STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, is made as of the 17th day of July,
1997, by and between Apollon, Inc., a Pennsylvania corporation ("APOLLON") and
The Trustees of the University of Pennsylvania, a Pennsylvania nonprofit
corporation ("PENN").
WHEREAS, as of December 1, 1994, APOLLON and PENN have entered into a
License Agreement, amended by Amendment to License Agreement, dated as of July
17, 1997, pursuant to which PENN has granted APOLLON a worldwide, exclusive
license to develop, make, have made, sell and have sold certain technology owned
by PENN relating to genetic vaccines, i.e., facilitated transfer and expression
of nucleic acids ("LICENSE AGREEMENT I"); and
WHEREAS, in partial consideration of the exclusive license granted by
PENN to APOLLON pursuant to LICENSE AGREEMENT I, APOLLON has granted to PENN
shares of APOLLON's common stock, in accordance with the terms and conditions of
this Agreement.
NOW THEREFORE, in consideration of the premises set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Issuance of Shares. As promptly as practicable after execution
of the Amendment to License Agreement, APOLLON shall issue to PENN 50,000 shares
of APOLLON's Common Stock, par value $.01 per share ("COMMON STOCK"), pursuant
to the INITIATION GRANT as defined in LICENSE AGREEMENT I and shall deliver or
cause to be delivered to PENN a certificate or certificates therefor, registered
in PENN's name. Upon receipt of such shares, PENN shall execute and deliver to
APOLLON such other documents as APOLLON may reasonably request.
2. Representations and Warranties of PENN.
(a) No Registration of the Shares. PENN represents and warrants
to APOLLON that: (i) it understands that the shares of COMMON STOCK issuable
hereunder (the "SHARES") are being sold to it under certain exemptions from the
registration provisions of the Securities Act of 1933, as amended (the
"SECURITIES ACT"); PENN is purchasing the SHARES without being furnished any
offering literature or prospectus; and the sales of the SHARES have not been and
will not be examined by the Securities and Exchange Commission or by any agency
charged with the administration of the securities laws of any state or other
jurisdiction; (ii) PENN has, either alone or together with its advisors, such
knowledge and experience in financial and business
matters that PENN is capable of evaluating the merits and risks of an
investment in the SHARES and of making an informed investment decision with
respect thereto; and (iii) PENN understands that APOLLON is relying on and
will rely on the truth and accuracy of the representations and warranties
made herein by PENN in selling the SHARES hereunder and under LICENSE
AGREEMENT I without having first registered such SHARES under the SECURITIES
ACT or under the securities laws of any state or other jurisdiction.
(b) Investment Intent. PENN confirms to APOLLON that: (I) PENN
understands that there are substantial restrictions on the transferability of
the SHARES and, accordingly, it may not be possible for PENN to liquidate its
investment in the SHARES in case of emergency; (ii) PENN is able to bear the
economic risk of its investment in the SHARES, to hold the SHARES for an
indefinite period of time, and to afford a complete loss of this investment,
(iii) the SHARES are being acquired in good faith solely for PENN's own personal
account, for investment purposes only, and are not being purchased with a view
to or for the resale or distribution thereof; (iv) PENN does not have any
contract, undertaking, understanding, agreement or arrangement, formal or
informal, with any person to sell, transfer or pledge to any person the SHARES,
or any part thereof, and has no current plan to enter into any such contract,
undertaking, agreement or arrangement; and (v) PENN understands that the legal
consequences of the foregoing representations and warranties are that PENN must
bear the economic risk of its investment in the SHARES for an indefinite period
of time because the SHARES have not been and the SHARES will not be registered
under the SECURITIES ACT.
(c) Decision to Invest. PENN confirms to APOLLON that, in
making its decision to invest in the SHARES, PENN has relied solely upon
independent investigations made by it or its representatives and advisors, and
that PENN and such representatives and advisors have been given the opportunity
to ask questions of, and to receive answers from, management of APOLLON with
respect to the business and affairs of APOLLON.
3. Restrictions on Transfer.
(a) Permitted Transfers. No SHARES may be sold, transferred,
assigned, pledged, hypothecated or otherwise disposed of by any holder thereof
except (i) pursuant to a public offering thereof registered under the SECURITIES
ACT, or (ii) an opinion of counsel satisfactory to APOLLON that registration
under the SECURITIES Act is not required in connection with such sale, transfer,
assignment, pledge, hypothecation or other disposition.
2
(b) Restrictive Legend. PENN understands that each certificate
representing any SHARES or any shares of capital stock received in respect
thereof, whether by reason of a stock split or share reclassification thereof, a
stock dividend thereon or otherwise, shall be stamped or otherwise imprinted
with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") AND ARE "RESTRICTED
SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER THE ACT.
THESE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE
DISTRIBUTED EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE ACT; (II) IN COMPLIANCE
WITH RULE 144; OR (III) AFTER RECEIPT OF AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR COMPLIANCE
IS NOT REQUIRED AS TO SAID SALE, OFFER OR DISTRIBUTION.
4. Compliance with Governmental and Other Regulations. APOLLON will
not be obligated to issue and sell the SHARES if, in the opinion of its counsel,
such issuance and sale would violate any applicable federal or state securities
laws, rules or regulations. APOLLON will seek to obtain from each regulatory
commission or agency having jurisdiction such authority as may be required to
issue and sell the SHARES. Inability of APOLLON to obtain from any such
regulatory commission or agency authority which counsel for APOLLON deems
necessary for the lawful issuance and sale of the SHARES shall relieve APOLLON
from any liability for failure to issue and sell the SHARES until the time, if
at all, when such authority is obtained or is obtainable.
5. Rights of PENN in Stock. Neither PENN nor its legal
representatives, heirs, legatees, or distributees shall be deemed to be the
holder of, or to have any rights of a holder with respect to, any SHARES unless
and until such SHARES are issued to it or them.
6. Piggyback Registrations.
a. Right to Piggyback. If, after the expiration of one hundred
eighty (180) days after the occurrence of a closing of an initial public sale
for the account of APOLLON of shares of its Common Stock or securities
convertible into or exchangeable for shares of its Common Stock, where the gross
proceeds to APOLLON from such sale (before deduction of any underwriting
commissions, discounts or concessions or expenses of
3
sale) is at least $12,500,000 (a "Public Offering"), APOLLON proposes to
register any of its securities under the Securities Act and the registration
form to be used may be used for the registration of the SHARES (a "Piggyback
Registration"), APOLLON will give prompt written notice to PENN of its
intention to effect such a registration and will use its best efforts to
include in such registration all SHARES with respect to which APOLLON has
received, within five (5) days after the receipt of APOLLON's notice, a
written request from PENN for inclusion therein, which request shall specify
the SHARES intended to be sold or disposed of by PENN and shall state the
intended method of disposition of such SHARES (the "Registrable Securities"),
all to the extent requisite to permit the sale of the Registrable Securities
by PENN (in accordance with the intended method thereof as set forth in such
request). If the securities proposed to be registered by APOLLON include
securities to be distributed by or through a firm of underwriters, then the
Registrable Securities shall also be included in such underwriting.
Notwithstanding anything contained in this Section 6 to the contrary, APOLLON
shall have no obligation to cause Registrable Securities to be registered if
the SHARES are eligible for resale under Rule 144(k) of the Securities Act.
b. Registration Procedures. If and whenever APOLLON is
required by the provisions of Section 6 hereof to use its best efforts to
include the Registrable Securities in a Piggyback Registration, APOLLON will, as
expeditiously as possible,
(1) furnish to PENN such number of copies of a prospectus,
including a preliminary prospectus and any amendments or supplements to the
prospectus, in conformity with the requirements of the Securities Act, and such
other documents, as PENN may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities;
(2) use every reasonable effort to register or qualify the
Registrable Securities covered by the Piggyback Registration under the
securities or blue sky laws of such jurisdictions as APOLLON shall reasonably
determine in its sole discretion, and do any and all other acts as things which
may be
necessary under such securities or blue sky laws to enable PENN to consummate
the public sale or other disposition in such jurisdictions of the Registrable
Securities;
(3) before filing a registration statement with respect to
the Registrable Securities or prospectus or amendments or supplements thereto
with the Securities and Exchange Commission (the "Commission"), furnish PENN and
its counsel with an opportunity to meet with responsible officers of APOLLON for
a "due diligence" review of the filing and with
4
copies of all such documents proposed to be filed which, insofar as they
relate to PENN, shall be subject to the reasonable approval of its counsel;
(4) cause all such Registrable Securities registered as
described herein to be listed on each securities exchange and quoted on each
quotation service on which similar securities issued by APOLLON are then listed
or quoted;
(5) provide a transfer agent and registrar for all
Registrable Securities registered as described herein and a CUSIP number for all
such Registrable Securities; and
(6) comply with all applicable rules and regulations of the
Commission.
c. Expenses. APOLLON shall pay all Registration Expenses (as
defined below) in connection with any registration, qualification or compliance
hereunder, and PENN shall pay all Selling Expenses (as defined below) and other
expenses that are not Registration Expenses relating to the Registrable
Securities. "Registration Expenses" shall mean all expenses, except for Selling
Expenses, incurred by APOLLON in complying with the registration provisions of
this Agreement, including without limitation all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for APOLLON, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration. "Selling Expenses" shall mean
all selling commissions, underwriting fees and stock transfer taxes applicable
to the Registrable Securities and all fees and disbursements of counsel for
PENN.
d. Information from PENN. PENN shall cooperate with APOLLON in
connection with any such registration and furnish to APOLLON such information
regarding it and the distribution proposed by it as APOLLON may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance described herein. PENN shall
represent that such information is true and complete.
e. Marketing Restrictions. If:
(1) PENN requests registration of SHARES under Section 6,
and
(2) the offering proposed to be made is to be an
underwritten public offering, and
(3) the managing underwriter of such public offering
furnishes a written opinion that the total amount of
5
securities to be included in such offering would exceed the maximum amount of
securities (as specified in such opinion) which can be marketed at a price
reasonably related to the then current market value of such securities and
without materially and adversely affecting such offering, then the Company
will include in such registration the amount of securities which, in such
opinion, can be sold, in the following order:
First: If such registration statement shall be with respect to
a primary offering, all of the securities APOLLON proposes to sell; and
then
Second: All of the Common Stock converted from Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C
Convertible Stock and all stock issued upon exercise of Warrants issued by
the Company and requested to be included in such registration, pro rata
among the holders thereof on the basis of the number of shares of such
Common Stock then awarded by such holders; and then
Third: All other securities, including the SHARES, the holders
of which have the right to include such securities in a registration
statement filed by APOLLON pro rata in accordance with the relative
priorities, if any, as shall exist among them.
f. Holdback Agreements. Unless the managing underwriters
otherwise agree, with respect to any underwritten public offering of Common
Stock, PENN agrees not to effect any public sale or distribution (including
sales pursuant to Rule 144) of the SHARES during a period equal to the lesser of
(1) the lock-up period for APOLLON's senior management with respect to such
underwritten offering or (2) one hundred eighty (180) days beginning on the
effective date of such underwritten offering (except as part of such
underwritten registration).
7. Indemnification.
a. In the event of any registration of any of the SHARES under
the Securities Act pursuant to Section 6, APOLLON agrees to indemnify and hold
harmless PENN from and against any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) to which PENN may become subject
(under the Securities Act or otherwise) insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) arise out of, or
are based upon, any claim by a third party asserting any untrue statement of a
material fact contained in a registration statement or omission of a material
fact required to be stated therein, on the effective date thereof, or arise out
of any failure by APOLLON to fulfill any
6
undertaking included in such registration statement, and APOLLON will, as
incurred, reimburse PENN for any legal or other expenses reasonably incurred
in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that APOLLON shall not be liable in
any such case to the extent that such loss, claim, damages or liability
arises out of, or is based upon (i) an untrue statement or omission made in
such registration statement in reliance upon and in conformity with written
information furnished to APOLLON by or on behalf of PENN specifically for use
in preparation of such registration statement or (ii) any untrue statement or
omission in any prospectus that is corrected in any subsequent prospectus
that was delivered to PENN prior to confirmation of the pertinent sale or
sales by PENN.
x. XXXX agrees to indemnify and hold harmless APOLLON, its
directors and officers and each other person, if any, who controls APOLLON
within the meaning of the Securities Act from and against any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) to which
APOLLON may become subject (under the Securities Act or otherwise) insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon any claim by a third party
asserting (i) an untrue statement of a material fact made in such registration
statement or omission to state a material fact required to be stated therein in
reliance upon and in conformity with written information furnished to APOLLON by
or on behalf of PENN specifically for use in preparation of such registration
statement, and PENN will, as incurred, reimburse APOLLON for any legal or other
expenses reasonably incurred in investigating, defending or preparing to defend
any such action, proceeding or claim; provided, however, that PENN shall not be
liable in any such case for any untrue statement or omission in any prospectus
which statement or omission has been corrected, in writing, by PENN and
delivered to APOLLON before confirmation of the sale from which such loss
occurred.
c. Promptly after receipt by any indemnified person of a notice
of a claim or the beginning of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to Sections 7.a or 7.b, such
indemnified person shall notify the indemnifying person in writing of such claim
or of the commencement of such action, and, subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person and the indemnifying person shall have been notified thereof,
the indemnifying person shall be entitled to participate therein, and, to the
extent that it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to the indemnified person. After notice from the
indemnifying person to such
7
indemnified person of the indemnifying person's election to assume the
defense thereof, the indemnifying person shall not be liable to such
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof; provided that if
there exists or shall exist a conflict of interest that would make it
inappropriate in the reasonable judgment of the indemnified person, the
indemnified person shall be entitled to retain its own counsel at the expense
of such indemnifying person, it being understood, however, that the
indemnifying person shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (together with appropriate local counsel)
at any time for all such indemnified persons, which firm shall be designated
in writing by such indemnified persons. The indemnifying person shall not be
liable for any settlement of any such action or proceeding effected without
its written consent, but if settled with its written consent, or if there be
a final judgment for the plaintiff in any such action or proceeding, the
indemnifying person shall indemnify and hold harmless the indemnified person
from and against any loss or liability (to the extent stated above) by reason
of such settlement or judgment.
d. The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified person or any officer, director or controlling person
of such indemnified person and will survive the transfer of the Registrable
Securities.
e. Indemnification similar to that specified in the preceding
subdivisions of this Section (with appropriate modifications) shall be given by
APOLLON and PENN with respect to any required registration or other
qualification of securities under any federal or state law or regulation of any
governmental authority other than the Act.
f. The indemnity agreements contained in this Section shall
remain operative and in full force and effect regardless of (i) any termination
of this Agreement or any underwriting agreement and (ii) the consummation of the
sale of the Registrable Securities.
g. The obligations of APOLLON and PENN under this Section 7
shall be in addition to any liability which APOLLON and PENN may otherwise have
and shall extend, upon the same terms and conditions, to each person, if any,
who controls APOLLON of PENN within the meaning of the Securities Act.
8
8. Participation in Underwritten Registrations. PENN may not
participate in any registration hereunder which is underwritten unless PENN (a)
agrees to sell the Registrable Securities on the basis provided in any
underwriting arrangements approved by the managing underwriter, and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
9. Transfer of Piggyback Registration Rights. The right to sell
Registrable Securities pursuant to a Piggyback Registration described herein may
not be assigned or transferred by PENN.
10. Agreement to be Bound by Procedures, Restrictions, etc. If PENN
shall propose to sell any Registrable Securities pursuant to a registration
statement, it shall notify APOLLON of its intent to do so in accordance with
Section 6, and the provision of such notice to APOLLON shall be deemed to
establish an agreement by PENN to comply with the registration procedures,
marketing restrictions and other provisions contained herein. Such notice shall
be deemed to constitute a representation that any information supplied by PENN
to APOLLON is accurate and complete.
11. Use of Terms. Capitalized terms used but not defined herein
shall have the meanings set forth in LICENSE AGREEMENT I.
12. Miscellaneous.
(a) Survival of Warranties. All representations, warranties,
covenants and agreements made in this Agreement shall survive the execution of
this Agreement.
(b) Assigns. This Agreement shall bind and inure to the benefit
of the parties hereto and their respective successors and assigns.
(c) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the Commonwealth of
Pennsylvania.
(d) Notices. All communications provided for in this Agreement
shall be made in the manner provided in LICENSE AGREEMENT I.
(e) Entire Agreement. This Agreement and LICENSE AGREEMENT I
constitute the entire agreement between the parties regarding the subject matter
and transactions contemplated
9
herein. This Agreement may not be modified or amended except by written
agreement of both parties.
(f) Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the interpretation of
this Agreement.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
THE TRUSTEES OF THE APOLLON, INC.
UNIVERSITY OF PENNSYLVANIA
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------- ----------------------------
Name: Xxxxx X. Xxxxxxxx Name: Xxxxxxx X. Xxxxxxxx, Xx.
------------------- ------------------------
Title: Managing Director, CTT Title: President and CEO
----------------------- ------------------------
10
SCHEDULE TO STOCK PURCHASE AGREEMENT BETWEEN
APOLLON, INC. AND THE TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA
DATED JULY 17, 0000
Xx December 1, 1994, the same date on which Apollon, Inc. (the
"Registrant") and the Trustees of the University of Pennsylvania ("Penn")
entered into the License Agreement relating to nucleic acid constructs ("License
Agreement I"), the Registrant and Penn also entered into a License Agreement
relating to the HIV vpr gene, vpr protein and vpr receptor ("License Agreement
II"). On July 17, 1997, the same date on which the Registrant and Penn entered
into the Stock Purchase Agreement related to License Agreement I to which this
schedule is attached ("Stock Purchase Agreement I"), the Registrant and Penn
also entered into a Stock Purchase Agreement related to License Agreement II
("Stock Purchase Agreement II"). Stock Purchase Agreement I and Stock Purchase
Agreement II are identical except that Stock Purchase Agreement I relates to
License Agreement I and Stock Purchase Agreement II relates to License Agreement
II.
Stock Purchase Agreement II has not been filed as a separate exhibit to the
Registrant's Registration Statement in accordance with Instruction 2 to Item 601
of Regulation S-K.
11
