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Exhibit 10.41
UNIDYM, INC.
SUBSCRIPTION AGREEMENT
SERIES C-1 PREFERRED STOCK
SUBSCRIPTION
AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this " Agreement ")
is made as of the last date indicated on the signature pages hereto
between Unidym, Inc., a Delaware corporation (the "
Company "), and the undersigned investor party hereto
(" Investor ").
RECITALS
WHEREAS, the Company wishes to sell up to an aggregate of
1,111,112 shares of the Company’s Series C-1 Preferred Stock
(" Shares ") to the Investor, at a purchase price of
$1.80 per Share, and the Investor wishes to purchase Shares from
the Company.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements and conditions, and upon acknowledgement of each of the
parties of the receipt of valuable consideration, the parties
herein agree as follows:
1. Purchase and Sale of Shares .
1.1 The Closing . At the Closing (as defined below), the
Company shall issue and sell to Investor such number of Shares as
is set forth immediately below Investor’s name on the
signature pages hereto. Investor shall pay an amount equal to $1.80
times the number of Shares to be purchased by the Investor (the "
Purchase Price ") in cash (by check or wire transfer)
or by cancellation of indebtedness in United States Dollars to the
Company to be held in escrow until the Closing, for release to the
Company thereafter. Promptly after the Closing, the Company shall
deliver to Investor a duly executed certificate representing the
Shares which Investor is purchasing hereunder. The purchase and
sale transaction contemplated hereby will close on the first
business day immediately following the satisfaction of the Closing
conditions set forth herein, which is targeted to be no later than
5:00 p.m., Pacific Time on November
, 2008, as such date and time may be modified by the Company in its
sole discretion (such day, the " Closing ").
1.2 Additional Closing(s) .
(a) Conditions of Additional Closing(s) . At any time and
from time to time following the Closing, the Company may, at one or
more additional closings (each an " Additional
Closing "), without obtaining the signature, consent or
permission of Investor, offer and sell to other investors (the "
New Investors "), at a price of $1.80 per Share, up
to that number of Shares that is equal to 1,111,112 Shares less the
number of Shares previously issued and sold by the Company. New
Investors may include persons or entities who are already owners of
shares of the Company’s Series C-1 Preferred Stock or other
capital stock.
(b) Amendments . The Company and the New Investors
purchasing Shares at each Additional Closing will execute a
Subscription Agreement in substantially the same form hereof, and
the New Investors will, to the extent not already a party thereto,
execute counterpart signature pages to: (i) the Amended and
Restated Investors’ Rights Agreement in the form attached to
this Agreement as Exhibit A , as amended (the "
Investors’ Rights Agreement "), (ii) the
Amended and Restated Right of First Refusal and Co-Sale Agreement
in the form attached to this Agreement as Exhibit B , as
amended (the " ROFR Agreement "), and (iii) the
Amended and Restated Voting Agreement in the form attached to this
Agreement as Exhibit C , as amended (the " Voting
Agreement ") (the Investors’ Rights Agreement, ROFR
Agreement and Voting Agreement, as such agreements may be amended,
collectively, the " Related Agreements "). Such New
Investors will, upon delivery to the Company of such signature
pages, become parties to, and bound by, the Related Agreements,
each to the same extent as if they had been an Investor at the time
of issuance of the first share of Series C-1 Preferred Stock.
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(c) Status of New Investors . Upon the
completion of each Additional Closing as provided in this
Section 1.2, each New Investor will be deemed to be an
"Investor" for all purposes of the Related Agreements.
2. Representations and Warranties of the Company . The
Company hereby represents and warrants to Investor, that the
statements in the following paragraphs of this Section 2 are
all true and complete as of the date hereof:
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 Delaware. The Company
is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure to so qualify would
reasonably be expected to have a material adverse effect on
(a) the present or future business, assets, or operations, of
the Company, taken as a whole or (b) the Company’s
ability to perform this Agreement or the Related Agreements (as
defined below) (a " Material Adverse Effect ").
2.2 Capitalization and Voting Rights .
(a) Authorized Stock . There are authorized for issuance
40,000,000 shares of common stock, par value $0.0001 (the "
Common Stock ") and 20,284,364 shares of preferred
stock, par value $0.0001 (the " Preferred Stock "),
of which 5,000,000 shares are designated as Series A Convertible
Preferred Stock (" Series A Preferred Stock "),
5,673,252 shares are designated as Series B Senior Convertible
Preferred Stock (" Series B Preferred Stock "),
8,500,000 shares are designated as Series C Senior Convertible
Preferred Stock (" Series C Preferred Stock ") and
1,111,112 shares are designated as Series C-1 Preferred Stock ("
Series C-1 Preferred Stock "). Immediately prior to
the Closing, the outstanding stock of the Company consists of the
following:
(i) Common Stock . Three Million Seven Hundred Fifty Five
Thousand (3,755,000) shares of issued and outstanding Common
Stock.
(ii) Five Million (5,000,000) shares of issued and
outstanding Series A Preferred Stock, which shares of Series A
Preferred Stock are convertible into 1.680096462 shares of Common
Stock upon (x) an involuntary or voluntary liquidation,
dissolution and winding up of the Company, (y) a Deemed
Liquidation Event (as such term is defined in the Restated
Certificate (as defined below)) or (z) a Qualified IPO (as
such term is defined in the Restated Certificate).
(iii) Five Million Six Hundred Seventy Three Thousand Two
Hundred and Fifty Two (5,673,252) shares of issued and
outstanding Series B Preferred Stock, which shares of Series B
Preferred Stock are convertible into 1.000042304 shares of Common
Stock.
(iv) Eight Million One Hundred Twenty Five Thousand Eight
Hundred Eighty-Nine (8,125,889) shares of issued and
outstanding Series C Preferred Stock.
(v) No shares of issued and outstanding Series C-1 Preferred
Stock.
Upon the Closing, the rights, preferences and privileges of each
series of Preferred Stock will be as stated in the Restated
Certificate and as provided by law.
(b) Valid Issuance . The outstanding shares of Common
Stock and Preferred Stock are all duly and validly authorized and
issued, fully paid and nonassessable.
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(c) Rights to Acquire . Except for
(i) the conversion privileges of the Preferred Stock,
(ii) the rights of first refusal provided in Section 4 of
the Investors’ Rights Agreement, (iii) the Five Million
(5,000,000) shares of Common Stock reserved for issuance to
employees, consultants and/or directors pursuant to the
Company’s 2006 Stock Option/Stock Issuance Plan (the "
Option Plan "), of which options to purchase an
aggregate of Three Million Nine Hundred Forty-Four Thousand
Sixty-Nine (3,944,069) shares of Common Stock are currently
outstanding, (iv) outstanding warrants to purchase Sixty Four
Thousand (64,000) shares of Common Stock and
(vi) outstanding restricted stock units for the issuance of
One Million One Hundred and Four Thousand and Ten
(1,104,010) shares of Common Stock, 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.
(d) Voting of Shares . Other than the Voting Agreement,
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.
(e) Market Stand-Off . To the Company’s best
knowledge, all outstanding shares of preferred stock of the Company
and all capital stock of the Company issuable upon the exercise of
outstanding employee incentive stock options are subject to a one
hundred eighty (180) day "market stand-off" restriction upon
an initial public offering by the Company resulting in at least $20
Million in gross proceeds pursuant to a registration statement
filed with the Securities and Exchange Commission ("
SEC ") pursuant to the Securities Act of 1933, as
amended (the " Act ").
2.3 Subsidiaries . Except for (i) the minority
ownership position in Nexeon MedSystems pursuant to the license
agreement with Nanotech Catheter Solutions, (ii) the 50%
ownership position in Ensysce Biosciences pursuant to the spin off
of Ensysce Biosciences and license agreement with Ensysce
Biosciences, and (iii) the 100% ownership position in
Nanoconduction, Inc. as a result of a recently completed
acquisition, the Company does not presently own or control,
directly or indirectly, any interest in any other corporation,
association, or other business entity. The Company is not a
participant in any joint venture, partnership, or similar
arrangement.
2.4 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
Related Agreements, the performance of all obligations of the
Company hereunder and thereunder, and the authorization, sale and
issuance of the Shares being sold hereunder, and the Common Stock
issuable upon conversion of the Shares, has been taken or will be
taken prior to the Closing. As of the Closing, this Agreement and
the Related Agreements 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 Related Agreements may
be limited by applicable federal or state securities laws.
2.5 Valid Issuance of Preferred and Common Stock . The
Shares that are being purchased by Investor hereunder, when issued,
sold and delivered in accordance with the terms of this Agreement
for the consideration expressed herein, will be duly and validly
issued, fully paid and nonassessable and will be free of
restrictions on transfer, other than restrictions on transfer, if
any, (i) under this Agreement, the Investor’s Rights
Agreement and the ROFR Agreement, (ii) under applicable state
and federal securities laws and (iii) otherwise imposed as a
result of actions taken by Investor. The Common Stock issuable upon
conversion of the Shares purchased under this Agreement has been
duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Company’s Restated
Certificate of Incorporation in the form attached hereto as
Exhibit D -1 as amended by the Company’s Certificate
of
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Amendment of Restated Certificate of
Incorporation in the form attached hereto as Exhibit D-2 (the
Restated Certificate of Incorporation, as amended, the "
Restated Certificate "), will be duly and validly
issued, fully paid and nonassessable and will be free of
restrictions on transfer, other than restrictions on transfer, if
any (i) under this Agreement, the Investor’s Rights
Agreement and the ROFR Agreement, (ii) under applicable state
and federal securities laws and (iii) otherwise imposed as a
result of actions taken by Investor.
2.6 Governmental Consents . No consent, approval, order
or authorization of, or registration, qualification, designation,
declaration or filing with, any federal, state or local
governmental authority on the part of the Company is required in
connection with the consummation of the transactions contemplated
by this Agreement and the Related Agreements, except for such
consents, approvals, orders, authorizations, registrations,
qualifications, designations, declarations or filings which are not
required to be obtained prior to the Closing, and such filings as
are required pursuant to applicable federal and state securities
laws and blue sky laws, which filings will be effected within the
required statutory period.
2.7 Offering . Subject in part to the truth and accuracy
of Investor’s representations set forth in Section 3 of
this Agreement, the offer, sale and issuance of the Shares as
contemplated by this Agreement are exempt from the registration
requirements of the Act, and the qualification or registration
requirements of applicable state blue sky laws, as such
registration requirements and laws currently exist.
2.8 Litigation . There is no action, suit, proceeding or
investigation pending or, to the Company’s knowledge,
currently threatened in writing against the Company that questions
the validity of this Agreement or the Related Agreements, or the
right of the Company to enter into such agreements or to consummate
the transactions contemplated hereby and thereby, or that would
reasonably be expected to result in a Material Adverse Effect. 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 that the Company
currently intends to initiate.
2.9 Proprietary Information Agreements . Each current
employee of the Company has executed a Proprietary Information and
Inventions Agreement in substantially the form provided to Investor
upon request by Investor. The Company is not aware that any such
employee is in violation thereof.
2.10 Compliance with Other Instruments . The Company is
not in violation of any provision of its Restated Certificate or
Bylaws nor, to its knowledge, of any instrument, judgment, order,
writ, decree or contract, statute, rule or regulation to which the
Company is subject and a violation of which would reasonably be
expected to have a Material Adverse Effect. The execution, delivery
and performance of this Agreement and the Related Agreements, 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 or an event
that 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 . Except for agreements
explicitly contemplated hereby, there are no agreements or
understandings between the Company and any of its officers,
directors, affiliates or any affiliate thereof (except for
quarterly allocations for services performed by Arrowhead) and
except as set forth on Schedule 2.11 ,
(a) there are no agreements, understandings, instruments,
contracts, judgments, orders, writs or decrees to which the Company
is a party or by which it is bound that may involve
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(i) obligations (contingent or otherwise) of, or
payments to the Company, in excess of $10,000, other than
obligations of, or payments to, the Company arising from purchase
or sale agreements entered into in the ordinary course of business,
or (ii) provisions materially restricting the development,
manufacture or distribution of the Company’s products or
services, and
(b) 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) made any loans or
advances to any person, other than ordinary advances for travel
expenses, or (iii) sold, exchanged or otherwise disposed of
any of its assets or rights.
For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments
and contracts 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.
2.12 Financial Statements . Attached hereto in Schedule
2.12 is the Company’s unaudited financial statements (balance
sheet, income statement and statement of cash flows) dated
June 30, 2008 ("Financial Statements"). The Financial
Statements have been prepared in accordance with U.S. generally
accepted accounting principles applied on a consistent basis
throughout the periods indicated and with each other. The Financial
Statements are true, correct and complete and fairly present the
financial condition and operating results of the Company as of the
dates, and for the periods, indicated therein, subject to normal
year-end audit adjustments.
2.13 Related-Party Transactions . 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, other than in Arrowhead
Research Corporation, a Delaware corporation ("
Arrowhead ") or in any of Arrowhead’s
subsidiaries, 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 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.
2.14 No Undisclosed Liabilities . Except as set forth in
the Financial Statements and the recently accrued liabilities
associated with the acquisition of Nanoconduction, Inc., the
Company does not have any liabilities (whether accrued, absolute,
unliquidated, contingent or otherwise, whether or not known to the
Company, whether due or to become due and regardless of when
asserted) arising out of transactions entered into at or prior to
the Closing, or any action or inaction at or prior to the Closing
or any state of facts existing at or prior to the Closing other
than (i) liabilities and obligations that have arisen after
June 30, 2008 in the ordinary course of business (none of
which is material and none of which is a liability resulting from
breach of contract, breach of warranty, tort, infringement, claim
or lawsuit), or (ii) obligations under contracts and
commitments incurred in the ordinary course of business that would
not be required to be reflected in financial statements prepared in
accordance with generally accepted accounting principles. The
Company is not a guarantor or indemnitor of any indebtedness of any
other person, firm or corporation.
2.15 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, except to the extent the
lack of which would not reasonably be expected to have a Material
Adversely Effect. The Company is not in default under any of such
franchises, permits, licenses or other similar authority which
would be reasonably expected to have a Material Adverse Effect.
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2.16 Environmental and Safety Laws
.
(a) Except as set forth in Section 2.15(b), to 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 its knowledge, no material
expenditures are or will be required in order to comply with any
such existing statute, law or regulation.
(b) The US Environmental Protection Agency (the "
EPA ") has issued recent guidance regarding the
classification of carbon nanotubes under the Toxic Substances
Control Act. The EPA has stated that it now considers carbon
nanotubes to be "new chemicals" rather than materials previously
listed on the TSCA Inventory, such as synthetic graphite or other
carbon compounds. The Company is in the process of reviewing its
compliance with this guidance and has filed paperwork with the EPA.
Accordingly, the Company withholds any representation or warranty
regarding the matters disclosed in this Section 2.15(b),
including its compliance with the new EPA guidance.
2.17 Disclosure . The Company has fully provided Investor
with all the information that Investor has requested in writing for
deciding whether to purchase the Shares. Neither this Agreement
(including all the exhibits and schedules hereto) nor any other
statements or certificates made or delivered in connection herewith
contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statements herein or therein
not misleading in light of the circumstances under which they were
made.
2.18 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.
2.19 Title to Property and Assets . The property and
assets used by the Company in its business are owned by the Company
free and clear of all mortgages, liens, loans and encumbrances,
except for (i) statutory liens for the payment of current
taxes that are not yet delinquent and (ii) for liens,
encumbrances and security interests that arise in the ordinary
course of business and/or pursuant to applicable law, and minor
defects in title, none of which, individually or in the aggr
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