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EXHIBIT 10.3
IMMUSOL, INC.
PREFERRED STOCK
PURCHASE AGREEMENT
May 3, 1995
Immusol, Inc.
PREFERRED STOCK PURCHASE AGREEMENT
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TABLE OF CONTENTS
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1. Purchase and Sale of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Sale of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing and Delivery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Organization, Good Standing and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Shares and Conversion Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.8 Proprietary Information Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.9 Patents and Other Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.10 Compliance with Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.11 Agreements; Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.13 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.14 Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.15 Title to Property and Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.16 No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.17 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.18 Material Agreements of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.20 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.21 Minute Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3. Representations and Warranties of each Investor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Purchase Entirely for Own Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Disclosure of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Investment Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Restricted Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 Further Limitations on Disposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.7 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4. California Commissioner of Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5. Conditions of Investors' Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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5.3 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.4 Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.5 Proceedings and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.6 Opinion of Company Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.7 Shareholder Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.8 Restated Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6. Conditions of the Company's Obligations at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2 Payment of Purchase Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.3 Restated Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.4 Shareholder Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7. Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.1 Maintain Corporate Rights and Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.2 Maintain Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.3 Pay Taxes and Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.4 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.5 Notice of Litigation and Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.6 Delivery of Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.7 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.8 Market Stand-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.9 Restrictive Agreements Prohibited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.10 Proprietary Information Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.11 Termination of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.1 Survival of Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.2 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.5 Titles and Subtitles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.7 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.9 Aggregation of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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EXHIBIT A Schedule of Investors
EXHIBIT B Amended and Restated Articles of Incorporation
EXHIBIT C Schedule of Exceptions
EXHIBIT D Proprietary Information Agreement
EXHIBIT E Legal Opinion
EXHIBIT F Amended and Restated Shareholder Rights Agreement
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PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is made as
of the 3rd day of May, 1995 by and between Immusol, Inc., a California
corporation located at 3050 Science Park Road, San Diego, CA 92121 (the
"Company"), and the investors listed on Exhibit A hereto, herein referred to as
the "Investors."
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Shares.
1.1 Sale of Shares.
(a) The Company shall adopt and file with the
Secretary of State of California on or before the Initial Closing (as defined
below) Amended and Restated Articles of Incorporation in the form attached
hereto as Exhibit B (the "Restated Articles").
(b) Subject to the terms and conditions of this
Agreement, the Investors agree to purchase at each Closing and the Company
agrees to sell and issue to the Investor at each Closing, that number of shares
of the Company's Preferred Stock set forth next to each Investor's name at the
purchase price set forth in Exhibit A attached hereto.
(c) The shares of Series B1, Series B2, and
Series B3 Preferred Stock sold to the Investors pursuant to this Agreement are
hereinafter referred to as the "Shares." The total amount of Common Stock and
other securities issuable upon conversion of the Shares is hereinafter referred
to as the "Conversion Stock." The Shares and the Conversion Stock are
hereinafter collectively referred to as the "Securities."
1.2 Closing and Delivery.
(a) The initial purchase and sale of the Shares
shall take place at the offices of Wilson, Sonsini, Goodrich & Rosati, 650 Page
Mill Road, Palo Alto, California ("WSGR"), at 1:00 p.m., on May 3, 1995 or at
such other time and place as the Company and the Investors purchasing the
majority of the Shares at such time mutually agree upon (which time and place
are designated specifically as the "Initial Closing" and generally as the
"Closing"). At the Initial Closing the Company shall deliver to the Investors
a certificate representing the Shares which such Investor is purchasing against
delivery to the Company by such Investor of a check, wire transfer or
cancellation of indebtedness in the aggregate amount of the purchase price
therefor payable to the Company's order.
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(b) The second purchase and sale of the Shares
shall take place at WSGR on September 3, 1996 or at such other time and place
as the Company and the Investors purchasing the majority of the Shares at such
time mutually agree upon (also, a "Closing"). At such Closing, the Investors
shall purchase the number of Shares as stated in Exhibit A. At such Closing,
the Company shall deliver to the Investors a certificate representing the
Shares which each Investor is purchasing against delivery to the Company by
such Investor of a check, or transfer or cancellation of indebtedness in the
aggregate amount of the purchase price therefor payable to the Company's order.
(c) (i) Subject to Section 1.2(c)(ii), the
third purchase and sale of the Shares shall take place at WSGR on May 3, 1998
or at such other time and place as the Company and the Investors purchasing the
majority of the Shares at such time mutually agree upon (also, a "Closing").
At such Closing, the Investors shall purchase the number of Shares as stated in
Exhibit A. At such Closing, the Company shall deliver to the Investors a
certificate representing the Shares which each Investor is pur chasing against
delivery to the Company by such Investor of a check, or transfer or
cancellation of indebtedness in the aggregate amount of the purchase price
therefor payable to the Company's order.
(ii) Thirty (30) months from the Initial
Closing, Pfizer, Inc. ("Pfizer") may terminate this Agreement, with or without
cause, with at least thirty (30) days' prior written notice to the Company. If
Pfizer terminates this Agreement, the purchase and sale of the Shares outlined
in Section 1.2(c)(i) shall not occur.
2. Representations and Warranties of the Company. As of the date
of the Initial Closing, the Company hereby represents and warrants to the
Investors that, except as set forth on a Schedule of Exceptions attached hereto
as Exhibit C, which exceptions shall be deemed to be representations and
warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of California and has all requisite corporate power
and authority to carry on its business as now conducted, to own its properties
and assets, to enter into and perform this Agreement and the Shareholder Rights
Agreement, to issue the Securities and to carry out the provisions thereof and
of the Restated Articles of Incorporation (the "Restated Articles"). The
Company is duly qualified to transact business 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.
2.2 Capitalization. The authorized capital of the
Company consists of:
(a) 3,491,700 shares of Preferred Stock (the
"Preferred Stock"), 2,000,000 of which have been designated Series A Preferred
Stock and 922,800, 264,600, and 304,300 of which have been designated Series
B1, Series B2, and Series B3 Preferred Stock,
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respectively. Immediately prior to the Initial Closing, 2,000,000 shares of
Series A Preferred Stock are outstanding and no shares of Series B1, Series B2,
and Series B3 Preferred Stock are outstanding. Up to 915,477, 264,600, and
304,300 shares of Series B1, Series B2, and Series B3 Preferred Stock,
respectively, will be sold pursuant to this Agreement. The rights,
preferences, privileges and restrictions of the Shares will be as stated in the
Restated Articles.
(b) 20,000,000 shares of Common Stock (the
"Common Stock"). Immediately prior to the Initial Closing, 7,045,000 shares of
Common Stock are outstanding.
(c) 2,000,000 shares of Common Stock are reserved
under the Company's 1992 Stock Plan (the "Plan"), of which 60,000 shares have
been issued pursuant to exercise of options granted under the Plan, 1,783,000
shares may be issued upon exercise of outstanding options granted under the
Plan, and 157,000 shares remain available for issuance upon exercise of future
option grants.
(d) Except for (i) the conversion privileges of
the Preferred Stock and (ii) the rights of first offer set forth in the Amended
and Restated Shareholder Rights Agreement attached hereto as Exhibit F
("Shareholder Rights Agreement"), there are no other outstanding options,
warrants, rights (including conversion or preemptive rights) or agreements for
the purchase or acquisition from the Company of any shares of its capital stock
or any other debt or equity securities.
(e) Neither the offer nor the issuance or the
sale of the Securities constitutes or will constitute an event, under any
anti-dilution or similar provision of any agreement or instrument to which the
Company is a party or by which it is bound or affected.
(f) The Company has no indebtedness for borrowed
money.
2.3 Subsidiaries. The Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
association, or other business entity.
2.4 Authorization. All corporate action on the part of
the Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, the Shareholder Rights
Agreement and the Restated Articles, the performance of all obligations of the
Company hereunder and the authorization, issuance (or reservation for
issuance) and delivery of the Shares being sold hereunder and the Conversion
Stock has been taken or will be taken prior to the Initial Closing, and this
Agreement, the Shareholder Rights Agreement and the Restated Articles
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their terms.
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2.5 Shares and Conversion Stock.
(a) The Shares which are being purchased by the
Investors hereunder, 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 and, based in part upon the
representations of the Investors in this Agreement, will be issued in
compliance with all applicable federal and state securities laws. The
Conversion Stock 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 nonassessable, free and clear of all liens
and restrictions, other than liens created by the Investor or state or federal
securities laws, and shall be issued in compliance with all applicable
securities laws, as presently in effect, of the United States and each of the
states whose securities laws govern the issuance of any of the Shares
hereunder. Neither the issuance, sale or delivery of the Shares or the
Conversion Shares is subject to any preemptive right of shareholders of the
Company or to any rights of first refusal or other right in favor of any
person.
(b) The outstanding shares of Series A Preferred
Stock and Common 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.
2.6 Governmental Consents. No consent, approval, order
or authorization of, or registration, qualification, designation, declaration
or filing with, any federal, state, local or provincial governmental authority
on the part of the Company is required in connection with the consummation of
the transactions contemplated by this Agreement, except for the filing pursuant
to Section 25102(f) of the California Corporate Securities law of 1968, as
amended, and the rules thereunder, which filing will be effected within 15 days
of the sale of the Shares hereunder.
2.7 Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company which
questions the validity of this Agreement or the right of the Company to enter
into it, or to consummate the transactions contemplated hereby, or which 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 decree 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.
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2.8 Proprietary Information Agreements. Each employee
and officer of the Company has executed a Proprietary Information Agreement in
the form attached hereto as Exhibit D, and no exceptions have been taken by
any such employee or officer to the terms of such agreement. 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.
2.9 Patents and Other Intangible Assets.
(a) The Company (i) owns or has the right to use,
free and clear of all liens, claims and restrictions, all patents, trademarks,
service marks, trade names, copyrights, licenses and rights with respect to the
foregoing, used in or necessary for the conduct of its business as now
conducted or proposed to be conducted, (ii) is not infringing upon or
otherwise acting adversely to the right or claimed right of any person under or
with respect to any patent, trademark, service mark, trade name, copyright or
license with respect thereto, and (iii) is not obligated or under any liability
whatsoever to make any payments by way of royalties, fees or otherwise to any
owner or licensee of, or other claimant to, any patent, trademark, service
mark, trade name, copyright or other intangible asset, with respect to the use
thereof or in connection with the conduct of its business or otherwise.
(b) The Company owns and has the unrestricted
right to use all product rights, manufacturing rights, trade secrets, including
know-how, negative know-how, formulas, patterns, compilations, programs,
devices, methods, techniques, processes, inventions, designs, computer programs
and technical data and all information that derives independent economic value,
actual or potential, from not being generally known or known by competitors and
which the Company has taken reasonable steps to maintain in secret (all of the
foregoing of which are collectively referred to herein as "intellectual
property") required for or incident to the development, manufacture, operation
and sale of all products and services sold or proposed to be sold by the
Company, free and clear of any right, lien or claim of others, including
without limitation former employers of its employees, provided however, the
possibility exists that other persons, completely independently of the Company
or its employees or agents, could have developed trade secrets or items of
technical information similar or identical to those of the Company. The
Company is not aware of any such development of similar or identical trade
secrets or technical information by others.
(c) The Company has not sold, transferred,
assigned, licensed or subjected to any lien, any intellectual property, trade
secret, know-how, invention, design, process, computer program or technical
data, or any interest therein, necessary or useful for the development,
manufacture, use, operation or sale of any product or service presently under
development or manufactured, sold or rendered by the Company.
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(d) No director, officer, employee, agent or
shareholder of the Company owns or has any right in the intellectual property
of the Company, or any patents, trademarks, service marks, trade names,
copyrights, licenses or rights with respect to the foregoing, or any
inventions, developments or discoveries used in or necessary for the conduct of
the Company's business as now conducted or as proposed to be conducted.
(e) The Company has not received any
communication alleging or stating that the Company or any employee has violated
or infringed, or by conducting business as proposed, would violate or infringe,
any patent, trademark, service mark, trade name, copyright, trade secret,
proprietary right, process or other intellectual property of any other person.
2.10 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, agreement, judgment, order, writ, decree or contract to which
it is a party or by which it is bound or, to its knowledge after due inquiry,
of any provision of federal, state or local law, statue, rule, ordinance,
regulation or other pronouncement applicable to the Company. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby 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 agreement
or other agreement.
2.11 Agreements; Action.
(a) Except for agreements explicitly contemplated
hereby and stock purchase agreements, option agreements or consulting
agreements existing as of even date herewith, 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 which 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.
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(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 any indebtedness for money
borrowed or incurred any other liabilities individually in excess of $50,000 or
in excess of $100,000 in the aggregate, (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 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 materially
adversely affects its business as now conducted and as proposed to be
conducted.
(e) The Company has not engaged in the past
twelve (12) months in any discussion (i) with any representative of any
corporation or corporations regarding the consolidation or 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 will be disposed of, or (iii) regarding any other form of
liquidation, dissolution or winding up of the Company.
(f) Except as provided in the Shareholder Rights
Agreement, the Company is not a party to or aware of any voting trust or
agreement, shareholders' agreement, pledge agreement, buy-sell agreement or
first refusal or preemptive rights agreement relating to securities of the
Company.
2.12 Disclosure. The Company has fully provided the
Investors with all the information which each such Investor has requested for
deciding whether to purchase the Shares and all information which the Company,
after due inquiry, believes is reasonably necessary to enable such Investor to
make such decision. Neither this Agreement nor any other statements or
certificates made or delivered in connection herewith contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements herein or therein not misleading.
2.13 Registration Rights. Except as provided in the
Shareholder Rights Agreement, the Company has not granted or agreed to grant
any registration rights, including piggyback rights, to any person or entity.
2.14 Corporate Documents. Except for the amendments
necessary to satisfy representations and warranties conditioned herein (the
form of which amendments has been
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approved by the Investor), the Articles of Incorporation and Bylaws of the
Company are in the form previously provided to the Investor.
2.15 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 its knowledge, holds a
valid leasehold interest free of any liens, claims or encumbrances.
2.16 No Brokers or Finders. No person has, or as a result
of the transactions contemplated herein will have, any right or valid claim
against the Company or any Investor for any commission, fee or other
compensation as a finder or broker, or in any similar capacity.
2.17 Absence of Undisclosed Liabilities. The Company has
no material obligation or liability (whether due or to become due) arising out
of any transaction entered into at or prior to the Initial Closing or any act
or omission to act at or prior to the Initial Closing, including taxes with
respect to or based upon the transactions or events occurring at or prior to
the Initial Closing.
2.18 Material Agreements of the Company. The Company has
furnished to the Investors true and complete copies of all agreements,
instruments and other documents requested by any Investor or its authorized
representative. The Company is in substantial compliance with all material
contractual arrangements.
2.19 Tax Returns. The Company has filed or obtained
extensions for all federal, state and other tax returns and reports which are
required to be filed and has paid all taxes and assessments which have become
due and payable. The Company has not been advised that any of its returns,
federal, state or other, have been or are being audited as of the date thereof.
None of the Company's federal income tax returns and none of its state income
or franchise tax or sales or use tax returns has ever been audited by
governmental authorities. The Company has withheld or collected from each
payment made to each of its employees, the amount of all taxes required to be
withheld or collected therefrom, and has paid the same to proper tax receiving
officers of authorized depositaries.
2.20 Licenses. The Company possesses from the appropriate
agency, commission, board and governmental body and authority, whether state,
local or federal, all licenses, permits, authorizations, approvals, franchises
and rights which are necessary for the Company to engage in the business
currently conducted by it and proposed to be conducted, including without
limitation the development, manufacture, use, sale and marketing of its
existing and proposed products and services; and all such certificates,
licenses, permits, authorizations and rights have been lawfully and validly
issued, are in full force and effect, will
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not be revoked, canceled, withdrawn, terminated or suspended and have a term of
perpetual existence.
2.21 Minute Books. If requested, the minute books of the
Company has been provided to special counsel for the Investors. Such minute
books contain all resolutions adopted by directors and shareholders since the
incorporation of the Company and fairly and accurately reflect, in all material
respects, all matters and transactions referred to in such minutes.
3. Representations and Warranties of each Investor. Each
Investor hereby represents and warrants that:
3.1 Authorization. This Agreement constitutes its valid
and legally binding obligation, enforceable in accordance with its terms.
3.2 Purchase Entirely for Own Account. This Agreement is
made with the Investor in reliance upon such Investor's representation to the
Company, which by such Investor's execution of this Agreement such Investor
hereby confirms, that the Shares will be acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, the Investor further
represents that such Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Securities. The Investor represents that it has full power and authority to
enter into this Agreement.
3.3 Disclosure of Information. It believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Shares. The Investor 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 Shares. The
foregoing, however, does not limit or modify the representations and warranties
of the Company in Section 2 of this Agreement or the right of the Investor to
rely thereon.
3.4 Investment Experience. The Investor is an investor
in securities of companies in the development stage and acknowledges that it
is able to fend for itself, and bear the economic risk of its investment and
has such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Shares. If
other than an individual, Investor also represents it has not been organized
for the purpose of acquiring the Shares.
3.5 Restricted Securities. The Investor understands that
the Shares it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering
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and that under such laws and applicable regulations such securities may be
resold without registration under the Securities Act of 1933, as amended (the
"Act") only in certain limited circumstances. In this connection, the Investor
represents that it is familiar with Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.
3.6 Further Limitations on Disposition. Without in any
way limiting the representations set forth above, the Investor further agrees
not to make any disposition of all or any portion of the Shares (or the
Conversion Stock) unless and until:
(a) There is then in effect a Registration
Statement under the Act covering such proposed disposition and such
disposition is made in accordance with such Registration Statement; or
(b) (i) Such Investor 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 requested by the Company, such Investor shall have
furnished the Company with an opinion of counsel, reasonably satisfactory to
the Company, that such disposition will not require registration of such
shares under the 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 subsections
(a) and (b) above, no such registration statement or opinion of counsel shall
be necessary for a transfer by an Investor which is a corporation to its direct
or indirect parent corporation or its direct or indirect subsidiary corporation
or for the transfer by an Investor which is a partnership to a partner of such
partnership or a retired partner of such partnership who retires after the
date hereof, or to the estate of any such partner or retired partner or the
transfer by gift, will or intestate succession of any partner to his spouse or
lineal descendants or ancestors, if the transferee agrees in writing to be
subject to the terms hereof to the same extent as if he were an original
Investor hereunder.
3.7 Legends. It is understood that the certificates
evidencing the Shares (and the Conversion Stock) 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."
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(b) Any legend required by the laws of the State
of California or any other applicable state, including any legend required by
the California Department of Corporations and Sections 417 and 418 of the
California Corporations Code.
4. California Commissioner of Corporations. 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, AND THE ISSUANCE
OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF THE
SECURITIES IS EXEMPT FROM 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.
5. Conditions of Investors' Obligations. The obligations of the
Investors under this Agreement are subject to the fulfillment on or before the
Initial Closing of each of the following conditions, the waiver of which shall
not be effective against any Investor who does not consent in writing thereto:
5.1 Representations and Warranties. The representations
and warranties of the Company contained in Section 2 shall be true on and as of
the Initial Closing with the same effect as though such representations and
warranties had been made on and as of the date of such Initial Closing.
5.2 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 Initial Closing.
5.3 Compliance Certificate. The Chief Executive Officer
of the Company shall deliver to the Investor at the Initial Closing a
certificate certifying that the conditions specified in Sections 5.1 and 5.2
have been fulfilled.
5.4 Qualifications. The Commissioner of Corporations of
the State of California shall have issued a permit qualifying the offer and
sale of the Shares and the Conversion Stock to the Investors 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.
5.5 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Initial
Closing and all documents incident thereto shall be reasonably satisfactory in
form and substance to each Investor and counsel to
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any of such Investor, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request.
5.6 Opinion of Company Counsel. Each Investor shall have
received from Wilson, Sonsini, Goodrich & Rosati, counsel for the Company, an
opinion, dated as of the Initial Closing, in the form attached hereto as
Exhibit E.
5.7 Shareholder Rights Agreement. The Company and the
Investors shall have executed and delivered the Shareholder Rights Agreement of
even date herewith.
5.8 Restated Articles. The Restated Articles shall
have been accepted for filing by the California Secretary of State.
6. Conditions of the Company's Obligations at Closing. The
obligations of the Company to the Investors under this Agreement are subject to
the fulfillment on or before the Initial Closing of each of the following
conditions, the waiver of which shall not be effective unless consented to in
writing by the Company:
6.1 Representations and Warranties. The representations
and warranties of the Investors contained in Section 3 shall be true on and as
of the Initial Closing with the same effect as though such representations and
warranties had been made on and as of the Initial Closing.
6.2 Payment of Purchase Prices. The Investors shall have
delivered the purchase prices specified in Section 1.1(b).
6.3 Restated Articles. The Restated Articles of
Incorporation attached hereto as Exhibit B shall have been accepted for filing
by the California Secretary of State.
6.4 Shareholder Rights Agreement. The Company and the
Investors shall have executed and delivered the Shareholder Rights Agreement of
even date herewith.
7. Covenants of the Company.
7.1 Maintain Corporate Rights and Facilities. The
Company shall maintain and preserve its corporate existence and all rights,
franchises and other authority adequate for the conduct of its business;
maintain its properties, equipment and facilities in good order and repair; and
conducts its business in an orderly manner without voluntary interruption.
7.2 Maintain Insurance. The Company shall maintain in
full force and effect a policy or policies of insurance issued by insurers of
recognized responsibility, insuring it and its properties and business against
such losses and risks, and in such amounts, as are
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customary in the case of corporations of established reputation engaged in the
same or a similar business and similarly situated.
7.3 Pay Taxes and Other Liabilities. The Company shall
pay and discharge, before the same become delinquent and before penalties
accrue thereon, all taxes, assessments and governmental charges upon or against
it or any of its properties, and all its other material liabilities at any time
existing, except to the extent and so long as (i) the same are being contested
in good faith and by appropriate proceedings in such manner as not to cause any
materially adverse effect upon its financial condition or the loss of any right
of redemption from any sale thereunder, and (ii) it shall have set aside on its
books reserves (segregated to the extent required by generally accepted
accounting principles) deemed by it adequate with respect thereto.
7.4 Records. The Company shall accurately and fairly
maintain its books of account in accordance with generally accepted accounting
principles, as approved from time to time by a majority of the Board and its
independent certified public accountants; employ a firm of independent
certified public accountants, which firm is either one of the six largest
national accounting firms or which is approved by a majority of the Preferred
Stock, to make annual audits of its accounts in accordance with generally
accepted auditing standards.
7.5 Notice of Litigation and Disputes. The Company shall
promptly notify the Investor which holds together with its affiliates, an
aggregate of 250,000 shares of the Securities, of each legal action, suit,
arbitration or other administrative or governmental investigation or proceeding
(whether federal, state, local or foreign) instituted or threatened against the
Company which could materially and adversely affect its condition (financial or
otherwise), properties, assets, liabilities, business, operations or prospects,
or of any occurrence or dispute which involves a reasonable likelihood of any
such action, suit, arbitration, investigation or proceeding being instituted.
7.6 Delivery of Financial Statements. The Company shall
deliver to each Investor which holds, together with its affiliates, an
aggregate of 250,000 shares of the Securities:
(a) as soon as practicable, but in any event
within ninety (90) days after the end of each fiscal year of the Company
commencing with the fiscal year ending December 31, 1995, a balance sheet, and
statements of operations and cash flow for such fiscal 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) within thirty (30) days of the end of each
month, and until a public offering of Common Stock of the Company, an unaudited
statement of operations and
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balance sheet for and as of the end of such month, in reasonable detail and
prepared in accordance with GAAP, subject to year end audit adjustments and the
absence of footnotes;
(c) within thirty (30) days of the end of each
fiscal quarter, a report on financial and operational highlights of the Company
during the fiscal quarter just ended;
(d) within forty-five (45) 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 a balance sheet and statement of
operations for such months and, as soon as prepared, any other budgets or
revised budgets prepared by the Company;
(e) with respect to the financial statements
called for in subsection (b) of this Section 7.6, an instrument executed by the
Chief Financial Officer, President or Chairman of the Company and certifying
that such financials were prepared in accordance with GAAP consistently
applied with prior practice for earlier periods and fairly present the
financial condition of the Company and its results of operation for the period
specified, subject to year-end audit adjustments and the absence of footnotes;
(f) such other information relating to the
financial condition, business, prospects or corporate affairs of the Company as
an Investor or any assignee of such Investor 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.
7.7 Inspection. The Company shall permit each Investor
which holds, together with its affiliates, an aggregate of 250,000 shares of
the Securities, at such Investor's expense to visit and inspect the Company's
properties, to examine its books of account and records and to discuss the
Company's affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by the Investor; provided, however, that
the Company shall not be obligated pursuant to this Section 7.7 to provide
access to any information which it reasonably considers to be a trade secret or
similar confidential information unless such Investor agrees in writing to hold
such information in confidence.
7.8 Market Stand-Off. So long as each Investor is, or
may be, bound by the provisions of Section 1.15 of the Shareholder Rights
Agreement, the Company shall obtain from each employee who is a purchaser of
shares of the Company's Common Stock, a market stand-off provision similar to
or more restrictive than Section 1.15 of the Shareholder Rights Agreement.
7.9 Restrictive Agreements Prohibited. Neither the
Company nor any of its subsidiaries shall become a party to any agreement which
by its terms restricts the Company's performance of this Agreement, the
Shareholder Rights Agreement or the Restated Articles of Incorporation.
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7.10 Proprietary Information Agreements. The Company
shall use its best efforts to obtain, and shall cause its subsidiaries to use
their best efforts to obtain, a Proprietary Information Agreement in
substantially the form of Exhibit D from all future officers, key employees and
other employees who will have access to confidential information of the Company
or any of its subsidiaries, upon their employment by the Company or any of its
subsidiaries.
7.11 Termination of Covenants. The covenants set forth in
this Section 7 shall terminate and be of no further force or effect when the
sale of securities pursuant to a registration statement filed by the Company
under the Act in connection with the firm commitment underwritten offering of
its securities to the general public is consummated or when the Company first
becomes subject to the periodic reporting requirements of Sections 12(g) or
15(d) of the Securities Exchange Act of 1934, whichever event shall first
occur.
8. Miscellaneous.
8.1 Survival of Warranties. The warranties,
representations and covenants of the Company and Investor contained in or made
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing and shall in no way be affected by any investigation
of the subject matter thereof made by or on behalf of the Investors or the
Company.
8.2 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.
8.3 Governing Law. This Agreement shall be governed by
and construed under the laws of the State of New York.
8.4 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.
8.5 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.
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8.6 Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in writing and shall
be deemed effectively given upon personal delivery to the party to be notified
or upon deposit with the United States Post Office, by registered or certified
mail, postage prepaid and addressed to the party to be notified at the address
indicated for such party in Exhibit A or in the case of the Company on the
first page of this Agreement, or at such other address as such party may
designate by ten (10) days' advance written notice to the other parties.
8.7 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 Investors
holding at least a majority of the Shares or Conversion Stock. Any amendment
or waiver effected in accordance with this Section shall be binding upon each
holder of any securities purchased under this Agreement at the time out-
standing (including securities into which such securities are convertible),
each future holder of all such securities, and the Company; provided, however,
that no condition set forth in Section 5 hereof may be waived with respect to
any Investor who does not consent thereto.
8.8 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.
8.9 Aggregation of Stock. All Shares held or acquired by
affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
IMMUSOL, INC.
By: /s/ Tsvi Goldenberg
----------------------------
Tsvi Goldenberg, Ph.D.,
Chairman of the Board and
Chief Executive Officer
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PFIZER LTD.
By: /s/ George M. (Not legible)
-------------------------------
Title: ____________________________
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EXHIBIT A
SCHEDULE OF INVESTORS
Type of
Investor Preferred Stock No. of Shares Closing Date Purchase Price
- ------------------------ ----------------- -------------- ------------ --------------
Pfizer, Inc. Series B1 915,477 05/03/95 $4,998,504.42
Series B2 264,600 11/03/96 $2,000,376.00
Series B3 304,300 05/03/98 $3,000,398.00
UC Regents Series B1 7,323 05/03/95 39,983.58
24
EXHIBIT B
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF IMMUSOL, INC.
The undersigned, Tsvi Goldenberg, Ph.D. and J. Casey McGlynn hereby
certify that:
ONE: Dr. Goldenberg is the duly elected Chairman of the Board and
Chief Executive officer and Mr. McGlynn is the duly elected Secretary of the
corporation.
TWO: The Restated Articles of Incorporation of the corporation
shall be amended and restated to read in full as follows:
I.
The name of this corporation is Immusol, Inc.
II.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business
or the practice of a profession permitted to be incorporated by the California
Corporations Code.
III.
This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares which the corporation is authorized to issue is 23,491,700
shares. 20,000,000 shares shall be Common Stock, with a par value of $0.001 per
share. 3,491,700 shares shall be Preferred Stock, with a par value of $0.001
per share, 2,000,000 of which are designated Series A Preferred Stock, 922,800
of which are designated Series B1 Preferred Stock, 264,600 of which are
designated Series B2 Preferred Stock, and 304,300 of which are designated
Series B3 Preferred Stock.
25
IV.
The rights, preferences, privileges and restrictions granted to or
imposed upon the Common Stock and Preferred Stock are as follows:
1. Dividend Provisions. The dividends shall be payable when,
as and if declared by the Board of Directors, and shall not be cumulative. The
holders of shares of Preferred Stock shall be entitled to receive cash
dividends, prior and in preference to any declaration or payment of any
dividend (payable other than in Common stock or other securities and rights
convertible into additional shares of Common Stock of this corporation) on the
outstanding shares of Common Stock of this corporation. The dividends on the
outstanding shares of Series A, Series B1, Series B2, and Series B3 Preferred
Stock shall be paid out of any funds legally available therefor at the rate of
$0.08, $0.44, $0.60, and $0.79 per share, respectively, per annum (as
determined on a per annum basis and on an as converted basis for the Preferred
Stock). If the rate of dividends declared or paid on each outstanding share of
common Stock is greater than any of the rates specified above, the corporation
shall pay, on a share of each relevant series of Preferred Stock, a rate equal
to the higher rate declared and paid on each share of Common Stock this
corporation.
2. Liquidation Preference.
(a) Preferred Preference. In the event of any
liquidation, dissolution or winding up of this corporation, either voluntary or
involuntary, the holders of Preferred Stock shall be entitled to receive, out
of the assets of this corporation available to distribution to its
shareholders, whether such assets are capital, surplus, or earnings, and prior
and in preference to any distribution of any of the assets of this corporation
to the holders of Common Stock by reason of their ownership thereof, an amount
per share equal to $1.00, $5.46, $7.56, and $9.86 for each outstanding share of
series A, Series B1, Series B2, and Series B3 Preferred Stock, respectively,
plus an amount equal to any declared but unpaid dividends on such shares up to
the date fixed for distribution (such amounts being referred to herein as the
"Premium") . If upon the occurrence of such event, the assets and funds thus
distributed among the holders of the Preferred Stock shall be insufficient to
permit the payment to such holders of the full Premium, then the entire assets
and funds of this corporation legally available for distribution shall be
distributed ratably among the holders of the Preferred Stock in proportion to
the full amount each such holder is otherwise entitled to receive.
After the payment in full or the setting apart in trust by the
corporation of payment to the holders of Preferred Stock of the preferential
amounts so payable to them, each share of Common
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Stock shall receive pro rata the remaining assets of the corporation.
(b) Mergers. A merger, or any consolidation of this
corporation with or into any other corporation or other entity or person, or
any other corporate reorganization or transaction or series of related
transactions by this corporation in which the shareholders of this corporation
immediately prior to the merger, consolidation or reorganization possess less
than fifty percent (50%) of the voting power of the surviving entity (or its
parent) immediately after the merger, consolidation or reorganization or a sale
or other disposition of all or substantially all of the assets of this
corporation shall be deemed to be a liquidation, dissolution or winding up
within the meaning of this Section 2.
Any securities or other property to be delivered to the
holders of the Preferred Stock and Common Stock upon merger, consolidation,
reorganization or sale of substantially all the assets Of the corporation shall
be valued as follows:
(i) Securities not subject to investment letter
or other similar restrictions on free marketability:
(A) if traded on a securities exchange,
the value shall be deemed to be the average of the closing prices of the
securities on such exchange over the 30-day period ending three (3) business
days prior to the closing;
(B) if actively traded over-the-counter,
the value shall be deemed to be the average of the closing bid prices over the
30-day period ending three (3) business days prior to the closing; and
(C) if there is no active public market,
the value shall be the fair market value thereof as mutually determined by the
corporation and the holders of not less than a majority of the outstanding
shares of Preferred Stock, provided that if the corporation and the holders of
a majority of the outstanding shares of Preferred Stock are unable to reach
agreement, then by independent appraisal by an investment banker hired and paid
by the corporation, but acceptable to the holders of a majority of the
outstanding shares of Preferred Stock.
(ii) The method of valuation of securities subject
to investment letter or other restrictions on free marketability shall be to
make an appropriate discount from the market value determined as provided in
Sections 2(b)(i)(A), (B) or (C) to reflect the approximate fair market value
thereof, as mutually determined by the corporation and the holders of a
majority of the outstanding shares of Preferred Stock.
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(iii) All other securities or other property shall
be valued at the fair market value thereof, as mutually determined by this
corporation and the holders of a majority of the outstanding shares of
Preferred Stock.
(iv) If the holders of a majority of the
outstanding shares of the Preferred Stock and the corporation are unable to
reach agreement on any valuation matter, such valuation shall be submitted to
and determined by a nationally recognized independent investment banking firm
selected by this corporation's board of directors and the holders of a majority
of the outstanding shares of the Preferred Stock (or, if such selection cannot
be made, by a nationally recognized independent investment banking firm
selected by the American Arbitration Association in accordance with its rules.)
(c) In the event the requirements of Section 2(b) hereof
are not complied with, this corporation shall forthwith either: (i) cause such
closing to be postponed until such time as the requirements of this Section 2
shall be complied with; or (ii) cancel such transaction, in which event the
rights, preferences and privileges of the holders of the Preferred Stock shall
revert to and be the same as such rights, preferences and privileges existing
immediately prior to the date of the first notice referred to in Section 2(d)
hereof.
(d) Not later than thirty (30) days before any event of
liquidation, dissolution or winding up under this Section 2, the corporation
shall deliver a notice to each holder of the Preferred Stock announcing such
proposed liquidation, dissolution or winding up. Such notice shall include a
description of the amounts that would be paid to the holders of the Preferred
Stock under this Section 2 and of the consideration that such holders would
receive if they exercised their rights to convert their shares of Preferred
Stock into shares of Common Stock. Not later than 10 days after delivery of
such notice, each holder of the Preferred Stock may deliver an election to the
corporation notifying the corporation that the holder desires that such
holder's shares of Preferred Stock be treated as if such shares had been
converted into shares of Common Stock. If such election is delivered, such
shares of Preferred Stock subject to such holder's notice shall be treated for
purposes of the liquidation, dissolution or winding up as if such shares had
been converted into Common Stock in accordance with the provisions of Section
4. If no such election is delivered, such holder shall receive the amounts as
provided for the holders of Preferred Stock under this Section 2.
(e) Consent for Certain Repurchase. Each holder of an
outstanding share of Preferred Stock shall be deemed to have consented, for
purposes of Sections 502, 503 and 506 of the California General Corporation
Law, to distributions made by the corporation
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in connection with the repurchase of shares of Common Stock issued to or by
employees or consultants upon termination of their employment or services
pursuant to agreements providing for the right of said repurchase between the
corporation and such persons.
3. Voting Rights.
(a) The holder of each share of Preferred Stock shall be
entitled to notice of any shareholders' meeting in accordance with the Bylaws
of the corporation and shall vote with holders of the Common Stock upon the
election of directors and upon any other matter submitted to a vote of
shareholders, except those matters required by law to be submitted to a class
vote and except as otherwise set forth herein. The holder of each share of
Preferred stock shall be entitled to that number of votes equal to the number
of shares of Common Stock into which each share of Preferred Stock could be
converted on the record date for the vote or consent of shareholders.
Fractional votes shall not, however, be permitted and any fractional voting
rights resulting from the above formula (after aggregating all shares of
Preferred Stock held by each holder) shall be disregarded.
(b) (i) Notwithstanding the foregoing, as long as
more than 500,000 shares of Series A Preferred Stock are outstanding, the
holders of Series A Preferred Stock, voting as a separate class, shall have the
right to elect one member of the corporation's board of directors. The holders
of Common Stock and Series B1, Series B2, and Series B3 Preferred Stock,
voting together as a single class, shall have the right to elect all other
members of the corporation's board of directors.
(ii) If there are less than or equal to 500,000
shares of Series A Preferred Stock outstanding, the holders of Common Stock,
Series A Preferred Stock, and Series B1, Series B2, Series B3 Preferred Stock,
voting together as a single class, shall have the right to elect all members of
the corporation's board of directors.
(iii) Notwithstanding any Bylaw provisions to the
contrary, the shareholders entitled to elect a particular director shall be
entitled to remove such director or to fill a vacancy in the seat formerly held
by such director, all in accordance with the applicable provisions provided in
the California Corporations Code.
4. Conversion. The holders of the Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Preferred Stock
shall be convertible into fully paid and nonassessable shares of Common Stock
without the payment of any additional consideration by the holder thereof and,
at the option of the holder thereof, at any
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time after the date of issuance of such share, at the office of the corporation
or any transfer agent for the Preferred Stock. Each share of Preferred Stock
shall be convertible into the number of fully paid and nonassessable shares of
Common Stock which results from dividing the Conversion Price (as hereinafter
defined) per share in effect for each series of Preferred Stock at the time of
conversion into the per share Conversion Value (as hereinafter defined) of such
series. The initial Conversion Price per share of Series A, Series B1, Series
B2, and Series B3 Preferred Stock shall be $1.00, $5.46, $7.56, and $9.86,
respectively. The per share Conversion Value of the Series A, Series B1,
series B2, and Series B3 Preferred Stock shall be $1.00, $5.46, $7.56, and
$9.86, respectively. The initial Conversion Prices of Preferred Stock shall be
subject to adjustment from time to time as provided below. The number of
shares of Common Stock into which a share of a series of Preferred Stock is
convertible is hereinafter referred to as the "Conversion Rate" of such series.
(b) Automatic Conversion. Each share of Preferred Stock
shall automatically be converted into shares of Common Stock at its then
effective Conversion Rate immediately upon the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, covering the offer and sale of
Common Stock for the account of the corporation in which (a) the public
offering price equals or exceeds $5.50 per share (adjusted to reflect
subsequent stock dividends, stock splits or recapitalization) and (b) the
aggregate proceeds raised by the corporation, equals or exceeds $7,500,000.
(c) Mechanics of Conversion. Before any holder of
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, such holder shall surrender the certificate(s) therefor, duly endorsed,
at the office of the corporation or of any transfer agent for the Preferred
Stock and shall give written notice to the corporation at such office that he
elects to convert the same (except that no such written notice of election to
convert shall be necessary in the event of an automatic conversion pursuant to
Section 4(b) hereof). The corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Preferred Stock
certificate(s) for the number of shares of Common Stock to which such holder
shall be entitled as aforesaid, together with cash for all declared and unpaid
dividends on the shares of Preferred Stock being converted, to and including
the time of conversion, and, if less than all of the shares of stock
represented by such Preferred Stock certificate(s) are converted, a certificate
representing the shares of Preferred Stock not converted. Such conversion
shall be deemed to have been made immediately prior to the close of business on
the date of such surrender of the shares of Preferred Stock to be converted
(except that in the case of an automatic conversion pursuant to
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Section 4 (b) hereof such conversion shall be deemed to have been made
immediately prior to the closing of the offering referred to in Section 4 (b))
and the person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on such date.
(d) Fractional Shares. In lieu of any fractional shares
to which the holder of Preferred Stock would otherwise be entitled, the
corporation shall pay cash equal to such fraction multiplied by the fair market
value of one share of Common Stock as reasonably determined by the board of
directors of the corporation. Whether or not fractional shares are issuable
upon such conversion shall be determined on the basis of the total number of
shares of Preferred stock of each holder to be converted at such time into
Common Stock and the number of shares of Common Stock issuable upon such
conversion.
(e) Adjustment of Conversion Price. The Conversion
Prices of each series of Preferred Stock shall be subject to adjustment from
time to time as follows:
(i) If the corporation shall issue or sell, any
Common Stock other than "Excluded Stock," as defined below, for a
consideration per share less than the Conversion Price of the Series A
Preferred Stock in effect immediately prior to the issuance of such Common
Stock (excluding stock dividends, subdivisions, split-ups, combinations,
dividends or recapitalizations which are covered by Sections 4(e)(iii), (iv),
(v), and (vi)), the Conversion Price of the Series A Preferred Stock in effect
after each such issuance shall thereafter (except as provided in this Section
4(e)) be adjusted to a price equal to the quotient obtained by dividing:
(A) an amount equal to the sum of
(x) the total number of shares of
Common Stock outstanding (including any shares of Common Stock issuable upon
conversion of the Preferred Stock, or deemed to have been issued pursuant to
subdivision (3) of this clause (i) and to clause (ii) below) immediately prior
to such issuance multiplied by the Conversion Price of the Series A Preferred
Stock in effect immediately prior to such issuance, plus
(y) the consideration received by
the corporation upon such issuance, by
(B) the total number of shares of Common
Stock outstanding (including any shares of Common Stock issuable upon
conversion of the Preferred Stock or deemed to have been issued pursuant to
subdivision (3) of this clause (i) and to
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clause (ii) below) immediately prior to such issuance plus the additional
shares of Common Stock issued in such issuance (but not including any
additional shares of Common Stock deemed to be issued as a result of any
adjustment in the Conversion Price of the Series A Preferred Stock resulting
from such issuance).
For purposes of any adjustment of the conversion Price
of the Series A Preferred Stock pursuant to this clause (i), the following
provisions shall be applicable:
(1) In the case of the issuance of
Common Stock for cash, the consideration shall be deemed to be the amount of
cash paid therefor after deducting any discounts or commissions paid or
incurred by the corporation in connection with the issuance and sale thereof.
(2) In the case of the issuance of
Common Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market value
thereof as determined by the board of directors of the corporation, in
accordance with generally accepted accounting treatment; provided, however,
that if, at the time of such determination, the corporation's Common Stock is
traded in the over-the-counter market or on a national or regional securities
exchange, such fair market value as determined by the board of directors of the
corporation shall not exceed the aggregate "Current Market Price" (as defined
below) of the shares of Common Stock being issued.
(3) In the case of the issuance of (i)
options to purchase or rights to subscribe for Common Stock (other than
Excluded Stock), (ii) securities by their terms convertible into or
exchangeable for Common Stock (other than Excluded Stock), or (iii) options to
purchase or rights to subscribe for such convertible or exchangeable
securities:
(A) the aggregate maximum number of
shares of Common Stock deliverable upon exercise of such options to purchase or
rights to subscribe for Common Stock shall be deemed to have been issued at the
time such options or rights were issued and for a consideration equal to the
consideration (determined in the manner provided in subdivisions (1) and (2)
above), if any, received by the corporation upon the issuance of such options
or rights plus the minimum purchase price provided in such options or rights
for the Common Stock covered thereby;
(B) the aggregate maximum number of
shares of Common Stock deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities or upon the exercise of options to
purchase or rights to subscribe for such convertible or exchangeable securities
and subsequent con-
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version or exchange thereof, shall be deemed to have been issued at the time
such securities were issued or such options or rights were issued and for a
consideration equal to the consideration received by the corporation for any
such securities and related options or rights (excluding any cash received on
account of accrued interest or accrued dividends), plus the minimum additional
consideration, if any, to be received by the corporation upon the conversion or
exchange of such securities or the exercise of any related options or rights
(the consideration in each case to be determined in the manner provided in
subdivisions (1) and (2) above);
(C) on any change in the number of
shares of Common Stock deliverable upon exercise of any such options or rights
or conversion of or exchange for such convertible or exchangeable securities,
or on any change in the minimum purchase price of such options, rights or
securities, other than a change resulting from the antidilution provisions of
such options, rights or securities, the Conversion Price of the Series A
Preferred Stock shall forthwith be readjusted to such Conversion Price as would
have obtained had the adjustment made upon (x) the issuance of such options,
rights or securities not exercised, converted or exchanged prior to such
change, as the case may be, been made upon the basis of such change or (y) the
options or rights related to such securities not converted or exchanged prior
to such change, as the case may be, been made upon the basis of such change;
and
(D) on the expiration of any such
options or rights, the termination of any such rights to convert or exchange or
the expiration of any options or rights related to such convertible or
exchangeable securities, the Conversion Price of the Series A Preferred Stock
shall forthwith be readjusted to such Conversion Price as would have obtained
had the adjustment made upon the issuance of such options, rights, convertible
or exchangeable securities or options or rights related to such convertible or
exchangeable securities, as the case may be, been made upon the basis of the
issuance of only the number of shares of Common Stock actually issued upon the
exercise of such options or rights, upon the conversion or exchange of such
convertible or exchangeable securities or upon the exercise of the options or
rights related to such convertible or exchangeable securities, as the case may
be.
(ii) "Excluded Stock" shall mean:
(A) all shares of Common Stock issued or
issuable to officers, directors, consultants or employees of the corporation
pursuant to any plan or arrangement approved by the board of directors of the
corporation; and
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(B) all shares of Series A Preferred
Stock and the Common Stock into which the shares of Series A Preferred Stock
are convertible.
(C) all shares of Series B1, Series B2,
and Series B3 Preferred Stock and the Common Stock into which the shares of
Series B1, Series B2, and Series B3 Preferred Stock are convertible.
All outstanding shares of Excluded Stock
(including any shares issuable upon conversion of the Preferred Stock but
excluding shares reserved for issuance for option plans for which options have
not yet been granted) shall be deemed to be outstanding for all purposes of the
computations of Section 4(e)(i) above.
(iii) If the number of shares of Common Stock
outstanding at any time after the date hereof is increased by a stock dividend
payable in shares of Common Stock or by a subdivision or split-up of shares of
Common Stock, then, on the date such payment is made or such change is
effective, the Conversion Price of each series of Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock issuable
on conversion of any shares of such series of Preferred Stock shall be
increased in proportion to such increase of outstanding shares.
(iv) If the number of shares of Common Stock
outstanding at any time after the date hereof is decreased by a combination of
the outstanding shares of Common Stock, then, on the effective date of such
combination, the Conversion Price of each series of Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock issuable
on conversion of any shares of such series of Preferred Stock shall be
decreased in proportion to such decrease in outstanding shares.
(v) In case the corporation shall declare a cash
dividend upon its Common Stock payable otherwise than out of retained earnings
or shall distribute to holders of its Common Stock shares of capital stock
(other than Common Stock), stock or other securities of other persons,
evidences of indebtedness issued by the corporation or other persons, assets
(excluding cash dividends) or options or rights (excluding options to purchase
and rights to subscribe for Common Stock or other securities of the corporation
convertible into or exchangeable for Common Stock), then, in each such case,
the holders of shares of Preferred Stock shall, concurrent with the
distribution to holders of Common Stock, receive a like distribution based upon
the number of shares of Common Stock into which each series of Preferred Stock
is convertible.
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(vi) In case, at any time after the date hereof,
of any capital reorganization, or any reclassification of the stock of the
corporation (other than as a result of a stock dividend or subdivision,
split-up or combination of shares), or the consolidation or merger of the
corporation with or into another person (other than a consolidation or merger
in which the corporation is the continuing entity and which does not result in
any change in the Common Stock), or of the sale or other disposition of all or
substantially all the properties and assets of the corporation, the shares of
Preferred Stock shall, after such reorganization, reclassification,
consolidation, merger, sale or other disposition, be convertible into the kind
and number of shares of stock or other securities or property of the
corporation or otherwise to which such holder would have been entitled if
immediately prior to such reorganization, reclassification, consolidation,
merger, sale or other disposition he had converted his shares of Preferred
Stock into Common Stock. The provisions of this clause (vi) shall similarly
apply to successive reorganizations, reclassifications, consolidations,
mergers, sales or other dispositions.
(vii) All calculations under this Section 4 shall
be made to the nearest cent or to the nearest one hundredth (1/100) of a share,
as the case may be.
(viii) For the purpose of any computation pursuant
to this section 4(e), the "Current Market Price" at any date of one share of
Common Stock, shall be deemed to be the average of the highest reported bid and
the lowest reported offer prices on the preceding business day as furnished by
the National Quotation Bureau, Incorporated (or equivalent recognized source of
quotations); provided, however, that if the Common Stock is not traded in such
manner that the quotations referred to in this clause (viii) are available for
the period required hereunder, Current Market Price shall be determined in good
faith by the board of directors of the corporation, but if challenged by the
holders of more than 50% of the outstanding Preferred Stock, then as determined
by an independent appraiser selected by the board of directors of the
corporation, the cost of such appraisal to be borne by the challenging parties.
(f) Minimal Adjustments. No adjustment in the Conversion
Price need be made if such adjustment would result in a change in the
Conversion Price of less than $0.01. Any adjustment of less than $0.01 which
is not made shall be carried forward and shall be made at the time of and
together with any subsequent adjustment which, on a cumulative basis, amounts
to an adjustment of $0.01 or more in the Conversion Price. At no time,
however, shall the Conversion Price be adjusted upward for subsequent issuances
or sales for a consideration per share higher than the then current conversion
price.
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(g) No Impairment. The corporation will not through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 4 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of Preferred Stock against impairment.
(h) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Conversion Rate pursuant to this Section
4, the corporation at its expense shall promptly computed such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Preferred Stock a Certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The corporation shall, upon written request at any time
of any holder of preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (i) such adjustments and readjustments,
(ii) the Conversion Rate of such series at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversions of such holder's shares of
Preferred Stock.
(i) Notices of Record Date. In the event of any taking
by the corporation of a record of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class
or any other securities or property or to receive any other right, the
corporation shall mail to each holder of Preferred Stock at least twenty (20)
days prior to such record date, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend or distribution or
right, and the amount and character of such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon conversion. The
corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of Preferred Stock such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of Preferred Stock, the
corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its
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authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.
(k) Notices. Any notice required by the provisions of
this Section 4 to be given to the holder of shares of Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of the
corporation.
(l) Reissuance of Converted-Shares. No shares of
Preferred stock which have been converted into Common Stock after the original
issuance thereof shall ever again be reissued and all such shares so converted
shall upon such conversion cease to be a part of the authorized shares of the
corporation.
5. Protective Provisions. So long as shares of Preferred Stock
are outstanding, this corporation shall not, and shall not permit any
subsidiary to, without first obtaining the approval (by vote or written
consent, as provided by law) of the holders of at least a majority of the then
outstanding shares of Preferred Stock:
(a) sell, lease, convey, assign or otherwise dispose of
or encumber all or substantially all of its property, assets or business or of
any of its subsidiaries' property, assets or business or merge into or
consolidate with any other corporation (other than a wholly owned subsidiary
corporation) or effect any transaction or series of related transactions in
which more than 50% of the voting power of the corporation is disposed of or
effect any reclassification or other change of any stock, or any
recapitalization or dissolution, liquidation or winding up of the corporation
or make any agreement to become obligated to do so;
(b) repurchase, redeem or otherwise acquire for value any
shares of Common Stock except repurchases of Common Stock at the original
issuance price from employees, officers, directors and consultants pursuant to
the terms of the agreement between the Company and such purchasers pursuant to
which the corporation has the option to repurchase such shares upon the
occurrence of certain events, including the termination of employment by or
service to the corporation or any subsidiary of the corporation:
(c) change or alter the rights, preferences, privileges
or restrictions of the Preferred Stock;
(d) increase or decrease the aggregate number of
authorized shares of Preferred Stock, other than an increase as provided in
either subdivision (b) of Section 405 or subdivision (c) of Section 902 of the
California Corporations Code;
(e) create a new class or series of shares having rights,
preferences or privileges prior to or on parity with the
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Preferred Stock or increase the rights, preferences or privileges or the number
of authorized shares of any class having rights, preferences or privileges
prior to or on parity with the Preferred Stock; for purposes of this
subsection, any indebtedness convertible into or exchangeable for a new class
or series of shares of capital stock of the corporation shall be considered to
be a new class or series of shares having rights, preferences, privileges or
restrictions prior to the Preferred Stock;
(f) increase or decrease the corporation's authorized
capitalization;
(g) declare or pay any dividends on or declare or make
any other distribution, direct or indirect, (other than a dividend payable
solely in shares of Common Stock) on account of the Common Stock or any other
shares of the corporation or set apart any sum for any such purpose; or
(h) amend this Amended and Restated Articles of
incorporation.
6. Status of Converted Stock. In the event any shares of
Preferred Stock shall be converted, the shares so converted shall be canceled
and shall not be issuable by the corporation, and the Articles of
Incorporation, as amended, of this corporation shall be appropriately amended
to effect the corresponding reduction in the corporation's authorized capital
stock.
V.
1. Limitation of Directors' Liability. The liability of the
directors of this corporation for monetary damages shall be eliminated to the
fullest extent permissible under California law.
2. Indemnification of Corporate Agents. This corporation is
authorized to indemnify its agents to the fullest extent permissible under
California law. For purposes of this provision the term "agent" has the
meaning set forth in Section 317 of the California Corporations Code.
3. Repeal or Modification. Any repeal or modification of the
foregoing provisions of this Article V shall not adversely affect any right of
indemnification or limitation of liability of an agent of this corporation
relating to acts or omissions occurring prior to such repeal or modification.
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THREE: The foregoing amendment and restatement of the Restated
Articles of Incorporation has been approved by the Board of Directors.
FOUR: The foregoing amendment and restatement of the Restated
Articles of Incorporation has been duly approved by the required vote of the
shareholders in accordance with Section 902 of the Corporations Code. The
total number of outstanding shares entitled to vote with respect to the
amendment is 7,045,000 shares of Common Stock and 2,000,000 shares of Series A
Preferred Stock. The number of shares voting in favor of the amendment equaled
or exceeded the vote required. The percentage vote required was a majority of
the outstanding shares of Common Stock and a majority of the outstanding shares
of Preferred Stock.
We declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge. Executed at San Diego, California on April ____, 1995.
-------------------------------------
Tsvi Goldenberg, Ph.D.,
Chairman of the Board and
Chief Executive Officer
-------------------------------------
J. Casey McGlynn, Secretary
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EXHIBIT C
SCHEDULE OF EXCEPTIONS
This Schedule of Exceptions, dated as of May 3, 1995 is made and given
pursuant to Section 2 of the Immusol, Inc. (the ("Company") Preferred Stock
Purchase Agreement of even date herewith (the "Agreement"). The paragraph
numbers in this Schedule of Exceptions correspond to the paragraph numbers in
the Agreement; however, any information disclosed herein under any paragraph
number shall be deemed to be disclosed and incorporated into any other
paragraph number under the Agreement where such disclosure would be
appropriate. Any terms defined in the Agreement shall have the same meaning
when used in this Schedule of Exceptions as when used in the Agreement unless
the context otherwise requires.
2.2 Capitalization.
(c) The Company has granted an option exercisable for up to
10,000 shares.
(d) Under Section 4.2 of the Exclusive License Agreement with
the Regents of the University of California (the "Regents") dated December 7,
1993 ("License Agreement") and Section 4 of the Appendix A to the License
Agreement, the Company must transfer to the Regents that whole number of shares
of Series B1 Preferred Stock equal to an aggregate value of $40,000.
2.9 Patents and Other Intangible Assets.
(a) Ribozyme Pharmaceutical, Inc. ("RPI") owns patents
regarding certain enzymatic RNAs. However, Ken Weber of Townsend and Townsend
et. al. states in a letter to the Company dated April 12, 1994 that a court
would not interpret RPI's patent claims to embrace hairpin ribozymes and that
the Company does not infringe RPI's patent(s).
(b) The Company has a Patent License Agreement with the
Chinese Academy of Preventive Medicine ("CAPM") dated December 20, 1994
("Patent Agreement"). Under the Patent Agreement, CAPM grants to the Company
an exclusive, royalty-bearing license to the U.S. patent application Serial No.
08/221,380. In consideration for the Patent Agreement, the Company has paid to
CAPM a nonrefundable license fee of $50,000, and shall pay to CAPM royalties on
sales of products resulting from the licensed technology.
40
2.11 Agreements; Action.
(a) The Company has an employment agreement with Tsvi
Goldenberg, Ph.D., the Chairman of the Board and Chief Executive officer of the
Company, dated April 26, 1994 ("Employment Agreement"). The Employment
Agreement is an at-will employment agreement, specifies Dr. Goldenberg's annual
salary, and provides a severance payment equal to nine months of Dr.
Goldenberg's then annual salary.
(b) The License Agreement remains in effect for the life
of the last-to-expire patent licensed under such agreement or until December
7, 2013 if no patent licensed under such agreement issues. Under the License
Agreement, the Company is obligated to pay royalty payments, with defined
annual minimums, and annual license maintenance fees. The Company must pay an
earned royalty of between 2% and 6% of nets sales of certain products defined
in the License Agreement during the term of such agreement. The minimum annual
royalty payments range between $50,000 and $200,000 beginning with the first
year the Company sells FDA approved products. The license maintenance fees,
which is not credited towards the royalty payments, range between $10,000 and
$200,000 per year.
The Company has a Master Lease Agreement dated November 18,
1994 ("Lease Agreement") with Comdisco, Inc. ("Comdisco"). The Lease Agreement
provides a lease line of up to $250,000, in the aggregate, for equipment leases
and subjects the Company to payments of between 24-60 months as lease payments
for certain equipments. As of the date herein, the Company has drawn down
approximately $85,000 from the available lease line.
The Company has a sublease agreement with Hybritech for the
Company's operations at 3050 Science Park Road, San Diego, CA 92121 which
expires on May 16, 1996. The Company subleases 23,905 square feet and
currently pays a monthly rent of $45,897.60, which will increase to $47,733.50
on June 17, 1995. The Company also pays its pro rata share of insurance, taxes
and common area expenses.
The Company subsubleases 11,987 square feet of its subleased
area to Idun Pharmaceuticals, Inc. ("Idun"). The current monthly rent payment
is $23,495, which will increase to $24,434.80 on June 17, 1995. Idun pays to
the Company its pro rata share of insurance, taxes and common area expenses.
In conjunction with the Agreement, the Company shall enter
into a License and Royalty Agreement and a Collaborative Research Agreement
with Pfizer Ltd.
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EXHIBIT D
IMMUSOL, INC.
PROPRIETARY INFORMATION AGREEMENT
As a condition of my employment with Immusol, Inc., its subsidiaries,
affiliates, successors or assigns (together the "COMPANY"), and in
consideration of my employment with the Company and my receipt of the
compensation now and hereafter paid to me by Company, I agree to the following:
I. At-Will Employment. I understand and acknowledge that my
employment with the Company is for an unspecified duration and constitutes
"at-will" employment. I acknowledge that this employment relationship may be
terminated at any time, with or without good cause or for any or no cause, at
the option either of the Company or myself, with or without notice.
II. Confidential Information.
A. Company Information. I agree at all times during the
term of my employment and thereafter, to hold in strictest confidence, and not
to use, except for the benefit of the Company, or to disclose to any person,
firm or corporation without written authorization of the Board of Directors of
the Company, any Confidential Information of the Company. I understand that
"Confidential Information" means any Company proprietary information, technical
data, trade secrets or know-how, including, but not limited to, research,
product plans, products, services, customer lists and customers (including, but
not limited to, customers of the Company on whom I called or with whom I became
acquainted during the term of my employment), markets, software, developments,
inventions, processes, formulas, technology, designs, drawings, engineering,
hardware configuration information, marketing, finances or other business
information disclosed to me by the Company either directly or indirectly in
writing, orally or by drawings or observation of parts or equipment. I further
understand that Confidential Information does not include any of the foregoing
items which has become publicly known and made generally available through no
wrongful act of mine or of others who were under confidentiality obligations as
to the item or items involved.
B. Former Employer Information. I agree that I will
not, during my employment with the Company, improperly use or disclose any
proprietary information or trade secrets of any former or concurrent employer
or other person or entity and that I will not bring onto the premises of the
Company any unpublished document or proprietary information belonging to any
such employer, person
42
or entity unless consented to in writing by such employer, person or entity.
C. Third Party Information. I recognize that the
Company has received and in the future will receive from third parties their
confidential or proprietary information subject to a duty on the Company's part
to maintain the confidentiality of such information and to use it only for
certain limited purposes. I agree to hold all such confidential or proprietary
information in the strictest confidence and not to disclose it to any person,
firm or corporation or to use it except as necessary in carrying out my work
for the Company consistent with the Company's agreement with such third party.
III. Inventions.
A. Inventions Retained and Licensed. I have attached
hereto, as Exhibit A, a list describing all inventions, original works of
authorship, developments, improvements, and trade secrets which were made by me
prior to my employment with the Company (collectively referred to as "PRIOR
INVENTIONS") , which belong to me, which relate to the Company's proposed
business, products or research and development, and which are not assigned to
the Company hereunder; or, if no such list is attached, I represent that there
are no such Prior Inventions. If in the course of my employment with the
Company, I incorporate into a Company product, process or machine a Prior
Invention owned by me or in which I have an interest, the Company is hereby
granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual,
worldwide license to make, have made, modify, use and sell such Prior Invention
as part of or in connection with such product, process or machine.
B. Assignment of Inventions. I agree that I will
promptly make full written disclosure to the Company, will hold in trust for the
sole right and benefit of the Company, and hereby assign to the Company, or its
designee, all my right, title, and interest in and to any and all inventions,
original works of authorship, developments, concepts, improvements or trade
secrets, whether or not patentable or registrable under copyright or similar
laws, which I may solely or jointly conceive or develop or reduce to practice,
or cause to be conceived or developed or reduced to practice, during the period
of time I am in the employ of the Company (collectively referred to as
"INVENTIONS"), except as provided in Section 3(f) below. I further acknowledge
that all original works of authorship which are made by me (solely or jointly
with others) within the scope of and during the period of my employment with
the Company and which are predictable by copyright are "works made for hire,"
as that term is defined in the United States Copyright Act.
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43
C. Inventions Assigned to the United States. I agree to
assign to the United States government all my right, title, and interest in and
to any and all Inventions whenever such full title is required to be in the
United States by a contract between the Company and the United States or any of
its agencies.
D. Maintenance of Records. I agree to keep and maintain
adequate and current written records of all Inventions made by me (solely or
jointly with others) during the term of my employment with the Company. The
records will be in the form of notes, sketches, drawings, and any other format
that may be specified by the Company. The records will be available to and
remain the sole property of the Company at all times.
E. Patent and Copyright Registrations. I agree to
assist the Company, or its designee, at the Company's expense, in every proper
way to secure the Company's rights in the Inventions and any copyrights,
patents, mask work rights or other intellectual property rights relating
thereto in any and all countries, including the disclosure to the Company of
all pertinent information and data with respect thereto, the execution of all
applications, specifications, oaths, assignments and all other instruments
which the Company shall deem necessary in order to apply for and obtain such
rights and in order to assign and convey to the Company, its successors,
assigns and nominees the sole and exclusive rights, title and interest in and
to such Inventions, and any copyrights, patents, mask work rights or other
intellectual property rights relating thereto. I further agree that my
obligation to execute or cause to be executed, when it is in my power to do so,
any such instrument or papers shall continue after the termination of this
Agreement. If the Company is unable because of my mental or physical
incapacity or for any other reason to secure my signature to apply for or to
pursue any application for any United States or foreign patents or copyright
registrations covering Inventions or original works of authorship assigned to
the Company as above, then I hereby irrevocably designate and appoint the
Company and its duly authorized officers and agents as my agent and attorney in
fact, to act for and in my behalf and stead to execute and file any such
applications and to do all other lawfully permitted acts to further the
prosecution and issuance of letters patent or copyright registrations thereon
with the same legal force and effect as if executed by me.
F. Exception to Assignments. I understand that the
provisions of this Agreement requiring assignment of Inventions to the Company
do not apply to any invention which qualifies fully under the provisions of
California Labor Code Section 2870 (attached hereto as Exhibit B). I will
advise the Company promptly in writing of any inventions that I believe meet
the criteria in California Labor Code Section 2870 and not otherwise disclosed
on Exhibit A.
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44
IV. Conflicting Employment. I agree that, during the term of
my employment with the Company, I will not engage in any other employment,
occupation, consulting or other business activity directly related to the
business in which the Company is now involved or becomes involved during the
term of my employment, nor will I engage in any other activities that conflict
with my obligations to the Company.
V. Returning Company Documents. I agree that, at the time of
leaving the employ of the Company, I will deliver to the Company (and will not
keep in my possession, recreate or deliver to anyone else) any and all devices,
records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, materials, equipment, other
documents or property, or reproductions of any aforementioned items developed
by me pursuant to my employment with the Company or otherwise belonging to the
Company, its successors or assigns. In the event of the termination of my
employment, I agree to sign and deliver the "TERMINATION CERTIFICATION"
attached hereto as Exhibit C.
VI. Notification to New Employer. In the event that I leave the
employ of the Company, I hereby grant consent to notification by the Company to
my new employer about my rights and obligations under this Agreement.
VII. Solicitation of Employees. I agree that for a period of
twelve (12) months immediately following the termination of my relationship
with the Company for any reason, whether with or without cause, I shall not
either directly or indirectly solicit, induce, recruit or encourage any of the
Company's employees to leave their employment, or take away such employees, or
attempt to solicit, induce, recruit, encourage or take away employees of the
Company, either for myself or for any other person or entity.
VIII. Conflict of Interest Guidelines. I agree to diligently adhere
to the Conflict of Interest Guidelines attached as Exhibit D hereto.
IX. Representations. I agree to execute any proper oath or verify
any proper document required to carry out the terms of this Agreement. I
represent that my performance of all the terms of this Agreement will not
breach any agreement to keep in confidence proprietary information acquired by
me in confidence or in trust prior to my employment by the Company. I have not
entered into, and I agree I will not enter into, any oral or written agreement
in conflict herewith.
X. Arbitration and Equitable Relief.
A. Arbitration. Except as provided in Section 10(b) below,
I agree that any dispute or controversy arising out of or
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45
relating to any interpretation, construction, performance or breach of this
Agreement, shall be settled by arbitration to be held in Santa Clara County,
California, in accordance with the rules then in effect of the American
Arbitration Association. The arbitrator may grant injunctions or other relief
in such dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgement may
entered on the arbitrator's decision in any court having jurisdiction. The
Company and I shall each pay one-half of the costs and expenses of such
arbitration, and each of us shall separately pay our counsel fees and expenses.
B. Equitable Remedies. I agree that it would be
impossible or inadequate to measure and calculate the Company's damages from
any breach of the covenants set forth in Sections 2, 3, and 5 herein.
Accordingly, I agree that if I breach any of such Sections, the Company will
have available, in addition to any other right or remedy available, the right
to obtain an injunction from a court of competent jurisdiction restraining such
breach or threatened breach and to specific performance of any such provision
of this Agreement. I further agree that no bond or other security shall be
required in obtaining such equitable relief and I hereby consent to the
issuance of such injunction and to the ordering of specific performance.
XI. General Provisions
A. Governing Law; Consent to Personal Jurisdiction.
This Agreement will be governed by the laws of the State of California. I
hereby expressly consent to the personal jurisdiction of the state and federal
courts located in California for any lawsuit filed there against me by the
Company arising from or relating to this Agreement.
B. Entire Agreement. This Agreement sets forth the
entire agreement and understanding between the Company and me relating to the
subject matter herein and merges all prior discussions between us. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this agreement, will be effective unless in writing signed by the party
to be charged. Any subsequent change or changes in my duties, salary or
compensation will not affect the validity or scope of this Agreement.
C. Severability. If one or more of the provisions in
this Agreement are deemed void by law, then the remaining provisions will
continue in full force and effect.
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46
D. Successors and Assigns. This Agreement will be
binding upon my heirs, executors, administrators and other legal representatives
and will be for the benefit of the Company, its Successors, and its assigns.
Date:
----------------------
-----------------------------------
Signature
-----------------------------------
Name of Employee
(typed or printed)
- ---------------------------
Witness
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47
EXHIBIT A
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
Identifying Number
Title Date or Brief Description
- ------------------------- ---------- -------------------------------
_____ No inventions or improvements
_____ Additional Sheets Attached
Signature of Employee: __________________________________________
Print Name of Employee: __________________________________________
Date: ______________________
48
EXHIBIT B
CALIFORNIA LABOR CODE SECTION 2870
EMPLOYMENT AGREEMENTS; ASSIGNMENT OF RIGHTS
"(a) Any provision in an employment agreement which provides that
an employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to
practice of the invention to the employer's business, or actual or demonstrably
anticipated research or development of the employer.
(2) Result from any work performed by the employee for
the employer.
(b) To the extent a provision in an employment agreement purports
to require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable."
49
EXHIBIT C
IMMUSOL, INC.
TERMINATION CERTIFICATION
This is to certify that I do not have in my possession, nor have I
failed to return, any devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items belonging to Immusol, Inc. its subsidiaries, affiliates, successors or
assigns (together, the "COMPANY") .
I further certify that I have complied with all the terms of the
Company's Employment, Confidential Information and Invention Assignment
Agreement signed by me, including the reporting of any inventions and original
works of authorship (as defined therein), conceived or made by me (solely or
jointly with others) covered by that agreement.
I further agree that, in compliance with the Proprietary Information
Agreement, I will preserve as confidential all trade secrets, confidential
knowledge, data or other proprietary information relating to products,
processes, know-how, designs, formulas, developmental or experimental work,
computer programs, data bases, other original works of authorship, customer
lists, business plans, financial information or other subject matter pertaining
to any business of the Company or any of its employees, clients, consultants or
licensees.
I further agree that for twelve (12) months from this date, I will not
hire any employees of the Company and I will not solicit, induce, recruit or
encourage any of the Company's employees to leave their employment.
Date:
-----------------------
------------------------------------
(Employee's Signature)
-------------------------------------
(Type/Print Employee's Name)
50
EXHIBIT D
IMMUSOL, INC.
CONFLICT OF INTEREST GUIDELINES
It is the policy of Immusol, Inc. to conduct its affairs in strict
compliance with the letter and spirit of the law and to adhere to the highest
principles of business ethics. Accordingly, all officers, employees and
independent contractors must avoid activities which are in conflict, or give
the appearance of being in conflict, with these principles and with the
interests of the Company. The following are potentially compromising
situations which must be avoided. Any exceptions must be reported to the
President and written approval for continuation must be obtained.
1. Revealing confidential information to outsiders or misusing
confidential information. Unauthorized divulging of information is a violation
of this policy whether or not for personal gain and whether or not harm to the
Company is intended. (The Employment, Confidential Information and Invention
Assignment Agreement elaborates on this principle and is a binding agreement.)
2. Accepting or offering substantial gifts, excessive
entertainment, favors or payments which may be deemed to constitute undue
influence or otherwise be improper or embarrassing to the Company.
3. Participating in civic or professional organizations that
might involve divulging confidential information of the Company.
4. Initiating or approving personnel actions affecting reward or
punishment of employees or applicants where there is a family relationship or
is or appears to be a personal or social involvement.
5. Initiating or approving any form of personal or social
harassment of employees.
6. Investing or holding outside directorships in suppliers,
customers or competing companies, including financial speculation, where such
investment or directorship might influence in any manner a decision or course
of action of the Company.
7. Borrowing from or lending to employees, customers or
suppliers.
51
8. Acquiring real estate of interest to the Company.
9. Improperly using or disclosing to the Company any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity with whom obligations of confidentiality exist.
10. Unlawfully discussing prices, costs, customers, sales or
markets with competing companies or their employees.
11. Making any unlawful agreements with distributors with respect
to prices.
12. Improperly using or authorizing the use of any inventions
which are the subject of patent claims of any other person or entity.
13. Engaging in any conduct which is not in the best interest of
the Company.
Each officer, employee and independent contractor must take every
necessary action to ensure compliance with these guidelines and to bring
problem areas to the attention of higher management for review. Violations of
this conflict of interest policy may result in discharge without warning.
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52
EXHIBIT E
May 3, 1995
To the Investors Listed in
Exhibit A to the Immusol, Inc.
Preferred Stock Purchase
Agreement Dated as of May 3, 1995
Ladies and Gentlemen:
Reference is made to the Preferred Stock Purchase Agreement of even
date herewith (the "Agreement"), complete with all listed exhibits thereto
(together, the "Agreements"), by and among Immusol, Inc., a California
corporation (the "Company"), and the persons and entities listed in Exhibit A
to the Agreement (the "Investors"), which provides for the present and future
issuances by the Company to the Investors of shares of Series B1, Series B2,
and Series B3 Preferred Stock of the Company (the "Shares"). This opinion is
rendered to you pursuant to Section 5.6 of the Agreement, and all terms used
herein have the meanings defined for them in the Agreement unless otherwise
defined herein.
We have acted as counsel for the Company in connection with the
negotiation of the Agreements and the issuance of the Shares. As such counsel,
we have made such legal and factual examinations and inquiries as we have
deemed advisable or necessary for the purpose of rendering this opinion. In
addition, we have examined originals or copies of such corporate records of the
Company, certificates of public officials and such other documents which we
consider necessary or advisable for the purpose of rendering this opinion. In
such examination we have assumed the genuineness of all signatures on original
documents, the authenticity and completeness of all documents submitted to us
as originals, the conformity to original documents of all copies submitted to
us and the due execution and delivery of all documents (except as to due
execution and delivery by the Company) where due execution and delivery are a
prerequisite to the effectiveness thereof.
As used in this opinion, the expression "to our knowledge," "known to
us" or similar language with reference to matters of fact means that, after an
examination of documents made available to us by the Company, and after
inquiries of officers of the Company, but without any further independent
factual investigation, we find no reason to believe that the opinions expressed
herein are factually incorrect. Further, the expression "to our knowledge",
"known to
53
WILSON SONSINI GOODRICH & ROSATI
us" or similar language with reference to matters of fact refers to the current
actual knowledge of the attorneys of this firm who have worked on matters for
the Company. Except to the extent expressly set forth herein or as we
otherwise believe to be necessary to our opinion, we have not undertaken any
independent investigation to determine the existence or absence of any fact,
and no inference as to our knowledge of the existence or absence of any fact
should be drawn from our representation of the Company or the rendering of the
opinion set forth below.
For purposes of this opinion, we are assuming the following:
(a) Each Investor has all requisite power and authority, and has
taken any and all necessary corporate or partnership action, to execute and
deliver the Agreements;
(b) The representations and warranties made by the Investors in
the Agreement and pursuant thereto are true and correct;
(c) The Investors have purchased and will be purchasing the Shares
for value, in good faith and without notice of any adverse claims within the
meaning of the California Uniform Commercial Code; and
(d) The representations and warranties made by the Company in the
Agreement and pursuant thereto are true and correct as to matters of fact.
The opinions hereinafter expressed are subject to the following
qualifications:
(a) We express no opinion as to the effect of applicable
bankruptcy, insolvency, reorganization, moratorium or other similar federal or
state laws affecting the rights of creditors;
(b) We express no opinion as to the effect of rules of law
governing specific performance, injunctive relief or other equitable remedies
(regardless of whether any such remedy is considered in a proceeding at law or
in equity);
(c) We express no opinion as to compliance with the anti-fraud
provisions of applicable securities laws;
(d) We express no opinion as to the enforceability of the
indemnification provisions of Section 1.9 of the Amended and Restated
Shareholder Rights Agreement, which is attached as Exhibit F to the Agreement,
to the extent the provisions thereof may be subject to limitations of public
policy and the effect of applicable statutes and judicial decisions;
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WILSON SONSINI GOODRICH & ROSATI
this opinion addresses applicable securities laws of states other than the
State of California, we have not retained nor relied on the opinion of counsel
admitted to the bar of such states, but rather have relied on compilations of
the securities laws of such states contained in reporting services presently
available to us.
Based upon and subject to the foregoing, and except as set forth in
the Schedule of Exceptions to the Agreement, we are of the opinion that:
1. The Company is a corporation duly organized and validly
existing under, and by virtue of, the laws of the State of California and is in
good standing under such laws. The Company has requisite corporate power and
authority to own and operate its properties and assets, and to carry on its
business as presently conducted. The Company is not qualified to do business
as a foreign corporation in any jurisdiction and such qualification is not
presently required. The Company does not presently own or control, directly or
indirectly, any interest in any other corporation, association or other
business entity.
2. The Company has all requisite legal and corporate power and
authority to execute and deliver the Agreements, to sell and issue the Shares
thereunder, to issue the Common issuable upon conversion of the Shares and to
carry out and perform its obligations under the terms of the Agreements.
3. Immediately prior to the Initial Closing, the authorized
capital stock of the Company consists of 20,000,000 shares of Common Stock,
7,045,000 shares of which are issued and outstanding, and 3,491,700 shares of
Preferred Stock, of which 2,000,000 shares are designated Series A Preferred
Stock and 922,800, 264,600, and 304,300, shares are designated Series B1,
Series B2, and Series B3 Preferred Stock, respectively. Immediately prior to
the Initial Closing, 2,000,000 shares of Series A Preferred Stock and no shares
of Series B1, Series B2, and Series B3 Preferred Stock are issued and
outstanding. All such issued and outstanding shares of Common Stock and Series
A Preferred Stock have been duly authorized and validly issued and are fully
paid and nonassessable and free of any preemptive or similar rights contained
in the Restated Articles or bylaws of the Company or, to our knowledge, any
other preemptive or similar rights. The offer, issuance and sale of such
shares of Common Stock and Series A Preferred Stock were exempt from the
registration under the Act and were registered or qualified (or were exempted
from registration or qualification) under the registration or qualification
requirements of applicable state securities laws. The Common Stock issuable
upon conversion of the Shares has been duly and validly reserved for issuance,
and when issued in accordance with the Company's Restated Articles will be duly
and validly issued, fully paid and nonassessable, free and clear of all liens
and restrictions, other than liens created by Investors or by the Agreements,
and shall be issued in compliance with applicable securities laws, as presently
in effect, of the United States and each of the states who's securities laws
govern
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WILSON SONSINI GOODRICH & ROSATI
Shares has been duly and validly reserved for issuance, and when issued in
accordance with the Company's Restated Articles will be duly and validly
issued, fully paid and nonassessable, free and clear of all liens and
restrictions, other than liens created by Investors or by the Agreements, and
shall be issued in compliance with applicable securities laws, as presently in
effect, of the United States and each of the states who's securities laws
govern the issuance of the Shares hereunder. The Shares issued under the
Agreement are validly issued, fully paid and non-assessable and free and clear
of any liens or encumbrances; provided, however, that the Shares (and the
Common Stock issuable upon conversion thereof) may be subject to restrictions
on transfer under state or federal securities laws as set forth in the
Agreement. Neither the issuance, sale or delivery of the Shares (or the Common
Stock issuance upon the conversion thereof) is subject to any preemptive right
of the shareholders of the Company or to any rights of first refusal or other
rights in favor of any person. To our knowledge, except for rights described
in the Agreements, there are no other options, warrants, conversion privileges
or other rights presently outstanding to purchase or otherwise acquire any
authorized but unissued shares of capital stock or other equity or debt
securities of the Company, or any other agreements to issue any such securities
or rights. The stock certificates representing the Shares delivered to the
Investors at the Initial Closing have been duly authorized, executed and
delivered by the Company, and the form and content of such certificates comply
with all relevant provisions of the California Corporations Code.
4. All corporate action on the part of the Company, its officers,
directors and shareholders necessary for the authorization, execution and
delivery of the Agreements by the Company, the authorization, sale, issuance
and delivery of the Shares (and the Common Stock issuable upon conversion
thereof) and the performance of the Company's obligations under the Agreements
have been taken. The Agreements have been duly and validly executed and
delivered by the Company and constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with its terms.
5. To our knowledge, the business and operations of the Company
have been and are being conducted in substantial compliance with applicable
federal, state and local laws and rules and regulations, except in those
instances in which failure to comply would not materially and adversely affect
the Company, its business, properties or finances. The execution, delivery and
performance of and compliance with the terms of the Agreements and the issuance
of the Shares (and the Common Stock issuable upon conversion thereof), do not
violate any provision of the Restated Articles or bylaws or any provision of
any applicable federal or state law, rule or regulation. To our knowledge, the
execution, delivery and performance of and compliance with the Agreements and
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WILSON SONSINI GOODRICH & ROSATI
the issuance of the Shares (and the Common Stock issuable upon conversion
thereof) do not violate, or constitute a default under any material contract,
agreement, instrument, judgment or decree binding upon the Company.
6. To our knowledge, there are no actions, suits, proceedings or
investigations pending or threatened against the Company or its properties
before any court or governmental agency which, either in any case or in the
aggregate, are likely to result in any material adverse change in the business
or financial condition of the Company or any of its properties, or in any
material impairment of the right or ability of the Company to carry on its
business as now conducted, or which questions the validity of the Agreements or
any action taken or to be taken by the Company in connection therewith, and we
are not aware of any facts which might result in or form basis for any such
action, suit, proceeding or investigation. To our knowledge, the Company is
not in default with respect to any order, writ, judgement, injunction, decree,
determination or award of any court or of any government agency or
instrumentality.
7. No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the
Company is required in connection with the valid execution and delivery of the
Agreements or the offer, sale or issuance of the Shares (and the Common Stock
issuable upon conversion thereof) or the consummation of any other transaction
contemplated by the Agreements, except (a) filing of the Restated Articles in
the Office of the Secretary of State of the State of California, and (b)
qualification (or taking such action as may be necessary to secure an exemption
from qualification, if available) under the California Corporate Securities Law
and other applicable blue sky laws (but excluding jurisdictions outside of the
United States) of the offer and sale of the Shares (and the Common Stock
issuable upon conversion thereof) and the modification of rights of
shareholders contemplated by the Agreements. The filing referred to in clause
(a) above has been accomplished and is effective.
8. Subject to the accuracy of the Investors' representations in
Section 3 of the Agreement and their responses (if any) to the Company's
inquiries, we are of the opinion that the offer, sale and issuance of the
Shares in conformity with the terms of the Agreements constitute transactions
exempt from the registration requirements of Section 5 of the Securities Act of
1933, as amended and the qualification requirements of Section 25110 of the
California Corporations Code. Our opinion herein is subject to the timely and
proper completion of all filings and other actions contemplated herein where
such filings and actions are to be undertaken on or after the date hereof.
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WILSON SONSINI GOODRICH & ROSATI
This opinion is furnished to the Investors solely for their benefit in
connection with the purchase of the Shares, and may not be relied upon by any
other person or for any other purpose without our prior written consent.
Very truly yours,
WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation
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EXHIBIT F
AMENDED AND RESTATED SHAREHOLDER RIGHTS AGREEMENT
This Amended and Restated Shareholder Rights Agreement (the
"Agreement") is effective as of May 3, 1995 by and between Immusol, Inc. (the
"Company") and the investors designated on Exhibit A attached hereto (the
"Investors"). This Agreement amends and restates the Shareholder Rights
Agreement dated July 27, 1992 (the "Prior Agreement"), and such amendment and
restatement is effective upon the execution of this Agreement by the Company
and the Holders of at least a majority of the Registrable Securities under the
prior Agreement.
1. Registration Rights. The Company covenants and agrees as
follows:
1.1 Definitions. For purposes of this Section 1:
(a) The terms "register", "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Act including
any pre-effective or post-effective amendments necessary thereto, and the
declaration or ordering of effectiveness of such registration statement or
document;
(b) The term "Registrable Securities" means (i)
the Common Stock issuable or issued upon conversion of the Series A, Series B1,
Series B2, and Series B3 Preferred Stock (together, the "Preferred Stock") and
(2) any Common Stock of the Company issued as (or issuable upon the conversion
or exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for or in
replacement of, such Preferred Stock or Common Stock, excluding in all cases,
however, (i) any Registrable Securities sold by a person in a transaction in
which his rights under this Section 1 are not assigned, or (ii) any Registrable
Securities sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction.
(c) The number of shares of "Registrable
Securities then outstanding" shall be determined by the number of shares of
Common Stock outstanding which are, and the number of shares of Common Stock
issuable pursuant to then exercisable or convertible securities which are,
Registrable Securities.
(d) The term "Holder" means any person owning or
having the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.12 hereof; and
(e) The term "Form S-3" means such form under the
Act as in effect on the date hereof or any registration form under the Act
subsequently adopted by the Securities and Exchange Commis-
59
sion (the "SEC") which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
(f) The term "Act" shall mean the Securities Act
of 1933, as amended.
(g) The term "Purchase Agreements" shall mean the
series A Preferred Stock Purchase Agreement dated July 27, 1992 and the
Preferred Stock Purchase Agreement of even date herewith.
1.2 Request for Registration
(a) If the Company shall receive at any time
after the earlier of (i) December 31, 1997 or (ii) six (6) months after the
effective date of the first registration statement for a public offering of
Securities of the Company (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 a SEC Rule 145 transaction), a
written request from the Holders of at least 500,000 shares of the outstanding
Registrable Securities (including securities convertible into Registrable
Securities) that the Company file a registration statement under the Act
covering the registration of at least forty percent (40%) of the Registrable
Securities then held by the Holders, or a lesser number if the anticipated
aggregate offering price, net of underwriting discounts and commissions,
exceeds $7,500,000, then the Company shall, within ten (10) days of the receipt
thereof, give written notice of such request to all Holders and shall, subject
to the limitations of Section 1.2(b), effect as soon as practicable, and in any
event within ninety (90) days of the receipt of such request, the registration
under the Act of all Registrable Securities which the Holders request to be
registered within thirty (30) days of the mailing of such written notice by the
Company; provided, however, that the Company shall not be obligated to take any
action to effect any such registration, qualification or compliance pursuant to
this Section 1.2(a):
(i) During the period starting with the
date ninety (90) days prior to the Company's estimated date of filing of, and
ending on the date one hundred eighty (180) days immediately following the
effective date of, any registration statement pertaining to securities of the
Company (other than a registration of securities in a Rule 145 transaction or
with respect to an employee benefit plan), provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective;
(ii) After the Company has effected two
(2) such registrations pursuant to this Section 1.2(a), and such registrations
have been declared or ordered effective, provided
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that a request for registration under this Section 1.2(a) shall not Recounted
for such purpose unless the Registrable Securities included in such
registration as of the time of the pertinent registration statement became
effective were in fact registered and distributed in accordance with the
intended method of distribution; or
(iii) If the Company shall furnish to such
holders a certificate signed by the President of the Company stating that in
the good faith judgment of the Board of Directors it would be seriously
detrimental to the Company or its shareholders for a registration statement to
be filed at such time, then the company's obligation to use its best efforts to
register, qualify or comply under this Section 1.2(a) shall be deferred for a
period not to exceed one hundred eighty (180) days from the date of receipt of
written request from the Holders; provided, however, that the Company may not
utilize this right more than once in any twelve-month period.
(b) If the Holders initiating the registration
request hereunder (the "Initiating Holders") intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 1.2 and the Company shall include such information in the written
notice referred to in Section 1.2(a). In such event, the right of any Holder to
include such Holder's Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company as provided in Section 1.4(e)) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by a majority in interest of the Initiating Holders.
Notwithstanding any other provision of this Section 1.2, if the underwriter
advises the Initiating Holders in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the Initiating
Holders shall so advise all Holders of Registrable Securities which would
otherwise be underwritten pursuant hereto, and the number of shares of
Registrable Securities that may be included in the underwriting shall be
allocated among all Holders thereof, including the Initiating Holders, in
proportion (as nearly as practicable) to the amount of Registrable Securities
of the Company owned by each Holder.
1.3 Company Registration. If (but without any obligation
to do so) the Company proposes to register (including for this purpose a
registration effected by the Company for shareholders other than the Holders)
any of its stock or other securities under the Act in connection with the
public offering of such securities
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solely for cash (other than a registration relating solely to the sale of
securities to participants in a Company stock plan, or a registration on any
form which does not include substantially the information as would be required
to be included in a registration statement covering the sale of the Registrable
Securities) the company shall, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each holer given
within thirty (30) days after mailing of written notice by the Company, the
Company shall, subject to the provisions of Section 1.8, cause to be registered
under the Act all of the Registrable Securities that each such Holder has
requested to be registered. However, the Company shall not be obligated to
take any action to effect the registration of the Registrable Securities of the
Holders pursuant to this Section 1.3 after the Company has effected three (3)
such registrations pursuant to this Section 1.3, and such registrations have
been declared or ordered effective.
1.4 Obligations of the Company. Whenever required under
this section 1 to effect the registration of any Registrable securities, the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to one hundred
twenty (120) days.
(b) Prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Act with respect to the disposition of all securities
covered by such registration statement.
(c) Furnish to the Holders such numbers of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Securities owned
by them.
(d) Use its best efforts to register and qualify
the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders, and do any and all other acts and things reasonably
necessary or advisable to enable the sale or disposition in such jurisdictions
of the shares covered by the registration statement, provided that the Company
shall not be required in connection therewith or as a condition thereto to
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qualify to do business or to file a general consent to service of process in
any such states or jurisdictions.
(e) In the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall also enter into
and perform such Holder's obligations under such an agreement provided that
such underwriting agreement shall not provide for indemnification or
contribution obligations on the part of the Holders greater than the
obligations set forth in Section 1.9(b).
(f) Cooperate with the selling Holders, to
facilitate the timely preparation and delivery of certificates representing
shares to be sold and not bearing any restrictive legends, and enable such
shares to be in such denominations and registered in such names as the
prospective underwriters may request at least two (2) business days prior to
any sale of shares to the prospective underwriters.
(g) Cause all shares covered by any registration
statement to be listed on each securities exchange on which similar securities
issued by the Company are then listed if requested by the Holders of a majority
of the Registrable Securities. The company further agrees to provide a
transfer agent and registrar for such Registrable Securities covered by such
registration statement not later than the effective date of such registration
statement.
(h) Provide a CUSIP number of all shares of
stock, not later than the effective date of the registration statement.
(i) Notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(j) Furnish, at the request of any Holder
requesting registration of Registrable Securities pursuant to this Section 1,
on the date that such Registrable Securities are delivered to the underwriters
for sale in connection with a registration pursuant to this Section 1, if such
securities are being sold through underwriters, or, if such securities are not
being sold through underwriters, on the date that the registration statement
with respect to such securities becomes effective, (i) an
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opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities
and (ii) a letter dated such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable securities, if possible.
1.5 Furnish Information. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Section 1 with respect to the Registrable Securities of any selling Holder that
such holder shall furnish to the company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such
Holder's Registrable Securities.
1.6 Expenses of Demand Registration. All expenses other
than underwriting discounts and commissions incurred in connection with
registrations filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers,
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel for the selling Holders (not
to exceed $25,000) shall be borne by the Company; provided, however, that the
company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 1.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all Participating
Holders shall bear such expenses), unless the Holders of a majority of the
Registrable Securities agree to forfeit their right to a demand registration
pursuant to Section 1.2; provided further, however, that if at the time of such
withdrawal the Holders have learned of a material adverse change in the
conditions business, or prospects of the Company from that known to the Holders
at the time of their request, then the Holders shall not be required to pay any
of such expenses and shall retain their rights pursuant to Section 1.2.
1.7 Expenses of Company Registration. The Company shall
bear and pay all expenses incurred in connection with any registration, filing
or qualification of Registrable Securities with respect to all registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as
provided in Section 1.12), including (without limitation) all registration,
filing, and qualification fees, printers and accounting fees relating or
apportionable thereto and the fees and disbursements of one counsel for the
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selling Holders selected by them (not to exceed $25,000), but excluding
underwriting discounts and commissions relating to Registrable Securities.
1.8 underwriting Requirements. In connection with any
offering involving an underwriting of shares being issued by the Company, the
Company shall not be required under Section 1.3 to include any of the Holders,
securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the company and the underwriters selected
by it, and then only in such quantity as will not, in the opinion of the
underwriters, jeopardize the success of the offering by the Company; provided
that such underwriting agreement is in customary form and is reasonably
acceptable to the Holders of a majority of the Registrable Securities requested
to be included in such registration and does not provide for indemnification or
contribution obligations on the part of the Holders greater than the
obligations set forth in Section 1.9(b). If the total amount of securities,
including Registrable Securities, requested by shareholders to be included in
such offering exceeds the amount of securities sold other than by the company
that the underwriters reasonably believe compatible with the success of the
offering, then the Company shall be required to include in the offering only
that number of such securities , including Registrable Securities, which the
underwriters believe will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling
shareholders according to the total amount of securities entitled to be
included therein owned by each selling shareholder or in such other proportions
as shall mutually be agreed to by such selling shareholders) but in no event
shall any shares being sold by a shareholder exercising a demand registration
right similar to that granted in Section 1.2 be excluded from such offering.
For purposes of apportionment, any selling shareholder which is a Holder of
Registrable Securities and which is a partnership or corporation, the partners,
retired partners and shareholders of such Holder, or the estates and family
members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single "selling
shareholder", and any pro rata reduction with respect to such "selling
shareholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling shareholder", as defined in this sentence.
1.9 Indemnification. In the event any Registrable
Securities are included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company
will indemnify and hold harmless each Holder, each of it officers, directors
and agents, any underwriter (as defined in the Act) for
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such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the Securities Exchange Act of 1934, amended
(the 1934 Act") , against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
or action in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation") :
(i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto,
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading or (iii) any violation or alleged violation by the Company of the
Act, the 1934 Act, any state securities law or any rule or regulation
promulgated under the Act, the 1934 Act or any state securities law; and the
Company will pay to each such Holder, each of its officers, directors and
agents, underwriter or controlling person, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this Section 1.9(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by any such
Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, its officers, directors
and agents, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the Company within
the meaning of the Act, any underwriter, any other Holder selling securities in
such registration statement and any controlling person of any such underwriter
or other Holder, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
Act, the 1934 Act or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereto) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will pay, as incurred, any legal
or other expenses reasonably incurred by any
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66
person intended to be indemnified pursuant to this Section 1.9(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this Section 1.9(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld; provided, that, in no event shall any indemnity under this Section
1.9(b) exceed the gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified
party under this Section 1.9 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this Section
1.9, deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 1.9, but the omission
so to deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 1.9.
(d) The obligations of the Company and Holders
under this Section 1.9 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 1, and
otherwise.
1.10 Reports Under Securities Exchange Act of 1934. With
a view to making available to the Holders the benefits of Rule 144 promulgated
under the Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available,
as those terms are understood and defined in SEC Rule 144, at all times after
ninety (90) days after the effective date of the first
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registration statement filed by the Company for the offering of its securities
to the general public;
(b) take such action, including the voluntary
registration of its Common Stock under Section 12 of the 1934 Act, as is
necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities, such action to be taken as soon as practicable after
the end of the fiscal year in which the first registration statement filed by
the Company for the offering of its securities to the general public is
declared effective;
(c) file with the SEC in a timely manner all
reports and other documents required of the Company under the Act and the 1934
Act; and
(d) furnish to any Holder, so long as the Holder
owns any Registrable Securities, forthwith upon request (i) a written statement
by the Company that it has complied with the reporting requirements of SEC Rule
144 (at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company) or the Act and the 1934 Act (at
any time after it has become subject to such reporting requirements) , or that
it qualifies as a registrant whose securities may be resold pursuant to Form
S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so
filed by the Company, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.
1.11 Form S-3 Registration. In case the Company shall
receive from any Holder or Holders who hold in excess of 500,000 shares of the
Company's Registrable Securities, a written request or requests that the
Company effect a registration on Form S-3 and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other
Holders; and
(b) as soon as practicable, effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities
of any other Holder or Holders joining in such request as are specified in a
written request given within twenty (20) days after receipt of such
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written notice from the Company; provided, however, that the Company shall not
be obligated to effect any such registration, qualification or compliance,
pursuant to this Section 1.11: (1) if Form S-3 is not available for such
offering by the Holders; (2) if the Holders, together with the holders of any
other securities of ,he company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public (net of any underwriters, discounts or
commissions) of less than $1,000,000; (3) if the Company shall furnish to the
Holders a certificate signed by the President of the Company stating that in
the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the company and its shareholders for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for a
period of not more than 120 days after receipt of the request of the Holder or
Holders under this Section 1.11; provided, however, that the Company shall not
utilize this right more than once in any twelve (12) month period; (4) if the
Company has already effected three registrations on Form S-3 for the Holders
pursuant to this Section 1.11; or (5) in any particular jurisdiction in which
the Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance.
(c) If the Holders initiating the registration
request hereunder (the "Initiating Holders") intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as part of their request made pursuant to this
Section 1.11 and the Company shall include such information in the written
notice referred to in Section 1.11(a). In such event, the right of any Holder
to include such Holder's Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company as provided in Section 1.4(e)) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by a majority in interest of the Initiating Holders.
Notwithstanding any other provision of this Section 1.11, if the underwriter
advises the Initiating Holders in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the Initiating
Holders shall so advise all Holders of Registrable Securities which would
otherwise be 'underwritten pursuant hereto, and the number of shares of
Registrable Securities that may be included in the underwriting shall be
allocated among all Holders thereof, including the Initiating
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Holders, in proportion (as nearly as practicable) to the amount of Registrable
securities of the Company owned by each Holder.
(d) Subject to the foregoing the Company shall
file a registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt
of the request or requests of the Holders. All expenses incurred in connection
with a registration requested pursuant to Section 1.11, including (without
limitation) all registration, filing, qualification, printer's and accounting
fees and the reasonable fees and disbursements of counsel for the selling
Holder or Holders and counsel for the Company, but excluding any underwriters,
discounts or commissions associated with Registrable Securities, shall be borne
by the Company. Registrations effected pursuant to this Section 1.11 shall not
be counted as demands for registration or registrations effected pursuant to
Sections 1.2 or 1.3, respectively.
1.12 Assignment of Registration Rights. The rights to
cause the Company to register Registrable Securities pursuant to this Section 1
may be assigned by a Holder to a transferee or assignee who acquires at least
500,000 shares of Registrable Securities, provided the Company is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; and provided, further, that
such assignment shall be effective only if immediately following such transfer
the further disposition of such securities by the transferee or assignee is
restricted under the Act. Notwithstanding the above, such rights may be
assigned by a Holder to a limited partner, general partner or other affiliate
of an Investor (the "Transferee") regardless of the number of shares acquired
by such Transferee.
1.13 Limitations on Subsequent Registration Rights. From
and after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of at least a majority of the outstanding
Registrable Securities, enter into any agreement with any holder or prospective
holder of any securities of the Company which would allow such holder or
prospective holder to include such securities in any registration filed under
Section 1.2 hereof, unless under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only to
the extent that the inclusion of his securities will not reduce the amount of
the Registrable Securities of the Holders which is included.
1.14 "Market Stand-Off" Agreement. Each holder of
securities which are Registrable Securities (or which are convertible into
Registrable Securities) hereby agrees that, during a period not to exceed 180
days, following the effective date of a
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registration statement of the Company filed under the Act, it shall not, to the
extent requested by the Company and reasonably required by the underwriter in a
firm commitment underwriting, sell or otherwise transfer or dispose of (other
than to donee who agree to be similarly bound) Any Common Stock of the Company
held by it at any time during such period except Common Stock included in such
registration; provided, however, that:
(a) such agreement shall be applicable only to
the first such registration statement of the Company which covers common Stock
(or other securities) to be sold on its behalf to the public in an underwritten
offering; and
(b) all officers and directors of the Company
enter into similar agreements.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
1.15 Amendment of Registration Rights. Any provision of
this Section 1 may be amended and the observance thereof 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 holders of
at least a majority of the Registrable Securities then outstanding. Any
amendment or waiver effected in accordance with this section shall be binding
upon each holder of any securities which are or at one time were Registrable
Securities (or which are or were convertible into Registrable securities), each
future holder of all such securities, and the Company.
1.16 Termination of Registration Rights. No shareholder
shall be entitled to exercise any right provided for in this Section 1 after
five (5) years following the consummation of the sale of securities pursuant to
a registration statement filed by the Company under the Act in connection with
the initial firm commitment underwritten offering of its securities to the
general public for a total offering of more than $7,500,000.
2. Right of First Offer.
2.1 Grant of Right. Subject to the terms and conditions
specified in this Section 2, the Company hereby grants to each Investor who
holds at least 500,000 shares of Registrable Securities (a "Major Investor") a
right of first offer with respect to future sales by the Company of its Future
Shares (as hereinafter defined). Each time the Company proposes to offer any
shares of, or securities convertible into or exercisable for any shares of,
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any class of its Future Shares, the Company shall first make an offering of
such Future Shares to each Major Investor in accordance with the provisions
listed below.
2.2 Future Shares. "Future Shares" shall mean shares of
any capital stock of the Company, whether now authorized or not, and any
rights, options or warrants to purchase such capital stock, and securities of
any type that are, or may become, convertible into such capital stock; Provided
however, that "Future Shares" do not include (i) the shares of Preferred Stock
purchased or to be purchased under the Purchase Agreements or the Common Stock
issued or issuable upon the conversion of such Preferred Stock, (ii) securities
offered pursuant to a registration statement filed under the Securities Act, as
hereinafter defined, (iii) securities issued pursuant to the acquisition of
another corporation by the Company by merger of, purchase of substantially all
of the assets or other reorganization, and (iv) all shares of Common Stock
hereafter issued or issuable to officers, directors, employees or consultants
of the Company pursuant to any employee or consultant stock offering, plan or
arrangement approved by the Board of Directors of the Company.
2.3 Notice. In the event the Company proposes to
undertake an issuance of Future Shares, the Company shall deliver a notice by
certified mail (the "Notice") to the Major Investors stating (i) its bona fide
intention to offer such Future Shares, (ii) the number of such Future Shares to
be offered and (iii) the price, if any, for which it proposes to offer such
Future Shares. within 30 calendar days after receipt of the Notice, the Major
Investor may elect to purchase or obtain, at the price and on the terms
specified in the Notice, up to that portion of such Future Shares which equals
the proportion that the number of Registrable Securities held by such Major
Investor bears to the total number of shares of Common Stock issued and
outstanding, including shares issuable upon conversion of convertible
securities issued and outstanding.
2.4 Sale after Notice. If all such Future Shares
referred to in the Notice are not elected to be obtained as provided in Section
2.3 hereof, the Company may, during the 90-day period following the expiration
of the period provided in Section 2.3 hereof, offer the remaining unsubscribed
Future Shares to any person or persons at a price not less than, and upon terms
no more favorable to the offeree than those specified in the Notice. If the
Company does not enter into an agreement for the sale of the Future Shares
within such period, or if such agreement is not consummated within 90 days of
the execution thereof, the right provided hereunder shall be deemed to be
revived and such Future Shares shall not be offered unless first reoffered to
the Major Investors in accordance herewith.
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2.5 Assignment. The right of first offer granted under
this section 2 is assignable by the Major Investors to any transferee of a
minimum of 500,000 shares of Registrable Securities.
2.6 Termination of Rights. No shareholder shall be
entitled to exercise any right provided for in this Section 2 (i) upon the
consummation of the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the initial firm
commitment underwritten offering of its securities to the general public of a
firm commitment underwritten public offering for a total offering of more than
$7 , 500,000 or (ii) when the Company first becomes subject to the periodic
reporting requirements of Section 12(g) or 15(d) of the securities Exchange Act
of 1934, whichever event shall first occur.
3. Obligation to Participate. Pfizer, Inc. ("Pfizer") and its
assignees of Registrable Securities shall purchase securities offered by the
Company in its initial public offering. Pfizer and its assignees shall
purchase such proportion of securities, that the number of Registrable
Securities held by Pfizer and its assignees bears to the total number of shares
of Common Stock then issued and outstanding, including shares issuable upon
conversion of convertible securities then issued and outstanding; provided,
however, the valuation of the Company upon the close of such initial public
offering must be greater than $150,000,000 and the initial public offering
raises at least $15,000,000 in the aggregate.
4. Waiver of Right of First Offer. The Right of First offer
under Section 2 of the Prior Agreement to purchase shares of Series B1, Series
B2, and Series B3 Preferred Stock to be sold pursuant to the Preferred Stock
Purchase Agreement of even date herewith is hereby waived. This waiver is
effective upon the execution of this agreement by First Small Business
Investment corporation of California, the sole Major Investor under the Prior
Agreement.
5. Miscellaneous Provisions.
5.1 Waivers and Amendments. Except as provided in
Section 1.15 of this Agreement, 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 Holders of at least a majority of
the Registrable Securities. Any amendment or waiver effected in accordance
with this Section 5.1 shall be binding upon each Investor or its assignee and
the Company
5.2 Notices. All notices and other communications
required or permitted hereunder shall be in writing and, except as
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otherwise noted herein, shall be deemed effectively given upon personal
delivery by nationally recognized courier or upon deposit with the United
States Post office, (by first class mail, postage prepaid) addressed: (a) if
to the Company, at 3050 Science Park Road, San Diego, California 92121 (or at
such other address as the Company shall have furnished to the Holders in
writing) attention of President and (b) if to a Holder, at the latest address
of such person shown on the Company's records.
5.3 Descriptive Headings. The descriptive headings
herein have been inserted for convenience only and shall not be deemed to limit
or otherwise affect the construction of any provisions hereof.
5.4 Governing Law. This Agreement shall be governed by
and interpreted under the laws of the State of New York.
5.5 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall constitute the same instrument, but only one of
which need be produced.
5.6 Expenses. 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.
5.7 Successors and Assigns. Except as otherwise
expressly provided in this Agreement, this Agreement shall benefit and bind the
successors, assigns, heirs, executors and administrators of the parties to this
Agreement.
5.8 Entire Agreement. This Agreement constitutes the
full and entire understanding and agreement between the parties with regard to
the subject matter of this Agreement.
5.9 Separability; Severability. Unless expressly
provided in this Agreement, the rights of each Investor under this Agreement
are several rights, not rights jointly held with any other Investors. Any
invalidity, illegality or limitation on the enforceability of this Agreement
with respect to any Investor shall not affect the validity, legality or
enforceability of this Agreement with respect to the other Investors. If any
provision of this Agreement is judicially determined to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not be affected or impaired.
5.10 Stock Splits. All references to numbers of shares in
this Agreement shall be appropriately adjusted to reflect any
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stock dividend, split, combination or other recapitalization of shares by the
Company occurring after the date of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first set forth above
IMMUSOL, INC.
/s/ TSVI GOLDENBERG
-----------------------------------------------
Tsvi Goldenberg, Ph.D., Chairman
of the Board and Chief Executive
officer
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PFIZER INC
By: /s/ GEORGE M. MILNE, JR.
----------------------------------------------
George M. Milne, Jr.
Vice President
76
BankAmerica Ventures
By: /s/ ????????
--------------------------
Title: Principal
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