Series A Preferred Stock Purchase Agreement, dated as of November 6, 2020, between FSV7, Inc. and ATAI Life Sciences AG
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and
(ii) would be competitively harmful if publicly disclosed.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
November 6, 2020
|Purchase and Sale of Preferred Stock||1|
|Sale and Issuance of Preferred Stock||1|
|Closing; Delivery; Escrow||1|
|Release, Cancellation of Milestone Shares||2|
|Consent to Conversion and Termination of Convertible Instruments||3|
|Use of Proceeds||4|
|Defined Terms Used in this Agreement||4|
|Representations and Warranties of the Company||5|
|Organization, Good Standing, Corporate Power and Qualification||5|
|Valid Issuance of Shares||7|
|Governmental Consents and Filings||7|
|Compliance with Other Instruments||8|
|Rights of Registration and Voting Rights||10|
|Tax Returns and Payments||11|
|Qualified Small Business Stock||12|
|Foreign Corrupt Practices Act||12|
|Representations and Warranties of the Purchasers||13|
|Purchase Entirely for Own Account||13|
|Disclosure of Information||13|
|No Public Market||14|
|No General Solicitation||14|
|Exculpation Among Purchasers||15|
|Conditions to the Purchasers Obligations at each Closing||15|
|Representations and Warranties||15|
|Opinion of Company Counsel||15|
|Investors Rights Agreement||15|
|Right of First Refusal and Co-Sale Agreement||15|
|Master Services Agreement||16|
|Proceedings and Documents||16|
|Conditions of the Companys Obligations at each Closing||17|
|Representations and Warranties||17|
|Investors Rights Agreement||17|
|Right of First Refusal and Co-Sale Agreement||17|
|Survival of Warranties||17|
|Successors and Assigns||17|
|Titles and Subtitles||18|
|No Finders Fees||18|
|Fees and Expenses||18|
|Amendments and Waivers||19|
|Delays or Omissions||19|
|Termination of Closing Obligations and Post-Closing Covenants||19|
|No Commitment for Additional Financing||20|
|No Further Issuances||20|
|Exhibit A ||SCHEDULE OF PURCHASERS|
|Exhibit B ||FORM OF CERTIFICATE OF INCORPORATION|
|Exhibit C ||DISCLOSURE SCHEDULE|
|Exhibit D ||FORM OF INDEMNIFICATION AGREEMENT|
|Exhibit E ||FORM OF INVESTORS RIGHTS AGREEMENT|
|Exhibit F ||FORM OF RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT|
|Exhibit G ||FORM OF VOTING AGREEMENT|
|Exhibit H ||FORM OF LEGAL OPINION OF COMPANY COUNSEL|
|Exhibit I ||MILESTONES|
|Exhibit J||INITIAL CLINICAL DEVELOPMENT PLAN|
|Exhibit K ||FORM OF MSA|
|Exhibit L ||FORM OF WARRANT|
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT (this Agreement), is made as of November 6, 2020, by and among FSV7, Inc., a Delaware corporation (the Company), and the investors listed on Exhibit A attached to this Agreement (each a Purchaser and together the Purchasers).
The parties hereby agree as follows:
1. Purchase and Sale of Preferred Stock.
1.1 Sale and Issuance of Preferred Stock.
(a) The Company shall have adopted and filed with the Secretary of State of the State of Delaware on or before the Initial Closing (as defined below) the Amended and Restated Certificate of Incorporation in the form of Exhibit B attached to this Agreement (the Restated Certificate).
(b) Subject to the terms and conditions of this Agreement, each Purchaser agrees to purchase at the Initial Closing and the Company agrees to sell and issue to each Purchaser at the Initial Closing that number of shares of Series A Preferred Stock, $0.00001 par value per share (the Series A Preferred Stock), set forth opposite each Purchasers name on Exhibit A, at a purchase price of $[***] per share (the Purchase Price). The shares of Series A Preferred Stock issued or issuable to the Purchasers pursuant to this Agreement (including those to be issued at the Initial Closing, any Escrow Shares and Milestone Shares, as each term is as defined below) shall be referred to in this Agreement as the Shares.
1.2 Closing; Delivery; Escrow.
(a) The initial purchase and sale of the Shares shall take place remotely via the exchange of documents and signatures on the date hereof, or at such other time and place as the Company and the Purchaser mutually agree upon, orally or in writing (which time and place are designated as the Initial Closing and together with any Milestone Closing (as defined in Section 1.3(b) below), each a Closing).
(b) At the Initial Closing, the Company shall (i) deliver to each Purchaser a certificate representing the Shares being purchased by such Purchaser at the Initial Closing against payment of the purchase price therefor by check payable to the Company or by wire transfer to a bank account designated by the Company, by cancellation or conversion of indebtedness or by any combination of such methods and (ii) notwithstanding the foregoing, issue to ATAI Life Sciences AG (ATAI) at the Initial Closing (x) a certificate representing [***] of the Shares and (y) hold in escrow for the benefit of ATAI pursuant to the terms of this Agreement, a certificate representing [***] of the Shares and to be released from time to time to ATAI or the Company pursuant to Section 1.3 (while so held in escrow, the Escrow Shares).
(c) With respect to the Escrow Shares:
(i) The Company hereby agrees and covenants with ATAI that it shall perform all of its obligations under this Agreement and shall not deliver custody or possession of any of the Escrow Shares to anyone except pursuant to the express terms of this Agreement or as otherwise required by law.
(ii) Notwithstanding anything herein to the contrary, for the avoidance of doubt, ATAI shall be the owner of the Escrow Shares, as adjusted by the Companys exercise of the Repurchase Option (as defined below), for all purposes (including for tax purposes) and shall have all rights and privileges, including voting rights and the rights to receive dividends, if any.
1.3 Release, Cancellation of Milestone Shares.
(a) Subject to Subsection 1.3(b) below, after the Initial Closing, ATAI shall make payment to the Company for, and the Company shall release to ATAI:
(i) [***] shares of Series A Preferred Stock at the Purchase Price on the certification by the Board (as confirmed by ATAI, which confirmation not to be unreasonably withheld) that the events specified under Milestone 1 in Exhibit I attached to this Agreement have occurred (Milestone 1);
(ii) [***] shares of Series A Preferred Stock at the Purchase Price on the certification by the Board (as confirmed by ATAI, which confirmation not to be unreasonably withheld) that the events specified under Milestone 2 in Exhibit I attached to this Agreement have occurred (Milestone 2); and
(iii) subject to Subsection (d) below, between [***] and [***] shares of Series A Preferred Stock at the Purchase Price on the certification by the Board (as confirmed by ATAI, which confirmation not to be unreasonably withheld) to fund the Milestone 3 Amount (defined below) to achieve Milestone 3 in Exhibit I attached to this Agreement (Milestone 3 and together with Milestone 1 and Milestone 2, the Milestones); provided however, ATAI shall have the right, but not the obligation, to make payment for up to [***] of the Milestone Shares at any time upon notice to the Company, irrespective of the achievement of any Milestone and, upon such payment, the Company shall instruct the Escrow Agent to release to ATAI the corresponding number of Escrow Shares.
(b) The Shares shall be released to ATAI upon achievement of the Milestones pursuant to Sections 1(a)(i)-(iii) (referred to in this Agreement as the Milestone Shares) and payment for the Milestone Shares at the Purchase Price (the date of such payment referred to in this Agreement as the Milestone Closing(s)).
(c) If ATAI fails to make payment for any of the Milestone Shares described in Sections 1(a)(i)-(iii) within ten (10) Business Days following written notice by the Company of the achievement of the relevant Milestone(s), the Company shall repurchase such Milestone Shares for which payment was not made from ATAI for a purchase price per share equal to the par value of such Shares and upon such repurchase, such Milestone Shares shall be released from escrow to the Company and shall thereafter be cancelled (the Repurchase Option).
(d) The Milestones shall initially be based on the Initial Clinical Development Plan (to include a Proof of Mechanism (POM) Study and a Phase 2 Proof of Concept (POC) Study, the total cost of which shall not exceed $[***] and $[***], respectively) for development of FSV7-007 in schizophrenia as set forth on Exhibit J hereto. No later than forty-five (45) days following receipt of data from the POM Study (unless otherwise agreed by ATAI) the Company and ATAI shall agree on an update to the Initial Clinical Development Plan (as so agreed the Clinical Development Plan), further detailing in particular the Phase 2 Proof of Concept (POC) Study and (i) including appropriate strategies to enrich the population based on the POM Study data, and (ii) taking into account the industry standard objective criteria and reasonable study parameters (e.g., clinical criteria of P = 0.05 and Power ³ 80%, taking into account the signal strength of the primary endpoint) and the estimated costs associated with the same necessary to achieve Milestone 3 (and the corresponding amount of Milestone Shares funded by Purchaser and released from escrow) (the Milestone 3 Amount).
1.4 Consent to Conversion and Termination of Convertible Instruments.
(a) By executing and delivering this Agreement, each Purchaser holding one or more convertible promissory notes issued by the Company prior to the date hereof (each, a Convertible Security and, collectively, the Convertible Securities) hereby irrevocably agrees that:
(i) all of such Purchasers Convertible Securities will automatically and without any action on the part of such Purchaser convert into shares of Series A Preferred Stock at the Initial Closing in the amount for such Purchaser as set forth on Exhibit A, regardless of whether any such Convertible Securities or an affidavit of loss therefor is actually delivered in original or other form to the Company;
(ii) the shares of Series A Preferred Stock in the amount set forth opposite such Purchasers name on Exhibit A are issued in full and complete discharge and satisfaction of all obligations of the Company (including outstanding principal, interest or any other amounts) under such Purchasers Convertible Securities, and such Convertible Securities will be terminated and of no further force or effect automatically immediately prior to the Initial Closing; and
(iii) such Purchasers Convertible Securities hereby are and will be deemed for all purposes to have been amended and modified by virtue hereof to the full extent necessary to permit and facilitate their conversion into the shares of Series A Preferred Stock, and, immediately prior to the Initial Closing, such Convertible Securities shall be deemed terminated in full and null, void and of no further force or effect; provided that the foregoing will not impair the right of such Purchaser to receive the applicable number of shares of Series A Preferred Stock shown opposite his, her or its name on Exhibit A as provided above.
(b) Such Purchaser hereby represents, warrants and confirms to the Company that: (i) Purchaser is the sole owner of all right, title and interest in and to the Convertible Securities corresponding to the amounts shown on Exhibit A opposite such Purchasers name and converting into the shares of Series A Preferred Stock shown on Exhibit A; and (ii) Purchaser has reviewed Exhibit A and agrees that his, her or its ownership of shares of Series A Preferred Stock after giving effect to the Initial Closing is fully and accurately reflected on Exhibit A.
(c) Aside from such Purchasers right to receive the shares of Series A Preferred Stock set forth opposite such Purchasers name on Exhibit A at the Initial Closing and to receive rights provided for in this Agreement and as a holder of shares of Series A Preferred Stock under the Restated Certificate, such Purchaser hereby waives any and all demands, claims, suits, actions, causes of actions, proceedings, assessments and rights in respect of such Purchasers Convertible Securities, including, without limitation, (i) any principal or interest payments in excess of the amounts to be converted into the shares of Series A Preferred Stock as provided on Exhibit A, (ii) any interest accrued on or after October 30, 2020, (iii) any right to formal notice of the conversion of the Convertible Securities and (iv) any rights arising from any past or present actual or alleged default or event of default under the Convertible Securities. The Purchasers further confirm and agree that any original Convertible Securities held by (or delivered to) the Company may be cancelled (and marked cancelled) by the Company upon or following the Initial Closing.
1.5 Use of Proceeds. In accordance with the directions of the Companys Board of Directors, as it shall be constituted in accordance with the Voting Agreement (as defined below), the Company will use the proceeds from the sale of the Shares for all Company operations related to the development of FSV7-007, including for activities in connection with the Companys Clinical Development Plan to achieve the Milestones and, as set forth on Exhibit I.
1.6 Defined Terms Used in this Agreement. In addition to the terms defined above or otherwise in this Agreement, the following terms used in this Agreement shall be construed to have the meanings set forth or referenced below.
(a) Affiliate means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including, without limitation, any general partner, managing member, officer, director or trustee of such Person, or any venture capital fund or registered investment company now or hereafter existing that is controlled by one or more general partners, managing members or investment advisers of, or shares the same management company or investment adviser with, such Person.
(b) Business Day means any day, except a Saturday, Sunday or legal holiday, on which banking institutions in the city of Frankfurt, Germany, or New York, New York, are authorized or obligated by law or executive order to close.
(c) Code means the Internal Revenue Code of 1986, as amended.
(d) Company Intellectual Property means all patents, patent disclosures and all related continuations, continuations-in-part, divisional, reissues, reexamination, utility models, renewals, extensions, certificates of invention and design patents, patent applications, registrations and applications for registrations; registered and unregistered trademarks, trademark applications, registered and unregistered service marks, service mark applications, tradenames, copyrights, trade secrets, domain names, information and proprietary rights and processes, similar or other intellectual property rights, subject matter of any of the foregoing, tangible embodiments of any of the foregoing, licenses in, to and under any of the foregoing, and any and all such cases that are owned or used by the Company in the conduct of the Companys business as now conducted and as presently proposed to be conducted.
(e) Founder means each of Matthew Pando and K. Angela Macfarlane.
(f) Indemnification Agreement means the agreement between the Company and the director and Purchaser Affiliates designated by any Purchaser entitled to designate members of the Board of Directors pursuant to the Voting Agreement, dated as of the date of the Initial Closing, in the form of Exhibit D attached to this Agreement.
(g) Investors Rights Agreement means the agreement among the Company and the Purchasers and certain other stockholders of the Company dated as of the date of the Initial Closing, in the form of Exhibit E attached to this Agreement.
(h) Knowledge including the phrase to the Companys knowledge shall mean the actual knowledge after reasonable investigation of any Founder.
(i) Material Adverse Effect means a material adverse effect on the business, assets (including intangible assets), liabilities, financial condition, property, or results of operations of the Company.
(j) Person means any individual, corporation, partnership, trust, limited liability company, association or other entity.
(k) Right of First Refusal and Co-Sale Agreement means the agreement among the Company, the Purchasers, and certain other stockholders of the Company, dated as of the date of the Initial Closing, in the form of Exhibit F attached to this Agreement.
(l) Securities Act means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(m) Transaction Agreements means this Agreement, the Investors Rights Agreement, the Right of First Refusal and Co-Sale Agreement, the Voting Agreement and the MSA (as defined below).
(n) Voting Agreement means the agreement among the Company, the Purchaser and certain other stockholders of the Company, dated as of the date of the Initial Closing, in the form of Exhibit G attached to this Agreement.
2. Representations and Warranties of the Company. The Company hereby represents and warrants to each Purchaser that, except as set forth on the Disclosure Schedule attached as Exhibit C to this Agreement, which exceptions shall be deemed to be part of the representations and warranties made hereunder, the following representations are true and complete as of the date of the Initial Closing, except as otherwise indicated. The Disclosure Schedule shall be arranged in sections corresponding to the numbered and lettered sections and subsections contained in this Section 2, and the disclosures in any section or subsection of the Disclosure Schedule shall qualify other sections and subsections in this Section 2 only to the extent it is readily apparent from a reading of the disclosure that such disclosure is applicable to such other sections and subsections.
2.1 Organization, Good Standing, Corporate Power and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted and as presently proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a Material Adverse Effect.
(a) The authorized capital of the Company consists, immediately prior to the Initial Closing, of:
(i) [***] shares of common stock, $0.00001 par value per share (the Common Stock), [***] shares of which are issued and outstanding immediately prior to the Initial Closing. All of the outstanding shares of Common Stock have been duly authorized, are fully paid and nonassessable and were issued in compliance with all applicable federal and state securities laws. The Company holds no Common Stock in its treasury.
(ii) [***] shares of Preferred Stock, of which [***] shares have been designated Series A Preferred Stock; none of which are issued and outstanding immediately prior to the Initial Closing. The rights, privileges and preferences of the Preferred Stock are as stated in the Restated Certificate and as provided by the Delaware General Corporation Law.
(b) The Company has reserved [***] shares of Common Stock for issuance to officers, directors, employees and consultants of the Company pursuant to its 2020 Equity Incentive Plan duly adopted by the Board of Directors and approved by the Company stockholders (the Stock Plan). Of such reserved shares of Common Stock, no shares have been issued pursuant to restricted stock purchase agreements, no options to purchase shares have been granted and are currently outstanding and 485,085 shares of Common Stock remain available for issuance to officers, directors, employees and consultants pursuant to the Stock Plan. The Company has furnished to the Purchasers complete and accurate copies of the Stock Plan and forms of agreements used thereunder.
(c) Subsection 2.2(c) of the Disclosure Schedule sets forth the capitalization of the Company immediately following the Initial Closing including the number of shares of the following: (i) issued and outstanding Common Stock, including, with respect to restricted Common Stock, vesting schedule and repurchase price; (ii) outstanding stock options, including vesting schedule and exercise price; (iii) shares of Common Stock reserved for future award grants under the Stock Plan; (iv) each series of Preferred Stock; and (v) warrants or stock purchase rights, if any. Except for (A) the conversion privileges of the Shares to be issued under this Agreement, and (B) the rights provided in Section 4 of the Investors Rights Agreement, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal or similar rights) or agreements, orally or in writing, to purchase or acquire from the Company any shares of Common Stock or Series A Preferred Stock, or any securities convertible into or exchangeable for shares of Common Stock or Series A Preferred Stock. All outstanding shares of the Companys Common Stock and all shares of the Companys Common Stock underlying outstanding options are subject to (i) a right of first refusal in favor of the Company upon any proposed transfer (other than transfers for estate planning purposes); and (ii) a lock-up or market standoff agreement of not less than one hundred eighty (180) days following the Companys initial public offering pursuant to a registration statement filed with the Securities and Exchange Commission under the Securities Act.
(d) None of the Companys stock purchase agreements or stock option documents contains a provision for acceleration of vesting (or lapse of a repurchase right) or other changes in the vesting provisions or other terms of such agreement or understanding upon the occurrence of any event or combination of events, including without limitation in the case where the Companys Stock Plan is not assumed in an acquisition. The Company has never adjusted or amended the exercise price of any stock options previously awarded, whether through amendment, cancellation, replacement grant, repricing, or any other means. Except as set forth in the Restated Certificate, the Company has no obligation (contingent or otherwise) to purchase or redeem any of its capital stock.
(e) The Company has obtained valid waivers of any rights by other parties to purchase any of the Shares covered by this Agreement.
2.3 Subsidiaries. The Company does not currently own or control, directly or indirectly, any interest in any other corporation, partnership, trust, joint venture, limited liability company, 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 required to be taken by the Companys Board of Directors and stockholders in order to authorize the Company to enter into the Transaction Agreements, and to issue the Shares at the Closing and the Common Stock issuable upon conversion of the Shares, has been taken or will be taken prior to the Closing. All action on the part of the officers of the Company necessary for the execution and delivery of the Transaction Agreements, the performance of all obligations of the Company under the Transaction Agreements to be performed as of the Closing, and the issuance and delivery of the Shares has been taken or will be taken prior to the Closing. The Transaction
Agreements, when executed and delivered by the Company, shall constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their respective terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (iii) to the extent the indemnification provisions contained in the Investors Rights Agreement and the Indemnification Agreement may be limited by applicable federal or state securities laws.
2.5 Valid Issuance of Shares. The Shares, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this Agreement (including the release from escrow), will be validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under the Transaction Agreements, applicable state and federal securities laws and liens or encumbrances created by or imposed by a Purchaser. Assuming the accuracy of the representations of the Purchasers in Section 3 of this Agreement and subject to the filings described in the Voting Agreement, the Shares will be issued in compliance with all applicable federal and state securities laws. The Common Stock issuable upon conversion of the Shares has been duly reserved for issuance, and upon issuance in accordance with the terms of the Restated Certificate, will be validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under the Transaction Agreements, applicable federal and state securities laws and liens or encumbrances created by or imposed by a Purchaser. Assuming the accuracy of the representations of the Purchasers in Section 3 of this Agreement and in the Voting Agreement, the Common Stock issuable upon conversion of the Shares will be issued in compliance with all applicable federal and state securities laws.
2.6 Governmental Consents and Filings. Assuming the accuracy of the representations made by the Purchasers in Section 3 of this Agreement, no consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority is required on the part of the Company in connection with the consummation of the transactions contemplated by this Agreement, except for (i) the filing of the Restated Certificate, which will have been filed as of the Initial Closing, and (ii) filings pursuant to Regulation D of the Securities Act, and applicable state securities laws, which have been made or will be made in a timely manner.
2.7 Litigation. There is no claim, action, suit, proceeding, arbitration, complaint, charge or investigation pending or to the Companys knowledge, currently threatened (i) against the Company or, to the Companys knowledge, any officer, director, officer or Founder of the Company; or (ii) that questions the validity of the Transaction Agreements or the right of the Company to enter into them, or to consummate the transactions contemplated by the Transaction Agreements; or (iii) to the Companys knowledge, that would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. Neither the Company nor, to the Companys knowledge, any of its officers, directors or Founders is a party or is named as subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality (in the case of officers, directors or Founders, such as would affect the Company). There is no action, suit, proceeding or investigation by the Company pending or which the Company intends to initiate. The foregoing includes, without limitation, actions, suits, proceedings or investigations pending or threatened in writing (or any basis therefor known to the Company) involving the prior employment of any of the Companys employees, their services provided in connection with the Companys business, any information or techniques allegedly proprietary to any of their former employers or their obligations under any agreements with prior employers.
2.8 Intellectual Property. The Company owns or possesses or can acquire on commercially reasonable terms sufficient legal rights to all Company Intellectual Property without any known conflict with, or infringement of, the rights of others, including prior employees or consultants, or academic or medical institutions with which any of them may be affiliated now or may have been affiliated in the past. To the Companys knowledge, no product or product candidate marketed or sold (or proposed to be marketed or sold) by the Company violates or will violate any license or infringes or will infringe any intellectual property rights of any other party. Other than with respect to commercially available software products under standard end-user object code license agreements, there are no outstanding options, licenses, agreements, claims, encumbrances or shared ownership interests of any kind relating to the Company Intellectual Property, 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. The Company has not received any communications alleging that the Company has violated, or by conducting its business, would violate any of the patents, trademarks, service marks, tradenames, copyrights, trade secrets, mask works or other proprietary rights or processes of any other Person. The Company has obtained and possesses valid licenses to use all of the software programs present on the computers and other software-enabled electronic devices that it owns or leases or that it has otherwise provided to its employees for their use in connection with the Companys business. To the Companys knowledge, it will not be necessary to use any inventions of any of its employees or consultants (or Persons it currently intends to hire) made prior to their employment by the Company, including prior employees or consultants, or academic or medical institutions with which any of them may be affiliated now or may have been affiliated in the past. Each employee and consultant has assigned to the Company all intellectual property rights he or she owns that are related to the Companys business as now conducted and as presently proposed to be conducted and all intellectual property rights that he, she or it solely or jointly conceived, reduced to practice, developed or made during the period of his, her or its employment or consulting relationship with the Company that (a) relate, at the time of conception, reduction to practice, development, or making of such intellectual property right, to the Companys business as then conducted or as then proposed to be conducted, (b) were developed on any amount of the Companys time or with the use of any of the Companys equipment, supplies, facilities or information or (c) resulted from the performance of services for the Company. Subsection 2.8 of the Disclosure Schedule lists all patents, patent applications, trademarks, trademark applications, service marks, service mark applications, tradenames, copyrights, and licenses to and under any of the foregoing, in each case owned by the Company. The Company has not embedded any open source, copyleft or community source code in any of its products generally available or in development, including but not limited to any libraries or code licensed under any General Public License, Lesser General Public License or similar license arrangement. For purposes of this Subsection 2.8, the Company shall be deemed to have knowledge of a patent right if the Company has actual knowledge of the patent right or would be found to be on notice of such patent right as determined by reference to United States patent laws. No government funding, facilities of a university, college, other educational institution or research center, or funding from third parties was used in the development of any Company Intellectual Property. No Person who was involved in, or who contributed to, the creation or development of any Company Intellectual Property, has performed services for the government, university, college, or other educational institution or research center in a manner that would affect Companys rights in the Company Intellectual Property.
2.9 Compliance with Other Instruments. The Company is not in violation or default (i) of any provisions of its Restated Certificate or Bylaws, (ii) of any instrument, judgment, order, writ or decree, (iii) under any note, indenture or mortgage, or (iv) under any lease, agreement, contract or purchase order to which it is a party or by which it is bound that is required to be listed on the Disclosure Schedule, or (v) of any provision of federal or state statute, rule or regulation applicable to the Company, the violation of which would have a Material Adverse Effect. The execution, delivery and performance of the Transaction Agreements and the consummation of the transactions contemplated by the Transaction Agreements 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 (i) a default under any such provision, instrument, judgment, order, writ, decree, contract or agreement; or (ii) an event which results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, forfeiture, or nonrenewal of any material permit or license applicable to the Company.
2.10 Agreements; Actions.
(a) Except for the Transaction Agreements, there are no agreements, understandings, instruments, contracts or proposed transactions to which the Company is a party or by which it is bound that involve (i) obligations (contingent or otherwise) of, or payments to, the Company in excess of $10,000, (ii) the license of any patent, copyright, trademark, trade secret or other proprietary right to or from the Company, (iii) the grant of rights to manufacture, produce, assemble, license, market, or sell its products to any other Person that limit the Companys exclusive right to develop, manufacture, assemble, distribute, market or sell its products, or (iv) indemnification by the Company with respect to infringements of proprietary rights.
(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) 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 the sale of its inventory in the ordinary course of business. For the purposes of (a) and (b) of this Subsection 2.10, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same Person (including Persons the Company has reason to believe are affiliated with each other) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsection.
(c) The Company is not a guarantor or indemnitor of any indebtedness of any other Person.
2.11 Certain Transactions.
(a) Other than (i) standard employee benefits generally made available to all employees, (ii) standard director and officer indemnification agreements approved by the Board of Directors, and (iii) the purchase of shares of the Companys capital stock and the issuance of options to purchase shares of the Companys Common Stock, in each instance, approved in the written minutes of the Board of Directors (previously provided to the Purchaser or its counsel), there are no agreements, understandings or proposed transactions between the Company and any of its officers, directors, consultants or any Founder, or any Affiliate thereof.
(b) The Company is not indebted, directly or indirectly, to any of its directors, officers or employees or to their respective spouses or children or to any Affiliate of any of the foregoing, other than in connection with expenses or advances of expenses incurred in the ordinary course of business or employee relocation expenses and for other customary employee benefits made generally available to all employees. None of the Companys directors, officers or employees, or any members of their immediate families, or any Affiliate of the foregoing are, directly or indirectly, indebted to the Company or, to the Companys knowledge, have any (i) material commercial, industrial, banking, consulting, legal, accounting, charitable or familial relationship with any of the Companys customers, suppliers, service providers, joint venture partners, licensees and competitors, (ii) 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 which competes with the Company except that directors, officers, employees or stockholders of the Company may own stock in (but not exceeding two percent (2%) of the outstanding capital stock of) publicly traded companies that may compete with the Company; or (iii) financial interest in any contract with the Company.
2.12 Rights of Registration and Voting Rights. Except as provided in the Investors Rights Agreement, the Company is not under any obligation to register under the Securities Act any of its currently outstanding securities or any securities issuable upon exercise or conversion of its currently outstanding securities. To the Companys knowledge, except as contemplated in the Voting Agreement, no stockholder of the Company has entered into any agreements with respect to the voting of capital shares of the Company.
2.13 Property. The property and assets that the Company owns are free and clear of all mortgages, deeds of trust, liens, loans and encumbrances, except for statutory liens for the payment of current taxes that are not yet delinquent and encumbrances and liens that arise in the ordinary course of business and do not materially impair the Companys 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 holds a valid leasehold interest free of any liens, claims or encumbrances other than those of the lessors of such property or assets. The Company does not own any real property.
2.14 Material Liabilities. The Company has no liability or obligation, absolute or contingent (individually or in the aggregate), except (i) obligations and liabilities incurred after the date of incorporation in the ordinary course of business that are not material, individually or in the aggregate, and (ii) obligations under contracts made in the ordinary course of business that would not be required to be reflected in financial statements prepared in accordance with GAAP.
2.15 Employee Matters.
(a) As of the date hereof, the Company employs two (2) full-time employees and no part-time employees and engages twenty (20) consultants or independent contractors. Subsection 2.15(a) of the Disclosure Schedule sets forth a detailed description of all compensation, including salary, bonus, severance obligations and deferred compensation paid or payable for each officer, employee, consultant and independent contractor of the Company.
(b) To the Companys knowledge, none of the Companys employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would materially interfere with such employees ability to promote the interest of the Company or that would conflict with the Companys business. Neither the execution or delivery of the Transaction Agreements, nor the carrying on of the Companys business by the employees of the Company, nor the conduct of the Companys business as now conducted and as presently proposed to be conducted, will, to the Companys 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 such employee is now obligated.
(c) The Company is not delinquent in payments to any of its employees, consultants, or independent contractors for any wages, salaries, commissions, bonuses, or other direct compensation for any service performed for it to the date hereof or amounts required to be reimbursed to such employees, consultants or independent contractors. The Company has complied in all material respects with all applicable state and federal equal employment opportunity laws and with other laws related to employment, including those related to wages, hours, worker classification and collective bargaining. The Company has withheld and paid to the appropriate governmental entity or is holding for payment not yet due to such governmental entity all amounts required to be withheld from employees of the Company and is not liable for any arrears of wages, taxes, penalties or other sums for failure to comply with any of the foregoing.
(d) To the Companys knowledge, no Founder who is an employee or consultant of the Company intends to terminate such employment or consulting relationship with the Company or is otherwise likely to become unavailable to continue in his or her correct role. The employment of each employee of the Company is terminable at the will of the Company. Except as set forth in Subsection 2.15(d) of the Disclosure Schedule or as required by law, upon termination of the employment of any such employees, no severance or other payments will become due. Except as set forth in Subsection 2.15(d) of the Disclosure Schedule, the Company has no policy, practice, plan or program of paying severance pay or any form of severance compensation in connection with the termination of employment services.
(e) The Company has not made any representations regarding equity incentives to any officer, employee, director or consultant that are inconsistent with the share amounts and terms set forth in the minutes of meetings of (or actions taken by unanimous written consent by) the Companys board of directors.
(f) Each former employee of the Company whose employment was terminated by the Company has entered into an agreement with the Company providing for the full release of any claims against the Company or any related party arising out of such employment.
(g) Subsection 2.15(g) of the Disclosure Schedule sets forth each employee benefit plan maintained, established or sponsored by the Company, or which the Company participates in or contributes to, which is subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA). The Company has made all required contributions and has no liability to any such employee benefit plan, other than liability for health plan continuation coverage described in Part 6 of Title I(B) of ERISA, and has complied in all material respects with all applicable laws for any such employee benefit plan.
(h) To the Companys knowledge, no Founder or director of the Company has been (a) subject to voluntary or involuntary petition under the federal bankruptcy laws or any state insolvency law or the appointment of a receiver, fiscal agent or similar officer by a court for his or her business or property; (b) convicted in a criminal proceeding or named as a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (c) subject to any order, judgment or decree (not subsequently reversed, suspended, or vacated) of any court of competent jurisdiction permanently or temporarily enjoining him or her from engaging, or otherwise imposing limits or conditions on his or her engagement in any securities, investment advisory, banking, insurance, or other type of business or acting as an officer or director of a public company; or (d) found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated any federal or state securities, commodities, or unfair trade practices law, which such judgment or finding has not been subsequently reversed, suspended, or vacated.
2.16 Tax Returns and Payments. There are no federal, state, county, local or foreign taxes due and payable by the Company which have not been timely paid. There are no accrued and unpaid federal, state, country, local or foreign taxes of the Company which are due, whether or not assessed or disputed. There have been no examinations or audits of any tax returns or reports by any applicable federal, state, local or foreign governmental agency. The Company has duly and timely filed all federal, state, county, local and foreign tax returns required to have been filed by it and there are in effect no waivers of applicable statutes of limitations with respect to taxes for any year.
2.17 Insurance. The Company has in full force and effect insurance policies concerning such casualties as would be reasonable and customary for companies like the Company.
2.18 Employee Agreements. Each Founder and current and former employee, consultant and officer of the Company has executed an agreement with the Company regarding confidentiality and proprietary information substantially in the form or forms delivered to the counsel for the Purchaser (the Confidential Information Agreements). No current or former employee of the Company has excluded works or inventions from his or her assignment of inventions pursuant to such employees Confidential Information Agreement. The Company is not aware that any of the Founders or any Company employees is in violation of any agreement covered by this Subsection 2.18.
2.19 Permits. The Company has all franchises, permits, licenses and any similar authority necessary for the conduct of its business, the lack of which could reasonably be expected to have a Material Adverse Effect. The Company is not in default in any material respect under any of such franchises, permits, licenses or other similar authority.
2.20 Corporate Documents. The Restated Certificate and Bylaws of the Company are in the form provided to the Purchasers. The copy of the minute books of the Company provided to the Purchasers contains minutes of all meetings of directors and stockholders and all actions by written consent without a meeting by the directors and stockholders since the date of incorporation and accurately reflects in all material respects all actions by the directors (and any committee of directors) and stockholders with respect to all transactions referred to in such minutes.
2.21 Qualified Small Business Stock. As of and immediately following the Closing: (i) the Company will be an eligible corporation as defined in Section 1202(e)(4) of the Code, (ii) the Company will not have made purchases of its own stock described in Code Section 1202(c)(3)(B) during the one (1) year period preceding the Initial Closing, except for purchases that are disregarded for such purposes under Treasury Regulation Section 1.1202-2, and (iii) the Companys aggregate gross assets, as defined by Code Section 1202(d)(2), at no time between its incorporation and through the Initial Closing have exceeded $50 million, taking into account the assets of any corporations required to be aggregated with the Company in accordance with Code Section 1202(d)(3); provided, however, that in no event shall the Company be liable to the Purchaser or any other party for any damages arising from any subsequently proven or identified error in the Companys determination with respect to the applicability or interpretation of Code Section 1202, unless such determination shall have been given by the Company in a manner either grossly negligent or fraudulent.
2.22 Foreign Corrupt Practices Act. Neither the Company nor any of its directors, officers, employees or agents have, directly or indirectly, made, offered, promised or authorized any payment or gift of any money or anything of value to or for the benefit of any foreign official (as such term is defined in the U.S. Foreign Corrupt Practices Act of 1977, as amended (the FCPA)), foreign political party or official thereof or candidate for foreign political office for the purpose of (i) influencing any official act or decision of such official, party or candidate, (ii) inducing such official, party or candidate to use his, her or its influence to affect any act or decision of a foreign governmental authority, or (iii) securing any improper advantage, in the case of (i), (ii) and (iii) above in order to assist the Company or any of its affiliates in obtaining or retaining business for or with, or directing business to, any person. Neither the Company nor any of its directors, officers, employees or agents have made or authorized any bribe, rebate, payoff, influence payment, kickback or other unlawful payment of funds or received or retained any funds in violation of any law, rule or regulation. Neither the Company nor, to the Companys knowledge, any of its officers, directors or employees are the subject of any allegation, voluntary disclosure, investigation, prosecution or other enforcement action related to the FCPA or any other anti-corruption law (collectively, Enforcement Action).
2.23 Preclinical Development. To the Companys Knowledge, the studies, tests and preclinical development and clinical trials, if any, conducted by or on behalf of the Company are being conducted in all material respects in accordance with experimental protocols, procedures and controls pursuant to accepted professional and scientific standards for products or product candidates comparable to those being developed by the Company and all applicable laws and regulations, including the Federal Food, Drug, and Cosmetic Act and 21 C.F.R. parts 50, 54, 56, 58, 312, and 812. The descriptions of, protocols for, and data and other results of, the studies, tests, development and trials conducted by or on behalf of the Company that have been furnished or made available to the Purchasers are accurate and complete. The Company is not aware of any studies, tests, development or trials the results of which reasonably call into question the results of the studies, tests, and the proposed development conducted by or on behalf of the Company, and the Company has not received any notices or correspondence from the FDA or any other Governmental Entity or any Institutional Review Board or comparable authority requiring the termination, suspension or material modification of any studies, tests, preclinical development or clinical trials conducted by or on behalf of the Company.
3. Representations and Warranties of the Purchasers. Each Purchaser hereby represents and warrants to the Company, severally and not jointly, that:
3.1 Authorization. The Purchaser has full power and authority to enter into the Transaction Agreements. The Transaction Agreements to which the Purchaser is a party, when executed and delivered by the Purchaser, will constitute valid and legally binding obligations of the Purchaser, enforceable against such Purchaser in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and any other laws of general application affecting enforcement of creditors rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies, or (b) 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 the Purchaser in reliance upon the Purchasers representation to the Company, which by the Purchasers execution of this Agreement, the Purchaser hereby confirms, that the Shares to be acquired by the Purchaser will be acquired for investment for the Purchasers own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that the Purchaser does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to any of the Shares. The Purchaser has not been formed for the specific purpose of acquiring the Shares.
3.3 Disclosure of Information. The Purchaser has had an opportunity to discuss the Companys business, management, financial affairs and the terms and conditions of the offering of the Shares with the Companys management and has had an opportunity to review the Companys facilities. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 2 of this Agreement or the right of the Purchasers to rely thereon.
3.4 Restricted Securities. The Purchaser understands that the Shares have not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchasers representations as expressed herein. The Purchaser understands that the Shares are restricted securities under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Purchaser must hold the Shares indefinitely
unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Shares, or the Common Stock into which it may be converted, for resale except as set forth in the Investors Rights Agreement. The Purchaser further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Shares, and on requirements relating to the Company which are outside of the Purchasers control, and which the Company is under no obligation and may not be able to satisfy.
3.5 No Public Market. The Purchaser understands that no public market now exists for the Shares, and that the Company has made no assurances that a public market will ever exist for the Shares.
3.6 Legends. The Purchaser understands that the Shares and any securities issued in respect of or exchange for the Shares, may be notated with one or all of the following legends:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
(a) Any legend set forth in, or required by, the other Transaction Agreements.
(b) Any legend required by the securities laws of any state to the extent such laws are applicable to the Shares represented by the certificate, instrument, or book entry so legended.
3.7 Accredited Investor. The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
3.8 Foreign Investors. If the Purchaser is not a United States person (as defined by Section 7701(a)(30) of the Code), the Purchaser hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Shares or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Shares, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Shares. The Purchasers subscription and payment for and continued beneficial ownership of the Shares will not violate any applicable securities or other laws of the Purchasers jurisdiction.
3.9 No General Solicitation. Neither the Purchaser, nor any of its officers, directors, employees, agents, stockholders or partners has either directly or indirectly, including, through a broker or finder (a) engaged in any general solicitation, or (b) published any advertisement in connection with the offer and sale of the Shares.
3.10 Exculpation Among Purchasers. The Purchaser acknowledges that it is not relying upon any Person, other than the Company and its officers and directors, in making its investment or decision to invest in the Company. The Purchaser agrees that neither any Purchaser nor the respective controlling Persons, officers, directors, partners, agents, or employees of any Purchaser shall be liable to any other Purchaser for any action heretofore taken or omitted to be taken by any of them in connection with the purchase of the Shares.
3.11 Residence. If the Purchaser is an individual, then the Purchaser resides in the state or province identified in the address of the Purchaser set forth on Exhibit A; if the Purchaser is a partnership, corporation, limited liability company or other entity, then the office or offices of the Purchaser in which its principal place of business is identified in the address or addresses of the Purchaser set forth on Exhibit A.
4. Conditions to the Purchasers Obligations at each Closing. The obligations of each Purchaser to purchase Shares at the Initial Closing or deliver payment at any Milestone Closing are subject to the fulfillment, on or before such Closing, of each of the following conditions, unless otherwise waived:
4.1 Representations and Warranties. The representations and warranties of the Company contained in Section 2 shall be true and correct in all respects as of such Closing.
4.2 Performance. The Company shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by the Company on or before such Closing.
4.3 Compliance Certificate. The President of the Company shall deliver to the Purchasers at such Closing a certificate certifying that the conditions specified in Subsections 4.1 and 4.2 have been fulfilled.
4.4 Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall be obtained and effective as of such Closing.
4.5 Opinion of Company Counsel. The Purchasers shall have received from Wilson Sonsini Goodrich & Rosati, P.C., counsel for the Company, an opinion, dated as of the Initial Closing, in substantially the form of Exhibit H attached to this Agreement.
4.6 Indemnification Agreement. The Company shall have executed and delivered the Indemnification Agreements.
4.7 Investors Rights Agreement. The Company and each Purchaser (other than the Purchaser relying upon this condition to such the Purchasers performance hereunder) and the other stockholders of the Company named as parties thereto shall have executed and delivered the Investors Rights Agreement.
4.8 Right of First Refusal and Co-Sale Agreement. The Company, each Purchaser (other than the Purchaser relying upon this condition to excuse such Purchasers performance hereunder), and the other stockholders of the Company named as parties thereto shall have executed and delivered the Right of First Refusal and Co-Sale Agreement.
4.9 Voting Agreement. The Company, each Purchaser (other than the Purchaser relying upon this condition to excuse such Purchasers performance hereunder), and the other stockholders of the Company named as parties thereto shall have executed and delivered the Voting Agreement.
4.10 Stock Restriction Agreement. The Company and each of Matthew Pando, Gary Walker and Thomas Südhof shall have executed and delivered a Stock Restriction Agreement, each in such form as has been reasonably agreed to by ATAI.
4.11 Restated Certificate. The Company shall have filed the Restated Certificate with the Secretary of State of Delaware on or prior to the Closing, which shall continue to be in full force and effect as of the Closing.
4.12 Master Services Agreement. The Company and the Purchaser shall have executed and delivered the Master Services Agreement attached hereto as Exhibit K (the MSA).
4.13 Secretarys Certificate. The Secretary of the Company shall have delivered to the Purchasers at the Closing a certificate certifying (i) the Bylaws of the Company, (ii) resolutions of the Board of Directors of the Company approving the Transaction Agreements and the transactions contemplated under the Transaction Agreements, and (iii) resolutions of the stockholders of the Company approving the Restated Certificate.
4.14 Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to each Purchaser, and each Purchaser (or its respective counsel) shall have received all such counterpart original and certified or other copies of such documents as reasonably requested. Such documents may include good standing certificates.
4.15 Post-Closing Covenants.
(a) Without limiting the rights and obligations set forth in the MSA, Company shall engage Chief Scientific Officer of the Purchaser, Srinivas Rao, M.D., Ph.D. (Dr. Rao) to serve as Companys Chief Medical Officer to guide the clinical design and execution of the POM Study and the POC Study.
(b) In the event that ATAIs ownership does not represent at least [***]% of the Company (on a fully-diluted basis):
(i) After ATAI purchases at least [***] shares of the Series A Preferred Stock but not more than [***] shares of the Series A Preferred Stock depending on the funding requirements of the Stage 3 Phase 2 POC Study as determined by the Companys Board of Directors; and
(ii) The Company and ATAI agree that the total purchase price for such purchased shares is sufficient to fully fund Stage 3 Phase 2 POC Study pursuant to Section 1.3(d) of this Agreement;
the Company shall issue a warrant in substantially the form attached hereto as Exhibit L (the First Warrant) to ATAI that will be exercisable for the number of shares of Series A Preferred Stock that will result in ATAI owning at least 50.23% of Company (on a fully-diluted basis) after the issuance of the First Warrant.
(c) In the event that the Company and ATAI agree that the Phase 2 POC Study will require in excess of $[***] in the aggregate but not more than $[***] in the aggregate and ATAI chooses to purchase shares of the Series A Preferred Stock equivalent to such amount in excess of $[***] in the aggregate, the Company shall issue a warrant in substantially the form attached hereto as Exhibit L (the Second Warrant) to ATAI that will be exercisable for such number of shares of Series A Preferred Stock that will result in ATAI owning [***]% of the Company, on a fully diluted basis after the issuance of the Second Warrant. For clarity, the Company must agree in writing that the Phase 2 POC Study will require more than $[***] in the aggregate before the Second Warrant may be issued.
5. Conditions of the Companys Obligations at each Closing. The obligations of the Company to sell Shares to the Purchasers at the Initial Closing or to instruct the Escrow Agent to release Shares at any Milestone Closing are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived:
5.1 Representations and Warranties. The representations and warranties of each Purchaser contained in Section 3 shall be true and correct in all respects as of such Closing.
5.2 Performance. The Purchasers shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by them on or before such Closing.
5.3 Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall be obtained and effective as of the Closing.
5.4 Investors Rights Agreement. Each Purchaser shall have executed and delivered the Investors Rights Agreement.
5.5 Right of First Refusal and Co-Sale Agreement. Each Purchaser and the other stockholders of the Company named as parties thereto shall have executed and delivered the Right of First Refusal and Co-Sale Agreement.
5.6 Voting Agreement. Each Purchaser and the other stockholders of the Company named as parties thereto shall have executed and delivered the Voting Agreement.
6.1 Survival of Warranties. Unless otherwise set forth in this Agreement, the representations and warranties of the Company and the Purchasers contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and each Closing and shall in no way be affected by any investigation or knowledge of the subject matter thereof made by or on behalf of the Purchasers or the Company.
6.2 Successors and Assigns. This Agreement, and the rights and obligations of ATAI hereunder, may be assigned by ATAI only with the prior written consent of the Company, such consent not to be unreasonably withheld; provided, however, that ATAI may assign this Agreement without the prior written consent of the Company to any Affiliate of ATAI so long as (i) such Affiliate has sufficient funds to make the payments due at all remaining Milestone Closing or (ii) ATAI agrees to remain liable for the payments due at all remaining Milestone Closing hereunder. This Agreement, and the rights and obligations of the Company hereunder, may be assigned by the Company only with the prior written consent of ATAI, such consent not to be unreasonably withheld. 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.
6.3 Governing Law. This Agreement shall be governed by the internal law of the State of Delaware, without regard to conflict of law principles that would result in the application of any law other than the law of the State of Delaware.
6.4 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
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. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt, or (a) personal delivery to the party to be notified, (b) when sent, if sent by electronic mail or facsimile during normal business hours of the recipient, and if not sent during normal business hours, then on the recipients next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) business day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their address as set forth on the signature page or Exhibit A, or to such e-mail address, facsimile number or address as subsequently modified by written notice given in accordance with this Subsection 6.6. If notice is given to the Company, a copy shall also be sent to Wilson Sonsini Goodrich & Rosati, P.C., 650 Page Mill Road, Palo Alto, CA 94304; Attention: Philip Oettinger, email: [***]. If notice is given to the Purchaser it shall be sent to Ryan Barrett, ATAI Life Sciences AG, Barer Straße, 80333 München, at [***], and a copy shall also be given to Kristina Beirne, Dentons US LLP at [***].
6.7 No Finders Fees. Each party represents that it neither is nor will be obligated for any finders fee or commission in connection with this transaction. Each Purchaser agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finders or brokers fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which each Purchaser or any of its officers, employees or representatives is responsible. The Company agrees to indemnify and hold harmless each Purchaser from any liability for any commission or compensation in the nature of a finders or brokers fee arising out of this transaction (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 Fees and Expenses. The Company and the Purchasers shall pay their own legal fees and expenses in connection with the transactions contemplated by this Agreement.
6.9 Attorneys Fees. If any action at law or in equity (including, arbitration) is necessary to enforce or interpret the terms of any of the Transaction Agreements, 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.
6.10 Amendments and Waivers. Except as set forth in Subsection 1.3(a) of this Agreement, any term of this Agreement may be amended, terminated or waived only with the written consent of the Company and the holders of at least a majority of the then-outstanding shares of Series A Preferred Stock. Any amendment or waiver effected in accordance with this Subsection 6.10 shall be binding upon the Purchaser and each transferee of the Shares (or the Common Stock issuable upon conversion thereof), each future holder of all such securities, and the Company.
6.11 Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.
6.12 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.
6.13 Entire Agreement. This Agreement (including the Exhibits hereto), the Restated Certificate and the other Transaction Agreements constitute the full and entire understanding and agreement between the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties are expressly canceled.
6.14 Termination of Closing Obligations and Post-Closing Covenants. Each Purchaser shall have the right to terminate its obligations to complete the Initial Closing or any Milestone Closing, as the case may be, and the Companys post-closing covenants under Section 4.16 shall be terminated, if prior to the occurrence thereof, any of the following occurs:
(a) the Company consummates a Deemed Liquidation Event (as defined in the Certificate);
(b) the closing of an initial public offering of the Company, in which case the Purchasers may terminate their obligations hereunder immediately prior to, or contingent upon, such closing; or
(c) the Company (i) applies for or consents to the appointment of a receiver, trustee, custodian or liquidator of itself or substantially all of its property, (ii) becomes subject to the appointment of a receiver, trustee, custodian or liquidator of itself or substantially all of its property, (iii) makes an assignment for the benefit of creditors, (iv) institutes any proceedings under the United States Bankruptcy Code or any other federal or state bankruptcy, reorganization, receivership, insolvency or other similar law affecting the rights of creditors generally, or files a petition or answer seeking reorganization or an arrangement with creditors to take advantage of any insolvency law, or files an answer admitting the material allegations of a bankruptcy, reorganization or insolvency petition filed against it, or (v) becomes subject to any involuntary proceedings under the United States Bankruptcy Code or any other federal or state bankruptcy, reorganization, receivership, insolvency or other similar law affecting the rights of creditors generally, when proceeding is not dismissed within thirty (30) days of filing, or have an order for relief entered against it in any proceedings under the United States Bankruptcy Code.
6.15 Dispute Resolution. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state and federal courts located in the State of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state or federal courts located in the State of Delaware, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.
WAIVER OF JURY TRIAL: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL
6.16 No Commitment for Additional Financing. The Company acknowledges and agrees that no Purchaser has made any representation, undertaking, commitment or agreement to provide or assist the Company in obtaining any financing, investment or other assistance, other than the purchase of the Shares as set forth herein and subject to the conditions set forth herein. In addition, the Company acknowledges and agrees that (i) no statements, whether written or oral, made by the Purchaser or its representatives on or after the date of this Agreement shall create an obligation, commitment or agreement to provide or assist the Company in obtaining any financing or investment, (ii) the Company shall not rely on any such statement by the Purchaser or its representatives, and (iii) an obligation, commitment or agreement to provide or assist the Company in obtaining any financing or investment may only be created by a written agreement, signed by the Purchaser and the Company, setting forth the terms and conditions of such financing or investment and stating that the parties intend for such writing to be a binding obligation or agreement. The Purchaser shall have the right, in its sole and absolute discretion, to refuse or decline to participate in any other financing of or investment in the Company, and shall have no obligation to assist or cooperate with the Company in obtaining any financing, investment or other assistance.
6.17 No Further Issuances. Until all the Milestones have been achieved, other than as approved by the Board of Directors of the Company and the Purchaser or in connection with a Milestone Failure Event (as defined in the Voting Agreement), the Company will not (i) issue any additional capital stock or other equity securities of the Company (including securities convertible into or exchangeable for such equity securities) other than the Preferred Stock issued at any Milestone Closing, or (ii) take uncoordinated action to solicit, initiate, encourage or assist the submission of any proposal, negotiation or offer from any person or entity other than the Purchaser relating to the sale or issuance, of any of the
capital stock of the Company or the acquisition, sale, lease, license or other disposition of the Company or any material part of the stock or assets of the Company and shall notify the Purchaser promptly of any inquiries by any third parties in regards to the foregoing, provided that the foregoing shall not include shares of Common Stock issued or issuable upon the exercise of options under the Stock Plan or any other options approved by the Board, including a majority of the Preferred Directors (as defined in the Voting Agreement).
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties have executed this Preferred Stock Purchase Agreement as of the date first written above.
SIGNATURE PAGE TO PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Preferred Stock Purchase Agreement as of the date first written above.
|ATAI LIFE SCIENCES AG|
|Address: Barer Straße 7|
IN WITNESS WHEREOF, the parties have executed this Preferred Stock Purchase Agreement as of the date first written above.