forth on Schedule 3.14 or any other Schedule hereto, the Company
has no employment contracts, deferred compensation agreements or bonus,
incentive, profit-sharing, or pension plans currently in force and effect, or
any understanding with respect to any of the foregoing. Except as set forth on
Schedule 3.14 or any other Schedules hereto, no default or defaults (without
regard to notice or lapse of time or both) exist by the Company (including
without limitation the Company's predecessor in interest) in the due
performance by it, or to the knowledge of the Company by the other party or
parties thereto, of any term, covenant or condition of any contract to which
the Company is a party that individually or in the aggregate would have a
materially adverse effect on the business, assets, operations or financial
condition of the Company. All of the Material Agreements are in full force and
effect.
3.15 Litigation. Except as provided in Schedule 3.15 or any other
Schedule hereto, no action, proceeding or governmental inquiry or investigation
(a "Proceeding") before any court, arbitrator or tribunal or administrative or
other governmental agency is (a) pending, or to the knowledge of the Company,
threatened against the Company or any of its officers, directors or employees
(in their capacity as such) or affecting any of its owned or leased assets, or
(b) to the knowledge of the Company, pending or threatened against any
consultant or shareholder of the Company (in their capacity as such) or
affecting any of its other assets, nor is the Company aware of any such
threatened or contemplated action, proceeding, inquiry or investigation nor, to
the knowledge of the Company, has there occurred any event or does there exist
any condition on the basis of which it is reasonably likely that any such
Proceeding might properly be instituted. There is no Proceeding by the Company
pending or threatened against others.
3.16 Fees and Commissions. Except as described in Schedule 3.16,
the Company has not retained any finder, broker, agent, financial advisor or
other intermediary (collectively, "Intermediary") in connection with the
transactions contemplated by this Agreement. Notwithstanding any disclosure on
Schedule 3.16, the Company agrees to indemnify and hold harmless the Purchaser
from liability for any compensation to any Intermediary retained by the Company
and the fees and expenses of defending against such liability or any such
alleged liability.
3.17 ERISA. Except as disclosed on Schedule 3.17, the Company does
not maintain, sponsor, or contribute (and has not during the last five years
been obligated to maintain, sponsor or contribute or maintained, sponsored or
contributed) to any program or arrangement that is an "employee pension benefit
plan," an "employee welfare benefit plan," a "multiple employer welfare
arrangement," or a "multi-employer plan," as those terms are defined in
Sections 3(1), 3(2), 3(4) or 3(37) of the Employee Retirement Income Security
Act of 1974, as amended, bonus or incentive award or compensation plan or
arrangement, severance pay policy or agreement, deferred compensation agreement
or arrangement, supplemental executive retirement
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program, vacation plan, cafeteria plan, educational assistance plan, and any
other employee benefit plans, agreements, or arrangements (collectively,
"Employee Programs"). The Company has complied with all applicable legal
requirements, including, without limitation, ERISA and the Code, with respect
to all Employee Programs.
3.18 Title to Properties; Encumbrances. Except as set forth in
Schedule 3.18 or any other schedule attached hereto, the Company has good and
marketable title to all of the assets owned by it and used in its business,
including, without limitation, all the material properties and assets reflected
in the Financial Statements, subject to no encumbrance, lien, charge or other
restriction of any kind or character, except for (a) liens reflected in the
Financial Statements or on Schedule 3.18 or any other Schedules hereto, (b)
liens consisting of zoning or planning restrictions, easements, permits and
other restrictions or limitations on the use of real property or irregularities
in title thereto which do not materially detract from the value of, or impair
the use of, such property by the Company, as applicable, (c) liens for current
taxes, assessments or governmental charges or levies on property not yet due
and delinquent and (d) liens which do not materially affect the operation of
the business of the Company, as applicable (liens of the type described in
clauses (a) through (d) above, inclusive, are hereinafter sometimes referred to
as "Permitted Liens"). Except as set forth in Schedule 3.18, the assets of the
Company are in good working order and condition, ordinary wear and tear
excepted.
3.19 Environmental Compliance. Except as disclosed in Schedule
3.19 and to the best of their knowledge:
(a) The Company has not released, emitted, discharged,
dumped or disposed of any hazardous substances onto or into the assets
of the Company, or any part thereof, or onto or into the air, surface
or groundwater, land or soil in violation of Environmental Laws. For
purposes of this Agreement, "Hazardous Substances" has the meaning set
forth in Section 101(14) of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and shall also
expressly include (i) petroleum, crude oil and any fraction thereof or
radioactive material; (ii) any other chemical, material or substance
defined as or included in the definition of "medical waste,"
"infectious waste," "hazardous substance," "hazardous waste,"
"hazardous material," "toxic substance," "special waste,"
"contaminant" or "pollutant," or word or term of similar import, under
any applicable Environmental Law; and (iii) any other chemical,
material or substance, exposure to which is regulated by any
governmental authority having jurisdiction over the Company or is
reasonably likely to give rise to any liability of the Company, in
either case under any Environmental Law. The term "Environmental
Laws" means all applicable foreign, federal, state, county and local
statutes, regulations or ordinances (including common law duties
established by courts or any published judicial or administrative
interpretation thereof) relating to human health and the environment
or the generation, treatment, storage, recycling, transportation,
release or disposal of Hazardous Substances.
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(b) No Hazardous Substances resulting from the Company's
operations have been or are currently located at, in, under or about
either the assets of the Company or any other property currently or
previously owned or operated by the Company in a manner which: (i)
violates in any material respect applicable Environmental Laws or (ii)
requires any material response, remedial, corrective action or cleanup
of any kind under any applicable Environmental Laws.
(c) With respect to the assets or other property owned or
leased by the Company, whether previously or currently owned or
operated or used by the Company for the treatment, storage or disposal
of Hazardous Substances, no litigation, investigation, administrative
or other proceeding of any kind is pending or threatened by any
federal, foreign, state or local governmental entity or private party
arising from: (i) any applicable Environmental Laws; (ii) any
response, remedial or cleanup activities or (iii) any release or
threatened release of Hazardous Substances. In addition, the Company
is not now aware of any facts on which such litigation, investigation,
administrative or other proceeding of any kind might reasonably be
based.
(d) With respect to the assets or other property owned or
leased by the Company, whether previously or currently owned or
operated or used by the Company for the treatment, storage or disposal
of Hazardous Substances, the Company is not subject to any judgment,
injunction, writ, order or agreement arising from: (i) any applicable
Environmental Laws; (ii) any remedial, response or cleanup activities
or (iii) any liabilities, damages, costs, fees or expenses related to
the release or threatened release of Hazardous Substances. In
addition, the Company is not aware of any facts on which such a
judgment, injunction, writ, order or agreement might reasonably be
based.
(e) The assets of the Company do not contain any asbestos
or PCB containing materials in material violation of any applicable
Environmental Laws.
(f) The Company has not caused or allowed, and the
Company has not contracted with any party for, the manufacture,
processing, handling, distribution, use, transportation, treatment or
storage of any Hazardous Substances, except in compliance in all
material respects with applicable Environmental Laws. The Company
does not own any real property.
(g) The Company has obtained and is maintaining in full
force and effect all Environmental Permits and is in compliance in all
material respects therewith "Environmental Permit" shall mean any
necessary permit, license, approval or other authorization or filing
required by the Environmental Laws applicable to the premises leased
by the Company and the business operations currently conducted thereon
and as currently proposed to be conducted.
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(h) The Company and the operations of its business are
being conducted in compliance in all material respects with all
applicable Environmental Laws and orders or directives of any
governmental authority having jurisdiction under such Environmental
Laws. To the Company's knowledge, the premises leased by the Company
are in compliance in all material respects with all applicable
Environmental Laws and orders or directives of any governmental
authorities having jurisdiction under such Environmental Laws.
3.20 Affiliate Transactions. Schedule 3.20 describes all material
contracts, arrangements or transactions between the Company and to the
Company's knowledge, between any customer, licensor, licensee or supplier of
the Company, and any of the Company's Affiliates.
3.21 Exemption from Registration. In sole reliance, as to factual
matters concerning the Purchaser, upon representations and warranties by the
Purchaser in SECTION 4 hereof and without independent investigation, the offer
and sale of the Series D Preferred, and the Common Stock issuable upon
conversion of the Series D Preferred, in the manner contemplated by the
Agreement are, and upon conversion will be, (a) exempt from the registration
requirements of Section 5 of the Securities Act of 1933, as amended, and (b)
either exempt from, or registered or qualified in compliance with, the
registration requirements of all applicable state "blue sky" securities laws.
3.22 Prior Exemptions from Registration. All offers and sales of
the Company's capital stock prior to the date hereof (a) were exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as
amended, and (b) were made in compliance with all applicable federal and state
securities laws.
3.23 Disclosure. Neither this Agreement, nor any other agreement,
document or certificate furnished to any Purchaser or its counsel by the
Company or on behalf of the Company by any of its officers or counsel in
connection with the transactions contemplated hereby, including, without
limitation, the Financial Statements, when taken as a whole, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein and therein, in light of the
circumstances under which they were made, not misleading. There is no
currently existing fact which materially and adversely affects, or which in the
future may (so far as the Company can reasonably foresee) materially and
adversely affect, the business, properties, operations or condition, financial
or otherwise, of the Company (except for industry and general economic
conditions and climate which are beyond the control of the Company), which has
not been set forth in this Agreement, including the Schedules and Exhibits
hereto. Without limiting the foregoing, the Company does not have knowledge
that there exists, or that there is pending or planned, any patent, invention,
device or application of a technology or any statute, rule, law, regulation,
standard or code which will, based solely on information currently known by the
Company, materially adversely affect the
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business, prospects, operations, Proprietary Rights, Intellectual Property
Rights, affairs or financial condition of the Company.
3.24 Additional Representations.
(a) Since the Unaudited Balance Sheet Date, (i) the Company
has not entered into any material transaction, made any distribution
on its capital stock, or redeemed or repurchased any of its capital
stock; (ii) paid or cancelled any obligations or liability, other than
current liabilities paid in the ordinary course of the business
consistent with past practice; (iii) suffered any substantial losses
or waived any rights of material value, whether or not in the ordinary
course of business or covered by insurance; or (iv) purchased any
properties or assets, except in the ordinary course of business in
immaterial amounts.
(b) No officer or key employee of the Company has advised
the Company (orally or in writing) that he intends to terminate
employment with the Company.
(c) Each of the Material Agreements is in full force and
effect. There is no anticipated or threatened default of the Material
Agreements and none of the parties nor the Company has provided any
notice of default or of its intention to terminate any Material
Agreement. The Company is not bound by any agreement or instrument or
subject to any charge or other corporate restriction which materially
and adversely affects the business, properties, operations, condition
or prospects, financial or otherwise, of the Company.
(d) The Company is not now and has never been a "United
States real property holding corporation," as defined in Section
897(c)(2) of the Code and Section 1.897-2(b) of the Regulations
promulgated by the Internal Revenue Service.
(e) To the extent reasonably within its control, the
Company shall endeavor to meet the active business requirements of
Section 1202(e) of the Code, provided that (i) the Company does not
represent that it is or will be a "qualified small business" within
the meaning of Section 1202(d) of the Code or that the Series D
Preferred Stock is or will be qualified small business stock as
defined in Section 1202(c) of the Code, (ii) the Company shall not be
required to cause any of its stockholders to reduce its holdings of
Company capital stock, and (iii) the Company shall not be required to
change its core business as currently conducted. The value of the
assets owned directly by the Company does not exceed Fifty Million
Dollars ($50,000,000) as of the date hereof.
4. Representations, Warranties and Covenants of the Purchaser.
The Purchaser represents and warrants to the Company as follows:
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4.1 Authorization. It has full power and authority to enter into
and to perform this Agreement and the Registration Rights Agreement (as defined
in Section 5.7) in accordance with their respective terms. This Agreement has
been, and at the Closing the Registration Rights Agreement will have been, duly
executed and delivered by it, and constitute valid and legally binding
obligations of the Purchaser, legally enforceable against the Purchaser in
accordance with their respective terms, subject to laws of general application
from time to time in effect affecting creditors' rights and the exercise of
judicial discretion in accordance with general equitable principles.
4.2 Investment Representations. It is acquiring the Series D
Preferred purchased by it (and any Common Stock into which Series D Preferred
may be converted) for its own account, for investment, and not with a view to,
or for sale in connection with, any distribution of such Series D Preferred (or
related Common Stock) or any part thereof in violation of federal or state
securities laws. The Purchaser has no present or contemplated agreement,
arrangement or commitment to dispose of Series D Preferred (or any Common Stock
into which the Series D Preferred may be converted) in violation of federal or
state securities laws.
4.3 Investment Experience; Access to Information. It (a) is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D as
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), (b) alone or together with its advisors is an investor experienced in
the evaluation of businesses similar to the Company's business, and has such
knowledge and experience in financial, business and other relevant matters as
to be competent and fully capable of examining all the merits, risks and other
aspects of the investment contemplated by this Agreement on its own and to make
an informed decision with respect thereto, (c) has the ability to bear the
economic risks of this investment which could include the loss of some or all
of its investment and has sufficient other assets such that the loss of all its
investment in the Company would not have a material adverse effect on its
financial condition or adversely affect its ability to maintain its present
operations, (d) has been afforded prior to the date hereof the opportunity to
ask questions of, and to receive answers from, the Company and its
representatives and has received from the Company all other information
concerning the investment contemplated by this Agreement that it has requested,
and (e) acknowledges that no assurances, representations or guaranties of any
nature whatsoever (including those relating to capital appreciation, dividends
or tax aspects) have been made by the Company or anyone else to it with regard
to the performance of the investment contemplated by this Agreement. The
Purchaser agrees that it will indemnify and hold harmless the Company and its
directors, officers, controlling persons and affiliates (the "indemnities")
from any liability or damage (including reasonable attorney's fees and
expenses) to any third party suffered or incurred by any of the indemnities
solely as a result of the inaccuracy of any of the foregoing representations
and warranties made by the Purchaser, including any liability or damage arising
from or under federal or state securities laws. No investigation pursuant to
this SECTION 4.3 shall affect any representation or warranty given by the
Company in this Agreement.
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4.4 Absence of Registration. The Purchaser understands that:
The Series D Preferred to be sold and issued hereunder (and the Common
Stock into which the Series D Preferred may be converted) have not been
registered under the Securities Act or any applicable state securities or "Blue
Sky" laws, and may be required to be held indefinitely, unless subsequently
registered under the Securities Act and such applicable Blue Sky laws, or an
exemption from such registration is available.
Except as may be required by the Registration Rights Agreement, the
Company is under no obligation to the Purchaser to file a registration
statement with the Securities and Exchange Commission (the "Commission") or any
state securities commission with respect to the Series D Preferred (or the
Common Stock into which the Series D Preferred may be converted).
4.5 Economic Risk. The Purchaser understands that it must bear
the economic risk of the investment represented by the purchase of Series D
Preferred (and any Common Stock into which the Series D Preferred may be
converted) for an indefinite period.
4.6 Fees and Commissions. Except as described in Schedule 4.6,
the Purchaser represents and warrants that it has retained no Intermediary in
connection with the transactions contemplated by this Agreement.
Notwithstanding any disclosure on Schedule 4.6, the Purchaser agrees to
indemnify and hold harmless the Company from liability for any compensation to
any Intermediary retained by the Purchaser and the fees and expenses of
defending against such liability or any such alleged liability.
5. Conditions to Closing of the Purchaser. The obligation of the
Purchaser on the Closing Date to pay the Purchase Price required by SECTION 2
hereof shall be subject to each of the following conditions precedent, any one
or more of which may be waived by the Purchaser:
5.1 Representations and Warranties. The representations and
warranties made by the Company herein shall be true and accurate on and as of
the Closing Date.
5.2 Performance. The Company shall have performed and complied
with all agreements and conditions contained herein required to be performed or
complied with by it prior to or at the Closing.
5.3 Consents, Amendments, etc. The Company shall have secured all
permits, consents and authorizations that shall be necessary or lawfully
required to consummate the transactions contemplated by this Agreement
(including consents or approvals required under federal or state securities
laws and from the holders of the Company's outstanding shares of Common Stock,
Series A Preferred, Series B Preferred and Series C Preferred), to issue the
Series D Preferred to be purchased by the Purchaser, and to issue the Common
Stock into which the Series D Preferred may be converted. The Company shall
have filed with the Secretary of State of the State of Delaware the Certificate
of Designation, Preferences and Rights of Series A
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Convertible Preferred Stock, the Certificate of Designation, Preferences and
Rights of Series B Convertible Stock, the Certificate of Designation,
Preferences and Rights of Series C Convertible Preferred Stock and the
Certificate of Designation, Preferences and Rights of Series D Convertible
Preferred Stock in the form set forth on Exhibit 5.5.
5.4 Compliance Certificates. The Company shall have delivered to
the Purchaser or its representative at the Closing a certificate signed by the
President and by the Secretary of the Company to the effect that the
representations and warranties of the Company contained in this Agreement
continue to be true and accurate on the Closing Date, and that all conditions
specified in Sections 5.2, 5.3, 5.7, 5.8 AND 5.9 have been fulfilled, including
a list of any permits, consents or authorizations required thereby.
5.5 Proceedings and Documents. All corporate and other
proceedings, and all documentation relating thereto, necessary to consummate
the transactions contemplated by this Agreement (including but not limited to
the filing by the Company with the Delaware Secretary of State of the
Certificate of Designation, Preferences and Rights of Series D Convertible
Preferred Stock) shall be reasonably satisfactory in substance and form to the
Purchaser and the Purchaser's counsel, and the Purchaser and the Purchaser's
counsel shall have received all such counterpart originals or certified or
other copies of the documents as the Purchaser or the Purchaser's counsel may
reasonably request, including, without limitation, a certificate of the
Secretary of the Company attesting to the accuracy of each of the following
documents which shall be attached hereto as Exhibit 5.5: (a) the Certificate
of Incorporation of the Company, including all amendments thereto, the
Certificate of Designation, Preferences and Rights of Series A Convertible
Preferred Stock, the Certificate of Designation, Preferences and Rights of
Series B Convertible Stock, the Certificate of Designation, Preferences and
Rights of Series C Convertible Preferred Stock, and the Certificate of
Designation, Preferences and Rights of Series D Convertible Preferred Stock,
each certified as of a recent date by the Delaware Secretary of State, (b) the
By-laws of the Company, and (c) the authorizations of the Board of Directors
and stockholders of the Company relating to the Company's execution, delivery
and performance of its respective obligations, if any, under this Agreement and
the Registration Rights Agreement and all other agreements and transactions
contemplated hereby.
5.6 Opinion of Company's Counsel. The Purchaser or its
representative shall have received an opinion from counsel for the Company,
dated the Closing Date and addressed to the Purchaser in substantially the form
attached hereto as Exhibit 5.6.
5.7 Registration Rights Agreement. The holders of the Series B
Preferred, the holders of the Series C Preferred, CTRC Research Foundation and
the Company shall have executed and delivered amendments to the Amended &
Restated Registration Rights Agreement in compliance with the requirements of
SECTION 16.1 therein, substantially in the form attached hereto as Exhibit 5.7
(the "Registration Rights Agreement"), and the Purchaser shall have executed
and delivered the Registration Rights Agreement.
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5.8 Founders' Sales Agreement. Xxxxxxx X. Love, Xxxxxxxxx X.
Xxxx, Xxxxxx X. Xxx Xxxx and Xxxxxxx X. Xxxxxxx, Xx. (the "Founders"), the
holders of the Series B Preferred, the holders of the Series C Preferred and
CTRC Research Foundation shall have executed and delivered amendments to the
Amended and Restated Founders' Sales Agreement in compliance with the
requirements of SECTION 15 therein substantially in the form attached hereto as
Exhibit 5.8 (the "Founders' Sales Agreement"), and the Purchaser shall have
executed and delivered the Founders' Sales Agreement.
5.9 Preferred Stockholders' Sales Agreement. The holders of the
Series B Preferred, the holders of the Series C Preferred and CTRC Research
Foundation shall have executed and delivered amendments to the Amended and
Restated Preferred Stockholders' Sales Agreement in compliance with the
requirements of SECTION 15 therein, substantially in the form attached hereto
as Exhibit 5.9, and the Purchaser shall have executed and delivered the
Preferred Stockholders' Sales Agreement.
6. Conditions to Closing of Company. The obligation of the
Company on the Closing Date to issue and sell the Series D Preferred to be
purchased under this Agreement shall be subject to each of the following
conditions precedent, any one or more of which may be waived by the Company:
6.1 Representations and Warranties. The representations and
warranties made herein by the Purchaser shall be true and accurate in all
material respects on and as of the Closing Date and the Purchaser shall be
deemed to have restated and confirmed such representations and warranties as of
the Closing Date by authorizing or permitting the Closing to be effected
without delivering in writing to the Company a notice of change prior to the
Closing.
6.2 Consents, etc. The Company shall have secured all material
permits, consents and authorizations that shall be necessary or lawfully
required to consummate the transactions contemplated by this Agreement
(including, but not limited to, consents or approvals required under federal or
state securities laws.)
7. Affirmative Covenants.
The Company covenants and agrees that it will perform and observe the
following covenants and provisions, and will cause each Subsidiary, if and when
such Subsidiary exists, to perform and observe the following covenants and
provisions, as if they applied to it in the same manner as they apply to the
Company.
7.1 Inspection. For so long as the Purchaser (or a Permitted
Holder, as defined in SECTION 14) holds at least One Hundred Thousand (100,000)
shares of the Series D Preferred (or Common Stock into which it has been
converted), as adjusted for Recapitalization Events, the Company will permit an
authorized representative of the Purchaser (or such Permitted Holder)
reasonable access during the normal business hours of the Company and upon
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reasonable notice (which notice in no event shall be provided less than three
business days in advance) to the books, records, personnel and properties of
the Company, for any reasonable purpose whatsoever related to the Purchaser's
(or such Permitted Holder's) investment in the Company. The Company will
furnish to Permitted Holder such other information as it from time to time may
reasonably request. For purposes of this SECTION 7.1, "Recapitalization
Events" means stock splits, stock dividends, recapitalizations,
reclassifications and similar events.
7.2 Accounting. The Company will maintain a system of accounting
established and administered in accordance with GAAP consistently applied, and
will set aside on its books such proper reserves as shall be required by GAAP.
In the event the services of the independent public accountants, so selected,
or any firm of independent public accountants hereafter employed by the Company
are terminated, the Company will promptly thereafter notify the Permitted
Holder and will request the firm of independent public accountants whose
services are terminated to deliver to the Permitted Holder a letter of such
firm setting forth the reasons for the termination of their services.
7.3 Monthly and Annual Financial Statements. For so long as any
Series D Preferred remains outstanding, the Company will deliver to the
Purchaser for so long as the Purchaser continues as a stockholder of the
Company:
(a) upon the written request of the Purchaser to the
Company (but in any event only so long as Purchaser owns greater than
100,000 shares of Series D Preferred), within 30 days after the end of
each month and each fiscal quarter an unaudited balance sheet of the
Company as at the end of each such month or fiscal quarter and
unaudited consolidated statements of income and of cash flow of the
Company for each such month or fiscal quarter compared to budget;
(b) within 90 days after the end of each fiscal year of
the Company, a balance sheet of the Company as at the end of such year
and statements of income and of cash flow of the Company for such
year, audited by such firm of independent public accountants of
national recognition that is appointed by the Company's Board of
Directors or an authorized committee thereof, and a report summarizing
the Company's development activities during the period, and a
certificate executed by the President confirming that during such
period the Company has been in compliance with the terms of this
Agreement;
(c) promptly upon receipt thereof, any written report
submitted to the Company by independent public accountants in
connection with an annual or interim audit of the books of the Company
and its Subsidiaries made by such accountants; and
(d) prior to the commencement of each fiscal year, a
reasonably detailed business plan for such fiscal year including
monthly operating expenses and profit and
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loss projections and a capital expenditure budget for the fiscal year
as approved by the Board of Directors, and promptly after any
revisions to such budget approved by the Board of Directors, a copy of
such revisions.
None of the foregoing provisions of this SECTION 7 nor any other
provision of this Agreement shall be in limitation of any rights which a holder
of Series D Preferred may have with respect to the books and records of the
Company, or to inspect its properties or discuss its affairs, finances and
accounts, under the laws of the jurisdiction of its incorporation.
7.4 Use of Proceeds. The Company shall use the proceeds from the
sale of Series D Preferred for purposes of expanding the development of the
Company's cancer pharmaceutical and research business and to fulfill general
corporate working capital purposes consistent therewith.
7.5 Confidentiality and Restrictions on Trading. Any confidential
or proprietary information concerning the Company provided to the Purchaser or
a representative thereof pursuant to this Agreement or otherwise, including
SECTIONS 7.1 and 7.3 hereof, shall be used by the Purchaser or any
representative or affiliate thereof solely in furtherance of its interests as
an investor in the Company, and the Purchaser or representative or affiliate
thereof shall (except as otherwise required by law to which the Purchaser or
representative or affiliate thereof may be subject) maintain the
confidentiality of all non-public information of the Company, provided that,
notwithstanding any other term of this Agreement to the contrary, (a) the
Company shall not be obligated to disclose any information, the disclosure of
which its Board of Directors or President believes in good faith could have a
material adverse effect on the Company or its stockholders, or both and (b) the
Purchaser shall be entitled to disclose such non-public information (i) as is
reasonably necessary to enforce their rights under this Agreement, (ii) on a
confidential basis to their attorneys and other professionals to the extent
reasonably necessary in connection with the Purchaser's investment in the
Company, and (iii) to any prospective purchaser of the Series D Preferred, or
any affiliate or partner of the Purchaser, provided that such third party
agrees to be bound by the confidentiality provisions hereof, and such third
party is not a competitor of the Company. No Purchaser or representative,
affiliate or transferee thereof shall purchase, sell or take any other action
relating to any capital stock or other securities issued by the Company if any
such purchase, sale or other action would be in violation of any federal or
state "xxxxxxx xxxxxxx" or other securities laws.
7.6 Right of First Refusal. So long as there are any shares of
Series D Preferred outstanding, the Company hereby grants to the Purchaser the
right of first refusal to purchase such amount of New Securities (as defined in
paragraph (a) below) that the Company may, from time to time, propose to sell
and issue that will enable the Purchaser, to maintain its percentage equity
interest in the Company. This right of first refusal shall be subject to the
following provisions:
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(a) "New Securities" shall mean any Common Stock,
preferred stock or other security which is convertible into or
exchangeable for shares of Common Stock of the Company or any option,
warrant or other right to acquire such security or Common Stock of the
Company; provided, however, that "New Securities" shall not include
(i) Common Stock issuable upon conversion of or with respect to the
Series D Preferred or upon conversion of any other convertible
security of the Company (including the Series A Preferred, the Series
B Preferred and the Series C Preferred) that is outstanding from time
to time, (ii) securities issued upon the exercise of any warrants or
options issued or granted by the Company that are referred to in or
contemplated by SECTION 3.2 or SECTION 8.3 of this Agreement, (iii)
637,625 shares of Common Stock to be issued by the Company at fair
market value, (iv) securities offered to the public in an underwritten
offering pursuant to a registration statement filed under the
Securities Act, (v) securities issued by the Company as consideration
for an acquisition of a portion or all of the equity or other
interests in another corporation, partnership, business entity or line
of business of another business entity by the Company by merger,
reorganization, stock- for-equity or stock-for-assets exchange or any
other similar transaction and (vi) any option issued pursuant to a
plan as permitted by and subject to SECTION 8.3 below.
(b) If the Company proposes to issue New Securities, it
shall give the Purchaser written notice (the "Rights Notice") of its
intention, describing the New Securities, the price, and the general
terms upon which the Company proposes to issue them. The Purchaser
shall have 15 days from the date of mailing of the Rights Notice to
agree to purchase (i) all or any part of its Pro-Rata Share (as
defined in subsection (d) below) of such New Securities and (ii) all
or any part of the Pro-Rata Share of such New Securities of all other
Purchasers to the extent that such other Purchasers do not elect to
purchase their respective full Pro- Rata Share, in each case for the
price and upon the general terms specified in the Rights Notice by
giving written notice to the Company setting forth the quantity of New
Securities it elects to purchase. If the Purchasers who elect to
purchase their full Pro-Rata Share also elect to purchase all or a
portion of the Pro- Rata Share of such New Securities of other
Purchasers who do not elect to purchase 100% of their respective
Pro-Rata Share (such other Purchasers referred to as
"Non-Participating Purchasers"), then such Purchasers shall be
entitled to purchase, in addition to their Pro-Rata Share, a
percentage of the Pro-Rata Shares of the Non-Participating Purchasers
determined by the fraction the numerator of which is the number of
shares of Common Stock then held, together with the number of shares
of Common Stock issuable upon conversion of the Series D Preferred
then held by such Purchaser as of the date of the Rights Notice, and
the denominator of which is the sum of the number of shares of Common
Stock then held, plus the number of shares of Common Stock issuable
upon the conversion of Series D Preferred then held, by all Purchasers
electing to purchase more than their Pro-Rata Share. The Purchaser
who agrees to purchase New Securities shall deliver the purchase price
for the New Securities and otherwise comply with the general terms of
sale set forth in the Rights Notice on the thirtieth (30th) day after
the date of mailing of the Rights Notice (or such other date as agreed
to by the
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Company and such Purchaser) and the Company shall deliver duly
registered share certificates for the New Securities in exchange
therefor.
(c) If the Purchaser fails to exercise in full the right
of first refusal within the period or periods specified in paragraph
(b) hereof, the Company shall have 90 days after the date of mailing
of the Rights Notice to sell the unsold New Securities and the balance
of the New Securities not subject to the Right of First Refusal
provided for herein at a price and upon general terms no more
favorable to the purchaser thereof than specified in the Rights
Notice. If the Company has not sold the New Securities within said 90
day period the Company shall not thereafter issue or sell any New
Securities without first offering such securities to the Purchaser in
the manner provided above.
(d) A Purchaser's "Pro-Rata Share" shall be the
percentage determined by a fraction the numerator of which is the
number of shares of Common Stock then held, together with the number
of shares of Common Stock issuable upon conversion of the Series D
Preferred then held, by such Purchaser as of the date of the Rights
Notice (as defined in paragraph (b) above) and the denominator of
which is the sum of the total number of shares of Common Stock then
outstanding, together with the number of shares of Common Stock
issuable upon conversion of convertible securities of the Company then
outstanding, all as of such date.
7.7 Restrictions on Transfer. The Purchaser (and each transferee,
successor or assign of a Purchaser) further agrees that (a) it will not offer,
sell or otherwise dispose of the Series D Preferred (or the Common Stock in to
which the Series D Preferred may be converted), unless such offer, sale or
other disposition is effected in accordance with the terms of this Agreement
and the Registration Rights Agreement and such offer, sale or other disposition
is (i) registered under the Securities Act and applicable state securities
laws, (ii) pursuant to Rule 144 of the Securities Act of 1933, or (iii) in
compliance with an opinion of counsel to such Purchaser delivered to the
Company and reasonably acceptable to the Company and its counsel to the effect
that such offer, sale or other disposition thereof does not violate the
Securities Act or applicable state securities laws, and (b) the certificate(s)
representing the Series D Preferred (and any Common Stock into which the Series
D Preferred maybe converted) shall bear legends in substantially the following
form:
THE TRANSFER AND VOTING OF THESE SHARES IS SUBJECT TO THE TERMS OF A
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT DATED AS OF NOVEMBER 11, 1996
AND A PREFERRED STOCKHOLDERS' SALES AGREEMENT DATED AS OF NOVEMBER 11, 1996,
COPIES OF WHICH ARE AVAILABLE FOR INSPECTION AT THE OFFICES OF THE COMPANY.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED,
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UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OF 1933 AND SUCH
APPLICABLE STATE LAW OR, IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE
ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, DOES NOT VIOLATE THE
PROVISIONS THEREOF OR UNLESS SOLD PURSUANT TO RULE 144 OF THE SECURITIES ACT OF
1933.
Upon request of the Purchaser or other person who in accordance with
the provisions of this SECTION 7.7 becomes a holder of Series D Preferred (or
the Common Stock into which the Series D Preferred has been converted), the
Company shall remove the legend set forth in the second paragraph above from
the certificates evidencing such Series D Preferred or Common Stock or issue to
such holder new certificates evidencing such Series D Preferred or Common Stock
free of such legend, if such request is accompanied by an opinion of counsel,
reasonably satisfactory to the Company and its counsel, to the effect that such
Series D Preferred or Common Stock, as applicable, is not required by the
Securities Act or other applicable law to continue to bear the legend or a
legend similar thereto.
7.8 Transfer Instructions. The Purchaser agrees that the Company
may provide for appropriate transfer instructions to implement the provisions
of SECTION 7.7 hereof.
7.9 Operation of Business. For so long as any shares of the
Series D Preferred remain outstanding, the Company shall comply with each of
the following covenants, and will cause each Subsidiary, if and when such
Subsidiary exists, to comply with each of the following covenants, as if they
applied to it in the same manner as they apply to the Company.
(a) Compliance with Laws, Etc. The Company shall comply
with all laws, rules, regulations, judgments, orders and decrees of
any governmental or regulatory authority, the violation of which could
have a material adverse effect on the business, assets or properties
of the Company and with all material contracts and agreements to which
it is a party or shall become a party and shall perform all material
obligations which it has or shall incur.
(b) Preservation of Corporate Existence and Property.
The Company shall preserve, protect and maintain: (i) its corporate
existence and good standing in its jurisdiction of incorporation, (ii)
its rights, franchises and privileges, and (iii) all of its properties
necessary or useful in the proper conduct of its business in good
working order and condition, with the exception of (y) ordinary wear
and tear, and (z) casualty losses covered by insurance, allowing for
reasonable deductibles.
(c) Insurance. The Company shall maintain or cause to be
maintained, with financially sound and reputable insurers, insurance
with respect to the properties and business of the Company, against
loss or damage of the kinds customarily insured against by
corporations of established reputation and similar size engaged in the
same or similar business, in adequate amounts.
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(d) Payment of Indebtedness. The Company shall pay or
cause to be paid the principal of, and the interest and premium, if
any, on all indebtedness heretofore or hereafter incurred or assumed
by the Company when and as the same shall become due and payable,
unless such indebtedness shall be renewed or extended, in which case
such payments shall be made in accordance with the terms of such
renewal or extension.
(e) Further Assurance. The Company shall cooperate with
the Purchaser and shall execute and deliver all such further
instruments and documents and do all such further acts and things as
the Company may be reasonably requested to do from time to time by the
Purchaser in order to satisfy the conditions and carry out the
provisions and purposes of this Agreement and the Registration Rights
Agreement.
(f) Section 305. The Company shall not enter into any
transaction which would result in the dividend on the Purchaser's
shares under Section 305 of the Code (or any successor provision)
other than dividends accruing pursuant to the Certificate of
Incorporation, as amended from time to time.
(g) U.S. Real Property Holding Corporation. The Company
will not be a "United States real property holding corporation," as
defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service and upon
written request, will provide to any holder of Preferred Stock a
statement to the effect informing such holder whether its interest in
the Company constitutes a U.S. real property interest.
7.10 Reservation of Common Stock. For so long as any shares of the
Series D Preferred remain outstanding, the Company shall increase the
authorized amount and maintain in reserve that number of shares of Common Stock
necessary to accommodate the conversion into Common Stock of all issued and
outstanding shares of the Series D Preferred.
7.11 Public Announcements. The Company shall not make any public
announcement or disclosure relating to any Purchaser's participation in the
transactions contemplated by this Agreement or the relationship established
hereby with any Purchaser unless such announcement or disclosure is (i) in the
judgment of the Company after consultation with its legal counsel, required by
applicable law or regulation or (ii) approved by the Purchaser, which approval
shall not be unreasonably withheld.
7.12 New Developments. Subject to the other contractual
obligations of such consultants, the Company will cause all technological
developments, patentable or unpatentable inventions, discoveries or
improvements by its officers, employees or consultants to be documented in
accordance with appropriate professional standards, cause all officers,
employees and consultants to execute appropriate patent and copyright
assignment agreements to the Company, as the case may be, and, where possible
and appropriate, cause all officers, employees and consultants to file and
execute United States and foreign patent or copyright
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applications relating to and protecting such developments on behalf of the
Company. The Company will cause each officer, key employee and key consultant
now or hereafter employed to execute and deliver an Employment Provision
Agreement in the form and substance of Exhibit 3.12(a) attached hereto, or as
otherwise approved by the Board of Directors of the Company.
7.13 Rule 144A Information. The Company covenants and agrees that,
at all times during which the Company is neither subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, nor exempt from
reporting pursuant to Rule 12(g)3-2(b) under the Exchange Act, it will provide
in written form (as promptly as practicable and in any event within 15 business
days), upon the written request of any holder of the Series D Preferred or a
prospective buyer of such shares or the Conversion Shares, all information
required by Rule 144A(d)(4)(i) of the General Regulations promulgated by the
Commission under the Securities Act ("Rule 144A Information"). The Company
further covenants, upon written request, to cooperate with and assist any
holder of the Series D Preferred or any member of the National Association of
Securities Dealers, Inc. system for Private Offerings Resales and Trading
through Automated Linkage ("PORTAL") in applying to designate and thereafter
maintain the eligibility of such shares or the Conversion Shares for trading
through PORTAL. The Company's obligations under this SECTION 7.14 shall at all
times be contingent upon the relevant holder of the Series D Preferred
obtaining from a prospective purchaser an agreement to take all reasonable
precautions to safeguard the Rule 144A Information from disclosure to anyone
other than a Person who will assist such purchaser in evaluating the purchase
of such securities.
7.14 Founders' Sales Agreement. Except as otherwise prohibited by
law, the Company agrees that it shall not permit any transfer of shares of
capital stock in violation of the Founders' Sales Agreement.
7.15 Preferred Stockholders' Sales Agreement. Except as otherwise
prohibited by law, the Company agrees that it shall not permit any transfer of
shares of capital stock in violation of the Preferred Stockholders' Sales
Agreement.
8. Additional Covenants of the Company.
8.1 Conduct of Business in the Ordinary Course. From the date of
this Agreement until the Closing, except with the prior approval of the
Purchaser, the Company will operate the business of the Company in the ordinary
course.
8.2 Reasonable Efforts. From the date of this Agreement until the
Closing, the Company shall use all reasonable efforts to obtain all necessary
consents and take all actions necessary for the consummation of the
transactions contemplated hereby.
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9. Termination of Agreement and Survival of Representations,
Warranties and Covenants.
(a) Termination. This Agreement may be terminated prior
to Closing by the Company or the Purchaser upon written notice to the
other party:
(i) At any time by mutual written agreement of
all the parties hereto;
(ii) At any time after November 11, 1996, by any
party if the Closing shall not have occurred on or prior to
such date;
(iii) By the Company if any representation or
warranty of the Purchaser contained in this Agreement or in
any certificate or other document executed and delivered by
the Purchaser to the Company pursuant to this Agreement is or
becomes untrue or breached in any material respect or if the
Purchaser fails to comply in any material respect with any
covenant or agreement contained herein, and any such
misrepresentation, breach or noncompliance is not cured,
waived, or eliminated before Closing;
(iv) By the Purchaser if any representation or
warranty of the Company contained in this Agreement or in any
certificate or other document executed and delivered by the
Company pursuant to this Agreement is or becomes untrue or
breached in any material respect or if the Company fails to
comply in any material respect with any covenant or agreement
contained herein, and any such misrepresentation, breach or
noncompliance is not cured, waived, or eliminated before
Closing;
(v) On the Closing Date by the Purchaser if the
conditions set forth in SECTION 5 have not been satisfied; or
(vi) On the Closing Date by the Company if the
conditions stated in SECTION 6 have not been satisfied.
In the event this Agreement is terminated pursuant to
subparagraph (iii) or (iv) above, the Purchaser and the Company shall
be entitled to pursue, exercise and enforce any and all remedies,
rights, powers and privileges available at law or in equity and under
this Agreement.
(b) Survival of Representations, Warranties and
Covenants. Except as otherwise provided in this Agreement, all
covenants made hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall survive the Closing and shall
continue in full force and effect thereafter. Any representation or
warranty the breach or inaccuracy of which involves fraud on the part
of the Company or the
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Purchaser shall survive the Closing and shall continue in full force
and effect thereafter. All other representations and warranties, as
certified to by the Company pursuant to the certificate required to be
delivered under SECTION 5.4 and by the Purchaser pursuant to SECTION
6.1 of this Agreement, made hereunder or pursuant hereto or in
connection with the transactions contemplated hereby shall survive the
Closing until the expiration of the applicable statute of limitations
and notice of any claim based on a breach of any such representation
or warranty must be given prior to the expiration of such statute of
limitations.
10. Indemnification. The Company shall indemnify and hold
harmless the Purchaser against and from any losses, claims, damages or
liabilities, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (a) the falsity or
incorrectness as of the Closing Date of any representation or warranty of the
Company contained in or made pursuant to SECTION 3 hereof, or (b) the existence
of any condition, event or fact constituting, or which with notice or passage
of time, or both, would constitute a default in the observance of any of the
Company's undertakings or covenants hereunder or under any of the documents
executed in connection herewith. The Company shall also pay all reasonable
attorney's fees and costs and court costs incurred by the Purchaser in
enforcing the indemnification provided for in this SECTION 10.
11. Notices. All notices, requests, consents and other
communications provided for herein (except as stated in the last sentence of
this SECTION 11) shall be in writing, and shall be mailed by certified mail,
postage prepaid, delivered by Federal Express or similar overnight courier, or
personally delivered, as follows:
(a) If to the Company:
ILEX Oncology, Inc.
00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Love
with a copy to:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
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(b) If to the Purchaser to the person
and address set forth on Exhibit A
or such other addresses as each of the parties hereto may provide from time to
time in writing to the other parties. For purposes of computing the time
periods set forth in SECTION 7, the date of mailing shall be deemed to be the
date of delivery. The financial statements and other reports required by
SECTION 7 may be mailed by first-class regular mail.
12. Modifications; Waiver. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated (a) prior to
the Closing Date unless effected by a writing executed and delivered by the
parties hereto and (b) after the Closing Date unless effected by a writing
executed and delivered by the Company and by holders representing not less than
66-2/3% of the aggregate number of issued and outstanding shares of Series D
Preferred and shares of Common Stock issued upon the conversion of Series D
Preferred, provided that this SECTION 12 may not be modified or amended without
the written consent of all the holders of Series D Preferred and the Company,
and provided further that in any event, no amendment or change may be made to
the terms hereof that imposes additional obligations or restrictions upon a
party without its written consent.
13. Entire Agreement. This Agreement, including the Schedules and
Exhibits hereto, including the Registration Rights Agreement, the Amended and
Restated Founders' Sales Agreement and the Amended and Restated Preferred
Stockholders' Sales Agreement, contains the entire agreements between the
parties with respect to the transactions contemplated hereby, and supersedes
all negotiations, agreements, representations, warranties, commitments, whether
in writing or oral, prior to the date hereof and shall, except as otherwise
expressly provided herein and therein, not affect the rights of the parties
under the Series B Purchase Agreement or the Series C Purchase Agreement.
14. Application to Successor Holders. The rights of the Purchaser
set forth in SECTIONS 7.1, 7.3 AND 7.6 shall inure to the benefit of any person
who becomes a holder of Series D Preferred sold pursuant to this Agreement (or
of Common Stock issued upon conversion of such Series D Preferred) in a
transfer made in accordance with the provisions of SECTION 7.7 (a "Permitted
Holder") hereof as though such holder were a Purchaser, and the obligations of
the Purchaser set forth in SECTION 7.5 shall be binding on any person who after
the date hereof becomes a holder of shares of Series D Preferred sold pursuant
to this Agreement as though such holder were a Purchaser.
15. Execution and Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed an original, and such counterparts together shall constitute one
instrument.
16. Governing Law and Severability. This Agreement shall be
governed by the laws of the State of Texas as applied to agreements entered
into and to be performed entirely within
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the State of Texas. In the event any provision of this Agreement or the
application of such provision to any party shall be held by a court of
competent jurisdiction to be contrary to law, the remaining provisions of this
Agreement shall remain in full force and effect.
17. Headings. The descriptive headings of the Sections hereof and
the Schedules and Exhibits hereto are inserted for convenience only and do not
constitute a part of this Agreement.
18. Waivers And Consents. Any waiver or consent hereunder shall
be effective only in the specific instance and for the purpose for which it was
given and shall not constitute a continuing waiver or consent. Notwithstanding
this Agreement, any term or condition hereof, or the consummation of the
transactions contemplated hereby, the Purchaser does not waive or relinquish
any right it may have or may acquire against the Company or any of its
Affiliates or agents in connection with the acquisition of the Series D
Preferred by such Purchaser, or the ownership thereof. All such rights shall
remain unimpaired by the execution of this Agreement and the consummation of
the transactions contemplated hereby.
19. Severability. In the event that any court of competent
jurisdiction shall determine that any provision, or any portion thereof,
contained in this Agreement shall be unenforceable in any respect, then such
provision shall be deemed limited to the extent that such court deems it
enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall deem any such provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Agreement shall nevertheless
remain in full force and effect.
20. No Waiver Of Rights, Powers and Remedies. Except as expressly
provided in this Agreement, no failure or delay by a party hereto in exercising
any right, power or remedy under this Agreement, and no course of dealing
between the parties hereto, shall operate as a waiver of any such right, power
or remedy of the party. No single or partial exercise of any right, power or
remedy under this Agreement by a party hereto, nor any abandonment or
discontinuance of steps to enforce any such right, power or remedy, shall
preclude such party from any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. The election of any remedy by a
party hereto shall not constitute a waiver of the right of such party to pursue
other available remedies. No notice to or demand on a party not expressly
required under this Agreement shall entitle the party receiving such notice or
demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.
21. Reliance. The parties hereto agree that, notwithstanding any
access to information by any party or any right of a party to this Agreement to
investigate the affairs of any other party to this Agreement, the party having
such access and right to investigate shall have the right to rely fully upon
the representations and warranties of the other party expressly contained in
this Agreement and on the accuracy of any Schedule, Exhibit or other document
attached hereto or referred to herein or delivered by such other party or
pursuant to this Agreement. The
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Purchaser acknowledges that, based on information provided by the Company, it
has made its own analysis and decision regarding the transactions contemplated
hereby, including the execution of this Agreement.
22. Costs, Expenses and Taxes. Each of the parties hereto shall
bear such party's own costs and expenses in connection with this Agreement and
the transactions contemplated hereby.
23. Definitions. The following terms shall have the respective
meanings set forth below whenever used in this Agreement:
"Affiliate" has the meaning ascribed to that term in Rule 12b-2 under
the Exchange Act or any successor rule, and in any event with respect to the
Company shall mean any Director, officer or stockholder thereof.
"Knowledge" or "known" shall mean or refer to the actual knowledge of
the Company, its officers, directors and key employees after reasonable
diligence.
"Subsidiary" or "Subsidiaries" shall mean any corporation,
partnership, trust or other entity of which the Company and/or any of its other
Subsidiaries directly or indirectly owns at the time a majority of the
outstanding shares of any class of equity security of such corporation,
partnership, trust or other entity.
[signatures on next page]
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This Convertible Preferred Stock Purchase Agreement is hereby executed
as of the date first above written.
ILEX ONCOLOGY, INC.
By: /s/ XXXXXXX X. LOVE
----------------------------------------
Xxxxxxx X. Love, President
PURCHASER:
XXXXXXX & XXXXXXX DEVELOPMENT CORPORATION
By: /s/
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
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EXHIBIT A
PURCHASER
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