Stock Purchase Agreement [Series D Preferred] - Nanogen Inc. and Becton, Dickinson and Co.
Execution Copy
NANOGEN, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
May 5, 1997
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TABLE OF CONTENTS
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1. Authorization and Sale of Stock........................................ 1
1.1 Sale and Issuance of Series D Preferred Stock................... 1
1.2 Closing......................................................... 1
1.3 Purchase of Additional Shares................................... 1
2. Representations and Warranties of the Company.......................... 2
2.1 Organization, Good Standing and Qualification................... 2
2.2 Capitalization and Voting Rights................................ 2
a. Preferred Stock.......................................... 2
b. Common Stock............................................. 3
c. Rights to Purchase Shares/Shareholder
Agreements............................................... 3
2.3 Subsidiaries.................................................... 3
2.4 Authorization................................................... 3
2.5 Valid Issuance of Preferred and Common Stock.................... 4
2.6 Governmental Consents........................................... 4
2.7 Litigation...................................................... 5
2.8 Proprietary Information......................................... 5
2.9 Patents and Trademarks.......................................... 5
2.10 Compliance with Other Instruments............................... 6
2.11 Agreements; Action.............................................. 6
2.12 Related-Party Transactions...................................... 7
2.13 Permits......................................................... 8
2.14 Environmental and Safety Laws................................... 8
2.15 Manufacturing and Marketing Rights.............................. 8
2.16 Registration Rights............................................. 8
2.17 Title to Property and Assets.................................... 8
2.18 Qualified Small Business........................................ 8
2.19 Financial Statements............................................ 9
2.20 Changes......................................................... 9
2.21 Employee Benefit Plan........................................... 10
2.22 Tax Returns, Payments and Elections............................. 10
2.23 Insurance....................................................... 10
2.24 Labor Agreements and Actions.................................... 10
2.25 Real Property Holding Company................................... 11
2.26 Disclosure...................................................... 11
2.27 Minute Books.................................................... 11
2.28 Private Placement Memorandum.................................... 11
3. Representations and Warranties of Investor............................. 12
3.1 Authorization................................................... 12
3.2 Purchase Entirely for Own Account............................... 12
3.3 Nature of Solicitation; Access to Data.......................... 12
3.4 Investment Experience........................................... 13
3.5 Accredited Investor............................................. 13
3.6 Restricted Securities........................................... 13
3.7 Further Limitations on Disposition.............................. 13
3.8 Legends......................................................... 13
4. Conditions of Investor's Obligations at Closing........................ 14
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4.1 Representations and Warranties.................................. 14
4.2 Performance..................................................... 14
4.3 Compliance Certificate.......................................... 14
4.4 Qualifications.................................................. 14
4.5 Opinion of Company's Counsel.................................... 14
4.6 Blue Sky........................................................ 15
4.7 Amendment to Investors' Rights Agreement........................ 15
4.8 Legal Matters................................................... 15
4.9 Research and Development Agreement.............................. 15
5. Conditions of the Company's Obligations at Closing..................... 15
5.1 Representations and Warranties.................................. 15
5.2 Payment of Purchase Price....................................... 15
5.3 Blue Sky........................................................ 15
5.4 Restated Articles............................................... 15
5.5 Legal Matters................................................... 15
5.6 Research and Development Agreement.............................. 15
6. Miscellaneous.......................................................... 16
6.1 Survival of Warranties.......................................... 16
6.2 Successors and Assigns.......................................... 16
6.3 Governing Law................................................... 16
6.4 Counterparts.................................................... 16
6.5 Titles and Subtitles............................................ 16
6.6 Notices......................................................... 16
6.7 Finder's Fee.................................................... 16
6.8 Attorneys' Fees................................................. 17
6.9 Amendments and Waivers.......................................... 17
6.10 Severability.................................................... 17
6.11 Aggregation of Stock............................................ 17
6.12 Entire Agreement................................................ 17
Exhibit A Amended and Restated Articles of Incorporation
Exhibit B Research and Development Agreement
Exhibit C Schedule of Exceptions
Exhibit D Opinion of Pillsbury Madison & Sutro LLP
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NANOGEN, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES D PREFERRED STOCK PURCHASE AGREEMENT is made as of the 5th day
of May 1997, by and between Nanogen, Inc., a California corporation (the
"Company"), and Becton, Dickinson and Company, a New Jersey corporation (the
"Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Authorization and Sale of Stock.
1.1 Sale and Issuance of Series D Preferred Stock.
a. The Company has, or before the Closing (as defined
below), will have, authorized the sale and issuance (the "Offering") of up to
1,000,000 shares of its Series D Preferred Stock (the "Series D Preferred
Stock"), having the rights, preferences, privileges and restrictions set forth
in the Amended and Restated Articles of Incorporation of the Company attached to
this Agreement as Exhibit A. The Company has, or before the Closing will have,
adopted and filed the Amended and Restated Articles of Incorporation with the
California Secretary of State.
b. Subject to the terms and conditions of this Agreement,
Investor agrees to purchase at the Closing, and the Company agrees to sell and
issue to Investor at the Closing, 1,000,000 shares of Series D Preferred Stock
at a purchase price of $6.00 per share.
1.2 Closing. The purchase and sale of the Series D Preferred Stock
shall take place at the offices of Pillsbury Madison & Sutro LLP, 235 Montgomery
Street, San Francisco, CA 94104, at 11:00 am., on May 13, 1997, or at such other
time and place as the Company and Investor mutually agree upon orally or in
writing (which time and place are designated as the "Closing"). At the Closing
the Company shall deliver to Investor a certificate representing the Series D
Preferred Stock which Investor is purchasing against delivery to the Company by
Investor of wired funds or a check in the amount of the purchase price therefor
payable to the Company's order.
1.3 Purchase of Additional Shares.
a. Investor agrees, in the event the Company consummates a
public offering of Common Stock in a firm commitment underwriting pursuant to a
registration statement on Form S-1 under the Securities Act of 1933, as amended,
of which the aggregate gross proceeds to the Company (exclusive of amounts
purchased by Investor) are at least $20,000,000(a "Public Offering") before May
31, 1999 (the "Termination Date"),
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to purchase, pursuant to the registration statement as part of such Public
Offering, such number of shares of the Company's Common Stock equal to
$1,000,000 divided by the price offered to the public ("Price to the Public")
for such Common Stock. In the event, prior to such Public Offering, Investor and
the Company shall have entered into a partnership or joint venture agreement as
provided in Section 7.2 of the Research and Development Agreement of even date
herewith between the parties (the "Research and Development Agreement") and such
agreement shall be in full force and effect, Investor shall purchase pursuant to
the registration statement as part of such Public Offering an additional number
of shares of the Company's Common Stock equal to $5,000,000 divided by the Price
to the Public.
b. In the event no Public Offering of the Company's Common
Stock is made before the Termination Date, Investor shall be entitled, but not
obligated, for a period of six months from the Termination Date, to exercise an
option to purchase up to $6,000,000 of the Company's Series D Preferred Stock at
a purchase price of $6.00 per share. If such option is exercised, the purchase
shall be made within 15 days pursuant to a purchase agreement substantially in
the form of this Agreement.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to Investor that, except as set forth on the Schedule of
Exceptions attached hereto as Exhibit C, specifically identifying the relevant
subparagraph hereof, which exceptions shall be deemed to be representations and
warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of California and has all requisite corporate power and
authority to own and operate its properties and assets, to carry on its business
as now conducted and as proposed to be conducted, to execute and deliver and
perform the Agreement and the Investors' Rights Agreement dated December 19,
1996 between the Company and the investors listed on Schedule A thereto, as
amended to add Investor as a party (the "Investors' Rights Agreement"). 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 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) (hereafter, a "Material Adverse Effect").
2.2 Capitalization and Voting Rights. The authorized capital of
the Company consists, or will consist prior to the Closing, of:
a. Preferred Stock. 15,500,000 shares of Preferred Stock
(the "Preferred Stock"), of which 2,339,667
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shares have been designated Series A Preferred Stock and all of which have been
issued and are outstanding, 3,800,600 shares have been designated Series B
Preferred Stock, of which 3,715,600 are currently issued and outstanding,
6,700,000 shares have been designated Series C Preferred Stock, of which
6,553,598 are currently issued and outstanding, 2,000,000 shares have been
designated Series D Preferred Stock, none of which are currently issued and
outstanding, and 1,000,000 of which will be sold pursuant to this offering. The
rights, privileges and preferences of the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock
will be as stated in the Company's Amended and Restated Articles of
Incorporation.
b. Common Stock. 40,000,000 shares of common stock ("Common
Stock"), of which as of April 30, 1997, 2,740,177 shares are issued and
outstanding.
c. Rights to Purchase Shares/Shareholder Agreements. Except
for (i) the conversion privileges of the Series A, Series B and Series C
Preferred Stock outstanding and the Series D Preferred Stock to be issued under
this Agreement, (ii) the rights set forth in Section 2.4 of the Investors'
Rights Agreement, (iii) options to purchase an aggregate of 362,325 shares of
Common Stock granted pursuant to the Company's 1993 Stock Option/Stock Issuance
Plan, as amended, and the Company's 1995 Amended and Restated Stock Option/Stock
Issuance Plan, (iv) warrants to purchase an aggregate of 626,905 shares of
Common Stock granted pursuant to agreements described in the Schedule of
Exceptions, (v) warrants to purchase an aggregate of 60,000 shares of Series B
Preferred Stock pursuant to agreements described in the Schedule of Exceptions
and (vi) a warrant to purchase 9,000 shares of Series C Preferred Stock issued
to Lease Management Services, Inc., there are not outstanding any 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.
The Company is not a party or subject to any agreement or understanding, 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 or giving of
written consents with respect to any security or by a director of the Company.
2.3 Subsidiaries. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, association or
other business entity.
2.4 Authorization. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement and the Investors'
Rights Agreement, the performance of all obligations of the Company hereunder
and thereunder and the authorization, issuance (or reservation for issuance) and
delivery of the Series D Preferred Stock being sold hereunder
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and the Common Stock issuable upon conversion of the Series D Preferred Stock
has been taken or will be taken prior to the Closing, and this Agreement and the
Investors' Rights Agreement constitute valid and legally binding obligations of
the Company, enforceable in accordance with their respective terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) to the
extent the indemnification provisions contained in the Investors' Rights
Agreement may be limited by applicable federal or state securities laws.
2.5 Valid Issuance of Preferred and Common Stock.
a. The Series D Preferred Stock which is being purchased by
Investor 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, free of any restrictions on transfer other than
pursuant to this Agreement and the Investors' Rights Agreement, and, based in
part upon the representations of Investor in this Agreement, will be issued in
compliance with all applicable federal and state securities laws. The Common
Stock issuable upon conversion of the Series D Preferred Stock purchased under
this Agreement has been duly and validly reserved for issuance and, upon
issuance in accordance with the terms of the Amended and Restated Articles of
Incorporation, shall be duly and validly issued, fully paid and nonassessable,
free of any restrictions on transfer other than pursuant to this Agreement and
the Investors' Rights Agreement, and issued in compliance with all applicable
securities laws, as presently in effect, of the United States and each of the
states whose securities laws govern the issuance of any of the Series D
Preferred Stock hereunder. The Series D Preferred Stock issued hereunder will be
free and clear from any liens or encumbrances.
b. The outstanding shares of Common Stock, Series A
Preferred Stock, Series B Preferred Stock and Series C 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.
2.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, local or provincial governmental authority
("Consents and Filings") on the part of the Company is required in connection
with the consummation of the transactions contemplated by this Agreement, except
for (i) such Consents and Filings as have been or will be obtained or made prior
to the Closing, (ii) pre-sale filings as may be required under applicable state
or foreign securities laws which have been or will be timely filed and
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(iii) any notices of sale required to be filed with the Securities and Exchange
Commission pursuant to Regulation D under the Securities Act of 1933, as amended
(the "Securities Act") or such post-closing filings as may be required under
applicable state or foreign securities laws, which will be timely filed within
the applicable periods therefor.
2.7 Litigation. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company which questions the validity of this Agreement or the
Investors' Rights Agreement, or the right of the Company to enter into either of
them, or to consummate the transactions contemplated hereby or thereby. The
foregoing includes, without limitation, actions pending or threatened 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.
2.8 Proprietary Information. Each employee, officer and consultant
of the Company has executed a Proprietary Information and Inventions Agreement
in the form provided to special counsel to Investor. The Company, after
reasonable investigation, is not aware that any of its employees, officers or
consultant are in violation thereof, and the Company will use its reasonable
commercial efforts to prevent any such violation.
2.9 Patents and Trademarks. The Company has sufficient title and
ownership of all patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses and proprietary rights necessary for its business as now
conducted and as proposed to be conducted without any conflict with or
infringement of the rights of others. Other than as described in the Schedule of
Exceptions, 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, licenses, trade secrets,
licenses, information or proprietary rights 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, licenses, copyrights or trade
secrets or other proprietary rights of any other person or entity, which
violation would have a Material Adverse Effect. The Company is not aware that
any of its employees are obligated under any contract (including licenses,
covenants or commitments of any
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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 and the Investors' Rights Agreement, nor the carrying
on of the Company's business as currently conducted or as proposed to be
conducted by the employees of the Company will, to the Company's knowledge,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any of such employees is now obligated. The Company does not believe it is or
will be necessary to utilize any inventions of any of its employees (or people
it currently intends to hire) made prior to their employment by the Company.
2.10 Compliance with Other Instruments. The Company is not in
violation or default of any provisions of its Amended and Restated Articles 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, after diligent
inquiry, to the best of its knowledge, of any provision of federal or state
statute, rule or regulation applicable to the Company, which violation or
default would have a Material Adverse Effect. The execution, delivery and
performance of this Agreement and the Investors' Rights Agreement and the
consummation of the transactions contemplated hereby and thereby will not result
in any such violation or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract or an event which results
in the creation of any lien, charge or encumbrance upon any assets of the
Company or the suspension, revocation, impairment, forfeiture or nonrenewal of
any material permit, license, authorization or approval applicable to the
Company, its business or operations or any of its assets or properties.
2.11 Agreements; Action.
a. Except for agreements explicitly contemplated hereby and
by the Investors' Rights Agreement or as disclosed in the Schedule of
Exceptions, there are no agreements, understandings or proposed transactions
between the Company and any of its officers, directors, affiliates or any
affiliate thereof.
b. There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or by which it is bound which may involve (i) obligations
(contingent or otherwise) of, or payments to the Company in excess of, $50,000,
or (ii) the license of any patent, copyright, trade secret or other proprietary
right to or from the Company or
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(iii) provisions restricting or affecting the development, manufacture or
distribution of the Company's products or services.
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 any other liabilities individually in excess of $50,000 or, in the case of
indebtedness and/or liabilities individually less than $50,000, in excess of
$100,000 in the aggregate, (iii) made any loans or advances to any person, other
than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise
disposed of any of its assets or rights, other than the sale of its inventory in
the ordinary course of business.
d. For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
e. The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Amended and Restated Articles of Incorporation or Bylaws, which has a Material
Adverse Effect.
f. The Company has not engaged in the past three (3) months
in any discussion (i) with any representative of any corporation or corporations
regarding the consolidation or merger of the Company with or into any such
corporation or corporations, (ii) with any corporation, partnership, association
or other business entity or any individual regarding the sale, conveyance or
disposition of all or substantially all of the assets of the Company in a
transaction or series of related transactions or regarding any transaction of
series of related transactions in which more than fifty percent (50%) of the
voting power of the Company is disposed of, or (iii) regarding any other form of
acquisition, liquidation, dissolution or winding up of the Company.
2.12 Related-Party Transactions. Other than as disclosed in the
Schedule of Exceptions, no employee, officer or director of the Company or
member of his or her immediate family is indebted to the Company, nor is the
Company indebted (or committed to make loans or extend or guarantee credit) to
any of them. To the best of the Company's knowledge, none of such persons has
any direct or indirect ownership interest in any firm or corporation with which
the Company is affiliated or with which the Company has a business relationship,
or any firm or corporation that competes with the Company, except that
employees, officers or directors of the Company and members of
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their immediate families may own stock in publicly traded companies that may
compete with the Company. No member of the immediate family of any officer or
director of the Company is directly or indirectly interested in any material
contract with the Company.
2.13 Permits. The Company has all franchises, permits, licenses and
any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could have a Material Adverse Effect and
believes it can obtain without undue burden or expense, any similar authority
for the conduct of its business as proposed to be conducted. The Company is not
in default in any material respect under any of such franchises, permits,
licenses, or other similar authority.
2.14 Environmental and Safety Laws. To the best of its knowledge,
the Company is not in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and to the best
of its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation.
2.15 Manufacturing and Marketing Rights. The Company has not
granted rights to manufacture, produce, assemble, license, market or sell its
products to any other person and is not bound by any agreement that affects the
Company's exclusive right to develop, manufacture, assemble, distribute, market
or sell its products.
2.16 Registration Rights. Except as provided in the Investors'
Rights Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.
2.17 Title to Property and Assets. The Company owns its property
and assets free and clear of all mortgages, liens, loans and encumbrances,
except such encumbrances and liens which arise in the ordinary course of
business and do not materially impair the Company's ownership or use of such
property or assets. With respect to the property and assets it leases, the
Company is in compliance with such leases and, to the best of its knowledge,
holds a valid leasehold interest free of any liens, claims or encumbrances.
2.18 Qualified Small Business. The Company represents and warrants
to Investor that it qualifies as a "Qualified Small Business" as defined in
Section 1202(d) of the Internal Revenue Code of 1986, as amended (the "Code").
The Company covenants that so long as it reasonably believes that the Series D
Preferred Stock (or shares issuable upon conversion) held by Investor or a
transferee would qualify as Qualified Small Business Stock as defined in Section
1202(c) of the Code it will
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timely file all reports or filings with the Internal Revenue Service required of
a Qualified Small Business.
2.19 Financial Statements. The Company has delivered to Investor
its audited financial statements at and for the year ended December 31, 1996 and
its unaudited financial statements (without footnotes) at and for the
three-month period ended March 31, 1997 (the "Financial Statements). The
Financial Statements are complete and correct in all material respects and have
been prepared in accordance with generally accepted accounting principles
consistently applied. Except as set forth in the Financial Statements, the
Company has no liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to the date of the last
Financial Statements 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.
2.20 Changes. Other than as disclosed in the Schedule of
Exceptions, since March 31, 1997, there has not been:
a. any change in the assets, liabilities, financial
condition or operating results of the Company from that reflected in the
Financial Statements, except changes in the ordinary course of business which
have not been, in the aggregate, materially adverse.
b. any damage, destruction or loss, whether or not covered
by insurance which has had a Material Adverse Effect;
c. any waiver by the Company of a valuable right or of a
material debt owed to it;
d. any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business or which does not have a Material Adverse Effect;
e. any change or amendment to a material contract or
arrangement by which the Company or any of its assets or properties is bound or
subject;
f. any material change in any compensation arrangement or
agreement with any employee; or
g. to the Company's knowledge, any other event or condition
of any character which might have a Material Adverse Effect.
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2.21 Employee Benefit Plan. Except for the Company's 401(k) plan
(the "Plan"), the Company does not have any Employee Benefit Plan as defined in
the Employee Retirement Income Security Act of 1974. The Plan is in full force
and effect in accordance with its terms and complies in all material respects
with all applicable law. The Company has made or provided for all payments due
under or with respect to the Plan to date, and all amounts properly accrued to
date (in accordance with generally accepted accounting principles) as
liabilities of the Company under the Plan in the current plan years have been
recorded on its financial statements.
2.22 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 timely paid all taxes and
other assessments due. The provision for taxes, penalties and interest of the
Company as shown in the Financial Statements is adequate for taxes due or
accrued as of the date thereof. The Company has not elected pursuant to the
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 that relate solely to
methods of accounting, depreciation or amortization) which would have a Material
Adverse Effect. The Company has fulfilled all withholding obligations with
respect to taxes and has timely paid to the appropriate governmental authorities
the proper amounts with respect to the foregoing. The tax and audit positions
taken by the Company have been consistently applied in connection with the tax
returns filed and were reasonable and asserted in good faith. The Company has
not waived any statute of limitations in respect of taxes or agreed to an
extension of time with respect to a tax assessment or deficiency. Neither the
Internal Revenue Service nor any foreign, state, local or other taxing authority
has examined or is in the process of examining any federal, foreign, state,
local or other tax returns of the Company. Neither the Internal Revenue Service
nor any foreign, state, local or other taxing authority is now asserting or
threatening to assert any deficiency or claim in respect of taxes. The Company
is not a party to, or bound by, any tax indemnity, tax sharing or tax allocation
agreement. There are no liens for taxes (other than for current taxes not yet
due and payable) upon the assets of the Company. The Company has not had an
"ownership change" as defined in Section 382 of the Code.
2.23 Insurance. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed.
2.24 Labor Agreements and Actions. The Company is not bound by or
subject to (and none of its assets or properties is
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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, 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.
Subject to general principles related to wrongful termination of employees, the
employment of each officer and employee of the Company is terminable at the will
of the Company.
2.25 Real Property Holding Company. The Company is not a real
property holding company within the meaning of Code Section 897.
2.26 Disclosure. The Company has fully provided Investor with all
the information which Investor has requested for deciding whether to purchase
the Series D Preferred Stock and all information which the Company believes is
reasonably necessary to enable Investor to make such decision. Neither this
Agreement nor the Investors' Rights Agreement, nor any other statements or
certificates made or delivered in connection herewith or therewith contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements herein or therein not misleading.
2.27 Minute Books. The minute books of the Company contain a
complete and accurate account of all meetings of the Board of Directors and
shareholders and all actions by written consent since the date of incorporation
of the Company.
2.28 Private Placement Memorandum. The Confidential Private
Placement Memorandum dated September 20, 1996, as supplemented on December 6,
1996, used by the Company in connection with the offer and sale of the Series C
Preferred Stock (the "Memorandum") has been prepared in good faith by the
Company and, together with the Schedule of Exceptions, does not contain any
untrue statement of a material fact nor does it omit to state a material fact
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading, except that with respect to
financial projections and other forward looking statements contained in the
Memorandum the Company represents only that such projections and forward looking
statements were prepared in good faith and that the Company reasonably believes
there is a reasonable basis for such projections and forward looking statements
(subject to the risk factors disclosed in the Memorandum relating to such
projections and forward looking statements).
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<PAGE> 15
3. Representations and Warranties of Investor. Investor hereby
represents and warrants that:
3.1 Authorization. This Agreement constitutes its valid and
legally binding obligation, enforceable in accordance with its terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) to the
extent the indemnification provisions contained in the Investors' Rights
Agreement may be limited by applicable federal or state securities laws.
3.2 Purchase Entirely for Own Account. This Agreement is made with
Investor in reliance upon Investor's representation to the Company, which by
Investor's execution of this Agreement Investor hereby confirms, that the Series
D Preferred Stock to be received by Investor and the Common Stock issuable upon
conversion thereof (collectively, the "Securities") will be acquired for
investment for 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 Investor has no
present intention of selling, granting any participation in or otherwise
distributing the same. By executing this Agreement, Investor further represents
that Investor does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or to
any third person, with respect to any of the Securities. Investor represents
that it has full power and authority to enter into this Agreement.
3.3 Nature of Solicitation; Access to Data. Investor confirms that
the offer to sell the Shares was communicated to Investor by the Company in such
manner that Investor was able to ask questions of and received answers from the
Company or a person acting on its behalf concerning the terms and conditions of
this transaction as well as to obtain any information requested by Investor. Any
questions raised by Investor or its representatives concerning the transaction
have been answered to the satisfaction of Investor and its representatives.
Investor's decision to purchase the Series D Preferred Stock is based in part on
the answers to such questions as Investor and its representatives have raised
concerning the transaction and on its own evaluation of the risks and merits of
the purchase and the Company's proposed business activities, provided that the
foregoing does not limit the right of Investor to rely upon the representations
and warranties of the Company set forth in Section 2 of this Agreement. Investor
confirms that at no time was Investor presented with or solicited by or through
any leaflet, public promotional meeting, television advertisement or any other
form of general advertising in connection and concurrently with such
communicated offer.
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<PAGE> 16
3.4 Investment Experience. Investor has experience in investing in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can 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 D
Preferred Stock. If other than an individual, Investor also represents it has
not been organized for the purpose of acquiring the Series D Preferred Stock.
3.5 Accredited Investor. Investor is an "accredited investor" as
defined in Rule 501(a) of Regulation D, as amended, of the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933 (the
"Securities Act").
3.6 Restricted Securities. It understands that the shares of
Series D Preferred Stock it is purchasing are characterized as "restricted
securities" under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be resold
without registration under the Securities Act, only in certain limited
circumstances. In this connection, Investor represents that it is familiar with
SEC Rule 144, as presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act.
3.7 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, Investor further agrees not to
make any disposition of all or any portion of the Series D Preferred Stock (or
the Common Stock issuable upon the conversion thereof) unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3.7 and Section 6, and by the Investors' Rights Agreement and:
a. There is then in effect a Registration Statement under
the Securities Act covering such proposed disposition and such disposition is
made in accordance with such Registration Statement; or
b. (i) 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, 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 Securities
Act. It is agreed that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual circumstances.
3.8 Legends. It is understood that the certificates evidencing the
Series D Preferred Stock (and the Common Stock
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<PAGE> 17
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, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
b. Any legend required by the laws of the state in which
Investor resides.
4. Conditions of Investor's Obligations at Closing. The obligations of
Investor under subsection 1.1(b) of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions:
4.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
4.2 Performance. The Amended and Restated Articles of
Incorporation attached as Exhibit A shall have been filed with the Secretary of
State of the State of California, the Company shall have received the purchase
price specified in Section 1.1(b) hereof, and the Company shall have performed
and complied with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.
4.3 Compliance Certificate. The President of the Company shall
deliver to Investor at the Closing a certificate certifying that the conditions
specified in Sections 4.1 and 4.2 have been fulfilled and stating that there
shall have been no material adverse change in the business, affairs, operations,
properties, assets or financial condition of the Company since March 31, 1997.
4.4 Qualifications. The Commissioner of Corporations of the State
of California shall have issued a permit qualifying the offer and sale of the
Series D Preferred Stock and the underlying Common Stock to Investor pursuant to
this Agreement, or such offer and sale shall be exempt from such qualification
under the California Corporate Securities Law of 1968, as amended.
4.5 Opinion of Company's Counsel. At the Closing Investor shall
have received from Pillsbury Madison & Sutro LLP, counsel to the Company, a
favorable opinion addressed to it,
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<PAGE> 18
dated the Closing Date, in substantially the form attached to this Agreement as
Exhibit D.
4.6 Blue Sky. The Company shall have obtained all necessary blue
sky law permits and qualifications, or secured exemptions therefrom, required by
any state for the offer and sale of the Series D Preferred Stock issuable upon
conversion thereof.
4.7 Amendment to Investors' Rights Agreement. The Investors'
Rights Agreement shall have been amended to make Investor a party thereto.
4.8 Legal Matters. All material matters of a legal nature which
pertain to this Agreement and the transactions contemplated by this Agreement
shall have been reasonably approved by counsel to Investor.
4.9 Research and Development Agreement. The Research and
Development Agreement shall have been executed by the Company.
5. Conditions of the Company's Obligations at Closing. The obligations
of the Company to Investor under this Agreement are subject to the fulfillment
on or before the Closing of each of the following conditions by Investor:
5.1 Representations and Warranties. The representations and
warranties of Investor contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the Closing.
5.2 Payment of Purchase Price. Investor shall have delivered the
purchase price of $6,000,000.
5.3 Blue Sky. The Company shall have obtained all necessary blue
sky law permits and qualifications, or secured exemptions therefrom, required by
any state for the offer and sale of the Series D Preferred Stock issuable upon
conversion thereof.
5.4 Restated Articles. The Amended and Restated Articles of
Incorporation shall have been filed with the California Secretary of State.
5.5 Legal Matters. All material matters of a legal nature which
pertain to this Agreement and the transactions contemplated by this Agreement
shall have been reasonably approved by counsel to the Company.
5.6 Research and Development Agreement. The Research and
Development Agreement shall have been executed by Investor.
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<PAGE> 19
6. Miscellaneous.
6.1 Survival of Warranties. The warranties, representations and
covenants of the Company and Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of Investor or the Company.
6.2 Successors and Assigns. Except as otherwise provided herein,
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 (including
transferees of any shares of Series D Preferred Stock sold hereunder or any
Common Stock issued upon conversion thereof). 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.
6.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
6.4 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.
6.5 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.
6.6 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
the date of attempted delivery where delivery is refused) or, if sent by
telecopier, telex, telegram, or other facsimile means, upon receipt of
appropriate confirmation of receipt, or upon deposit with the United States
Postal Service, by registered or certified mail, or next day air courier, with
postage and fees prepaid and addressed to the party entitled to such notice at
the address indicated for such party on the signature page hereof, or at such
other address as such party may designate by 10 days' advance written notice to
the other parties to this Agreement.
6.7 Finder's Fee. Investor represents that it neither is nor will
be obligated for any finders' fee or commission in connection with this
transaction. Investor agrees to indemnify and to hold harmless the Company from
any liability
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<PAGE> 20
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 Investor or any of its officers, partners, employees, or
representatives is responsible.
The Company agrees to indemnify and hold harmless 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.
6.8 Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement or the Amended and
Restated Articles of Incorporation, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
6.9 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Common Stock issued or issuable upon conversion of the Series
D Preferred Stock. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any securities purchased under
this Agreement at the time outstanding (including securities into which such
securities are convertible), each future holder of all such securities, and the
Company.
6.10 Severability. If one or more provisions of this Agreement are
held to 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.
6.11 Aggregation of Stock. All shares of the Series D 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.
6.12 Entire Agreement. This Agreement, the Confidentiality
Agreement effective as of February 5, 1997 between the parties, the Research and
Development Agreement and the documents referred to herein constitute the entire
agreement among the parties and no party shall be liable or bound to any other
party in any manner by any warranties, representations, or covenants except as
specifically set forth herein or therein.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 21
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NANOGEN, INC.
By: /s/ Howard Birndorf
-----------------------------------
Howard Birndorf, Chief
Executive Officer
Address: 10398 Pacific Center Court
San Diego, CA 92121
BECTON, DICKINSON AND COMPANY
By: /s/ Vincent A. Forlenza
-----------------------------------
Vincent A. Forlenza
President - Worldwide
Microbiology Systems
Address: One Becton Drive
Franklin Lakes, NJ 07417
[SIGNATURE PAGE TO SERIES D PREFERRED STOCK
PURCHASE AGREEMENT]
<PAGE> 22
EXHIBIT A
Amended and Restated Articles of Incorporation
-2-
Schedule A
<PAGE> 23
EXHIBIT B
Research and Development Agreement
-3-
Schedule A
<PAGE> 24
EXHIBIT C
Schedule of Exceptions
-4-
Schedule A
<PAGE> 25
EXHIBIT D
Form of Legal Opinion of
Pillsbury Madison & Sutro LLP
-5-
Schedule A