<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 1, 1996
REGISTRATION NO. 333-11297
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
INTROGEN THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 2834 74-2704230
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
301 CONGRESS AVENUE
SUITE 1850
AUSTIN, TEXAS 78701
(512) 320-5010
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------
DAVID G. NANCE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
INTROGEN THERAPEUTICS, INC.
301 CONGRESS AVENUE
SUITE 1850
AUSTIN, TEXAS 78701
(512) 320-5010
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
------------------------
COPIES TO:
<TABLE>
<S> <C>
ROBERT D. BROWNELL, ESQ. JI HOON HONG, ESQ.
MARNIA NICHOLS, ESQ. SHEARMAN & STERLING
WILSON SONSINI GOODRICH & ROSATI 599 LEXINGTON AVENUE
PROFESSIONAL CORPORATION NEW YORK, NEW YORK 10022
650 PAGE MILL ROAD (212) 848-4000
PALO ALTO, CALIFORNIA 94304
(415) 493-9300
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act of 1933 registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act of
1933 registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE (1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------
Common Stock, $0.001 par value...................... $37,260,000 $14,000(2)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o).
(2) Previously paid.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of Common Stock being registered. All amounts are estimates except
the registration fee, the NASD filing fee and the Nasdaq National Market System
listing fee.
<TABLE>
<CAPTION>
AMOUNT
TO BE PAID
----------
<S> <C>
Registration Fee.......................................................... $ 14,000
NASD Filing Fee........................................................... 4,548
The Nasdaq National Market System Listing Fee............................. 23,400
Printing.................................................................. 100,000
Legal Fees and Expenses................................................... 400,000
Accounting Fees and Expenses.............................................. 150,000
Blue Sky Fees and Expenses................................................ 25,000
Registrar and Transfer Agent Fees......................................... 10,000
Miscellaneous............................................................. 23,052
--------
Total........................................................... $750,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
Article VII of the Registrant's Certificate of Incorporation provides for
the indemnification of directors to the fullest extent permissible under
Delaware law.
Article VI of the Registrant's Bylaws provides for the indemnification of
officers, directors and third parties acting on behalf of the corporation if
such person acted in good faith and in a manner reasonably believed to be in and
not opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, the indemnified party had no reason to believe
his conduct was unlawful.
The Registrant has entered into indemnification agreements with its
directors and executive officers, in addition to indemnification provided for in
the Registrant's Bylaws, and intends to enter into indemnification agreements
with any new directors and executive officers in the future.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
(a) From inception through June 30, 1996, the Registrant has issued and
sold the following unregistered securities:
(1) From August 23, 1994 to September 28, 1994, the Registrant sold
2,443,360 shares of Common Stock to eight investors at an average price of
$0.06 per share.
(2) On August 23, 1994, the Registrant sold 3,011,423 shares of Series
A Preferred Stock to one investor at a price of $0.18 per share.
(3) On October 7, 1994 the Registrant sold 446,250 shares of Series B
Preferred Stock to RPR at $5.72 per share for $2,552,550. In February 1995,
the Registrant sold 170,625 shares of Series B Preferred Stock to RPR at
$7.47 per share for $1,274,567. In January 1996, the Registrant sold
170,625 shares of Series B Preferred Stock to RPR at $7.47 per share for
$1,274,567.
II-1
<PAGE> 3
(4) From March 29, 1996 to June 28, 1996 the Registrant sold 551,410
shares of Series C Preferred Stock to 26 Investors at $8.65 per share.
(b) The Registrant was assisted in the issuance and sale of the Series C
Preferred Stock by Genesis Merchant Group Securities and Harris, Webb &
Garrison, Inc.
(c) The sales of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act, or Regulation D promulgated thereunder, or Rule 701 promulgated
under Section 3(b) of the Securities Act as transactions by an issuer not
involving a public offering or transactions pursuant to compensatory benefit
plans and contracts relating to compensation as provided under such Rule 701.
The recipients of securities in each such transaction represented their
intentions to acquire the securities for investment only and not with a view to
or for sale in connection with any distribution thereof and appropriate legends
were affixed to the instruments representing such securities issued in such
transactions. All recipients had adequate access, through their relationships
with the Company, to information about the Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<S> <C>
1.1* Form of Underwriting Agreement.
3.1* Certificate of Incorporation of the Company, as amended, as currently in
effect.
3.2* Form of Restated Certificate of Incorporation of the Company, to be filed
immediately following the closing of the offering made under this
Registration Statement.
3.3* Bylaws of the Company.
4.1* Specimen Common Stock Certificate.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.1* Form of Indemnification Agreement between the Company and each of its
directors and officers.
10.2* Incentive Stock Plan and form of Stock Option Agreement thereunder.
10.3* Director Option Plan and form of Director Stock Option Agreement
thereunder.
10.4* Employee Stock Purchase Plan and forms of agreements thereunder.
10.5* Series A Preferred Stock Purchase Agreement, dated August 23, 1994,
between the Company and Texas Biomedical Development Partners.
10.6**+ Series B Preferred Stock Purchase Agreement, dated October 7, 1994,
between the Company and RPR, as amended.
10.7* Form of Series C Preferred Stock Purchase Agreement between the Company
and certain investors.
10.8* Lease Agreement, dated February 9, 1996, between the Company and Aetna
Life Insurance Company for the Company's facility located at 301 Congress
Avenue, Suite 1850, Austin, Texas, 78701.
10.9A* Sublease Agreement, dated February 1, 1995 between the Company and Bee-Mac
Reference Laboratories, Inc. for the Company's facility located at 8080
North Stadium Drive, #1200, Houston, Texas, 77059.
10.9B* Addendum to Sublease Agreement by and between the Company and Bee-Mac
Reference Laboratories, Inc., dated November 1, 1995.
10.10* Lease Agreement, dated June 7, 1996, between the Company and Plaza del Oro
Business Center for the Company's facility located at 8012 El Rio,
Houston, Texas 77054.
</TABLE>
II-2
<PAGE> 4
<TABLE>
<S> <C>
10.11*+ Patent and Technology License Agreement, effective as of July 20, 1994, by
and between the Board of Regents of the University of Texas System,
UTMDACC and the Company, as amended.
10.12*+ Sponsored Research Agreement for Clinical Study, No. CS 93-27, dated
February 11, 1993, between the Company and UTMDACC, as amended.
10.13*+ Sponsored Research Agreement No. SR95-012, dated September 21, 1995
between the Company and UTMDACC, as amended.
10.14*+ Sponsored Research Agreement No. SR 93-04, dated February 11, 1993 between
UTMDACC and the Company, as amended.
10.15*+ Sponsored Laboratory Study Agreement No. LS95-035 between UTMDACC and the
Company, dated September 21, 1995.
10.16*+ Sponsored Research Agreement No. SR 96-004 between the Company and
UTMDACC, dated January 17, 1996.
10.17*+ Sponsored Research Agreement, dated March 29, 1996, between the Company
and SKCC.
10.18*+ License Agreement, dated March 29, 1996 between the Company and SKCC.
10.19* Consulting Agreement between the Company and Jack A. Roth, M.D., effective
as of October 1, 1994.
10.20* Consulting Agreement between EJ Financial Enterprises, Inc. and Introgen,
effective as of July 1, 1994.
10.21* Service Agreement between Introgen and Domecq Technologies, Inc. effective
as of July 1, 1994.
10.22*+ Collaboration Agreement (p53 Products), effective as of October 7, 1994,
between the Company and RPR, as amended.
10.23*+ Collaboration Agreement (K-ras Products), effective as of October 7, 1994,
between the Company and RPR, as amended.
10.24*+ Letter of Intent dated March 26, 1996 between NCI, the Company and RPR
regarding a CRADA.
10.25* Employment Agreement dated August 1, 1996 between the Company and David G.
Nance.
11.1* Calculation of earnings per share.
23.1* Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2* Consent of Counsel (included in Exhibit 5.1).
23.3* Consent of Arnold, White & Durkee, patent counsel for the Company.
24.1* Power of Attorney.
</TABLE>
- ---------------
+ Confidential treatment requested for portions of these agreements.
* Previously filed.
** Supersedes agreement previously filed.
(b) Financial Statement Schedules
Schedules have been omitted because the information required to be set
forth therein is not applicable or is shown in the financial statements or notes
thereto.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 14, or
II-3
<PAGE> 5
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to provide to the Underwriter
at the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 3 to Registration Statement on
Form S-1 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Austin, State of Texas, on the 1st day of November,
1996.
INTROGEN THERAPEUTICS, INC.
By: /s/ DAVID G. NANCE
------------------------------------
David G. Nance
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 3 to Registration Statement on Form S-1 has been signed by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- -------------------------------- -----------------
<S> <C> <C>
/s/ DAVID G. NANCE President, Chief Executive November 1, 1996
- ------------------------------------- Officer (Principal Executive
David G. Nance Officer) and Director
*/s/ MAHENDRA G. SHAH, PH.D. Vice President, Corporate and November 1, 1996
- ------------------------------------- Business Development and
Mahendra G. Shah, Ph.D. Director
/s/ JAMES W. ALBRECHT, JR. Chief Financial Officer November 1, 1996
- ------------------------------------- (Principal Financial and
James W. Albrecht, Jr. Accounting Officer)
*/s/ JOHN N. KAPOOR, PH.D. Chairman of the Board November 1, 1996
- -------------------------------------
John N. Kapoor, Ph.D.
*/s/ THIERRY SOURSAC, M.D., PH.D. Director November 1, 1996
- -------------------------------------
Thierry Soursac, M.D., Ph.D.
*/s/ AUSTIN M. LONG, III Director November 1, 1996
- -------------------------------------
Austin M. Long, III
*/s/ MARK B. CHANDLER, PH.D. Director November 1, 1996
- -------------------------------------
Mark B. Chandler, Ph.D.
*By /s/ DAVID G. NANCE
---------------------------------
David G. Nance, Attorney-in-Fact
</TABLE>
II-5
<PAGE> 7
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. EXHIBIT PAGE NUMBER
- ----------- -------------------------------------------------------------------
<C> <S> <C>
1.1* Form of Underwriting Agreement.....................................
3.1* Certificate of Incorporation of the Company, as amended, as
currently in effect................................................
3.2* Form of Restated Certificate of Incorporation of the Company, to be
filed immediately following the closing of the offering made under
this Registration Statement........................................
</TABLE>
<TABLE>
<C> <S> <C>
3.3* Bylaws of the Company..............................................
4.1* Specimen Common Stock Certificate..................................
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation........................................................
10.1* Form of Indemnification Agreement between the Company and each of
its directors and officers.........................................
10.2* Incentive Stock Plan and form of Stock Option Agreement
thereunder.........................................................
10.3* Director Option Plan and form of Director Stock Option Agreement
thereunder.........................................................
10.4* Employee Stock Purchase Plan and forms of agreements thereunder....
10.5* Series A Preferred Stock Purchase Agreement, dated August 23, 1994,
between the Company and Texas Biomedical Development Partners......
10.6**+ Series B Preferred Stock Purchase Agreement, dated October 7, 1994,
between the Company and RPR, as amended............................
10.7* Form of Series C Preferred Stock Purchase Agreement between the
Company and certain investors......................................
10.8* Lease Agreement, dated February 9, 1996, between the Company and
Aetna Life Insurance Company for the Company's facility located at
301 Congress Avenue, Suite 1850, Austin, Texas, 78701..............
10.9A* Sublease Agreement, dated February 1, 1995 between the Company and
Bee-Mac Reference Laboratories, Inc. for the Company's facility
located at 8080 North Stadium Drive, #1200, Houston, Texas,
77059..............................................................
10.9B* Addendum to Sublease Agreement by and between the Company and
Bee-Mac Reference Laboratories, Inc., dated November 1, 1995.......
10.10* Lease Agreement, dated June 7, 1996, between the Company and Plaza
del Oro Business Center for the Company's facility located at 8012
El Rio, Houston, Texas 77054.......................................
10.11*+ Patent and Technology License Agreement, effective as of July 20,
1994, by and between the Board of Regents of the University of
Texas System, UTMDACC and the Company, as amended..................
10.12*+ Sponsored Research Agreement for Clinical Study, No. CS 93-27,
dated February 11, 1993, between the Company and UTMDACC, as
amended............................................................
10.13*+ Sponsored Research Agreement No. SR95-012, dated September 21, 1995
between the Company and UTMDACC, as amended........................
10.14*+ Sponsored Research Agreement No. SR 93-04, dated February 11, 1993
between UTMDACC and the Company, as amended........................
10.15*+ Sponsored Laboratory Study Agreement No. LS95-035 between UTMDACC
and the Company, dated September 21, 1995..........................
10.16*+ Sponsored Research Agreement No. SR 96-004 between the Company and
UTMDACC, dated January 17, 1996....................................
</TABLE>
<PAGE> 8
INDEX TO EXHIBITS--(CONTINUED)
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. EXHIBIT PAGE NUMBER
- ----------- -------------------------------------------------------------------
<C> <S> <C>
10.17*+ Sponsored Research Agreement, dated March 29, 1996, between the
Company and SKCC...................................................
10.18*+ License Agreement, dated March 29, 1996 between the Company and
SKCC...............................................................
10.19* Consulting Agreement between the Company and Jack A. Roth, M.D.,
effective as of October 1, 1994....................................
10.20* Consulting Agreement between EJ Financial Enterprises, Inc. and
Introgen, effective as of July 1, 1994.............................
10.21* Service Agreement between Introgen and Domecq Technologies, Inc.
effective as of July 1, 1994.......................................
10.22*+ Collaboration Agreement (p53 Products), effective as of October 7,
1994, between the Company and RPR, as amended......................
10.23*+ Collaboration Agreement (K-ras Products), effective as of October
7, 1994, between the Company and RPR, as amended...................
10.24*+ Letter of Intent dated March 26, 1996 between NCI, the Company and
RPR regarding a CRADA..............................................
10.25* Employment Agreement dated August 1, 1996 between the Company and
David G. Nance.....................................................
11.1* Calculation of earnings per share..................................
23.1* Consent of Arthur Andersen LLP, Independent Public Accountants.....
23.2* Consent of Counsel (included in Exhibit 5.1).......................
23.3* Consent of Arnold, White & Durkee, patent counsel for the
Company............................................................
24.1* Power of Attorney..................................................
</TABLE>
- ---------------
+ Confidential treatment requested for portions of these agreements.
* Previously filed.
** Supersedes agreement previously filed.
<PAGE> 1
EXHIBIT 10.6
INTROGEN THERAPEUTICS, INC.
SERIES B PREFERRED STOCK
PURCHASE AGREEMENT
301 Congress Avenue
Suite 2025
Austin, Texas 78701
October 7, 1994
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Purchase and Sale of Stock..................................................................................1
1.1 Authorization...................................................................................1
1.2 Sales of Preferred..............................................................................1
1.3 Seven Closings..................................................................................1
2. Closing Dates; Delivery.....................................................................................2
2.1 First Closing Date..............................................................................2
2.2 Second Closing Date.............................................................................2
2.3 Third Closing Date..............................................................................2
2.4 Fourth Closing Date.............................................................................2
2.5 Fifth Closing Date..............................................................................3
2.6 Sixth Closing Date..............................................................................3
2.7 Seventh Closing Date............................................................................3
2.8 Delivery........................................................................................4
3. Representations and Warranties of the Company...............................................................4
3.1 Organization, Good Standing and Qualification...................................................4
3.2 Capitalization..................................................................................4
3.3 Subsidiaries....................................................................................5
3.4 Authorization...................................................................................5
3.5 Valid Issuance of Preferred and Common Stock....................................................5
3.6 Liabilities.....................................................................................6
3.7 Governmental Consents...........................................................................6
3.8 Litigation......................................................................................6
3.9 Employees.......................................................................................6
3.10 Patents and Trademarks..........................................................................7
3.11 Compliance with Other Instruments...............................................................7
3.12 Agreements; Action..............................................................................8
3.13 Disclosure......................................................................................8
3.14 Registration Rights.............................................................................8
3.15 Title to Property and Assets....................................................................9
3.16 Financial Statements............................................................................9
3.17 Employee Benefit Plans..........................................................................9
3.18 Tax Returns, Payments and Elections.............................................................9
3.19 Insurance......................................................................................10
3.20 Labor Agreements and Actions...................................................................10
3.21 Real Property Holding Corporation..............................................................10
3.22 Offering.......................................................................................10
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
4. Representations and Warranties of the Investor.............................................................11
4.1 Authorization..................................................................................11
4.2 Purchase Entirely for Own Account..............................................................11
4.3 Disclosure of Information......................................................................11
4.4 Investment Experience..........................................................................11
4.5 Restricted Securities..........................................................................11
4.6 Further Limitations on Disposition.............................................................12
4.7 Legends........................................................................................12
5. Conditions to First Closing of Investor....................................................................13
5.1 Representations and Warranties Correct.........................................................13
5.2 Covenants......................................................................................13
5.3 Compliance Certificate.........................................................................13
5.4 Blue Sky.......................................................................................13
5.5 Restated Certificate...........................................................................13
5.6 Directors......................................................................................13
5.7 Collaboration Agreements.......................................................................13
6. Conditions to First Closing of Company.....................................................................13
6.1 Representations................................................................................14
6.2 Blue Sky.......................................................................................14
6.3 Restated Certificate...........................................................................14
7. Conditions to Second Closing of Investor...................................................................14
7.1 [*]............................................................................................14
7.2 Representations and Warranties.................................................................14
7.3 Covenants......................................................................................14
7.4 Compliance Certificate.........................................................................14
7.5 Collaboration Agreements.......................................................................14
7.6 Blue Sky.......................................................................................14
8. Conditions to Second Closing of Company....................................................................15
8.1 Representations................................................................................15
8.2 Blue Sky.......................................................................................15
8.3 Collaboration Agreements.......................................................................15
9. Conditions to Third Closing of Investors...................................................................15
9.1 [*]............................................................................................15
9.2 Representations and Warranties.................................................................15
9.3 Covenants......................................................................................15
</TABLE>
-ii-
<PAGE> 4
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
9.4 Compliance Certificate.........................................................................15
9.5 Blue Sky.......................................................................................16
9.6 Collaboration Agreements.......................................................................16
10. Conditions to Third Closing of Company.....................................................................16
10.1 Representations................................................................................16
10.2 Blue Sky.......................................................................................16
10.3 Collaboration Agreements.......................................................................16
11. Conditions to Fourth Closing of Investor...................................................................16
11.1 [*]............................................................................................16
11.2 Representations and Warranties.................................................................16
11.3 Covenants......................................................................................16
11.4 Compliance Certificate.........................................................................17
11.5 Blue Sky.......................................................................................17
11.6 Collaboration Agreements.......................................................................17
12. Conditions to Fourth Closing of Company....................................................................17
12.1 Representations................................................................................17
12.2 Blue Sky.......................................................................................17
12.3 Collaboration Agreements.......................................................................17
13. Conditions to Fifth Closing of Investor....................................................................17
13.1 [*]............................................................................................17
13.2 Representations and Warranties.................................................................17
13.3 Covenants......................................................................................18
13.4 Compliance Certificate.........................................................................18
13.5 Blue Sky.......................................................................................18
13.6 Collaboration Agreements.......................................................................18
14. Conditions to Fifth Closing of Company.....................................................................18
14.1 Representations................................................................................18
14.2 Blue Sky.......................................................................................18
14.3 Collaboration Agreements.......................................................................18
</TABLE>
-iii-
<PAGE> 5
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
15. Conditions to Sixth Closing of Investor....................................................................18
15.1 [*]............................................................................................18
15.2 Representations and Warranties.................................................................19
15.3 Covenants......................................................................................19
15.4 Compliance Certificate.........................................................................19
15.5 Blue Sky.......................................................................................19
15.6 Collaboration Agreements.......................................................................19
16. Conditions to Sixth Closing of Company.....................................................................19
16.1 Representations................................................................................19
16.2 Blue Sky.......................................................................................19
16.3 Collaboration Agreements.......................................................................19
17. Conditions to Seventh Closing of Investor..................................................................20
17.1 [*]............................................................................................20
17.2 Representations and Warranties.................................................................20
17.3 Covenants......................................................................................20
17.4 Compliance Certificate.........................................................................20
17.5 Blue Sky.......................................................................................20
17.6 Collaboration Agreements.......................................................................20
18. Conditions to Seventh Closing of Company...................................................................20
18.1 Representations................................................................................20
18.2 Blue Sky.......................................................................................20
18.3 Collaboration Agreements.......................................................................21
19. Additional Covenants and Restrictions Regarding
the Purchase of Series B Preferred.........................................................................21
19.1 Purchase Price Adjustment......................................................................21
19.2 Acceleration of Purchases Upon a Public Offering...............................................21
19.3 [*]............................................................................................22
19.4 Purchase of Common Stock.......................................................................22
19.5 Standstill Agreement...........................................................................22
</TABLE>
-iv-
<PAGE> 6
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
20. Registration Rights........................................................................................22
20.1 Definitions....................................................................................22
20.2 Request for Registration.......................................................................23
20.3 Company Registration...........................................................................25
20.4 Obligations of the Company.....................................................................26
20.5 Furnish Information............................................................................27
20.6 Expenses of Demand Registration................................................................27
20.7 Expenses of Company Registration...............................................................28
20.8 Underwriting Requirements......................................................................28
20.9 Delay of Registration..........................................................................29
20.10 Indemnification................................................................................29
20.11 Reports Under Securities Exchange Act of 1934..................................................31
20.12 Form S-3 Registration..........................................................................32
20.13 Assignment of Registration Rights..............................................................33
20.14 Limitations on Subsequent Registration Rights..................................................33
20.15 "Market Stand-Off" Agreement...................................................................34
20.16 Amendment of Registration Rights
and Information Rights.........................................................................34
20.17 Termination of Registration Rights.............................................................35
21. Covenants of the Company...................................................................................35
21.1 Delivery of Financial Statements...............................................................35
21.2 Assignment of Rights to Financial Information..................................................35
21.3 Termination of Covenants.......................................................................36
22. Investor's Right of First Refusal..........................................................................36
22.1 Right of First Refusal.........................................................................36
23. Investor's Board Representation............................................................................37
23.1 Amendment to Certificate of Incorporation......................................................37
23.2 Scientific Advisory Board......................................................................38
23.3 Post Conversion................................................................................38
24. Miscellaneous..............................................................................................38
24.1 Survival of Warranties.........................................................................38
24.2 Successors and Assigns.........................................................................38
24.3 Governing Law..................................................................................38
</TABLE>
-v-
<PAGE> 7
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
24.4 Counterparts...................................................................................38
24.5 Titles and Subtitles...........................................................................38
24.6 Notices........................................................................................39
24.7 Finder's Fee...................................................................................39
24.8 Expenses.......................................................................................39
24.9 Amendments and Waivers.........................................................................39
24.10 Severability...................................................................................39
24.11 Aggregation of Stock...........................................................................40
EXHIBITS
A Restated Certificate of Incorporation
B Schedule of Purchases
C Schedule of Exceptions
D-1 Compliance Certificate for the First Closing
D-2 Compliance Certificate for the Second Closing
D-3 Compliance Certificate for the Third Closing
D-4 Compliance Certificate for the Fourth Closing
D-5 Compliance Certificate for the Fifth Closing
D-6 Compliance Certificate for the Sixth Closing
D-7 Compliance Certificate for the Seventh Closing
E Collaboration Agreement (Kras Products)
F Collaboration Agreement (P53 Products)
</TABLE>
-vi-
<PAGE> 8
STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT is made as of the 7th day of
October 1994, by and between Introgen Therapeutics, Inc., a Delaware corporation
(the "Company"), and Rhone-Poulenc Rorer Pharmaceuticals Inc. (the "Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Authorization. The Company will authorize the sale and
issuance of up to 2,114,100 shares of its Series B Preferred Stock (the "Series
B Preferred") having the rights, privileges and preferences as set forth in the
Restated Certificate of Incorporation (the "Restated Certificate") in the form
attached to this Agreement as Exhibit A.
1.2 Sales of Preferred. Subject to the terms and conditions
hereof, the Company will issue and sell to the Investor, and the Investor will
buy from the Company at the Closings (defined below) set forth in column 2 of
the Schedule of Purchases attached hereto as Exhibit B, the number of shares of
Series B Preferred set forth in column 3 of the Schedule of Purchases for the
aggregate purchase price set forth in column 4 of the Schedule of Purchases (The
aggregate shares of Preferred Stock to be sold to the Investor hereunder are
hereinafter referred to as the "Shares"). The Shares shall be issued to the
entity listed in Column 1 of the Schedule of Purchases.
1.3 Seven Closings. The purchase and sale of the Shares shall
occur in seven installments. The first 525,000 shares (the "First Installment")
of the Company's Series B Preferred to be sold and purchased hereunder shall be
sold at the First Closing (as defined below). An additional 200,735 shares (the
"Second Installment") of the Company's Series B Preferred to be sold and
purchased here under shall be sold and purchased at the Second Closing (as
defined below). An additional 200,735 shares (the "Third Installment") of the
Company's Series B Preferred Stock to be sold and purchased hereunder shall be
sold and purchased at the Third Closing (as defined below). An additional [*]
shares (the "Fourth Installment") of the Company's Series B Preferred to be sold
and purchased hereunder shall be sold and purchased at the Fourth Closing (as
defined below). An additional [*] shares (the "Fifth Installment") of the
Company's Series B Preferred to be sold and purchased hereunder shall be sold
and purchased at the Fifth Closing (as defined below). An additional [*] shares
(the "Sixth Installment") of the Company's Series B Preferred to be sold and
purchased
<PAGE> 9
hereunder shall be sold and purchased at the Sixth Closing (defined below). An
additional [*] shares (the "Seventh Installment") of the Company's Series B
Preferred to be sold and purchased hereunder shall be sold and purchased at the
Seventh Closing (defined below). The issuance of the First, Second, Third,
Fourth, Fifth, Sixth and Seventh Installments shall be subject to satisfaction
of the conditions precedent to the First, Second, Third, Fourth, Fifth, Sixth
and Seventh Closings, respectively, described herein.
2. Closing Dates; Delivery.
2.1 First Closing Date. The closing of the First Installment
hereunder shall be held at the offices of Wilson, Sonsini, Goodrich & Rosati, a
Professional Corporation, 650 Page Mill Road, Palo Alto, California 94304 at
3:00 p.m., local time, on October 7, 1994 or at such other time and place upon
which the Company and the Investor shall agree (the "First Closing"). The date
of the First Closing is hereinafter referred to as the "First Closing Date."
2.2 Second Closing Date. The closing of the Second Installment
hereunder will take place as soon as practicable after the Company provides to
the Investor a certificate in the form attached hereto as Exhibit D-2 at such
place as the Company and Investors shall agree (the "Second Closing"). Should
the conditions precedent to the Second Closing specified in Section 7 hereof
not be satisfied or waived in writing by the Investor within twelve months of
the First Closing, the Investor's obligation to buy the Second Installment and
the Company's obligation to sell the Second Installment shall terminate. The
date of the Second Closing is hereinafter referred to as the "Second Closing
Date."
2.3 Third Closing Date. The closing of the Third Installment
hereunder will take place as soon as practicable after the Company provides to
the Investor a certificate in the form attached hereto as Exhibit D-3, at such
place as the Company and the Investors shall agree (the "Third Closing"). Should
the conditions precedent to the Third Closing specified in Section 9 hereof not
be satisfied or waived in writing by the Investor within twenty-four months of
the First Closing, the Investor's obligation to buy the Third Installment and
the Company's obligation to sell the Third Installment shall terminate. The date
of the Third Closing is hereinafter referred to as the "Third Closing Date."
2.4 Fourth Closing Date. The closing of the Fourth Installment
hereunder will take place as soon as practicable after the Company provides to
the Investor a certificate in the form attached hereto as Exhibit D-4, at such
place as the Company and
-2-
<PAGE> 10
the Investor shall agree (the "Fourth Closing"). Should the conditions
precedent to the Fourth Closing specified in Section 11 hereof not be satisfied
or waived in writing by the Investor by January 15, 1997, the Investor's
obligation to buy the Fourth Installment and the Company's obligation to sell
the Fourth Installment shall terminate. The date of the Fourth Closing is
hereinafter referred to as the "Fourth Closing Date."
2.5 Fifth Closing Date. The closing of the Fifth Installment
hereunder will take place as soon as practicable after the Company provides to
the Investor a certificate in the form attached hereto as Exhibit D-4, at such
place as the Company and the Investor shall agree (the "Fifth Closing"). Should
the conditions precedent to the Fifth Closing specified in Section 13 hereof
not be satisfied or waived in writing by the Investor by January 15, 1997, the
Investor's obligation to buy the Fifth Installment and the Company's obligation
to sell the Fifth Installment shall terminate. The date of the Fifth Closing is
hereinafter referred to as the "Fifth Closing Date."
2.6 Sixth Closing Date. The closing of the Sixth Installment
hereunder will take place as soon as practicable after the Company provides to
the Investor a certificate in the form attached hereto as Exhibit D-5, at such
place as the Company and the Investor shall agree (the "Sixth Closing"). Should
the conditions precedent to the Sixth Closing specified in Section 15 hereof
not be satisfied or waived in writing by the Investor by June 15, 1999, the
Investor's obligation to buy the Sixth Installment and the Company's obligation
to sell the Sixth Installment shall terminate. The date of the Sixth Closing is
hereinafter referred to as the "Sixth Closing Date."
2.7 Seventh Closing Date. The closing of the Seventh
Installment hereunder will take place as soon as practicable after the Company
provides to the Investor a certificate in the form attached hereto as Exhibit
D-6, at such place as the Company and the Investor shall agree (the "Seventh
Closing"). Should the conditions precedent to the Seventh Closing specified in
Section 17 hereof not be satisfied or waived in writing by the Investor by June
15, 1999, the Investor's obligation to buy the Seventh Installment and the
Company's obligation to sell the Seventh Installment shall terminate. The date
of the Seventh Closing is hereinafter referred to as the "Seventh Closing Date."
The First Closing, the Second Closing, the Third Closing, the Fourth Closing,
the Fifth Closing, the Sixth Closing and the Seventh Closing shall be
individually referred to as a "Closing" and collectively referred to as
"Closings."
-3-
<PAGE> 11
2.8 Delivery. At each Closing, the Company will deliver to the
Investor at such Closing a certificate, registered in the Investor's name,
representing the number of shares of Series B Preferred to be purchased by the
Investor at such Closing as specified in the Schedule of Purchases, against
payment of the purchase price therefor by check payable to the Company, by
surrender and cancellation of outstanding notes of the Company and/or by wire
transfer per the Company's wiring instructions.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investor 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:
3.1 Organization, Good Standing and Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to carry on its business
as now conducted and as proposed to be conducted, to enter into this Agreement
and to sell the Shares and carry out the other transactions contemplated
hereunder. 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.
3.2 Capitalization. The authorized capital of the Company
consists, or will consist prior to the First Closing, of:
(a) 5,125,523 shares of Preferred Stock
("Preferred Stock"), of which 3,011,423 shares have been designated Series A
Preferred Stock and 2,114,100 shares have been designated Series B Preferred
Stock. Prior to the First Closing, there will be 3,011,423 shares of issued and
outstanding Series A Preferred Stock and no issued or outstanding shares of
Series B Preferred Stock. The rights, privileges and preferences of the Series A
and the Series B Preferred Stock are as stated in the Restated Certificate.
(b) 10,000,000 shares of Common Stock ("Common
Stock"), of which 2,036,132 shares are issued and outstanding.
(c) Except as set forth in this Agreement and
the Exhibits hereto, there are no 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
securities of the Company.
-4-
<PAGE> 12
(d) Except as set forth in this Agreement and
the Exhibits hereto, the Company is not a party to or is not subject to any
agreement or understanding relating to, and to the Company's knowledge there is
no agreement or understanding between any persons and/or entities which affects
or relates to, the voting of shares of capital stock of the Company or the
giving of written consents by a shareholder or director of the Company.
3.3 Subsidiaries. The Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
association, or other business entity.
3.4 Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the performance of all
obligations of the Company hereunder and the authorization, issuance (or
reservation for issuance) and delivery of the Series B Preferred sold hereunder
and the Common Stock issuable upon conversion of the Series B Preferred has been
taken or will be taken prior to the Closing. This Agreement constitutes a valid
and legally binding obligation of the Company, enforceable in accordance with
its terms, except as such enforcement is limited by bankruptcy, insolvency and
similar laws affecting creditor rights.
3.5 Valid Issuance of Preferred and Common Stock.
(a) The Series B Preferred 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 not subject to any preemptive rights,
rights of first refusal or other similar rights imposed by the Company, and will
be issued in compliance with all applicable federal and state securities laws.
The Common Stock issuable upon conversion of the Series B Preferred has been
duly and validly reserved for issuance and, upon issuance in accordance with the
terms of the Restated Certificate, shall be duly and validly issued, fully paid
and nonassessable, free of any liens or encumbrances and not subject to any
preemptive rights, rights of first refusal or other similar rights imposed by
the Company, and issued in compliance with all applicable federal and state
securities laws.
(b) The outstanding shares of Common Stock and
Series A Preferred Stock are all duly and validly authorized and issued, fully
paid and nonassessable, and were issued in compliance with all applicable
federal and state securities laws.
-5-
<PAGE> 13
3.6 Liabilities. The Company has not incurred any indebtedness
for money borrowed or any other liabilities (absolute, accrued or contingent) in
excess of $10,000 individually or $50,000 in the aggregate.
3.7 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for registration or qualification, or
taking such action to secure exemption from such registration or qualification,
under applicable state or federal securities laws, which actions shall be taken
on a timely basis as may be required.
3.8 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 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 (on 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.
3.9 Employees. The Company is not aware, nor has a third party
asserted to the Company, that any of its employees is obligated under any
contract (including licenses, covenants or contracts of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his best efforts to
promote the interests of the Company or that would conflict with the Company's
business as proposed to be conducted. Neither the execution nor delivery of this
Agreement, nor the carrying on of the Company's business by the employees of the
Company, nor the conduct of the Company's business as proposed, will, to the
Company's knowledge, conflict with or result in a breach of the
-6-
<PAGE> 14
terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees is now obligated.
3.10 Patents and Trademarks. The Company has sufficient title
and ownership of all trademarks, service marks, trade names, copyrights, trade
secrets, information, proprietary rights, processes, and, to its knowledge,
patents, necessary for its business as now conducted and as proposed to be
conducted without any conflict with or infringement of the rights of others.
There are no outstanding options, licenses, or agreements of any kind relating
to the foregoing, nor is the Company bound by or a party to any options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information,
proprietary rights and processes of any other person or entity. The Company has
not received any communications alleging that the Company has violated or, by
conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity.
3.11 Compliance with Other Instruments.
(a) The Company is not in violation or default
of any provisions of its Certificate of Incorporation or Bylaws or of any
instrument, judgment, order, writ, decree or contract to which it is a party or
by which it is bound or, to its knowledge, of any provision of federal or state
statute, rule or regulation applicable to the Company, and, to its knowledge,
there is no such provision which materially and adversely affects the business
of the Company or its properties or assets. 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 or other
agreement.
-7-
<PAGE> 15
3.12 Agreements; Action.
(a) Except for agreements explicitly contemplated
hereby, there are no agreements, understandings, transactions or proposed
transactions between the Company and any of its officers, directors, affiliates,
or any affiliate thereof, and none of any such individuals or entities have any
interest in any party to any such agreement, understanding, transaction or
proposed transaction.
(b) There are no agreements, understandings,
instruments, contracts transactions 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 $5,000, or (ii) the license of any patent,
copyright, trade secret or other proprietary right to or from the Company.
(c) The Company has not (i) declared or paid any
dividends, or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (ii) incurred any indebtedness for money
borrowed or incurred any other liabilities individually in excess of $10,000 or
in excess of $50,000 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
Restated Certificates or Bylaws, which materially adversely affects its business
as now conducted or as proposed to be conducted.
3.13 Disclosure. The Company has fully provided the Investor
with all the information which the Investor has requested for deciding whether
to purchase the Shares and all information which the Company believes is
reasonably necessary to enable the Investor to make such decision. Neither this
Agreement nor any other statements or certificates made or delivered in
connection herewith or otherwise provided to the Investor, when taken as a
whole, 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.
3.14 Registration Rights. Except as provided in Section 20 of
this Agreement, the Company has not granted or agreed to grant any registration
rights, including piggyback rights, to any person or entity.
-8-
<PAGE> 16
3.15 Title to Property and Assets. The Company owns its
property and assets free and clear of all mortgages, liens, loans and
encumbrances, except such encumbrances and liens which arise in the ordinary
course of business and do not materially impair the Company's ownership or use
of such property or assets. With respect to the property and assets it leases,
the Company is in compliance with such leases and, to its knowledge, holds a
valid leasehold interest free of any liens, claims or encumbrances.
3.16 Financial Statements. The Company has delivered to the
Investor its unaudited financial statements (balance sheet and profit and loss
statement) at December 31, 1993 and for the fiscal year then ended
(respectively), and its unaudited financial statements (balance sheet and profit
and loss statement) as at and for the eight-month period ended August 31, 1994
(the "Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated and with each other, except that the
Financial Statements are prepared on a cash basis and do not contain all
footnotes required by generally accepted accounting principles. The Financial
Statements fairly present the financial condition and operating results of the
Company as of the dates, and for the periods, indicated therein, subject to
normal audit adjustments. Except as set forth in the Financial Statements and in
the material agreements listed in the Schedule of Exceptions, the Company has no
material liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to August 31, 1994 and
(ii) obligations under contracts and commitments incurred in the ordinary course
of business and not required under generally accepted accounting principles to
be reflected in the Financial Statements, which, in both cases, individually or
in the aggregate, are not material to the financial condition or operating
results of the Company. Except as disclosed in the Financial Statements, the
Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation. The Company maintains and will continue to maintain
a standard system of accounting established and administered in accordance with
generally accepted accounting principles.
3.17 Employee Benefit Plans. The Company does not have any
Employee Benefit Plan as defined in the Employee Retirement Income Security Act
of 1974.
3.18 Tax Returns, Payments and Elections. The Company has
filed all tax returns and reports as required by law. These returns and reports
are true and correct in all material respects. The Company has not elected
pursuant to the Internal Revenue Code
-9-
<PAGE> 17
of 1986, as amended ("Code"), to be treated as a Subchapter S corporation or a
collapsible corporation pursuant to Section 341(f) or Section 1362(a) of the
Code, nor has it made any other elections pursuant to the Code (other than
elections which relate solely to methods of accounting, depreciation or
amortization) which would have a material effect on the Company, its financial
condition, its business as presently conducted or proposed to be conducted or
any of its properties or material assets.
3.19 Insurance. The Company has in full force and effect fire,
casualty and liability insurance policies, with extended coverage, sufficient in
amount (subject to reasonable deductibles) to allow it to replace any of its
properties that might be damaged or destroyed.
3.20 Labor Agreements and Actions. The Company is not bound by
or subject to (and none of its assets or properties is bound by or subject to)
any written or oral, express or implied, contract, commitment or arrangement
with any labor union, and no labor union has requested or, to the knowledge of
the Company, has sought to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute involving the
Company pending, or to the knowledge of the Company threatened, which could have
a material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company (as such business is presently
conducted and as it is proposed to be conducted), nor is the Company aware of
any labor organization activity involving its employees. The Company is not
aware that any officer or key employee, or that any group of key employees,
intends to terminate their employment with the Company, nor does the Company
have a present intention to terminate the employment of any of the foregoing.
The employment of each officer and employee of the Company is terminable at the
will of the Company.
3.21 Real Property Holding Corporation. The Company is not,
and has not been at any time a "United States real property holding corporation"
as defined in Section 897 of the Internal Revenue Code of 1986, as amended.
3.22 Offering. Subject in part on the accuracy of the
Investor's representations set forth in Section 4 of this Agreement, the offer,
sale and issuance of the Shares to be issued in conformity with the terms of
this Agreement constitute transactions exempt from the registration requirements
of Section 5 of the Securities Act of 1933, as amended (the "Act"), and from all
applicable state registration or qualification requirements.
-10-
<PAGE> 18
4. Representations and Warranties of the Investor. The Investor hereby
represents and warrants the following:
4.1 Authorization. This Agreement constitutes its valid and
legally binding obligation, enforceable in accordance with its terms, except as
such enforcement is limited by bankruptcy, insolvency and similar laws
affecting creditor rights.
4.2 Purchase Entirely for Own Account. This Agreement is made
with the Investor in reliance upon the Investor's representation to the
Company, which by the Investor's execution of this Agreement the Investor hereby
confirms, that the Series B Preferred to be received by the Investor and the
Common Stock issuable upon conversion of the Series B Preferred Stock
(collectively, the "Securities") will be acquired for investment for the
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that the Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, the Investor further represents that the
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. Each Investor represents
that it has full power and authority to enter into this Agreement.
4.3 Disclosure of Information. The Investor has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Series B Preferred hereunder. 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 Series B Preferred.
The foregoing, however, does not limit or modify the representations and
warranties of the Company in Section 3 of this Agreement or the right of the
Investor to rely thereon.
4.4 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 Series B
Preferred hereunder.
4.5 Restricted Securities. The Investor understands that the
shares of Series Preferred it is purchasing are characterized as "restricted
securities" under the federal securities laws inasmuch as they are being
acquired from the Company in a trans-
-11-
<PAGE> 19
action not involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under 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.
4.6 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 Series B Preferred purchased
hereunder or Common Stock issuable upon the conversion of the Series B
Preferred, 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) The 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 reasonably requested by the Company, the 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.
(c) Notwithstanding the provisions of
paragraphs (a) and (b) above, no such registration statement or opinion of
counsel shall be necessary for a transfer by an Investor pursuant to Rule 144 if
such Investor makes the factual representations reasonably requested by the
Company indicating the availability of the exemption provided by Rule 144.
4.7 Legends. It is understood that the certificates evidencing
the Series B Preferred and the Common Stock issuable upon conversion thereof,
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 under the
Securities Act of 1933."
(b) Any legend required by applicable state
securities laws.
-12-
<PAGE> 20
5. Conditions to First Closing of Investor. The Investor's obligation
to purchase the First Installment at the First Closing is, at the option of each
Investor, subject to the fulfillment as of the First Closing Date of the
following conditions:
5.1 Representations and Warranties Correct. The
representations and warranties made by the Company in Section 3 hereof shall be
true and correct in all material respects as of the First Closing Date.
5.2 Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
First Closing Date shall have been performed or complied with in all material
respects.
5.3 Compliance Certificate. The Company shall have delivered
to the Investors a certificate of the Company in the form of Exhibit D-1 hereto,
executed by the President of the Company, certifying to the fulfillment of the
conditions specified in Sections 5.1 and 5.2 of this Agreement.
5.4 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred and the Common Stock issuable upon conversion thereof.
5.5 Restated Certificate. The Restated Certificate shall have
been filed with the Delaware Secretary of State.
5.6 Directors. The Company will have a Board of Directors with
six members. Upon the Closing the members of the Company's Board of Directors
shall be David G. Nance, Mahendra G. Shah, Ph.D., Austin Long, III, John N.
Kapoor, Ph.D., Mark B. Chandler and Thierry Soursac, M.D., Ph.D.
5.7 Collaboration Agreements. The Company and the Investor
shall have entered into the Collaboration Agreement (Kras Products) in
substantially the form of Exhibit E and the Collaboration Agreement (P53
Products) in substantially the form of Exhibit F (these agreements shall be
collectively referred to as the "Collaboration Agreements").
6. Conditions to First Closing of Company. The Company's obligation to
sell and issue the First Installment at the First Closing is, at the option of
the Company, subject to the fulfillment as of the First Closing Date of the
following conditions:
-13-
<PAGE> 21
6.1 Representations. The representations made by the Investor
in Section 4 hereof shall be true and correct when made, and shall be true and
correct on the First Closing Date.
6.2 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred and the Common Stock issuable upon conversion thereof.
6.3 Restated Certificate. The Restated Certificate shall have
been filed with the Delaware Secretary of State.
7. Conditions to Second Closing of Investor. The
Investor's obligation to purchase the Second Installment at the
Second Closing is, at the option of the Investor, subject to the
fulfillment as of the Second Closing Date of the following
conditions:
7.1 [*]
7.2 Representations and Warranties. The Representations and
Warranties made by the Company in Section 3 hereof, as modified or qualified by
the Company in an updated Schedule of Exceptions, shall be true and correct in
all material respects as of the Second Closing Date.
7.3 Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Second Closing Date shall have been performed or complied with in all material
respects.
7.4 Compliance Certificate. The Company shall have delivered
to the Investor a certificate of the Company in the form of Exhibit D-2 hereto,
executed by the President of the Company, dated the Second Closing Date, and
certifying to the fulfillment of the conditions specified in Sections 7.1, 7.2
and 7.3 of this Agreement.
7.5 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company, pursuant to Section 18.3.1 of such agreements.
7.6 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the
-14-
<PAGE> 22
offer and sale of the Series B Preferred and the Common Stock issuable upon
conversion thereof.
8. Conditions to Second Closing of Company. The Company's obligation to
sell and issue the Second Installment at the Second Closing is, at the option of
the Company, subject to the fulfillment as of the Second Closing Date of the
following conditions:
8.1 Representations. The representations made by the Investors
in Section 4 hereof shall be true and correct when made, and shall be true and
correct on the Second Closing Date.
8.2 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred and the Common Stock issuable upon conversion thereof.
8.3 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company.
9. Conditions to Third Closing of Investors. The Investor's obligation
to purchase the Third Installment at the Third Closing is, at the option of the
Investor, subject to the fulfillment as of the Third Closing Date of the
following conditions:
9.1 [*]
9.2 Representations and Warranties. The Representations and
Warranties made by the Company in Section 3 hereof, as modified or qualified by
the Company in an updated Schedule of Exceptions, shall be true and correct in
all respects as of the Third Closing Date.
9.3 Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Third Closing Date shall have been performed or complied with in all material
respects.
9.4 Compliance Certificate. The Company shall have delivered
to the Investors a certificate of the Company in the form of Exhibit D-3 hereto,
executed by the President of the Company, certifying to the fulfillment of the
conditions specified in Sections 9.1, 9.2 and 9.3 of this Agreement.
-15-
<PAGE> 23
9.5 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred and the Common Stock issuable upon conversion thereof.
9.6 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company, pursuant to Section 18.3.1 of such agreements.
10. Conditions to Third Closing of Company. The Company's obligation to
sell and issue the Third Installment at the Third Closing is, at the option of
the Company, subject to the fulfillment as of the Third Closing Date of the
following conditions:
10.1 Representations. The representations made by the
Investors in Section 4 hereof shall be true and correct when made, and shall be
true and correct on the Third Closing Date.
10.2 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred Stock and the Common Stock issuable upon conversion thereof.
10.3 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company.
11. Conditions to Fourth Closing of Investor. The Investor's
obligations to purchase the Fourth Installment at the Fourth Closing is, at the
option of the Investor, subject to the fulfillment as of the Fourth Closing Date
of the following:
11.1 [*]
11.2 Representations and Warranties. The Representations and
Warranties made by the Company in Section 3 hereof, as modified or qualified by
the Company in an updated Schedule of Exceptions, shall be true and correct and
all material respects as of the Fourth Closing Date.
11.3 Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Fourth Closing Date shall have been performed or complied with in all material
respects.
-16-
<PAGE> 24
11.4 Compliance Certificate. The Company shall have delivered
to the Investors a certificate of the Company in the form of Exhibit D-4 hereto,
executed by the President of the Company, certifying to the fulfillment of the
conditions specified in Sections 11.1, 11.2 and 11.3 of this Agreement.
11.5 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred and the Common Stock issuable upon conversion thereof.
11.6 Collaboration Agreements. The Investor or its
affiliate shall not have delivered notice of termination for each
of the Collaboration Agreements to the Company, pursuant to Section
18.3.1 of such agreements.
12. Conditions to Fourth Closing of Company. The Company's
obligation to sell and issue the Fourth Installment at the Fourth
Closing is, at the option of the Company, subject to fulfillment as
of the Fourth Closing Date of the following conditions:
12.1 Representations. The representations made by the
Investors in Section 4 hereof shall be true and correct when made, and shall be
true and correct on the Fourth Closing Date.
12.2 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred Stock and the Common Stock issuable upon conversion thereof.
12.3 Collaboration Agreements. The Investor or its
affiliate shall not have delivered notice of termination for each
of the Collaboration Agreements to the Company.
13. Conditions to Fifth Closing of Investor. The Investor's
obligations to purchase the Fifth Installment at the Fifth Closing
is, at the option of the Investor, subject to the fulfillment as of
the Fifth Closing Date of the following:
13.1 [*]
13.2 Representations and Warranties. The Representations and
Warranties made by the Company in Section 3 hereof, as modified or qualified by
the Company in an updated Schedule of Exceptions, shall be true and correct and
all material respects as of the Fifth Closing Date.
-17-
<PAGE> 25
13.3 Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Fifth Closing Date shall have been performed or complied with in all material
respects.
13.4 Compliance Certificate. The Company shall deliver to the
Investors a certificate of the Company in the form of Exhibit D-4 hereto,
executed by the President of the Company, dated the Fifth Closing Date, and
certifying to the fulfillment of the conditions specified in Sections 13.1, 13.2
and 13.3 of this Agreement.
13.5 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred and the Common Stock issuable upon conversion thereof.
13.6 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company, pursuant to Section 18.3.1 of such agreements.
14. Conditions to Fifth Closing of Company. The Company's
obligation to sell and issue the Fifth Installment at the Fifth
Closing is, at the option of the Company, subject to fulfillment as
of the Fifth Closing Date of the following conditions:
14.1 Representations. The representations made by the
Investors in Section 4 hereof shall be true and correct when made, and shall be
true and correct on the Fifth Closing Date.
14.2 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred Stock and the Common Stock issuable upon conversion thereof.
14.3 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company.
15. Conditions to Sixth Closing of Investor. The Investor's
obligations to purchase the Sixth Installment at the Sixth Closing
is, at the option of the Investor, subject to the fulfillment as of
the Sixth Closing Date of the following:
15.1 [*]
-18-
<PAGE> 26
15.2 Representations and Warranties. The Representations and
Warranties made by the Company in Section 3 hereof, as modified or qualified by
the Company in an updated Schedule of Exceptions shall be true and correct in
all material respects as of the Sixth Closing Date.
15.3 Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Sixth Closing Date shall have been performed or complied with in all material
respects.
15.4 Compliance Certificate. The Company shall deliver to the
Investors a certificate of the Company in the form of Exhibit D-6 hereto,
executed by the President of the Company, certifying to the fulfillment of the
conditions specified in Sections 15.1, 15.2 and 15.3 of this Agreement.
15.5 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred and the Common Stock issuable upon conversion thereof.
15.6 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company, pursuant to Section 18.3.1 of such agreements.
16. Conditions to Sixth Closing of Company. The Company's obligation to
sell and issue the Sixth Installment at the Sixth Closing is, at the option of
the Company, subject to fulfillment as of the Sixth Closing Date of the
following conditions:
16.1 Representations. The representations made by the
Investors in Section 4 hereof shall be true and correct when made, and shall be
true and correct on the Sixth Closing Date.
16.2 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred Stock and the Common Stock issuable upon conversion thereof.
16.3 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company.
-19-
<PAGE> 27
17. Conditions to Seventh Closing of Investor. The Investor's
obligations to purchase the Seventh Installment at the Seventh Closing is, at
the option of the Investor, subject to the fulfillment as of the Seventh Closing
Date of the following:
17.1 [*]
17.2 Representations and Warranties. The Representations and
Warranties made by the Company in Section 3 hereof, as modified or qualified by
the Company in an updated Schedule of Exceptions shall be true and correct and
all material respects as of the Seventh Closing Date.
17.3 Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Seventh Closing Date shall have been performed or complied with in all material
respects.
17.4 Compliance Certificate. The Company shall deliver to the
Investor a certificate of the Company in the form of Exhibit D-7 hereto,
executed by the President of the Company, certifying to the fulfillment of the
conditions specified in Sections 17.1, 17.2 and 17.3 of this Agreement.
17.5 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series B
Preferred and the Common Stock issuable upon conversion thereof.
17.6 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company, pursuant to Section 18.3.1 of such agreements.
18. Conditions to Seventh Closing of Company. The Company's obligation
to sell and issue the Seventh Installment at the Seventh Closing is, at the
option of the Company, subject to fulfillment as of the Seventh Closing Date of
the following conditions:
18.1 Representations. The representations made by the
Investors in Section 4 hereof shall be true and correct when made, and shall be
true and correct on the Seventh Closing Date.
18.2 Blue Sky. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the
-20-
<PAGE> 28
offer and sale of the Series B Preferred Stock and the Common Stock issuable
upon conversion thereof.
18.3 Collaboration Agreements. The Investor or its affiliate
shall not have delivered notice of termination for each of the Collaboration
Agreements to the Company.
19. Additional Covenants and Restrictions Regarding the Purchase of
Series B Preferred. Notwithstanding the foregoing provisions, the following
provisions shall govern the purchase of Series B Preferred pursuant to this
Agreement:
19.1 Purchase Price Adjustment.
(a) For all Closings which occur after January 1,
1995 and prior to an underwritten public offering of the Common Stock of the
Company, the purchase price per share of Series B Preferred indicated on Exhibit
B hereto shall be increased (but not decreased) to the price per share (the
"Adjusted Purchase Price") paid in the most recent equity financing of the
Company, if any, which occurs prior to the applicable Closing and which
involves gross proceeds of at least $2,000,000. The adjustment of the price per
share shall not reduce the aggregate purchase price indicated on Exhibit B, but
shall reduce the number of shares of Series B Preferred Stock purchased to the
quotient of the aggregate purchase price indicated for the applicable Closing
divided by the Adjusted Purchase Price;
(b) At the election of the Investor, the purchase
price per share of Series B Preferred indicated on Exhibit B hereto or the
Adjusted Purchase Price calculated pursuant to Section 19.1(a) above, as
applicable, may be increased (but not decreased) to a price per share (the
"Elected Adjusted Purchase Price") that when divided into the aggregate
purchase price indicated on Exhibit B for the applicable Closing would result
in the Investor holding no more than 19.9% of the outstanding stock of the
Company after such Closing. The adjustment of the purchase price per share
shall not reduce the obligation to pay the aggregate purchase price indicated
on Exhibit B for any Closing, but shall reduce the number of shares of Series B
Preferred Stock to be purchased (possibly to zero).
19.2 Acceleration of Purchases Upon a Public Offering. In the
event of an underwritten public offering of Common Stock of the Company with
aggregate gross proceeds of more than $10,000,000 (an "IPO"):
(a) The Investor shall be obligated to
purchase at the closing of an IPO, the dollar amount of stock indicated on
Exhibit B hereto which still remains unpurchased pursuant to the Closings (the
"Scheduled IPO Purchase Amount"). The price per share shall be the price per
share to the public in the IPO.
(b) Notwithstanding the provisions of
paragraph (a) above, the Investor can reduce the IPO Purchase Amount (x) to 20%
of the gross proceeds to be received in the IPO, but not to exceed the lesser of
$4,000,000 or such dollar amount of shares that when aggregated with the other
shares held by the Investor would amount to 19.9% of the outstanding stock of
the Company (calculated on an as-converted to Common Stock basis) following the
IPO, in the event that there is reasonable evidence of local efficacy of a
Company product in Phase I or later stage clinical trials or (y) to zero, in the
event that there is not reasonable
-21-
<PAGE> 29
evidence of local efficacy of a Company product in Phase I or later stage
clinical trials. Such reduced amount shall be referred to as the "Actual IPO
Purchase Amount".
(c) In the event that the Investor reduces the
Scheduled IPO Purchase Amount pursuant to paragraph (b) above, then the Investor
shall be obligated to pay a sum equal to the Scheduled IPO Purchase Amount less
the Actual IPO Purchase Amount; provided, however, that such sum shall only be
payable (i) at those times when a purchase of Series B Preferred would have
occurred at a Closing, if the Company had not undertaken the IPO and (ii) no
payments need be made until the dollar amount of the Series B Preferred that
would have been purchased at a Closing or Closings following the date of the IPO
(if the Company had not undertaken the IPO) exceeds the Actual IPO Purchase
Amount.
19.3 Purchase of Outstanding Stock. Up to fifteen percent
(15%) of the shares of capital stock of the Company to be purchased at each
Closing contemplated by this Agreement and up to fifteen (15%) of the shares to
be purchased at an acceleration upon an IPO shall, upon the election of Texas
Biomedical Development Partners ("TBDP"), be purchased from TBDP. Such
purchases shall be made upon the same terms (including the applicable price per
share and conditions to closing) as the purchase of Series B Preferred, except
the Investor shall receive shares of Series A Preferred Stock (or Common Stock,
in the event that the Series A Preferred Stock has converted to Common Stock)
from TBDP. TBDP shall exercise its right to sell such shares at the First
Closing. In the event that TBDP wishes to exercise its right to sell such
shares at subsequent Closings, it shall do so by delivering a notice of
election to the Company and the Investor at least five business days prior to a
Closing. Such election shall indicate the number of shares which TBDP wishes to
sell and be accompanied by stock certificate(s), representing at least the
amount of shares that TBDP wishes to sell, which are duly endorsed for transfer
to the Investor.
19.4 Purchase of Common Stock. In the event that the Investor
is obligated to purchase Series B Preferred Stock at a Closing or upon the
acceleration of purchases upon an IPO and the Series B Preferred Stock has
converted to Common Stock pursuant to the terms of the Company's Certificate of
Incorporation then obligation to purchase and sell Series B Preferred shall be
an obligation to purchase and sell Common Stock.
19.5 Standstill Agreement. Prior to the date which is five
years from the date of the Company's initial public offering, neither the
Investor nor any subsidiary, parent corporation or other affiliate of the
Investor's shall acquire beneficial ownership of any voting stock in the Company
("Voting Stock"), any securities convertible into or exchangeable for Voting
Stock, or any other right to acquire Voting Stock (except, in any case, by way
of stock dividends or other distributions or offerings made available to holders
of any Voting Stock generally) or authorize or make a tender, exchange or other
offer, without the written consent of the Company, if the effect of such
acquisition would be to increase the Investor's percentage ownership beyond
thirty-two percent (32%) of the voting power of all Voting Stock of the Company.
20. Registration Rights. The Company covenants and agrees as
follows:
20.1 Definitions. For purposes of this Section 20:
(a) The term "register," "registered," and
"registration" refer to a registration effected by preparing and
-22-
<PAGE> 30
filing a registration statement or similar document in compliance with the Act,
and the declaration or ordering of effectiveness of such registration statement
or document;
(b) The term "Registrable Securities" means
(1) the Common Stock issuable or issued upon conversion of the Series B
Preferred sold pursuant to this Agreement, (2) the Common Stock issuable or
issued upon conversion of any Series A Preferred Stock held by individuals and
entities who have signed a consent for the purpose of being bound by this
Section 20, (3) any Common Stock held by individuals and entities who have
signed a consent for the purposes of being bound by this Section 20 and (4) 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 Series A Preferred Stock, Series B 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 20 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 20.13 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 Commission ("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.
20.2 Request for Registration.
(a) If the Company shall receive at any time
after December 31, 1998, either (i) a written request from the Holders of at
least fifty percent (50%) of the Registrable Securities
-23-
<PAGE> 31
(including securities convertible into Registrable Securities) then outstanding
that the Company file a registration statement under the Act covering the
registration of at least forty percent (40%) of the Registrable Securities (or a
lesser percentage if the anticipated aggregate offering price, net of
underwriting discounts and commissions, would exceed $10,000,000) or (ii) a
written request from the Investor that the Company file a registration statement
under the Act covering the registration of at least sixty percent (60%) of the
Registrable Securities held by the Investor (or a lesser percentage if the
anticipated aggregate offering price, net of underwriting discounts and
commissions would exceed $10,000,000), 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 subsections 20.2(b) and (c), effect as
soon as practicable, and in any event within 120 days of the receipt of such
request, the registration under the Act of all Registrable Securities which the
Holders request to be registered within 20 days of the mailing of such written
notice by the Company.
(b) Notwithstanding the foregoing, the Company
shall not be obligated to take any action to effect any such registration,
qualification or compliance pursuant to subsection 20.2(a):
(i) During the period starting with the
date sixty (60) days prior to the Company's estimated date of filing of, and
ending on the date six months 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
registrations pursuant to subsection 20.2(a) (i) (if the request is being made
pursuant to subsection 20.2(a)(i)), and such registration has been declared or
ordered effective, or after the Company has effected a single registration
pursuant to subsection 20.2(a)(ii) (if the request is being made pursuant to
subsection 20.2(a)(ii)) and such registration has been declared or ordered
effective;
(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 share-
-24-
<PAGE> 32
holders 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 subsection 20.2(a) shall be deferred for a period not to exceed 120 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.
(c) If the Holders initiating the registration
request hereunder ("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 20.2
and the Company shall include such information in the written notice referred to
in subsection 20.2(a). In such event, the right of any Holder to include his
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 Holders requesting the registration 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 subsection 20.4(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 Holders requesting the
registration and reasonably acceptable to the Company. Notwithstanding any other
provision of this Section 20.2, if the underwriter advises the Holders
requesting the registration 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, in
proportion (as nearly as practicable) to the amount of Registrable Securities of
the Company owned by each Holder; provided, however, that the number of shares
of Registrable Securities to be included in such underwriting shall not be
reduced unless all other securities are first entirely excluded from such
underwriting.
20.3 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 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 substan-
-25-
<PAGE> 33
tially the same 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 Holder given within twenty (20)
days after mailing of written notice by the Company, the Company shall, subject
to the provisions of Section 20.8, cause to be registered under the Act all of
the Registrable Securities that each such Holder has requested to be registered.
20.4 Obligations of the Company. Whenever required under this
Section 20 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 sixty (60)
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, provided that the Company shall not be required in
connection therewith or as a condition thereto to 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 its obligations under such an agreement.
-26-
<PAGE> 34
(f) 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.
(g) Furnish, at the request of any Holder
requesting registration of Registrable Securities pursuant to this Section 20,
on the date that such Registrable Securities are delivered to the underwriters
for sale in connection with a registration pursuant to this Section 20, 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 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.
20.5 Furnish Information. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 20
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.
20.6 Expenses of Demand Registration. All expenses, other than
underwriting discounts and commissions and any fees and expenses of a special
counsel of a selling stockholder, incurred in connection with registrations,
filings or qualifications pursuant to Section 20.2, including (without
limitation) all registration, federal and state filing and qualification fees
and expenses, printers' and accounting fees and fees and disbursements of
counsel for the Company, shall be paid by the Company; provided, however, that
the Company shall not be required to pay for any expenses of
-27-
<PAGE> 35
any registration proceeding begun pursuant to Section 20.2 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 one demand registration
pursuant to Section 20.2; provided further, however, that if at the time of such
withdrawal, the Holders have learned of a material adverse change in the
condition, 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 20.2. The
Company's obligations under this 20.6 shall apply to each registration pursuant
to Section 20.2.
20.7 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 the registrations
pursuant to Section 20.3 for each Holder (which right may be assigned as
provided in Section 20.13), including (without limitation) all registration,
filing, qualification, printers and accounting fees relating or apportionable
thereto, but excluding underwriting discounts and commissions relating to
Registrable Securities and any fees or expenses of a special counsel of a
selling stockholder.
20.8 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 20.3 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 is provided for herein. If the underwriters determine
that marketing factors require a limitation of the number of shares to be
underwritten, the underwriters may limit the number of Registrable Securities to
be included in the registration on a pro-rata basis, or may exclude Registrable
Securities entirely from such registration (the securities so included to be
apportioned pro rata among the selling stockholders according to the total
amount of securities entitled to be included therein owned by each selling
stockholder or in such other proportions as shall mutually be agreed to by such
selling stockholders) but in no event shall any shares being sold by a
stockholder exercising a demand registration right similar to that granted in
Section 20.2 be excluded from such offering. For purposes of apportionment, any
selling stockholder 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
-28-
<PAGE> 36
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 stockholder", and
any pro rata reduction with respect to such "selling stockholder" shall be based
upon the aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such "selling stockholder", as defined in
this sentence.
20.9 Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 20.
20.10 Indemnification. In the event any Registrable Securities
are included in a registration statement under this Section 20:
(a) To the extent permitted by law, the Company
will indemnify and hold harmless each Holder, any underwriter (as defined in the
Act) for 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 actions 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, 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 subsection 20.10(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
-29-
<PAGE> 37
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, 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
person intended to be indemnified pursuant to this subsection 20.10(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 20.10(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 subsection
20.10(b) exceed the gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified
party under this Section 20.10 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
20.10, 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
-30-
<PAGE> 38
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
20.10, 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 20.10.
(d) The obligations of the Company and Holders
under this Section 20.10 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 20, and
otherwise.
20.11 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 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), 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
-31-
<PAGE> 39
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 (exclusive of Rule 144A) which permits the selling of any such
securities without registration or pursuant to such form.
20.12 Form S-3 Registration. In case the Company shall receive
from any Holder or Holders of the 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 shares of Registrable Securities the
reasonably anticipated aggregate price to the public of which, net of
underwriting discounts and commissions, would exceed $1,000,000 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 15 days after receipt of such 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 20.12: (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 the 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 20.12;
provided, however, that the Company shall not utilize this right more than once
in any twelve (12) month period; or (4) in any particular juris-
-32-
<PAGE> 40
diction 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) 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
the registrations requested pursuant to Section 20.12, (exclusive of
underwriting discounts and commissions and any fees and expenses of a special
counsel to a selling shareholder) shall be paid by the Company.
20.13 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 20 may be
assigned by a Holder to a transferee or assignee of such securities who acquires
(i) at least 300,000 shares of Registrable Securities, or (ii) all shares of
Registrable Securities then held by such Holder if such Holder transfers all
such Registrable Securities to a single entity, provided the Company is, within
a reasonable time after such transfer, furnished with written notice of the name
and the 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 or general partner of the Holder
regardless of the number of shares acquired by such transferee.
20.14 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 a majority of the Registrable Securities,
enter into any agreement (other than an amendment to this agreement or
supplemental agreement effected in accordance with Section 20.16 of this
Agreement) with any holder or prospective holder of any securities of the
Company which would allow such holder or prospective holder (a) to include such
securities in any registration filed pursuant to Section 20.2 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 such securities will not reduce the amount of the Registrable Securities of
the Holders which are included in any such registration or (b) to make a demand
registration which could result in such registration being declared effective
prior to the earlier of either of the dates set forth in
-33-
<PAGE> 41
subsection 20.2(a) or within six months of the effective date of any
registration effected pursuant to Section 20.2.
20.15 "Market Stand-Off" Agreement. Each holder of securities
which are or at one time were Registrable Securities (or which are or were
convertible into Registrable Securities) hereby agrees that, during a period not
to exceed 180 days, following the effective date of a registration statement of
the Company filed under the Act, it shall not, to the extent requested by the
Company and such underwriter, sell or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any Common Stock or Preferred
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,
and all other persons with registration rights (whether or not pursuant to this
Agreement) 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 Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
20.16 Amendment of Registration Rights and Information Rights. Any
provision of Sections 20 and 21 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, the holders of at
least sixty-seven percent (67%) of the Registrable Securities then outstanding
and the holders of a majority of the Series B Preferred Stock then outstanding,
and with the same consent the Company may enter into a supplemental agreement
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of Sections 20 or 21. Any amendment, waiver or
supplemental agreement effected in accordance with this Section 20.16 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.
-34-
<PAGE> 42
20.17 Termination of Registration Rights. No stockholder shall be
entitled to exercise any right provided for in this Section 20 after six (6)
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 underwritten offering of its securities to the general public.
21. Covenants of the Company.
21.1 Delivery of Financial Statements. The Company shall
deliver to each Holder which holds 300,000 shares of Registrable Securities:
(a) as soon as practicable, but in any event
within ninety (90) days after the end of each fiscal year of the Company,
statements of operations and cash flow for such fiscal year, a balance sheet of
the Company as of the end of such year, and a schedule as to the sources and
applications of funds for such year, all in reasonable detail, prepared in
accordance with generally accepted accounting principles ("GAAP"), and audited
and certified by independent public accountants of nationally recognized
standing selected by the Company;
(b) as soon as practicable, but in any event
within forty-five (45) days of the end of each quarter, an unaudited statement
of operations and balance sheet for and as of the end of such quarter, in
reasonable detail and prepared in accordance with GAAP, subject to year end
audit adjustments and the absence of footnotes;
(c) as soon as practicable, but in any event
within thirty (30) days of the end of each month (commencing six calendar months
from the first Closing), an unaudited statement of operations and 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; and
(d) such other information relating to the
financial condition, business, prospects or corporate affairs of the Company as
the Holder 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 unless such Investor or assignee of such Investor agrees in writing
to hold in confidence and trust and to act in a fiduciary manner with respect to
all information so provided.
21.2 Assignment of Rights to Financial Information. The rights
granted pursuant to Section 21.1 may not be assigned or
-35-
<PAGE> 43
otherwise conveyed by any Holder or by any subsequent transferee of any such
rights without the prior written consent of the Company; provided, however, that
any Holder may assign to any transferee, other than a competitor of the Company,
and after giving notice to the Company, the rights granted pursuant to Section
21.1 to (i) a transferee who acquires at least 300,000 shares of Registrable
Securities.
21.3 Termination of Covenants. The covenants set forth in
Section 21.1 shall terminate as to Holders 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.
22. Investor's Right of First Refusal.
22.1 Right of First Refusal. As more specifically set forth
below, the Company hereby grants to the Investor the right of first refusal to
purchase, pro rata, all or any part of New Securities (as defined in this
Section 22.1) which the Company may, from time to time, propose to sell and
issue. A pro rata share, for purposes of this right of first refusal, is the
ratio that the sum of the number of shares of Common Stock and Common Stock
issuable upon conversion of the Series B Preferred then held by the Investor
bears to the sum of the total number of shares of Common Stock then outstanding
and the number of shares of Common Stock issuable upon conversion of the then
outstanding Preferred Stock.
(a) Except as set forth below, "New Securities"
shall mean any shares of Common Stock or Preferred Stock of the Company, whether
now authorized or not, and rights, options or warrants to purchase shares of
Common Stock or Preferred Stock, and securities of any type whatsoever that are,
or may become, convertible into shares of Common Stock or Preferred Stock.
Notwithstanding the foregoing, "New Securities" does not include (i) the
Preferred purchased under this Agreement, including Common Stock issuable upon
conversion of the Series B Preferred, (ii) securities offered to the public
generally pursuant to a registration statement or pursuant to Regulation A under
the Act, (iii) securities issued pursuant to the acquisition of or strategic
partnering with another corporation by the Company by merger, purchase of
substantially all of the assets, licensing arrangement, joint venture
arrangement or other transaction, (iv) employees, officers and directors of, and
consultants, customers, and vendors to, the Company, pursuant to any arrangement
approved by the Board of
-36-
<PAGE> 44
Directors of the Company, (v) stock issued pursuant to any rights or agreements,
including without limitation convertible securities, options and warrants,
provided that the rights of first refusal established by this Section 22.1 apply
with respect to the initial sale or grant by the Company of such rights or
agreements, (vi) stock issued in connection with any stock split, stock dividend
or recapitalization by the Company.
(b) In the event the Company proposes to
undertake an issuance of New Securities, it shall give the Investor written
notice of its intention, describing the type of New Securities, and the price
and terms upon which the Company proposes to issue the same. The Investor shall
have 20 days from the date of receipt of any such notice to agree to purchase up
to its pro rata share of such New Securities for the price and upon the terms
specified in the notice by giving written notice to the Company and stating
therein the quantity of New Securities to be purchased.
(c) In the event the Investor fails to exercise
the right of first refusal within the 20 day period, the Company shall have 120
days thereafter to enter into an agreement to sell the New Securities not
elected to be purchased by the Investor at the price and upon the terms no more
favorable to the purchasers of such securities than specified in the Company's
notice. In the event the Company has not entered into an agreement to sell the
New Securities within the 120 day period, the Company shall not thereafter
issue or sell any New Securities, without first offering such securities in the
manner provided above.
(d) The right of first refusal granted under this
Agreement shall expire upon the closing of the first public offering of the
Common Stock of the Company to the general public which is effected pursuant to
a registration statement filed with, and declared effective by, the SEC under
the Act.
(e) The right of first refusal hereunder is not
assignable except by the Investor.
23. Investor's Board Representation.
23.1 Amendment to Certificate of Incorporation. The Company
shall not amend its Certificate of Incorporation to eliminate the right of the
holders of Series B Preferred Stock to select a member of the Company's Board of
Directors, without the consent of the holders of at least a majority of the
Series B Preferred Stock.
-37-
<PAGE> 45
23.2 Scientific Advisory Board. The holders of Series B
Preferred Stock shall be entitled to appoint a member to the Company's
Scientific Advisory Board who is reasonably acceptable to the Company.
23.3 Post Conversion. Following a conversion of Series B
Preferred Stock into Common Stock and provided that the Investor is still
holding at least fifteen percent (15%) of the outstanding stock of the Company,
the Company shall (i) include a nominee of the Investor who is reasonably
acceptable to the Company in its recommended slate for the Board of Directors
and shall utilize the same degree of effort to have such nominee elected as it
utilizes to have the other members of the slate elected, and (ii) include a
nominee of the Investor who is reasonably acceptable to the Company upon the
Company's Scientific Advisory Board.
24. Miscellaneous.
24.1 Survival of Warranties. The warranties, representations
and covenants of the Company and the Investor contained in 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 Investor or the Company.
24.2 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.
24.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware as applied to agreements among
Delaware residents entered into and to be performed entirely within Delaware.
24.4 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.
24.5 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.
-38-
<PAGE> 46
24.6 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, or
other courier service, postage prepaid and addressed to the party to be notified
at the address indicated for such party in the Company's stock records 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.
24.7 Finder's Fee. Each party represents that it neither is
nor will be obligated for any finders' fee or commission in connection with this
transaction. The Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Investor or any of its officers, partners,
employees, or representatives is responsible. The Company agrees to indemnify
and hold harmless the Investor from any liability for any commission or
compensation in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.
24.8 Expenses. Each party shall pay its own fees and expenses
with respect to this Agreement. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement or the Restated Articles,
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.
24.9 Amendments and Waivers. Any term of this Agreement
(except those set forth in Sections 20 and 21) 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 Investor. Amendments, waivers and supplemental
agreements relating to Sections 20 and 21 hereof shall be governed by the
provisions of Section 17.16 hereof.
24.10 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
-39-
<PAGE> 47
24.11 Aggregation of Stock. All shares of Common Stock, Series A
Preferred Stock and Series B Preferred Stock 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
INTROGEN THERAPEUTICS, INC.
By: /s/ DAVID NANCE
-----------------------------
Title: President
RHONE-POULENC RORER
PHARMACEUTICALS INC.
By: /s/ MICHEL DE ROSEN
-----------------------------
Title: President
-40-
<PAGE> 48
EXHIBIT B
SCHEDULE OF PURCHASES
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Aggregate
Number of Purchase
Investor Closing Shares Price
- ------------------------ ------- --------- ----------
<S> <C> <C> <C>
Phone-Poulenc Rorer
International (Holdings) Inc. First 525,000 $3,003,000.00(1)
Delaware Corporate Center I Second 200,735 1,499,490.45
Suite 114 Third 200,735 1,499,490.45
1 Righter Parkway Fourth [*] [*]
Wilmington, DE 19803 Fifth [*] [*]
Sixth [*] [*]
Seventh [*] [*]
--------- ----------
TOTAL [*] [*]
--------- ----------
</TABLE>
(1) $500,000 of ;this purchase price was paid prior to closing pursuant to
the Letter of Intent between the Company and the Investor dated
June 15, 1994.
<PAGE> 49
EXHIBIT C
SCHEDULE OF EXCEPTIONS
This Schedule of Exceptions, dated as of October 7, 1994, is made and
given pursuant to Section 3 of the Introgen Therapeutics, Inc. Series B and
Series B Preferred Stock Purchase Agreement dated October 7, 1994 (the
"Agreement"). The Section numbers in this Schedule of Exceptions correspond to
the Section numbers in the Agreement; however, any information disclosed herein
under any Section number shall be deemed to be disclosed and incorporated into
any other Section 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.
3.6 Liabilities.
The Company is a party to the following agreements (copies of which
have been provided to the Investor) which may result in liabilities in
excess of $10,000:
- Consulting Agreement with EJ Financinal Enterprises, Inc.
- Consulting Agreement with Jack A. Roth, M.D.
- Service Agreement with Domecq Technologies, Inc.
- Sponsored Research Agreements and Clinical Study
Agreements with the University of Texas M.D. Anderson
Cancer Center.
- Genetix License and Materials Transfer Agreement.
- Patent and Technology License Agreement with the Board of
Regents of the University of Texas System.
Legal fees and expenses due to Wilson & Varner, PC.
Legal fees and expenses due to Wilson, Sonsini, Goodrich & Rosati, PC.
3.8 Litigation.
In December 1993, Schering Corporation contacted the Company
(then known as Intron Therapeutics, Inc.) and asked that the
name "Intron", allegedly a Schering trademark, cease to be used
by the Company. Schering threatened the Company with trademark
infringement litigation. On January 28, 1994, Schering
<PAGE> 50
notified the Company that Schering would not file an infringement
complaint based upon the Company's representation that the Company
would change its name. The Company subsequently changed its name to
Introgen Therapeutics, Inc. and has notified Schering of the name
change.
The Company believes there will continue to be significant litigation
regarding patent and other intellectual property rights of companies
involved in gene therapy.
3.9 Employees.
The Company entered into a Consulting Agreement with Domecq
Technologies, Inc. effective July 1, 1994. The Company acknowledged in
the Consulting Agreement that Mr. Nance serves as an officer, director
and or trustee of other entities and that it is in the best interest of
the Company for Mr. Nance to continue those activities which are deemed
by the Company to be not conflicting with the Company's interests.
3.10 Patents and Trademarks.
The Company's success will depend, in large part, on the strength of
its current and future patent position relating to gene therapy. The
Company's patent position, like that of others in the gene therapy
field, is highly uncertain and involves complex legal and factual
questions. The Company is the licensee of certain patents and patent
applications of the University of Texas System. Claims made under
patent applications may be denied or significantly narrowed and issued
patents may not provide significant commercial protection to the
Company. There is no assurance that the Company's patents will not be
challenged by others, and the Company could incur substantial costs in
proceedings before the United States Patent Office, including
interference proceedings. These proceedings could also result in
adverse decisions as to the priority of the Company's licensed
inventions. There can be no assurance that the Company's products do
not or will not infringe on the patent or proprietary rights of others,
and the Company may be required to obtain additional licenses to the
patents, patent applications or other proprietary rights of others.
There can be no assurance that any such licenses would be made
available on terms acceptable to the Company, if at all.
-2-
<PAGE> 51
3.12 Agreement; Action. The following parties:
<TABLE>
<CAPTION>
Association with
Name the Company
-------------- -----------------------------
<S> <C>
David G. Nance President and Chief Executive
Officer
Jack A. Roth, M.D. Consultant and Chairman of the
Scientific Advisory Board
Mahendra G. Shah, Ph.D. Vice President
Timothy R. Kelly Chief Financial Officer
Rodney Varner Secretary
John N. Kapoor, Ph.D. Director
</TABLE>
are associated with the following entities which are also
affiliated with the Company.
- Dr. Kapoor, Dr. Shah and Mr. Kelly are associated with EJ
Financial Enterprises, Inc. (a consultant to the Company)
and Texas Biomedical Development Partners (a major
shareholder of the Company).
- Mr. Nance is associated with Texas Biomedical Development
Partners and Technology Capital Corporation.
- Rodney Varner is associated with Wilson & Varner PC which
provides legal services to the Company.
- Dr. Roth is an employee of M.D. Anderson Cancer Center
which is a component of Regents of the University of Texas
System (a Licensor to the Company).
3.13 Disclosure.
The Company's License Agreement with the Board of Regents of the
University of Texas System has been amended. However, such amendment is
not legally binding until it has been approved at a meeting of the
Board of Regents, and no such approval has been obtained.
3.19 Insurance.
The Company has no insurance at this time.
-3-
<PAGE> 52
3.20 Labor Agreements and Actions.
The Company is not bound by any labor union agreements, except as may
indirectly apply through the Company's agreements with the University
of Texas M.D. Anderson Cancer Center ("UTMDACC") related to sponsored
research and clinical studies. The Company pays UTMDACC which in turn
pays UTMDACC and University of Texas personnel and employees. Some of
these personnel and employees may be associated with a state employee
labor union or other union.
-4-
<PAGE> 53
EXHIBIT D-1
The undersigned, hereby certifies that:
1. He is the duly elected and acting President of Introgen
Therapeutics, Inc., a Delaware corporation.
2. The conditions specified in Sections 5.1 and 5.2 of the Series
B Preferred Stock Purchase Agreement dated October 1, 1994
have been fulfilled.
IN WITNESS WHEREOF, the undersigned has executed this certificate as an
officer of the Company as of___________________ .
______________________________
__________________, President
-5-
<PAGE> 54
EXHIBIT D-2
The undersigned, hereby certifies that:
1. He is the duly elected and acting President of Introgen
Therapeutics, Inc., a Delaware corporation.
2. The conditions specified in Sections 7.1, 7.2 and 7.3 of the
Series B Preferred Stock Purchase Agreement dated October 1,
1994 have been fulfilled.
IN WITNESS WHEREOF, the undersigned has executed this certificate as an
officer of the Company as of______________________ .
______________________________
__________________, President
<PAGE> 55
EXHIBIT D-3
The undersigned, hereby certifies that:
1. He is the duly elected and acting President of Introgen
Therapeutics, Inc., a Delaware corporation.
2. The conditions specified in Sections 9.1, 9.2 and 9.3 of the
Series B Preferred Stock Purchase Agreement dated October 1,
1994 have been fulfilled.
IN WITNESS WHEREOF, the undersigned has executed this certificate as an
officer of the Company as of____________________ .
______________________________
__________________, President
<PAGE> 56
EXHIBIT D-4
The undersigned, hereby certifies that:
1. He is the duly elected and acting President of Introgen
Therapeutics, Inc., a Delaware corporation.
2. The conditions specified in Sections 11.1, 11.2 and 11.3 of
the Series B Preferred Stock Purchase Agreement dated October
1, 1994 have been fulfilled.
IN WITNESS WHEREOF, the undersigned has executed this certificate as an
officer of the Company as of________________________ .
______________________________
__________________, President
<PAGE> 57
EXHIBIT D-5
The undersigned, hereby certifies that:
1. He is the duly elected and acting President of Introgen
Therapeutics, Inc., a Delaware corporation.
2. The conditions specified in Sections 13.1, 13.2 and 13.3 of
the Series B Preferred Stock Purchase Agreement dated October
1, 1994 have been fulfilled.
IN WITNESS WHEREOF, the undersigned has executed this certificate as an
officer of the Company as of______________ .
______________________________
__________________, President
<PAGE> 58
EXHIBIT D-6
The undersigned, hereby certifies that:
1. He is the duly elected and acting President of Introgen
Therapeutics, Inc., a Delaware corporation.
2. The conditions specified in Sections 15.1, 15.2 and 15.3 of
the Series B Preferred Stock Purchase Agreement dated October
1, 1994 have been fulfilled.
IN WITNESS WHEREOF, the undersigned has executed this certificate as an
officer of the Company as of________________________ .
______________________________
__________________, President
<PAGE> 59
EXHIBIT D-7
The undersigned, hereby certifies that:
1. He is the duly elected and acting President of Introgen
Therapeutics, Inc., a Delaware corporation.
2. The conditions specified in Section of the Series
B Preferred Stock Purchase Agreement dated October 1,
1994 have been fulfilled.
IN WITNESS WHEREOF, the undersigned has executed this certificate as an
officer of the Company as of_______________________ .
______________________________
__________________, President
-60-
<PAGE> 60
AMENDMENT NUMBER ONE TO THE SERIES B PREFERRED
STOCK PURCHASE AGREEMENT
This Amendment Number One to the Series B Preferred Stock Purchase
Agreement dated October 7, 1994 (the "Purchase Agreement") between Rhone-Poulenc
Rorer Pharmaceuticals Inc. ("Investor") and Introgen Therapeutics, Inc. (the
"Company") is being entered into as of October 11, 1996. This Amendment shall be
void and of no further force or effect in the event that the Company does not
close an underwritten initial public offering of Common Stock with aggregate
gross proceeds of more than $10,000,000 prior to January 1, 1997 (the "IPO").
The parties hereby agree as follows:
1. Acceleration. The parties acknowledge that upon the IPO, the
$11,003,262.10 to be paid upon the Fourth, Fifth, Sixth and Seventh
Closings is accelerated, subject to certain limitations, pursuant to
Section 19.2 of the Purchase Agreement.
2. Initial Public Offering. Investor shall purchase $6,000,000 of Common
Stock in a private placement upon completion of the IPO at the price at
which the Common Stock is offered to the public.
3. Fourth and Fifth Closings. No amounts shall be due upon satisfaction of
the conditions to closing for the Fourth and Fifth Closings, and all
references to such Closings in the Purchase Agreement are hereby
deleted.
4. Sixth Closing. That Section 15.1 of the Purchase Agreement shall be
amended and restated in its entirety to read:
"15.1 [*]"
Upon satisfaction of the conditions to closing for the Sixth Closing
Investor shall make a payment of $2,503,262.10 to the Company and not
receive any equity.
5. Seventh Closing. No amounts shall be due upon the satisfaction of the
conditions to closing for the Seventh Closing, and all references to
such Closing in the Purchase Agreement are hereby deleted.
6. October Purchase. If the Investor has not terminated both of the
Collaboration Agreements between the parties and the date shall be
October 1, 1997, then Investor shall purchase from the Company
$2,500,000 worth of Common Stock from the Company in a private
placement transaction at the higher of (i) the price to the public in
the IPO, or (ii) the average closing price over the [*].
7. For the avoidance of doubt, the provisions of Section 20 of the
Purchase Agreement shall apply to the shares purchased under paragraphs
2 and 6.
<PAGE> 61
8. All capitalized terms used in this Amendment that are not otherwise
defined herein shall have the meaning defined in the Purchase
Agreement.
9. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which together, shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned duly authorized parties have
executed this Amendment as of the date set forth above.
INTROGEN THERAPEUTICS, INC. RHONE-POULENC RORER
PHARMACEUTICALS INC.
By: /s/ DAVID G. NANCE By: /s/ TIMOTHY G. ROTHWELL
-------------------------------- --------------------------------
Title: President and CEO Title: President
----------------------------- -----------------------------
-2-
