1
EXHIBIT 10.3
SERIES E PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES E PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of 26 April, 1996 by and between RiboGene, Inc., a California
corporation (the "COMPANY"), and Xxxxxx Laboratories, an Illinois Corporation
(the "Purchaser").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Preferred Stock.
1.1 Authorization. The Company shall adopt and file with
the Secretary of State of the State of California on or before the Closing (as
defined below) the Amendment to Articles of Incorporation in the form attached
hereto as Exhibit A (such amendment and the Company's existing Articles of
Incorporation, as amended, are herein referred to jointly as the "Restated
Articles").
1.2 Sale and Issuance of Series E Preferred Stock. Subject
to the terms and conditions of this Agreement, the Purchaser agrees to purchase
at the Closing (as defined below) and the Company agrees to sell and issue to
the Purchaser at the Closing 1,555,556 shares of the Company's Series E
Preferred Stock at a purchase price of $2.25 per share. The shares of Series E
Preferred Stock issued to the Purchaser pursuant to this Agreement shall be
hereinafter referred to as the "Stock."
2. Closing and Delivery.
2.1 Closing Date. The closing of the purchase and sale of
the Stock (the "Closing") shall take place at the offices of Venture Law Group,
0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx, at 1:00 p.m., on May 1, 1996, or
at such other time and place as the Company and the Purchaser mutually agree
upon, orally or in writing (the date of the Closing is hereinafter referred to
as the "Closing Date").
2.2 Delivery. At the Closing, the Company will deliver to
the Purchaser a certificate, registered in the Purchaser's name, representing
the Stock to be purchased in the Closing by the Purchaser. Such delivery shall
be against payment of the purchase price therefor, by check payable to the
Company, by wire transfer to the Company's bank account, or against
cancellation of indebtedness.
3. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Purchaser that, except as set forth on a
Schedule of Exceptions attached hereto as Exhibit B, specifically identifying
the relevant subsection hereof, which exceptions shall be deemed to be
representations and warranties as if made hereunder.
3.1 Organization, Good Standing and Qualification. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of California and has all requisite corporate power
and authority to carry on its business as now conducted and as proposed to be
conducted. The Company is duly qualified to transact business
2
and is in good standing in each jurisdiction in which the failure so to qualify
would have a material adverse effect on its business or properties.
3.2 Capitalization. The authorized capital of the Company
consists, or will consist, immediately prior to the Closing, of:
(i) Preferred Stock. 12,558,491 shares of Preferred Stock,
of which (A) 138,269 shares have been designated Series A Preferred Stock,
138,268 of which are issued and outstanding, (B) 800,000 shares have been
designated Series B Preferred Stock, 580,061 of which are issued and
outstanding, (C) 2,950,000 shares have been designated Series C Preferred
Stock, 2,805,519 of which are issued and outstanding, (D) 270,222 shares have
been designated Series D Preferred Stock, all of which are issued and
outstanding, and (E) 8,400,000 shares have been designated Series E Preferred
Stock, 5,647,814 of which are issued and outstanding. The rights, privileges
and preferences of the Series A, Series B, Series C, Series D and Series E
Preferred Stock (collectively, the "Preferred") are as stated in the Company's
Articles of Incorporation, as amended.
(ii) Common Stock. 25,000,000 shares of Common Stock, of
which 743,232 shares are issued and outstanding.
(iii) Except for (a) the conversion privileges of the
Preferred, (b) the warrants to purchase up to 21,546 shares of Series B
Preferred Stock, 15,000 shares of Series C Preferred Stock, and 17,777 shares
of Series E Preferred Stock each issued to Dominion Ventures, Inc. (and the
conversion privileges of the Preferred Stock issuable upon exercise thereof),
(c) the warrants to purchase up to an aggregate of 1,313,000 shares of Common
Stock issued to Hyline Laboratories, Inc. and another entity formerly related
thereto, (d) warrants for the purchase of up to 33,333 shares of Series E
Preferred Stock issued to Silicon Valley Bank, (e) warrants for the purchase of
up to 52,850 shares of Common Stock issued to SBC Capital Markets and an
individual affiliated therewith, and (f) the outstanding options issued under
the Company's equity incentive plan(s) described below, there are no
outstanding options, warrants, rights (including conversion or preemptive
rights) or agreements, orally or in writing, for the purchase or acquisition
from the Company of any shares of its capital stock. The Company has from time
to time reserved up to an aggregate of 2,735,000 shares of Common Stock for
issuance, at the discretion of the Board of Directors, to officers, directors,
employees and consultants pursuant to the Company's 1993 Stock Plan, of which
(a) 448,292 shares are currently outstanding pursuant to stock purchases or
stock option exercises, (b) 1,910,691 shares are currently subject to
outstanding stock options or committed for issuance pursuant to pending stock
option grants, and (c) 375,817 shares are reserved for future stock option or
purchase grants. The Company has also reserved 4,000 shares of Common Stock for
issuance upon the exercise of a single outstanding stock option pursuant to the
Company's 1990 Stock Option Plan.
3.3 Subsidiaries. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity.
3.4 Authorization. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of the
-2-
3
Agreement, the Ninth Amended and Restated Rights Agreement in substantially the
form attached hereto at Exhibit C (the "Rights Agreement"), and the issuance of
the Stock and the Common Stock issuable upon conversion thereof (collectively,
the "Securities"), the performance of all obligations of the Company hereunder
and thereunder has been taken or will be taken prior to the Closing, and the
Agreement, the Rights Agreement constitute valid and legally binding
obligations of the Company, enforceable in accordance with their respective
terms.
3.5 Valid Issuance of Securities.
(a) The Stock, when issued, sold and delivered in
accordance with the terms hereof for the consideration expressed herein, will
be duly and validly issued, fully-paid and nonassessable. Based in part upon
the representations of the Purchaser in this Agreement and subject to the
provisions of Section 3.6 below, the Securities will be issued in compliance
with all applicable federal and state securities laws. The Common Stock
issuable upon conversion of the Preferred has been duly and validly reserved
for issuance, and upon issuance in accordance with the terms of the Restated
Articles, shall be duly and validly issued, fully paid and non-assessable and
will be issued in compliance with all applicable federal and state securities
laws.
(b) The outstanding shares of Common Stock and Preferred
Stock are all duly and validly authorized and issued, fully-paid and
nonassessable, and were issued in compliance with all applicable federal and
state securities laws.
3.6 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 the Agreement, except for the federal and state securities law
filings to be made by the Company as set forth on the Schedule of Exceptions
attached hereto as Exhibit B.
3.7 Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company that
questions the validity of the Agreement, or the right of the Company to enter
into the Agreement, or to consummate the transactions contemplated thereby, or
that might result, either individually or in the aggregate, in any material
adverse changes in the assets, condition, affairs or prospects of the Company,
financially or otherwise, or any change in the current equity ownership of the
Company, nor is the Company aware that there is any basis for the foregoing.
The foregoing includes, without limitation, actions pending or threatened (or
any basis therefor known to the Company) involving the prior employment of any
of the Company's employees, their use in connection with the Company's
business of any information or techniques allegedly proprietary to any of their
former employers, or their obligations under any agreements with prior
employers. The Company is not a party or subject to the provisions of any
order, writ, injunction, judgment or degree of any court or government agency
or instrumentality. There is no action, suit, proceeding or investigation by
the Company currently pending or which the Company intends to initiate.
4
3.8 Employee Agreement. Each employee and officer of the Company has
executed an agreement with the Company regarding confidentiality and
proprietary information. The Company, after reasonable investigation, is not
aware that any of its employees are in violation thereof, and the Company will
use its best efforts to prevent any such violation and to maintain and enforce
such agreement with its employees.
3.9 Patents and Trademarks. As of the Closing, the Company has or
will have sufficient title and ownership of all patents, trademarks, service
marks, trade names, copyrights, trade secrets, information, proprietary rights
and processes necessary for its business as now conducted and as proposed to be
conducted without any conflict with or infringement of the rights of others.
There are no outstanding options, licenses, or agreements of any kind relating
to the foregoing, nor is the Company bound by or a party to any options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information,
proprietary rights and processes of any other person or entity. The Company has
not received any communications alleging that the Company has violated or, by
conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere
with the use of his best efforts to promote the interests of the Company or
that would conflict with the Company's business as proposed to be conducted.
Neither the execution nor delivery of the Agreement, nor the carrying on of the
Company's business as proposed, will, to the Company's knowledge, conflict with
or result in a breach of the terms, conditions or provisions of, or constitute
a default under, any contract, covenant or instrument under which any of such
employees is now obligated. The Company does not believe it is or will be
necessary to utilize any inventions of any of its employees (or people it
currently intends to hire) made prior to their employment by the Company.
3.10 Compliance with Other Instruments.
(a) The Company is not in violation or default of any
provisions of its Articles of Incorporation, as amended, or Bylaws or of any
instrument, judgment, order, writ, decree or contract to which it is a party or
by which it is bound or, to its knowledge, of any provision of federal or state
statute, rule or regulation applicable to the Company. The execution, delivery
and performance of the Agreement, and the consummation of the transactions
contemplated hereby and thereby, 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 which results in the creation of any lien,
charge or encumbrance upon any assets of the Company.
(b) The Company has avoided every condition, and has not
performed any act, the occurrence of which would result in the Company's loss
of any right granted under any license, distribution or other agreement.
-4-
5
3.11 Agreements: Action
(a) Except for agreements explicitly contemplated hereby, there
are no agreements, understandings or proposed transactions between the Company
and any of its officers, directors, affiliates, or any affiliate thereof.
(b) There are no agreements, understandings, instruments,
contracts or proposed transactions to which the Company is a party or by
which it is bound that involve (i) obligations of, or payments to the Company
in excess of, $50,000, or (ii) the license of any patent, copyright, trade
secret or other proprietary right to or from the Company.
(c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or
series of its capital stock, (ii) incurred indebtedness for money borrowed or
incurred any other liabilities individually in excess of $10,000 or in excess
of $50,000 in the aggregate, including guarantees for such amounts, (iii) made
any loans or advances to any person, other than ordinary advances for travel
expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets
or rights, other than the sale of its inventory in the ordinary course of
business.
(d) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Articles of Incorporation, as amended, or Bylaws, which adversely affects its
business as now conducted or as proposed to be conducted, its properties or its
financial condition.
(e) The Company has not engaged in the past three (3) months in
any discussion (i) with any representative of any corporation or corporations
regarding the merger of the Company with or into any such corporation or
corporations, (ii) with any corporation, partnership, association or other
business entity or any individual regarding the sale, conveyance or disposition
of all or substantially all of the assets of the Company or a transaction or
series of related transactions in which more than fifty percent (50%) of the
voting power of the Company is disposed of, or (iii) regarding any other form
of liquidation, dissolution or winding up of the Company.
3.12 Disclosure. The Company has fully provided the Purchaser with all
the information which the Purchaser has requested for deciding whether to
acquire the Stock and Warrants and all information which the Company believes is
reasonably necessary to enable the Purchaser to make such decision, including
the latest draft of the Company's Business Plan (the "Business Plan"). No
representation or warranty of the Company contained in the Agreement and the
Exhibits attached hereto, any certificate furnished or to be furnished to the
Purchaser at the Closing, or the Business Plan (when read together) contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made. To the extent the
Business Plan was prepared by management of the Company, the Business Plan and
the financial projections contained in the Business Plan were prepared in good
faith; however, the Company does not warrant that it will achieve such
financial projections.
-5-
6
3.13 Rights of Registration and First Offer. Except as contemplated
on the Schedule of Exceptions, the Company has not granted or agreed to grant
any registration rights, including piggyback rights, to any person or entity.
3.14 Corporate Documents. The Articles of Incorporation, as
amended, and Bylaws of the Company are in the form provided to special counsel
for the Purchaser.
3.15 Title to Property and Assets. The Company owns its property
and assets free and clear of all mortgages, liens,loans and encumbrances,
except such encumbrances and liens which arise in the ordinary course of
business and do not materially impair the Company's ownership or use of such
property or assets. With respect to the property and assets it leases, the
Company is in compliance with such leases and, to the best of its knowledge,
holds a valid leasehold interest free of any liens, claims or encumbrances.
3.16 Financial Statements. The Company has delivered to the
Purchaser or counsel to the Purchaser its unaudited financial statements
(balance sheet and profit and loss statement) as at December 31, 1995 (the
"Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated and with each other, except that
unaudited Financial Statements may not contain all footnotes required by
generally accepted accounting principles. The Financial Statements fairly
present the financial condition and operating results of the Company as of the
dates, and for the periods, indicated therein, subject to normal year-end audit
adjustments, which are neither individually nor in the aggregate material.
Except as set forth in the Financial Statements, the Company has no material
liabilities, contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business subsequent to December 31, 1995, and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected in the Financial Statements, which, in both cases, individually or in
the aggregate, are not material to the financial condition or operating results
of the Company. The Company maintains and will continue to maintain a standard
system of accounting established and administered in accordance with generally
accepted accounting principles.
3.17 Employee Benefit Plans. The Company does not have any Employee
Benefit Plan as defined in the Employee Retirement Income Security Act of 1974.
3.18 Tax Returns and Payments. The Company has filed all tax
returns and reports as required by law. These returns and reports are true and
correct in all material respects. The Company has paid all taxes and other
assessments due, except those contested by it in good faith which are listed in
the Schedule of Exceptions.
3.19 Insurance. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed.
3.20 Labor Agreements and Actions. The Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contracts, commitments or arrangement with
any labor union, and no labor union has
7
requested or, to the knowledge of the Company, has sought to represent any of
the employees, representatives or agents of the Company. There is no strike or
other labor dispute involving the Company pending, or to the knowledge of the
Company threatened, which could have a material adverse effect on the assets,
properties, financial condition, operating results, or business of the Company
(as such business is presently conducted and as it is proposed to be
conducted), nor is the Company aware of any labor organization activity
involving its employees. The Company is not aware that any officer or key
employee, or that any group of key employees, intends to terminate their
employment with the Company, nor does the Company have a present intention to
terminate the employment of any of the foregoing. The employment of each
officer and employee of the Company is terminable at the will of the Company.
4. Representations and Warranties of the Purchaser. The Purchaser
hereby severally and not jointly represents and warrants to the Company that:
4.1 Authorization. This Agreement constitutes its valid and
legally binding obligation, enforceable in accordance with its terms.
4.2 Purchase Entirely for Own Account. This Agreement is
made with the Purchaser in reliance upon the Purchaser's representation to the
Company, which by the Purchaser's execution of this Agreement the Purchaser
hereby confirms, that the Securities will be acquired for investment for the
Purchaser'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 Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, the Purchaser further
represents that the Purchaser does not presently have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities. The Purchaser represents that it has full power and authority to
enter into this Agreement.
4.3 Disclosure of Information. The Purchaser believes it
has received all the information it considers necessary or appropriate for
deciding whether to acquire the Securities. The Purchaser further represents
that it has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the offering of the Securities.
The foregoing, however, does not limit or modify the representations and
warranties of the Company in Section 3 of this Agreement or the right of the
Purchaser to rely thereon.
4.4 Investment Experience. The Purchaser is acquiring the
Securities for investment for the Purchaser's own account, not as a nominee or
agent, and not with the view to, or for resale in connection with, any
distribution thereof. The Purchaser understands that the Securities have not
been, and will not be, registered under the Securities Act of 1933, as amended
(the "Securities Act") by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of the
Purchaser's representations as expressed herein. The Purchaser has not been
formed for the specific purpose of acquiring the Securities.
4.5 Restricted Securities. The Purchaser understands that
the Securities are characterized as "restricted securities" under the federal
securities laws inasmuch as they are
-7-
8
being acquired from the Company in a transaction not involving a public offering
and that under such laws and applicable regulations such Securities may be
resold without registration under the Securities Act, only in certain limited
circumstances. In this connection, the Purchaser represents that it is familiar
with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.
4.6 Further Limitations on Disposition. Without in any way limiting
the representations set forth above, the Purchaser severally and not jointly
further agrees not to make any disposition of all or any portion of the
Securities unless and until:
(a) There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
(b) (i) The Purchaser shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii)
if reasonably requested by the Company, in the event that such transfer is not
made pursuant to a registration statement under the Securities Act, the
Purchaser shall have furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company, that such disposition will not require
registration under the Securities Act. It is agreed that the Company will not
require opinions of counsel for transactions made pursuant to Rule 144 except
in unusual circumstances.
(c) Notwithstanding the provisions of paragraphs (a) and (b)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by the Purchaser to a shareholder or partner of the Purchaser,
if the transferee or transferees agree in writing to be subject to the terms
hereof to the same extent as if they were the Purchaser hereunder.
4.7 Legends. It is understood that the Securities, and any securities
issued in respect thereof or exchange therefor, may bear one or all of the
following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE
144 OF SUCH ACT."
(b) Any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations.
(c) Any legend required by the Blue Sky laws of any other
state to the extent such laws are applicable to the shares represented by the
certificate so legended.
4.8 U.S. Persons. The Purchaser is a United States person.
-8-
9
5. California Commissioner of Corporations.
5.1 Corporate Securities Law. THE SALE OF THE SECURITIES
THAT IS THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA. THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH
SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF
SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF
THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT
ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED UNLESS THE
SALE IS SO EXEMPT.
6. Conditions of Purchaser Obligations at Closing. The obligations
of the Purchaser to the Company under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions:
6.1 Representations and Warranties. The representations
and warranties of the Company contained in Section 3 shall be true on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the date of such Closing.
6.2. Performance. The Company shall have performed and
complied with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.
6.3 Compliance Certificate. The Chief Executive Officer of
the Company shall deliver to the Purchaser at the Closing a certificate
certifying that the conditions specified in Sections 6.1 and 6.2 have been
fulfilled.
6.4 Qualifications. The Commissioner of Corporations of
the State of California shall have issued a permit qualifying the offer and
sale of the Stock to the Purchaser pursuant to this Agreement, or such offer
and sale shall be exempt from such qualification under the California
Corporate Securities Law of 1968, as amended.
6.5 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
and all documents incident thereto shall be reasonably satisfactory in form and
substance to the Purchaser and its special counsel, and they shall have
received all such counterpart original and certified or other copies of such
documents as they may reasonably request.
6.6 Opinion of Company Counsel. The Purchaser shall have
received from Venture Law Group, A Professional Corporation, counsel for the
Company, an opinion, dated as of the Closing, in substantially the form of
Exhibit D.
6.7 Board of Directors. The Board of Directors of the
Company as of the Closing Date shall be comprised of Xxxxxxxxx Xxxxxx, Xxxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxx, Xxx Xxxx, Xxxxx Xxxx and Petri Vainio.
-9-
10
6.8 Rights Agreement. The Company, the Purchaser and
sufficient other shareholders of the Company shall have executed and delivered
the Rights Agreement.
7. Conditions of the Company's Obligations at Closing. The
obligations of the Company to the Purchaser under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions:
7.1 Representations and Warranties. The representations
and warranties of the Purchaser contained in Section 4 shall be true on and as
of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
7.2 California Qualification. The Commissioner of
Corporations of the State of California shall have issued a permit qualifying
the offer and sale to the Purchaser of the Stock or such offer and sale shall
be exempt from such qualification under the California Corporate Securities Law
of 1968, as amended.
7.3 Rights Agreement. The Company, the Purchaser and
sufficient other shareholders of the Company shall have executed and delivered
the Rights Agreement.
8. Covenants of the Company.
8.1 Delivery of Financial Statements. The Company shall
deliver to the Purchaser so long as it holds (i) shares of Stock with respect
to the information provided for in subsection (a) and (ii) not less than
100,000 shares of Stock with respect to the information provided for in
subsections (b)-(e) (adjusted for subsequent stock splits, stock dividends or
recapitalization):
(a) as soon as practicable, but in any event within
ninety (90) days after the end of each fiscal year of the Company, an income
statement for such fiscal year, a balance sheet of the Company as of the end of
such year, and a schedule as to the sources and applications of funds for such
year, such year-end financial reports to be in reasonable detail, prepared in
accordance with generally accepted accounting principles ("GAAP"), and audited
and certified by independent public accountants of nationally recognized
standing selected by the Company;
(b) as soon as practicable, but in any event within
forty-five (45) days after the end of each of the first three (3) quarters of
each fiscal year of the Company, an unaudited profit or loss statement and
schedule as to the sources and application of funds for such fiscal quarter and
an unaudited balance sheet as of the end of such fiscal quarter in reasonable
detail;
(c) within thirty (30) days of the end of each
month, an unaudited income statement and schedule as to the sources and
application of funds and balance sheet for and as of the end of such month, in
reasonable detail;
-10-
11
(d) as soon as practicable, but in any event thirty
(30) days prior to the end of each fiscal year, a budget and business plan for
the next fiscal year, prepared on a monthly basis, including balance sheets and
sources and applications of funds statements for such months and, as soon as
prepared, any other budgets or revised budgets prepared by the Company; and
(e) such other information relating to the
financial condition, business, prospects or corporate affairs of the Company as
the Purchaser or any assignee of the Purchaser may from time to time request,
provided, however, that the Company shall not be obligated to provide
information which it deems in good faith to be proprietary.
8.2 Inspection. The Company shall permit the Purchaser, at
the Purchaser's expense, to visit and inspect the Company's properties, to
examine its books of account and records and to discuss the Company's affairs,
finances and accounts with its officers, all at such reasonable times as may be
requested by the Purchaser; provided, however, that the Company shall not be
obligated pursuant to this Section 8.2 to provide access to any information
which it reasonably considers to be a trade secret or similar confidential
information.
8.3 Board Meetings; Expenses. The Company shall reimburse
the reasonable coach-class airfare and other travel and lodging expenses
incurred by its nonemployee directors in attending any duly held regular or
special meeting of the Board of Directors.
8.4 Termination of Covenants. The covenants set forth in
Sections 8.1, 8.2 and 8.3 shall terminate as to the Purchaser and be of no
further force or effect immediately upon the consummation of the Company's sale
of its Common Stock in a bona fide, firm commitment underwriting pursuant to a
registration statement under the Securities Act (other than a registration
statement relating either to the sale of securities to employees of the Company
pursuant to a stock option, stock purchase or similar plan or an SEC Rule 145
transaction).
9. Additional Investment.
9.1 Purchase Events and Terms. The Purchaser covenants that
it will contribute an additional $4,000,000 in funding to the Company or its
successor in the form of an additional equity investment in connection with the
earliest to occur of following events and on the terms stated herein:
(a) Initial Public Offering. In the event that,
within three years from the date of this Agreement, the Company consummates a
sale of capital stock in a bona fide, firm commitment underwriting pursuant to
a registration statement under the Securities Act (other than a registration
statement relating either to the sale of securities to employees of the Company
pursuant to a stock option, stock purchase or similar plan or an SEC Rule 145
transaction) with an aggregate Price to Public of not less than $20,000,000
(inclusive of the Purchaser's participation therein) (the "INITIAL PUBLIC
OFFERING"), the Purchaser will purchase for cash from the underwriters shares
of the Company's capital stock at the Price to Public stated on the front cover
of the final prospectus distributed in connection with such offering. The
number of securities to be purchased shall be equal to $4,000,000 divided by
the Price to Public, rounded to the nearest whole share. The Purchaser's
obligations under this subsection (a) shall
- 11 -
12
be conditioned upon the Company delivering to the Purchaser written notice of
the Initial Public Offering at least twenty days prior to the consummation
thereof.
(b) Business Combination Transaction
(i) In the event that, within three years from the
date of this Agreement, the Company consummates a Business Combination
Transaction (as defined below) in which the surviving entity is subject to
periodic reporting requirements under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the surviving entity shall have the right, upon
twenty (20) days prior written notice (the "Notice"), to require the Purchaser
to purchase for cash securities of the surviving entity of the class that is
publicly traded. The number of securities to be purchased shall be equal to
$4,000,000 divided by the average closing price (or price of the last trade if
no closing price is available)for the ten trading days ending at the close of
business on the date two days prior to the date of the closing of the
Purchaser's purchase of the securities under this subsection, as reported on
the exchange or system on which the surviving entity's securities are traded,
rounded to the nearest whole share. The Purchaser's obligations under this
paragraph shall terminate in the event that the surviving entity shall not have
given the Notice to the Purchaser within sixty days after the consummation of
the Business Combination of Transaction.
(ii) For purposes of this Section 9(b), a "Business
Combination Transaction" shall mean a merger, sale of all or substantially all
of the Company's assets (including the assets associated with the activities
being conducted pursuant to the Research Agreement between the Purchaser at
the Company of even date herewith), or similar business combination
transaction.
(iii) The Purchaser's obligations under Section
9.1(b)(i) above shall be further conditioned upon the securities to be purchased
under such section by the Purchaser (the "Purchased Securities") being either
(A) registered under Section 6 of the Securities Act, or (B) entitled to the
registration rights described in the ensuing paragraphs of this subsection
(b)(iii).
(1) In the event that the Purchased Securities
are not registered when purchased or shortly thereafter, the Purchaser shall be
granted the right to demand, in writing, on two occasions, that the surviving
entity register certain of such shares for resale pursuant to the provisions of
the Securities Act. The first of such demands may be made at any time after the
date six months after the acquisition of the Purchased Securities and may cover
not more than 50% of the Purchased Securities; provided however, that if the
Purchased Securities represent 1% or less of the outstanding capital stock of
the issuer, such first demand registration may cover all of the Purchased
Securities. The second of such demands may be made at any time after the date
twelve months after the acquisition of the Purchased Securities and may cover up
to all of the Purchased Securities then held by the Purchaser; provided that
the second demand may not be made less than six months after the first demand
is made.
(2) Unless otherwise consented to by the
surviving entity, each registration must cover securities generating net
proceeds to the Purchaser of at least $500,000 (net of underwriting discounts
and commissions). Pursuant to each such
-12-
13
demand, the surviving entity will agree to file a registration statement on
Form S-3 (or a successor form), if available, on or Form S-1 covering the
Purchased Securities to be sold and will hold such registration statement open
for a thirty (30) day period in which the Purchaser may sell the registered
securities.
(3) The terms set forth in the Rights Agreement in Sections
3.2(d) (regarding postponement for business reasons), Section 3.6 (regarding
expenses of demand registrations), 3.10 (regarding indemnification), and 3.11
(regarding reports under the Exchange Act) shall be applicable to the
registration rights discussed in this paragraph and such registration rights
would terminate at the earlier of the date three years from the acquisition of
the Purchased Securities or such time and for so long as the Purchaser could
sell all of its Purchased Securities in any one three-month period.
9.2 Stock Purchase Agreement. The Purchaser understands and
agrees that this additional equity investment, and the sale and purchase of
securities in connection therewith, other than a purchase of securities in the
Initial Public Offering, will require the Purchaser's execution of a Stock
Purchase Agreement, which shall in form be substantially similar to this
document.
10. Miscellaneous.
10.1 Survival of Warranties. The warranties, representations and
covenants of the Company and the Purchaser contained in or made pursuant to
this Agreement shall survive the execution and delivery of this Agreement and
the Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Purchaser or the Company.
10.2 Transfer, Successors and Assigns. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
10.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California in the United States of
America as applied to agreements among California resident entered into and to
be performed entirely within California.
10.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
-13-
14
10.6 Notices.
(a) All notices, requests, demands and other communications
under this Agreement or in connection herewith shall be given to or made upon
the respective parties as follows: if to the Purchaser, to Xxxxxx Laboratories,
000 Xxxxxx Xxxx Xxxx, Xxxxxx Xxxx, XX, 00000-0000, Attn: President,
Pharmaceutical Products Division (with a copy to the General Counsel at the
same address), or, if to the Company, to RiboGene, Inc., 00000 Xxxxx Xxxxxxxxx,
Xxxxxxxx X, Xxxxxxx, Xxxxxxxxxx 00000, Attn: President.
(b) All notices, requests, demands and other communications
given or made in accordance with the provisions of this Agreement shall be in
writing, and shall be sent by airmail, return receipt requested, or by telex or
telecopy (facsimile) with confirmation of receipt, and shall be deemed to be
given or made when receipt is so confirmed.
(c) Any party may, by written notice to the other, alter
its address or respondent, and such notice shall be considered to have been
given ten (10) days after the airmailing, telexing or telecopying thereof.
10.7 Finder's Fee. Each party represents that it neither is
nor will be obligated for any finder's fee or commission in connection with
this transaction. The Purchaser agrees to indemnify and to hold harmless the
Company from any liability for any commission or compensation in the nature of
a finder's fee (and the costs and expenses of defending against such liability
or asserted liability) for which the Purchaser or any of its officers,
employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless the Purchaser from any
liability for any commission or compensation in the nature of a finder's fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
10.8 Expenses. The Company and the Purchaser shall bear their own
expenses incurred with respect to this Agreement and the transactions
contemplated hereby. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
10.9 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Purchaser.
Any amendment or waiver effected in accordance with this Section shall be
binding upon each transferee of any Securities, each future holder of all such
Securities, and the Company; provided, however, that none of the conditions set
forth in Section 6 hereof may be waived with respect to a particular Purchaser
unless it consents thereto.
10.10 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
- 14 -
15
10.11 Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto pertaining to the subject matter
hereof, and any and all other written or oral agreements existing between the
parties hereto are expressly cancelled.
IN WITNESS WHEREOF, the parties have executed this Series E Preferred
Stock Purchase Agreement as of the date first above written.
COMPANY:
RIBOGENE, INC.
By: [SIGNATURE]
-------------------------------
Title: Chairman, President & CEO
PURCHASER:
XXXXXX LABORATORIES
By: [SIGNATURE]
-------------------------------
Title: President and Chief
Operating Officer
- 15 -
