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EXHIBIT 10.15
NOTE PURCHASE AGREEMENT
(Advantage)
THIS NOTE PURCHASE AGREEMENT, dated as of the date of acceptance set
forth below, by and between LIDAK PHARMACEUTICALS, a California corporation,
with headquarters located at 00000 X. Xxxxxx Xxxxx Xxxx, Xx Xxxxx, Xxxxxxxxxx
00000 (the "Company"), and the undersigned (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 under Regulation D ("Regulation D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act");
WHEREAS, the Buyer wishes to purchase, upon the terms and subject to the
conditions of this Agreement, a convertible note of the Company which will be
convertible into shares of Class A Common Stock, no par value (the "Common
Stock"), of the Company upon the terms and subject to the conditions of such
note, subject to acceptance of this Agreement by the Company; and
WHEREAS, contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Subscription
Agreement (the "Subscription Agreement") providing for the purchase and sale of
shares of Common Stock and the Company and GFL Performance Fund Limited
("Performance") are executing and delivering a Note Purchase Agreement (the
"Performance Note Purchase Agreement") providing for the purchase and sale, upon
the terms and subject to the conditions provided therein, of a convertible
promissory note of the Company in the principal amount of $1,000,000.00;
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
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a. Purchase. The undersigned hereby agrees to purchase from the
Company a convertible promissory note of the Company in the principal amount set
forth on the signature page of this Agreement having the terms and conditions
and in the form attached hereto as Annex I (the "Note") at the price set forth
on the signature page of this Agreement. The purchase price for the Note shall
be as set forth on the signature page hereto and shall be payable in United
States Dollars.
b. Form of Payment. The Buyer shall pay the purchase price for the
Note by delivering good funds in United States Dollars to the escrow agent (the
"Escrow Agent") identified in the Joint Escrow Instructions attached hereto as
Annex II (the "Joint Escrow Instructions"). Such delivery of funds shall be made
against delivery by the Company of the Note duly executed on behalf of the
Company. Promptly following payment by the Buyer to the Escrow Agent of the
purchase price of the Note, the Company shall deliver the Note, duly executed on
behalf of the Company, to the Escrow Agent. By signing this Agreement, the Buyer
and the Company each agrees to all of the terms and conditions of, and becomes a
party to, the Joint Escrow Instructions, all of the provisions of which are
incorporated herein by this reference as if set forth in full.
c. Method of Payment. Payment of the purchase price for the Note
shall be made by wire transfer of funds to:
Citibank, N.A.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA#000000000
For Further Credit to A/C#37179446
for credit to the account of Xxxxx X. Xxxxx Attorney
Escrow Account
Reference: GFL/Lidak Pharmaceuticals
Not later than 4:00 p.m., New York City time, on the date which is five New York
Stock Exchange trading days after the Company shall have accepted this Agreement
and the Subscription Agreement and returned signed counterparts of this
Agreement and the Subscription Agreement to the Buyer, the Buyer shall deposit
with the Escrow Agent the aggregate purchase price for the Note.
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2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees with, the
Company as follows:
a. The Buyer is purchasing the Note for its own account for
investment only and not with a view towards the public sale or distribution
thereof;
b. The Buyer is an "accredited investor" as that term is defined in
Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3);
c. All subsequent offers and sales of the Note and the shares of
Common Stock issuable upon conversion of the Note (the "Shares" and, together
with the Note, the "Securities") by the Buyer shall be made pursuant to
registration of the Shares under the 1933 Act or pursuant to an exemption from
registration;
d. The Buyer understands that the Note is being offered and sold,
and the Shares are being offered, to it in reliance on specific exemptions from
the registration requirements of United States federal and state securities laws
and that the Company is relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Note and to receive an offer of the Shares;
e. The Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Note and the offer of the Shares
which have been requested by the Buyer. The Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and have received
complete and satisfactory answers to any such inquiries. Without limiting the
generality of the foregoing, the Buyer has had the opportunity to obtain and to
review the Company's (1) Annual Report on Form 10-K for the fiscal year ended
September 30, 1994, (2) Quarterly Reports on Form 10-Q for the fiscal quarters
ended December 31, 1994, March 31, 1995 and June 30, 1995, (3) Current Report on
Form 8-K, dated September 27, 1995, (4) the Company's definitive Proxy Statement
for its
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1995 Annual Meeting of Stockholders and (5) the Company's
Registration Statement on Form S-3, dated March 7, 1995, and the prospectus
forming part thereof, dated March 28, 1995, in each case as filed with the SEC.
The Buyer understands that its investment in the Securities involves a high
degree of risk;
f. The Buyer understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities; and
g. This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Buyer and is a valid and binding agreement of the
Buyer enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally;
h. The execution and delivery of this Agreement by the Buyer and the
consummation by the Buyer of the purchase of the Note and the other transactions
contemplated by this Agreement do not and will not conflict with or result in a
breach by the Buyer of any of the terms or provisions of, or constitute a
default under, the certificate of incorporation or by-laws of the Buyer, the
investment policies and investment restrictions of the Buyer, or any indenture,
mortgage, deed of trust or other material agreement or instrument to which the
Buyer is a party or by which it or any of its properties or assets are bound;
and
i. The Buyer is not purchasing the Note for the purpose of covering
any short sales of the Common Stock made by the Buyer with the Shares, and the
Buyer will not engage in hedging transactions (including, without limitation,
short sales) in the Common Stock, other than hedging transactions entered into
prior to the effectiveness of the Registration Statement required to be filed by
the Company pursuant to Section 2(a) of the Registration Rights Agreement, the
form of which is attached to the Subscription Agreement as Annex II (the
"Registration Rights Agreement"), which hedging transactions by the Buyer and
Performance when entered into by the Buyer and Performance in the aggregate at
any time will not relate to Common Stock with a value greater than 12% of the
aggregate initial investment of the Buyer pursuant to this Agreement and the
Subscription Agreement
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and of Performance pursuant to the Performance Note Purchase Agreement.
3. COMPANY REPRESENTATIONS, ETC.
The Company represents and warrants to the Buyer that:
a. Concerning the Shares. The Shares have been duly authorized and,
when issued upon conversion of the Note, will be duly and validly issued, fully
paid and non-assessable and will not subject the holder thereof to personal
liability by reason of being such holder. There are no preemptive rights of any
stockholder of the Company, as such, to acquire the Shares. The Common Stock is
listed for trading on the NASDAQ National Market and no suspension of trading in
the Common Stock is in effect.
b. Note Purchase Agreement; Registration Rights Agreement and Note.
This Agreement and the Registration Rights Agreement have been duly and validly
authorized by the Company, this Agreement has been duly executed and delivered
by the Company and this Agreement is, and the Registration Rights Agreement,
when executed and delivered by the Company, will be, valid and binding
agreements of the Company enforceable in accordance with their respective terms,
subject as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors' rights generally; and the Note has been duly and validly authorized
and, when executed and delivered on behalf of the Company in accordance with
this Agreement, will be a valid and binding obligation of the Company in
accordance with its terms, subject to general principles of equity and to
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors rights generally.
c. Non-contravention. The execution and delivery of this Agreement
and Registration Rights Agreement by the Company and the consummation by the
Company of the issuance of the Securities and the other transactions
contemplated by this Agreement, Registration Rights Agreement and the Note do
not and will not conflict with or result in a breach by the Company of any of
the terms or provisions of, or constitute a default under, the certificate of
incorporation or by-laws of the Company, or any indenture, mortgage, deed of
trust or other material agreement or instrument to which the Company is a party
or by
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which it or any of its properties or assets are bound, or any existing
applicable law, rule or regulation or any applicable decree, judgment or order
of any court, United States federal or state regulatory body, administrative
agency or other governmental body having jurisdiction over the Company or any of
its properties or assets.
d. Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the stockholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities as contemplated by
this Agreement and the Note.
e. Information Provided. The information provided by or on behalf
of the Company to the Buyer and referred to in Section 2(e) of this Agreement
does not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light
of the circumstance under which they are made, not misleading.
f. Absence of Certain Changes. Since September 30, 1994 through the
date hereof, there has been no material adverse change and no material adverse
development in the business, properties, operations, financial condition,
results of operations or prospects of the Company, except as disclosed in the
documents referred to in Section 2(e) hereof.
g. Absence of Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board or body pending
or, to the knowledge of the Company or any of its subsidiaries, threatened
against or affecting the Company or any of its subsidiaries, wherein an
unfavorable decision, ruling or finding would have a material adverse effect on
the properties, business, condition (financial or other), results of operations
or prospects of the Company and its subsidiaries taken as a whole or the
transactions contemplated by this Agreement or any of the documents contemplated
hereby or which would adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations under, this
Agreement or any of such other documents.
h. Absence of Events of Default. No Event of Default, as defined in
the Note, and no event which, with the giving of notice or the passage of time
or both, would become an
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Event of Default (as so defined), in any case which Event of Default would have
a material adverse effect on the business, properties, operations, financial
condition, results of operations or prospects of the Company or a material
adverse effect on the transactions contemplated by this Agreement or the rights
of the Buyer in connection therewith, has occurred and is continuing.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. The Buyer acknowledges that (1) the Note
has not been and is not being registered under the provisions of the 1933 Act
and, except as provided in the Registration Rights Agreement, the Shares have
not been and are not being registered under the 1933 Act, and may not be
transferred unless (A) subsequently registered thereunder or (B) the Buyer shall
have delivered to the Company an opinion of counsel, reasonably satisfactory in
form, scope and substance to the Company, to the effect that the Securities to
be sold or transferred may be sold or transferred pursuant to an exemption from
such registration; (2) any sale of the Securities made in reliance on Rule 144
promulgated under the 1933 Act may be made only in accordance with the terms of
said Rule and further, if said Rule is not applicable, any resale of such
Securities under circumstances in which the seller, or the person through whom
the sale is made, may be deemed to be an underwriter, as that term is used in
the 1933 Act, may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (3) neither the
Company nor any other person is under any obligation to register the Securities
(other than pursuant to the Registration Rights Agreement) under the 1933 Act or
to comply with the terms and conditions of any exemption thereunder.
b. Restrictive Legend. The Buyer acknowledges and agrees that the
Note, and, until such time as the Shares have been registered under the 1933 Act
as contemplated by the Registration Rights Agreement, the certificates for the
Shares, may bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates for the
Shares):
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The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be sold, transferred or assigned in
the absence of an effective registration statement for the securities
under the Securities Act of 1933, as amended, or an opinion of counsel
that registration is not required under said Act.
c. Registration Rights Agreement. The parties hereto agree to enter
into the Registration Rights Agreement, in the form attached to the Subscription
Agreement as Annex II, on or before the Closing Date.
d. Form D. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to the
Buyer promptly after such filing.
e. NASDAQ Notification; Reporting Status. On or before the Closing
Date, the Company shall file a "NASDAQ National Market Notification Form for
Listing of Shares and Notification Pursuant to SEC Rule 10b-17" with respect to
the Shares with the National Association of Securities Dealers, Inc. and shall
provide evidence of such filing to the Buyer. So long as the Buyer beneficially
owns any of the Securities, the Company shall file all reports required to be
filed with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and the Company shall not terminate
its status as an issuer required to file reports under the 1934 Act even if the
1934 Act or the rules and regulations thereunder would permit such termination
for a period of three years after the Closing Date.
f. Use of Proceeds. The Company will use the proceeds from the sale
of the Note for the Company's internal working capital purposes and shall not,
directly or indirectly, use such proceeds for any loan to or investment in any
other corporation, partnership enterprise or other person.
g. Receipt of Escrow Funds. If the closing hereunder shall have
occurred and the Company has not received from the Escrow Agent the Escrow Funds
(as defined in the Joint Escrow Instructions) within three business days after
the Closing Date, the Company shall have the right, exercisable by written
notice
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to the Buyer given at any time prior to receipt of the Escrow Funds by the
Company, to rescind the sale of the Note pursuant to this Agreement and to
cancel the issuance of the Note, whereupon the Buyer shall, as promptly as
practical, return the Note to the Company and the Company shall return to the
Buyer all Escrow Funds, if any, received by the Company after such notice is
given.
5. TRANSFER AGENT INSTRUCTIONS.
Promptly following the delivery by the Buyer of the aggregate purchase
price for the Note in accordance with Section 1(c) hereof, and prior to the
Closing Date, the Company will irrevocably instruct its transfer agent to issue
certificates for the Shares from time to time upon conversion of the Note in
such amounts as specified from time to time by the Company to the transfer
agent, bearing the restrictive legend specified in Section 4(b) of this
Agreement prior to registration of the Shares under the 1933 Act, registered in
the name of the Buyer or its nominee and in such denominations to be specified
by the Buyer in connection with each conversion of the Note. The Company
warrants that no instruction other than such instructions referred to in this
Section 5 and stop transfer instructions to give effect to Section 4(a) hereof
prior to registration of the Shares under the 1933 Act will be given by the
Company to the transfer agent and that the Shares shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement. Nothing in
this Section shall affect in any way the Buyer's obligations and agreement to
comply with all applicable securities laws upon resale of the Securities. If the
Buyer provides the Company with an opinion of counsel that registration of a
resale by the Buyer of any of the Securities in accordance with clause (1)(B) of
Section 4(a) of this Agreement is not required under the 1933 Act, the Company
shall permit the transfer of the Securities and, in the case of the Shares,
promptly instruct the Company's transfer agent to issue one or more share
certificates in such name and in such denominations as specified by the Buyer.
6. NOTE DELIVERY INSTRUCTIONS.
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The Note shall be delivered by the Company to the Escrow Agent pursuant
to Section 1(b) hereof on a delivery against payment basis at the closing.
7. CLOSING DATE.
The date and time of the issuance and sale of the Note (the "Closing
Date") shall be 12:00 noon, New York City time, on the date which is three New
York Stock Exchange trading days after the date on which the Buyer has deposited
the purchase price for the Note with the Escrow Agent in accordance with Section
1(c) hereof, or such other mutually agreed to time. The closing shall occur on
the Closing Date at the offices of the Escrow Agent.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to sell the Note to
the Buyer pursuant to this Agreement is conditioned upon:
a. The receipt and acceptance by the Company of this Agreement as
evidenced by execution of this Agreement by the Company;
b. Delivery by the Buyer to the Escrow Agent of good funds as
payment in full of an amount equal to the purchase price for the Note in
accordance with Section 1(c) hereof;
c. The accuracy in all material respects on the Closing Date of the
representations and warranties of the Buyer contained in this Agreement as if
made on the Closing Date and the performance by the Buyer on or before the
Closing Date of all covenants and agreements of the Buyer required to be
performed on or before such Closing Date; and
d. The closings under the Subscription Agreement and the
Performance Note Purchase Agreement shall have occurred.
9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the Note
is conditioned upon:
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a. Delivery by the Company to the Escrow Agent of the Note in
accordance with this Agreement;
b. The accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained in this Agreement as if
made on the Closing Date and the performance by the Company on or before the
Closing Date of all covenants and agreements of the Company required to be
performed on or before such Closing Date;
c. On the Closing Date, the Buyer having received an opinion of
counsel for the Company, dated the Closing Date, in form, scope and substance
reasonably satisfactory to the Buyer, to the effect set forth in Annex III
attached to the Subscription Agreement; and
d. The closings under the Subscription Agreement and the
Performance Note Purchase Agreement shall have occurred.
10. GOVERNING LAW; MISCELLANEOUS. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of California. A
facsimile transmission of this signed Agreement shall be legal and binding on
all parties hereto. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement. If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This Agreement may
be amended only by an instrument in writing signed by the party to be charged
with enforcement. Any notices required or permitted to be given under the terms
of this Agreement shall be sent by mail or delivered personally or by courier
and shall be effective five days after being placed in the mail, if mailed, or
upon receipt, if delivered personally or by courier, in each case addressed to a
party at such party's address shown in the introductory paragraph or on the
signature page of this Agreement or such other address as a party shall have
provided by notice to the other party in accordance with this provision. The
Buyer shall have the right to assign it rights and obligations under this
Agreement with respect to the purchase of all or any portion of the principal
amount of the Note to one or more of ten funds advised by Genesee Advisors,
provided such assignee, by written instrument duly
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executed by such assignee, assumes all obligations of the Buyer hereunder with
respect to the purchase of the portion of the principal amount of the Note so
assigned and makes the same representations and warranties with respect thereto
as the Buyer makes in this Agreement, whereupon the Buyer shall be relieved of
any further obligations, responsibilities and liabilities with respect to the
purchase of all or the portion of the principal amount of the Note so assigned.
In the case of any such assignment, the Company shall agree in writing with such
assignee to make available to such assignee the benefits of the Registration
Rights Agreement referred to in Section 4(c) hereof, as such agreement is
amended, with respect to the Shares issuable on conversion of the Note or the
portion of the principal amount thereof with respect to which the purchase under
this Agreement has been so assigned.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer or
one of its officers thereunto duly authorized as of the date set forth below.
PRINCIPAL AMOUNT OF NOTE: $6,500,000.00
PURCHASE PRICE: $6,500,000.00
NAME OF BUYER: GFL ADVANTAGE FUND LIMITED
SIGNATURE /s/ X.X. xx Xxxxx
-----------------
Title: President
Date: November 15, 1995
Address: x/x XXXXX
Xxxx Xxxxxxxxx 0
Xxxxxxx, Xxxxxxxxxxx Antilles
This Agreement has been accepted as of the date set forth below.
LIDAK PHARMACEUTICALS
By: /s/Xxxxxxx X. Xxxxxx
--------------------
Title: Vice President/Chief Financial Officer
Date: November 15, 1995
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LIDAK PHARMACEUTICALS
SCHEDULE TO EXHIBIT 10.15
In addition to the Note Purchase Agreement issued to GFL Advantage Fund
Limited referenced as Exhibit 10.15, a Note Purchase Agreement in substantially
the same terms executed between LIDAK Pharmaceuticals and GFL Performance Fund
Limited on November 15, 1995.
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