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EXHIBIT 10.77
COMMON STOCK
PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of October 16, 2000 (the
"Effective Date"), by and between Epimmune Inc., a Delaware corporation with its
principal place of business at 0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx,
Xxxxxxxxxx 00000 (the "Company"), and the purchaser whose name and address is
set forth on the signature page hereof (the "Purchaser").
AGREEMENT
In consideration of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Purchaser hereby agree as follows:
1. AUTHORIZATION OF SALE OF THE SECURITIES. Subject to the terms and
conditions of this Agreement, the Company has authorized the sale and issuance
of (i) up to the Initial Amount (as defined below) of shares of the Company's
Common Stock, par value $0.01 (the "Common Stock"), at the Initial Closing and
(ii) up to an additional number of shares of its Common Stock equal to the
Initial Amount at the Milestone Closing (as defined below). The shares of Common
Stock sold to the Purchaser hereunder shall be referred to herein as the
"Shares."
2. AGREEMENT TO SELL AND PURCHASE THE SHARES.
2.1 SALE OF SHARES.
(a) At the Initial Closing, the Company will sell to the Purchaser, and the
Purchaser will purchase from the Company, 500,000 shares of Common Stock
(the "Initial Amount") at a per share purchase price equal to $4.00 (the
"Purchase Price"), for a total purchase price of $2,000,000.
(b) At the Milestone Closing, the Company will sell to Purchaser, and the
Purchaser will purchase from the Company, an additional 500,000 shares
of Common Stock, as adjusted for any stock dividends, combinations,
splits, recapitalizations or similar transactions (the "Milestone
Shares") at a purchase price equal to the lesser of (i) the closing
price of the Company's Common Stock as reported on The Nasdaq National
Market on the trading day immediately preceding the date of the
Milestone Closing or (ii) two times the Purchase Price (as adjusted for
any stock dividends, combinations, splits, recapitalizations or similar
transactions affecting the Common Stock) (the "Milestone Price");
provided, however, that if the Milestone Closing occurs as a result of
the Purchaser's exercise of its rights under Section 3.2(b) hereof, the
Milestone Price shall not be below $6.00 per share. Notwithstanding
anything herein to the contrary, the Company will not be obligated to
issue Milestone Shares to the extent that they would be equal to 20% or
more of the total number of shares of Common Stock outstanding
immediately prior to such issuance and that, as a result thereof, such
issuance would require approval of the Company's stockholders under the
applicable Rules of the Nasdaq National Market or any other national
securities exchange on which the Company's Common Stock is then traded.
In such event, Purchaser may elect to purchase up to that number of
Milestone Shares equal to 19.99% of the total number of shares of Common
Stock so outstanding at the Milestone Price.
2.2 ACCEPTANCE OF PROPOSED PURCHASE OF SHARES. The Company shall have no
obligation hereunder with respect to the Purchaser until the Company
shall execute and deliver to the Purchaser an executed copy of this
Agreement. If this Agreement is not executed and delivered by the
Company, this Agreement shall be of no further force and effect
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3. CLOSING AND DELIVERY.
3.1 INITIAL CLOSING. The closing of the purchase and sale of the Initial
Amount pursuant to this Agreement (the "Initial Closing") shall be held
on the Effective Date at the offices of Xxxxxx Godward LLP, 0000
Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxxxxx 00000, or on such other date and
place as may be agreed to by the Company and the Purchaser. At or prior
to the Initial Closing, the Purchaser and Company shall execute any
related agreements or other documents required to be executed hereunder,
dated as of the date of the Initial Closing (the "Initial Closing
Date").
3.2 MILESTONE CLOSING.
(a) The closing of the purchase and sale of the Milestone Shares pursuant to
this Agreement (the "Milestone Closing") shall be held on the third
business day immediately following the earlier of the following dates
and notice from Company to Purchaser of the occurrence thereof (the
"Milestone Closing Date").
(i) the date on or before January 1, 2004 that the Company or one of
its affiliates or strategic partners (A) has determined in good
faith, and demonstrated to the reasonable satisfaction of
Purchaser, that Phase II trials were successfully concluded and
that Phase III clinical trials in the United States should be
pursed and (B) has enrolled the first subject in such Phase III
clinical trials, and demonstrated same to the reasonable
satisfaction of Purchaser, with respect to both DNA and
polypeptide HIV vaccines; or
(ii) at the Company's election, the date upon which both of the
following conditions have simultaneously occurred: (A) the 30 day
average of the closing price of the Company's Common Stock on The
Nasdaq National Market (or other comparable stock exchange or
over the counter market on which the Company's Common Stock is
then traded) has equaled or exceeded, and continues to equal or
exceed, a price equal to four times the Purchase Price (as
adjusted for any stock dividends, combinations, splits,
recapitalizations or similar transactions affecting the Common
Stock) and (B) a registration statement filed by the Company
under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the issuance of the Milestone Shares has
become, and continues to be, effective. The Milestone Closing
shall be held on the Milestone Closing Date at the offices of the
Company's legal counsel.
(b) Notwithstanding anything herein to the contrary:
(i) Purchaser may postpone from time-to-time any condition precedent
to the Milestone Closing; and/or
(ii) Purchaser may waive any condition precedent(s) to the Milestone
Closing, in which event the Milestone Closing Date shall be
accelerated to the third business day following notice of such
waiver thereof from Purchaser to Company.
(c) An event described in Sections 3.2(a) and 3.2(b) above may be referred
to hereinafter as an "Acceleration Event."
3.3 ADDITIONAL CLOSINGS. In the event that Pharmacia exercises its right of
first refusal in connection with the transactions contemplated by this
Agreement, the Company proposes to enter the same form of purchase
agreement as this Agreement with such partner (an "Additional
Agreement") to sell shares of Common Stock to such partner at a purchase
price equal to the Purchase Price, but in no event less than, the
closing price of the Company's Common Stock as reported on The Nasdaq
National Market on the trading day immediately preceding the effective
date of the Additional Agreement at an additional closing to be held no
later than 30 days after the Effective Date.
3.4 DELIVERY OF THE SHARES AT THE CLOSINGS.
(a) At the Initial Closing, the Company shall deliver to the Purchaser stock
certificates registered in the name of the Purchaser, and/or in such
nominee name(s) as designated in writing by the Purchaser, representing
the Initial Amount against payment of the purchase price for such
Initial Amount.
(b) At the Milestone Closing, the Company shall deliver to the Purchaser
stock certificates registered in the name of the Purchaser, and/or in
such nominee name(s) as designated by the Purchaser in writing,
representing the
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Milestone Shares against payment of the purchase price for such
Milestone Shares; provided, however, that the Company shall not be
obligated to issue to the Purchaser any of the Milestone Shares, or may
postpone the date of the Milestone Closing, if any Restricted
Transaction (as defined in Section 11.1 below) occurs during the 30-day
period immediately prior to the date of Milestone Closing.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
Except as set forth on the Schedule of Exceptions attached hereto as Exhibit A,
the Company hereby represents and warrants as of the date hereof to, and
covenants with, the Purchaser as follows:
4.1 ORGANIZATION AND GOOD STANDING. The Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws
of the State of Delaware, has full corporate power and authority to own
or lease its properties and conduct its business as presently conducted
(as defined below), and is duly qualified as a foreign corporation and
in good standing in all jurisdictions in which the character of the
property owned or leased or the nature of the business transacted by it
makes qualification necessary (except where the failure to be so
qualified would not have a material adverse effect on the business,
properties, financial condition or results or operations of the
Company).
4.2 CORPORATE POWER; AUTHORIZATION. The Company has all requisite corporate
power, and has taken all requisite corporate action, to execute and
deliver this Agreement, sell and issue the Shares and carry out and
perform all of its obligations under this Agreement. This Agreement
constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting the enforcement of creditors' rights
generally, (ii) as limited by equitable principles generally, including
any specific performance, and (iii) as to those provisions of Section 0
relating to indemnity or contribution. The execution and delivery of
this Agreement does not, and the performance of this Agreement and the
compliance with the provisions hereof and the issuance, sale and
delivery of the Shares by the Company will not, conflict with, or result
in a breach or violation of the terms, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of
any lien pursuant to the terms of, the Certificate of Incorporation or
Bylaws of the Company or any statute, law, rule or regulation applicable
to the Company or any state or federal order, judgment or decree
applicable to the Company or any indenture, mortgage, lease or other
material agreement or instrument to which the Company or any of its
properties is subject, where such conflict, breach or violation would
have a material adverse effect on the Company.
4.3 ISSUANCE AND DELIVERY OF THE SHARES. The Shares, when issued and paid
for in compliance with the provisions of this Agreement, will be validly
issued, fully paid and nonassessable and will not be issued in violation
of any preemptive right.
4.4 SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has filed in a timely
manner all documents that the Company was required to file with the
United States Securities and Exchange Commission (the "SEC") under
Sections 13, 14(a) and 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), during the twelve (12) months preceding
the date of this Agreement. As of their respective filing dates (or, if
amended, when amended), all documents filed by the Company with the SEC
(the "SEC Documents") complied in all material respects with the
requirements of the Exchange Act. None of the SEC Documents as of their
respective dates contained any untrue statement of material fact or
omitted to state a material fact required (under the federal securities
laws in connection with the sale of the Shares) to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents (the "Financial
Statements") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of
the SEC with respect thereto. The Financial Statements have been
prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the financial position of the
Company at the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal, recurring adjustments).
4.5 INTELLECTUAL PROPERTY. The Company owns or possesses adequate rights to
use all material patents, patent rights, inventions, trade secrets and
know-how that are necessary for the conduct of its business as presently
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conducted and as described in the SEC Documents. Except as set forth in
the SEC Documents, the Company has not received any written notice of,
nor has any knowledge of, any infringement of or conflict with asserted
rights of others with respect to any patent, patent right, invention,
trade secret or know-how that, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
material adverse effect on the business, properties, financial condition
or results or operations of the Company.
4.6 CAPITALIZATION. The capitalization of the Company is described in the
Company's SEC Documents. The Company has not issued any capital stock
since June 30, 2000 other than pursuant to employee benefit plans
disclosed in the Company's SEC Documents. The outstanding shares of
capital stock of the Company have been duly and validly issued and are
fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, and were not issued in violation of
any preemptive rights or similar rights to subscribe for or purchase
securities. Except as set forth in or contemplated by the Company's SEC
Documents or as otherwise described in this Agreement, there are no
outstanding rights (including, without limitation, preemptive rights),
warrants or options to acquire, or instruments convertible into or
exchangeable for, any unissued shares of capital stock or other equity
interest in the Company, or any contract, commitment, agreement,
understanding or arrangement of any kind to which the Company is a party
and relating to the issuance or sale of any capital stock of the
Company, any such convertible or exchangeable securities or any such
rights, warrants or options.
4.7 LITIGATION. There is no pending or, to the Company's knowledge,
threatened, action, suit or other proceeding to which the Company is a
party or to which its property or assets are subject that is not
disclosed in the SEC Documents that is required to be so disclosed.
4.8 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with,
any federal, state, or local governmental authority on the part of the
Company is required in connection with the consummation of the
transactions contemplated by this Agreement except for compliance with
the securities and blue sky laws in the states and other jurisdictions
in which shares of Common Stock are offered and/or sold, which
compliance will be effected in accordance with such laws.
4.9 NO MATERIAL ADVERSE CHANGE. Except as otherwise disclosed herein, since
June 30, 2000, there have not been any changes in the assets,
liabilities, financial condition or operations of the Company from that
reflected in the Company's Form 10-Q for the period ended June 30, 2000
except changes in the ordinary course of business or which have not
been, either individually or in the aggregate, materially adverse.
4.10 SECURITIES VIOLATIONS. The Company represents and warrants that none of
its directors or officers is or has within the last five years, been the
subject of, or a defendant in: (i) an enforcement action or prosecution
(or settlement in lieu thereof) brought by a governmental authority
relating to a violation of securities, tax, fiduciary or criminal laws,
or (ii) a civil action (or settlement in lieu thereof) brought by
shareholders or investors in a common investment vehicle for violation
of duties owed to the shareholders or investors.
4.11 NASDAQ. The Company's Common Stock is listed on The Nasdaq National
Market and the Company shall use its commercially reasonable efforts to
maintain such listing.
4.12 NO CONFLICTS OF INTEREST REPRESENTATION. The Company represents,
warrants and covenants that, to the best of its knowledge, no officer or
employee of the Purchaser has or will receive, directly or indirectly, a
personal interest in the Company or its property or anything of
substantial economic value for his or her private benefit from the
Company, or anyone acting on its behalf, in connection with the
investment made by the Purchaser pursuant to this Agreement.
4.13 OPINIONS OF COMPANY'S COUNSEL. Company shall cause its legal counsel to
deliver to Purchaser concurrently with the Initial Closing, a legal
opinion in form and substance acceptable to Purchaser.
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5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
5.1 The Purchaser represents and warrants to and covenants with the Company
that:
(a) The Purchaser, taking into account the personnel and resources it can
practically bring to bear on the purchase of the Shares contemplated
hereby, either alone or together with the advice of the Purchaser's
representative, is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to investments
in shares presenting an investment decision like that involved in the
purchase of the Shares, including investments in securities issued by
the Company, and has requested, received, reviewed and considered,
either alone or with the Purchaser's representative, all information the
Purchaser deems relevant (including the SEC Documents) in making an
informed decision to purchase the Shares.
(b) The Purchaser is acquiring the Shares being acquired by the Purchaser
pursuant to this Agreement in the ordinary course of its business and
for its own account for investment only and with no present intention of
distributing any of such Shares or any arrangement or understanding with
any other persons regarding the distribution of such Shares, except in
compliance with Section 5.1(c).
(c) The Purchaser will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the securities
purchased hereunder except in compliance with the Securities Act,
applicable blue sky laws, and the rules and regulations promulgated
thereunder.
(d) The Purchaser has, in connection with its decision to purchase the
Securities, relied with respect to the Company and its affairs solely
upon the SEC Documents and the other information delivered to the
Purchaser by the Company as described in Sections 4.4 and 5.1(a) above
and the representations, warranties and covenants of the Company
contained herein.
(e) The Purchaser is an "accredited investor" within the meaning of Rule 501
of Regulation D promulgated under the Securities Act or a Qualified
Institutional Buyer within the meaning of Rule 144A promulgated under
the Securities Act.
(f) The Purchaser has full right, power, authority and capacity to enter
into this Agreement and to consummate the transactions contemplated
hereby and has taken all necessary action to authorize the execution,
delivery and performance of this Agreement. Upon the execution and
delivery of this Agreement by the Purchaser, this Agreement shall
constitute a valid and binding obligation of the Purchaser, enforceable
in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting the enforcement of creditors' rights generally,
(ii) as limited by equitable principles generally, including any
specific performance, and (iii) as to those provisions of Section 0
relating to indemnity or contribution.
5.2 The Purchaser represents and warrants to and covenants with the Company
that it has not engaged and will not engage in any short sales of the
Company's Common Stock for so long as such Purchaser holds such Shares.
5.3 The Purchaser understands that nothing in the SEC Documents, this
Agreement or any other materials presented to the Purchaser in
connection with the purchase and sale of the Shares constitutes legal,
tax or investment advice and that independent legal counsel has reviewed
these documents and materials on the Purchaser's behalf. The Purchaser
has consulted such legal, tax and investment advisors as it, in its sole
discretion, has deemed necessary or appropriate in connection with its
purchase of the Shares.
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein and in the certificates for the securities delivered
pursuant hereto shall survive the execution of this Agreement, the delivery to
the Purchaser of the Shares being purchased and the payment therefor.
7. CONDITIONS TO COMPANY'S OBLIGATIONS AT CLOSING. The Company's
obligation to complete the sale and issuance of the Shares and deliver the
Shares to the Purchaser at the Initial Closing or the
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Milestone Closing, as applicable, shall be subject to the following conditions
to the extent not waived by the Company:
7.1 RECEIPT OF PAYMENT. The Company shall have received payment, by check or
wire transfer of immediately available funds, in the full amount of (a)
the Purchase Price for the Initial Shares being purchased by the
Purchaser at the Initial Closing, or (b) the Milestone Price for the
Milestone Shares being purchased by the Purchaser at the Milestone
Closing.
7.2 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties made by the Purchaser in Section 5 hereof shall be true and
correct when made at the Initial Closing or the Milestone Closing, as
applicable, and shall be true and correct on the Initial Closing Date or
the Milestone Closing Date, as applicable. The Purchaser shall have
performed and complied with all obligations and conditions required to
be performed and completed with by the Purchaser under this Agreement on
or prior to the Initial Closing Date or the Milestone Closing Date, as
applicable. At the Milestone Closing, if requested by Company, the
Purchaser shall deliver to Company a duly executed certificate to the
effect of the foregoing, as of the Milestone Closing Date.
8. CONDITIONS TO PURCHASERS' OBLIGATIONS AT CLOSING. The Purchaser's
obligation to accept delivery of the Shares and to pay for the Shares at the
Initial Closing or the Milestone Closing, as applicable shall be subject to the
following conditions to the extent not waived by such Purchaser:
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties made by the Company in Section 4 hereof shall be true and
correct when made and shall be true and correct on the Initial Closing
Date or the Milestone Closing Date, as applicable; provided, however,
that such representations and warranties shall be deemed modified as
required to reflect changes occurring between the Initial Closing Date
and the Milestone Closing Date as described in any documents that the
Company files with the SEC under the Securities Act or the Exchange Act
during such period or in any update to the Company's Schedule of
Exceptions provided by the Company to the Purchaser prior to the
Milestone Closing Date. At the Milestone Closing, if requested by
Purchaser, the Company shall deliver to Purchaser a duly executed
certificate to the effect of the foregoing, as of the Milestone Closing
Date.
8.2 OPINIONS OF COMPANY'S COUNSEL . Company shall deliver the opinion of
Company's legal counsel as described in Section 4.13 hereof.
9. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS.
9.1 RESTRICTIONS ON TRANSFER.
(a) Purchaser agrees not to make any disposition of all or any portion of
the Shares unless and until:
(i) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration
statement; or
(ii) (A) The transferee has agreed in writing to be bound by the terms
of this Agreement, (B) Purchaser shall have notified the Company
of the proposed disposition and shall have furnished the Company
with a detailed statement of the circumstances surrounding the
proposed disposition, and (C) if reasonably requested by the
Company, Purchaser shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares
under the Securities Act.
(b) Notwithstanding the provisions of Section 9.1(a) above, no such
registration statement or opinion of counsel shall be necessary for a
transfer by a Purchaser which is (A) a partnership to its partners or
former partners in accordance with partnership interests, (B) a limited
liability company to its members or former members in accordance with
their interest in the limited liability company, or (C) to the
Purchaser's family member or trust for the benefit of an individual
Purchaser, provided the transferee will be subject to the terms of this
Agreement to the same extent as if he were an original Purchaser
hereunder.
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(c) Each certificate representing Shares shall (unless registered prior to
the issuance of such Shares or otherwise permitted by the provisions of
the Agreement) be stamped or otherwise imprinted with a legend
substantially similar to the following (in addition to any legend
required under applicable state securities laws, as provided elsewhere
in this Agreement or any other applicable agreement or instrument):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO
THE SECURITIES UNDER SAID ACT OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED."
The Company shall be obligated to reissue promptly unlegended
certificates at the request of any holder thereof if such holder shall have
obtained an opinion of counsel (which counsel may be counsel to the Company)
reasonably acceptable to the Company to the effect that the securities proposed
to be disposed of may lawfully be so disposed of (with no need for compliance
with Rule 144) without registration, qualification or legend.
Any legend endorsed on an instrument pursuant to applicable state
securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
9.2 "PIGGY-BACK" REGISTRATIONS. In the event that shares of the Company's
equity securities held by any selling stockholder are included in a
registration statement under the Securities Act for purposes of the
Company's Qualified Offering (as defined below), the Company shall
notify all holders of the Shares (individually, a "Holder" and
collectively the "Holders") in writing at least 30 days prior to the
filing of such registration statement and will afford each such Holder
an opportunity to include in such registration statement all or part of
the Shares held by such Holder on a pro rata basis with the securities
of such other selling stockholders to be included in the registration
statement. Each Holder desiring to include in any such registration
statement all or any part of the Shares held by it shall, within 20 days
after the above-described notice from the Company, so notify the Company
in writing. For purposes of this Agreement, "Qualified Offering" shall
mean the Company's first firm underwritten public offering of its Common
Stock registered under the Securities Act after the Effective Date in
which the Company receives gross proceeds of at least $15 million.
9.3 UNDERWRITING. The right of any such Holder to be included in a
registration pursuant to Section 0 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such
Holder's Shares in the underwriting to the extent provided herein. All
Holders proposing to distribute their Shares through such underwriting
shall enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the
Company. Notwithstanding any other provision of this Agreement, if the
underwriter determines in good faith that marketing factors require a
limitation of the number of shares to be underwritten, the number of
shares that may be included in the underwriting shall be allocated,
first, to the Company; and second, to any stockholder of the Company
(including the Holders) on a pro rata basis based on the total number of
Shares held by the Holders and securities held by such other
stockholders; provided that no such reduction shall reduce the
securities being offered by the Company for its own account to be
included in the registration and underwriting.
9.4 RIGHT TO TERMINATE REGISTRATION. The Company shall have the right to
terminate or withdraw any registration initiated by it under Section 0
prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration. The
expenses of such withdrawn registration shall be borne by the Company.
9.5 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted to a
Holder under this Section 9 shall terminate and be of no further force
and effect upon the date that all Shares held by and issuable to such
Holder (and its affiliates) may be sold under Rule 144 during any 90-day
period.
9.6 FURNISHING INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 0 that
the selling Holders shall furnish to the Company such information
regarding
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themselves, the Shares held by them and the intended method of
disposition of such securities as shall be required to effect the
registration of their Shares.
9.7 INDEMNIFICATION. In the event any Shares are included in a registration
statement under Section 0:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, the partners, officers, directors and legal
counsel of each Holder, any underwriter (as defined in the Securities
Act) for such Holder and each person, if any, who controls such Holder
or underwriter within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages, expenses (including attorney
fees) or liabilities (joint or several) to which they may become subject
under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation") by the
Company: (i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto; (ii) the omission or alleged omission
to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading; or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any state
securities law in connection with the offering covered by such
registration statement; and the Company will reimburse each such Holder,
partner, officer or director, underwriter or controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided however, that the indemnity agreement contained in this
Section (a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company, which consent shall not be
unreasonably withheld, nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that
it arises out of or is based upon a Violation which occurs in reliance
upon and in conformity with written information furnished expressly for
use in connection with such registration by such Holder, partner,
officer, director, underwriter or controlling person of such Holder.
(b) To the extent permitted by law, each Holder will, if Shares held by such
Holder are included in the securities as to which such registration,
qualifications or compliance is being effected, indemnify and hold
harmless the Company, each of its directors, its officers, and legal
counsel and each person, if any, who controls the Company within the
meaning of the Securities Act, any underwriter and any other holder
selling securities under such registration statement or any of such
other holder's partners, directors or officers or any person who
controls such holder, against any losses, claims, damages, expenses
(including attorney fees), or liabilities (joint or several) to which
the Company or any such director, officer, counsel, controlling person,
underwriter or other such holder, or partner, director, officer or
controlling person of such other holder may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by
such Holder under an instrument duly executed by such Holder and stated
to be specifically for use in connection with such registration; and
each such Holder will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, counsel,
controlling person, underwriter or other Holder, or partner, officer,
director or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or
action if it is judicially determined that there was such a Violation;
provided, however, that the indemnity agreement contained in this
Section (b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be
unreasonably withheld; provided further, that in no event shall any
indemnity under this Section (b) exceed the proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section 0 of
notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is
to be made against any indemnifying party under this Section 0, deliver
to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and,
to the extent
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the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with
the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its
ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 0, but the
omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 0.
(d) If the indemnification provided for in this Section 0 is held by a court
of competent jurisdiction to be unavailable to an indemnified party with
respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified
party thereunder, shall to the extent permitted by applicable law
contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on
the one hand and of the indemnified party on the other in connection
with the Violation(s) that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party
shall be determined by a court of law by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission; provided,
that in no event shall any contribution by a Holder hereunder exceed the
proceeds from the offering received by such Holder.
(e) The obligations of the Company and Holders under this Section 0 shall
survive completion of any offering of Shares in a registration
statement. No indemnifying party, in the defense of any such claim or
litigation, shall, except with the consent of each indemnified party,
consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
9.8 "MARKET STAND-OFF" AGREEMENT. If requested by the Company or the
representative of the underwriters of Common Stock (or other securities)
of the Company, each Holder shall not sell or otherwise transfer or
dispose of any Common Stock (or other securities) of the Company held by
such Holder (other than those included in the registration) for a period
specified by the representative of the underwriters, in any case not to
exceed one hundred eighty (180) days following any registered offering
of the Common Stock of the Company, provided that the Company, all
officers and directors of the Company and any other selling stockholders
enter into similar agreements (subject to customary exceptions).
9.9 The obligations described in this Section (e) shall not apply to a
registration relating solely to employee benefit plans on Form S-8 or
similar forms that may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or
similar forms that may be promulgated in the future. The Company may
impose stop-transfer instructions with respect to the shares of Common
Stock (or other securities) subject to the foregoing restriction until
the end of said periods.
9.10 RULE 144 REPORTING. With a view to making available to the Holders the
benefits of certain rules and regulations of the SEC which may permit
the sale of the Shares to the public without registration, the Company
agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act;
(b) File with the SEC, in a timely manner, all reports and other documents
required of the Company under the Exchange Act; and
(c) So long as a Holder owns any Shares, furnish to such Holder forthwith
upon request: a written statement by the
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Company as to its compliance with the reporting requirements of said
Rule 144 of the Securities Act, and of the Exchange Act (at any time
after it has become subject to such reporting requirements); a copy of
the most recent annual or quarterly report of the Company; and such
other reports and documents as a Holder may reasonably request in
availing itself of any rule or regulation of the SEC allowing it to sell
any such securities without registration.
(d) Notwithstanding anything herein to the contrary, Company undertakes the
obligations set forth above in this Section 9.9 for a period of not less
than two (2) years following the Initial Closing Date with respect to
the Shares purchased by Purchaser on the Initial Closing Date and for a
period of not less than two (2) years following the Milestone Closing
Date with respect to the Shares purchased by Purchaser at the Milestone
Closing, or until such earlier date upon which such Shares became
registered under the Securities Act.
10. RIGHT OF FIRST REFUSAL.
10.1 SUBSEQUENT OFFERINGS. The Purchaser shall have a right of first refusal
to purchase its pro rata share of all Equity Securities (as defined
below), that the Company may, from time to time, propose to sell and
issue after the date of this Agreement, other than the Equity Securities
excluded by Section 10.7 hereof. The Purchaser's pro rata share is equal
to the ratio of (a) the number of shares of Common Stock purchased
pursuant to this Agreement, then held by the Purchaser or any transferee
pursuant to Section 0, to (b) the total number of shares of the
Company's outstanding Common Stock (including all shares of Common Stock
issued or issuable upon the conversion of any Equity Securities or upon
exercise of any outstanding warrants or options) immediately prior to
the issuance of the Equity Securities. The term "Equity Securities"
shall mean (i) any Common Stock, Preferred Stock or other security of
the Company, (ii) any security convertible, with or without
consideration, into any Common Stock, Preferred Stock or other security
(including any option, warrant or other right to purchase such a
convertible security), (iii) any security carrying any option, warrant
or right to subscribe to or purchase any Common Stock, Preferred Stock
or other security, or (iv) any such option, warrant or right.
10.2 EXERCISE OF RIGHT OF FIRST REFUSAL. If the Company proposes to issue any
Equity Securities in a transaction subject to Section 10.1, it shall
give the Purchaser written notice of its intention, describing the
Equity Securities, the price and the terms and conditions upon which the
Company proposes to issue the same (an "Offering Notice"). The Purchaser
shall have five (5) business days from the giving of such Offering
Notice to agree to purchase its pro rata share of the Equity Securities
for the price and upon the terms and conditions specified in the notice
by giving written notice to the Company and stating therein the quantity
of Equity Securities to be purchased. Notwithstanding the foregoing, the
Company shall not be required to offer or sell such Equity Securities to
the Purchaser if doing so would cause the Company to be in violation of
applicable federal securities laws by virtue of such offer or sale;
provided, however, the Company agrees to use its reasonable best efforts
to take whatever action may be necessary or appropriate to comply with
applicable federal securities laws in connection with such offer or
sale. Notwithstanding anything herein to the contrary, such action by
Company shall include, but not be limited to, providing Purchaser with
any additional information provided to the prospective investors in the
applicable transaction so long as Purchaser has executed an agreement
not to disclose such information in a form and substance as reasonably
requested by the Company.
10.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If the Purchaser fails
to exercise in full the right of first refusal, the Company shall have
one hundred twenty (120) days thereafter to sell the Equity Securities
in respect of which the Purchaser's right was not exercised, at a price
and upon general terms and conditions no more favorable to the
purchasers thereof in any material respect than specified in the
Company's Offering Notice to the Purchaser. If the Company has not sold
such Equity Securities within one hundred twenty (120) days of the
Offering Notice, the Company shall not thereafter issue or sell any
Equity Securities, without first offering such securities to the
Purchaser in the manner provided in this Section 10.
10.4 TERMINATION OF RIGHT OF FIRST REFUSAL. The right of first refusal
established by this Section 10 shall terminate on the first to occur of
(a) the third anniversary of the Effective Date, or (b) the first date
on which the Purchaser holds less than 50% of the total number of Shares
purchased under this Agreement.
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10.5 NO TRANSFER OF RIGHT OF FIRST REFUSAL. The right of first refusal
established by this Section (d) may not be assigned or transferred,
except as otherwise provided in Section 0.
10.6 EXCLUDED SECURITIES. The right of first refusal established by Section
(d) shall have no application to any of the following Equity Securities:
(a) shares of Common Stock (and/or options, warrants or other Common Stock
purchase rights issued pursuant to such options, warrants or other
rights) issued or to be issued to employees, officers or directors of,
or consultants or advisors to the Company or any subsidiary, pursuant to
stock purchase or stock option plans or other compensatory arrangements
that are approved by the Board of Directors;
(b) stock issued pursuant to any rights, agreements, options or warrants
outstanding as of the date of this Agreement, and stock issued pursuant
to any rights, agreements, options or warrants granted after the date of
this Agreement provided that the right of first refusal established by
this Section (d) did not apply to the initial sale or grant by the
Company of such rights, agreements, options or warrants;
(c) any Equity Securities issued for consideration other than cash pursuant
to a merger, consolidation, acquisition or similar business combination
whereby the stockholders of the Company will own more than 50% of the
voting power of the combined entity;
(d) shares of Common Stock issued in connection with any stock split, stock
dividend or recapitalization by the Company;
(e) any Equity Securities issued in connection with an underwritten public
offering;
(f) shares of Common Stock issued upon conversion of any Equity Securities;
(g) shares of Common Stock issued pursuant to Section 3.2 or Section 3.3 of
this Agreement;
(h) any Equity Securities issued pursuant to any equipment leasing
arrangement; and
(i) shares of the Company's Common Stock or Preferred Stock issued in
connection with strategic transactions involving the Company and any
third party, including (i) joint ventures, manufacturing, marketing,
corporate partnering or distribution arrangements, or (ii) technology
transfer, research or development arrangements; provided that such
strategic transactions and the issuance of shares therein, has been
approved by the Company's Board of Directors.
10.7 CONDITION TO PURCHASER'S RIGHT OF FIRST REFUSAL. Notwithstanding any
other provisions in this Agreement, the Purchaser or any Holder shall
not be entitled to exercise the right of first refusal contained in this
Section (d) if such Purchaser or Holder has entered into any Restricted
Transaction between the date of any Offering Notice and the closing of
the transaction described in such Offering Notice.
11. ADDITIONAL COVENANTS.
11.1 RESTRICTED TRANSACTIONS. The Purchaser shall not, and shall not
authorize, instruct, facilitate or permit any of its affiliates or any
other person or entity, to engage in any of the following (a "Restricted
Transaction") during any period described in Section (b) or (i): (a)
offers, pledges, sells, contracts to sell, sells any option or contract
to purchase, purchases any option or contract to sell, grants any
option, right or warrant for the sale of, or other disposition of or
transfer of any shares of the Company's Common Stock or any securities
convertible into or exchangeable or exercisable for Common Stock (except
pursuant to Section 9.1), or (b) enters into any swap or any other
agreement or any transaction that transfers, in whole or in part
directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction is to be settled by
delivery of common stock or other securities, in cash or otherwise.
11.2 EQUITABLE PRICING. The Company agrees that any HIV vaccines developed by
the Company, when available for sale, shall be made available to
consumers in the Caribbean at prices and terms no less favorable than
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afforded consumers in any other third world country.
11.3 USE OF PROCEEDS. The Company will use the proceeds it receives from
Purchaser at the Initial Closing solely for the development of DNA and
polypeptide HIV vaccines. In connection with such development, the
Company's current development plan is to commence Phase I U.S. trials on
or before June 30, 2002, and to complete same on or before June 30,
2003. The Company agrees to take commercially reasonable efforts to meet
such development objectives. The Company shall use its internal
accounting system as consistently applied to other development programs
at the Company to account for how the proceeds are spent. For purposes
of this Section 11.3, any funding or capital the Company may receive
from the NIH, collaborative partners or others, specifically to support
its HIV vaccine program, shall not be deemed to offset the Company's
expenditures on the HIV program.
(a) If the Company materially breaches this Section 0 at any time, the
Purchaser may require the Company, to the extent the Company may
lawfully do so, to redeem any or all of the Initial Shares; provided,
however, that if the Company abandons the development of HIV vaccines
based upon a good faith determination by the Company's board of
directors that such development is no longer viable or financially
practical (a "Reconsideration"), such Reconsideration shall not be
deemed to be a material breach of this Section 0.
(b) In the event of a Reconsideration, the Purchaser may require the
Company, to the extent the Company may lawfully do so, to redeem the
number of Initial Shares equal to the balance of the proceeds received
at the Initial Closing that the Company has not spent towards the
development of HIV vaccines (determined in accordance with this Section
11.3) divided by the Purchase Price (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like with
respect to the Common Stock).
(c) To exercise the redemption rights set forth in this Section 11.3, the
Purchaser shall request a redemption from the Company in writing, such
request to specifically detail the reasons for the requested redemption
(a "Redemption Request"). The Company shall effect the requested
redemption within 60 days of receiving a Redemption Request (the
"Redemption Date") by paying in cash for each of the Initial Shares to
be redeemed an amount equal to the Purchase Price (the number of Shares
and Purchase Price to be adjusted for any stock dividends, combinations,
splits, recapitalizations and the like with respect to the Common
Stock). If the Company does not have sufficient funds legally available
to redeem all Initial Shares to be redeemed by the Redemption Date,
then, to the extent possible, the Company shall redeem those shares for
which funds are legally available and shall redeem the remaining shares
to be redeemed as soon as sufficient funds are legally available.
11.4 DELIVERY OF FINANCIAL STATEMENTS, BUDGETS. So long as the Purchaser
(with its affiliates) holds at least 50% of the Initial Shares issued
pursuant to this Agreement, the Company shall deliver to the Purchaser
copies of its Forms 10-K and 10-Q as filed with the SEC, and other
public announcements and releases made by the Company. In addition, so
long as the Purchaser (with its affiliates) holds at least 50% of the
Initial Shares issued pursuant to this Agreement, the Company shall
deliver to Purchaser an annual budget and operating plan for the
development of HIV vaccines, which shall be confidential information of
the Company and may not be disclosed by the Purchaser to any third party
used by the Purchaser for any purpose other than for purposes of this
Agreement.
11.5 INSPECTION RIGHTS. Only with respect to the development of HIV vaccines
and so long as the Purchaser holds at least 50% of the Initial Shares
issued pursuant to this Agreement, the Purchaser shall have the right to
visit any of the properties of the Company or any of its subsidiaries,
and to discuss the affairs, finances and accounts of the Company or any
of its subsidiaries with its officers, and to review such information as
is reasonably requested all at such times and as often as may be
reasonably requested; provided, however, that the Company shall not be
obligated under this Section 11.4 with respect to a competitor of the
Company or with respect to information which the Company's Board of
Directors determines in good faith is confidential and should not,
therefore, be disclosed.
12. BROKER'S FEE. The Company and the Purchaser hereby represent that,
there are no brokers or finders entitled to compensation in connection with the
sale of the Shares, and shall indemnify each other for any such fees for which
they are responsible.
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13. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing, shall be sent by confirmed facsimile or mailed by
first-class registered or certified airmail, or nationally recognized overnight
express courier, postage prepaid, and shall be deemed given when so sent in the
case of facsimile transmission, or when so received in the case of mail or
courier, and addressed as follows:
if to the Company, to:
(a) Epimmune Inc.
0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: President and Chief Executive Officer
with a copy so mailed to:
Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxx, Esq.
or to such other person at such other place as the Company shall designate to
the Purchasers in writing; and
(c) if to the Purchaser, at the address as set forth at the end of this
Agreement, or at such other address or addresses as may have been
furnished to the Company in writing, with a copy so mailed to: Xxxxxx X.
Xxxxxxxxx, Esq., Venture Counsel, Inc., 0000 Xx Xxxxx Xxxxxxx Xxxxx,
Xxxxx 000, Xxx Xxxxx, XX 00000.
14. MISCELLANEOUS.
14.1 WAIVERS AND AMENDMENTS. Neither this Agreement nor any provision hereof
may be changed, waived, discharged, terminated, modified or amended
except upon the written consent of the Company and the Purchaser.
14.2 HEADINGS. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed
to be part of this Agreement.
14.3 SEVERABILITY. In case any provision contained in this Agreement should
be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
14.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to
contracts entered into and performed entirely in California by
California residents, without regard to conflicts of law principles.
14.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument, and
shall become effective when one or more counterparts have been signed by
each party hereto and delivered to the other parties.
14.6 ASSIGNMENT. This Agreement, including the right to use the Restricted
Proceeds to develop DNA and polypeptide HIV vaccines and the right to
sell the Milestone Shares (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like) shall be freely
assignable by the Company in the event of the sale of all or any part of
the Company's business or a change of control of the Company approved by
its Board of Directors.
14.7 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of
the parties
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hereto.
14.8 ENTIRE AGREEMENT. This Agreement and other documents delivered pursuant
hereto, including the exhibits, constitute the full and entire
understanding and agreement between the parties with regard to the
subjects hereof and thereof.
14.9 PAYMENT OF FEES AND EXPENSES. Each of the Company and the Purchaser
shall bear its own expenses and legal fees incurred on its behalf with
respect to this Agreement and the transactions contemplated hereby. If
any action at law or in equity is necessary to enforce or interpret the
terms of this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
14.10 SPECIAL NOTICE OF CERTAIN ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment the number of Shares or the Purchase Price
pursuant to Section 2.1(b), 3.2(a)(2), 11.3(b), 11.3(c) and/or 14.6, the
Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to the
Purchaser a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon the written request, at
any time, of the Purchaser, furnish or cause to be furnished to
Purchaser a like certificate setting forth: (i) such adjustments and
readjustments; and (ii) the Purchase Price at the time in effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
EPIMMUNE INC.
By: /s/ Xxxxxx De Vaere
----------------------------------------
Name: Xxxxxx De Vaere
--------------------------------------
Title: Vice President, Finance & CFO
--------------------------------------
PURCHASER
/s/ Xxxxx Xxxxxx
---------------------------------------------
Xxxxx Xxxxxx
Seaview, Chancery Xxxx
Xxxxxx Church
Barbados, West Indies
Facsimile: (000) 000-0000
COMMON STOCK PURCHASE AGREEMENT
16
EPIMMUNE INC.
COMMON STOCK
PURCHASE AGREEMENT
OCTOBER 16, 2000
17
TABLE OF CONTENTS
1. AUTHORIZATION OF SALE OF THE SECURITIES................................ 1
2. AGREEMENT TO SELL AND PURCHASE THE SHARES.............................. 1
2.1 Sale of Shares.................................................. 1
2.2 Acceptance of Proposed Purchase of Shares....................... 2
3. CLOSING AND DELIVERY................................................... 2
3.1 Initial Closing................................................. 2
3.2 Milestone Closing............................................... 2
3.3 Additional Closings............................................. 3
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY............... 3
4.1 Organization and Good Standing.................................. 3
4.2 Corporate Power; Authorization.................................. 3
4.3 Issuance and Delivery of the Shares............................. 4
4.4 SEC Documents; Financial Statements............................. 4
4.5 Intellectual Property........................................... 4
4.6 Capitalization.................................................. 5
4.7 Litigation...................................................... 5
4.8 Governmental Consents........................................... 5
4.9 No Material Adverse Change...................................... 5
4.10 Securities Violations........................................... 5
4.11 Nasdaq.......................................................... 5
4.12 No Conflicts of Interest Representation......................... 6
4.13 Opinions of Company's Counsel................................... 6
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER............. 6
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS................. 7
7. CONDITIONS TO COMPANY'S OBLIGATIONS AT CLOSING......................... 7
7.1 Receipt of Payment.............................................. 7
7.2 Representations, Warranties and Covenants....................... 7
8. CONDITIONS TO PURCHASERS' OBLIGATIONS AT CLOSING....................... 8
8.1 Representations, Warranties and Covenants....................... 8
8.2 Opinions of Company's Counsel................................... 8
9. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS.......................... 8
9.1 Restrictions on Transfer........................................ 8
9.2 "Piggy-Back" Registrations...................................... 9
9.3 Underwriting.................................................... 9
9.4 Right to Terminate Registration................................. 10
9.5 Termination of Registration Rights.............................. 10
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9.6 Furnishing Information.......................................... 10
9.7 Indemnification................................................. 10
9.8 "Market Stand-Off" Agreement.................................... 12
9.9 Rule 144 Reporting.............................................. 12
10. RIGHT OF FIRST REFUSAL................................................. 13
10.1 Subsequent Offerings............................................ 13
10.2 Exercise of Right of First Refusal.............................. 13
10.3 Issuance of Equity Securities to Other Persons.................. 14
10.4 Termination of Right of First Refusal........................... 14
10.5 No Transfer of Right of First Refusal........................... 14
10.6 Excluded Securities............................................. 14
10.7 Condition to Purchaser's Right of First Refusal................. 15
11. ADDITIONAL COVENANTS................................................... 15
11.1 Restricted Transactions......................................... 15
11.2 Equitable Pricing............................................... 15
11.3 Use of Proceeds................................................. 15
11.4 Delivery of Financial Statements, Budgets....................... 16
11.5 Inspection Rights............................................... 16
12. BROKER'S FEE........................................................... 17
13. NOTICES................................................................ 17
14. MISCELLANEOUS.......................................................... 17
14.1 Waivers and Amendments.......................................... 17
14.2 Headings........................................................ 17
14.3 Severability.................................................... 17
14.4 Governing Law................................................... 18
14.5 Counterparts.................................................... 18
14.6 Assignment...................................................... 18
14.7 Successors and Assigns.......................................... 18
14.8 Entire Agreement................................................ 18
14.9 Payment of Fees and Expenses.................................... 18
14.10 Special Notice of Certain Adjustments........................... 18
ii
