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EXHIBIT 10.3
UNITS PURCHASE AGREEMENT
BY AND BETWEEN
CYPRESS BIOSCIENCE, INC.
AND
THE PURCHASER NAMED HEREIN
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1. AUTHORIZATION OF SALE OF THE UNITS...................................................................... 1
2. AGREEMENT TO SELL AND PURCHASE THE UNITS................................................................ 1
3. CLOSING DATE; DELIVERY.................................................................................. 2
3.1 Closing........................................................................................ 2
3.2 Delivery Payments.............................................................................. 2
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COMPANY................................................................................................. 3
4.1 Organization and Qualification................................................................. 3
4.2 Due Execution, Delivery and Performance of the Agreements...................................... 3
4.3 Issuance, Sale and Delivery of the Units....................................................... 4
4.4 Additional Information......................................................................... 4
4.5 No Material Change............................................................................. 4
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
PURCHASER............................................................................................... 5
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.................................................. 7
7. REGISTRATION OF THE SECURITIES; COMPLIANCE WITH THE
SECURITIES ACT.......................................................................................... 7
7.1 Restrictions on Transfer....................................................................... 7
7.2 Registration Procedures and Expenses........................................................... 8
7.3 Transfer of Securities After Registration...................................................... 9
7.4 Indemnification................................................................................ 9
7.5 Termination of Conditions and Obligations...................................................... 11
7.6 Information Available.......................................................................... 11
8. BROKER'S FEE............................................................................................ 12
9. NOTICES................................................................................................. 12
10. CHANGES................................................................................................. 13
11. HEADINGS................................................................................................ 13
12. SEVERABILITY............................................................................................ 13
13. GOVERNING LAW........................................................................................... 13
14. COUNTERPARTS............................................................................................ 13
15. REMEDIES................................................................................................ 13
APPENDICES
Appendix I Stock and Warrant Certificates and Funds Transfer Questionnaire
Appendix II Registration Statement Questionnaire
Appendix III Investor Qualification Questionnaires (Individual/Partnership,
Trust or Entity)
Appendix IV Certificate of Subsequent Sale
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UNITS PURCHASE AGREEMENT
This UNITS PURCHASE AGREEMENT ("AGREEMENT") is made as of September
___, 1996 between CYPRESS BIOSCIENCE, INC., a Delaware corporation with its
principal place of business at 0000 Xxxxxxxxx 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").
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 agree as follows:
1. AUTHORIZATION OF SALE OF THE UNITS. Subject to the terms and
conditions of this Agreement, the Company has authorized the issuance and sale
in one or more closings of up to one million five hundred thousand (1,500,000)
units of the Company (each a "Unit" and, collectively, the "Units") at a price
of $4.00 per Unit. Each Unit consists of two shares of Common Stock of the
Company (each a "Share" and collectively, the "Shares") and one Common Stock
Purchase Warrant (each a "Warrant" and, collectively, the "Warrants"), entitling
the holder to purchase one share of Common Stock of the Company at a purchase
price of $2.00, at any time until 5:00 P.M. Eastern Time, on October 1, 2001.
The Warrants will be issued pursuant to that certain Warrant Agreement dated as
of September 18, 1996 between the Company and American Stock Transfer & Trust
Company (the "Warrant Agent"), a copy of which is attached hereto as Exhibit A
(the "Warrant Agreement"), and will be evidenced by warrant certificates in the
form attached hereto as Exhibit B (the "Warrant Certificates"). The shares of
Common Stock issuable upon exercise of the Warrants are referred to herein as
the "Warrant Shares." The Units, the Shares, the Warrants and the Warrant Shares
are sometimes collectively referred to herein as the "Securities."
2. AGREEMENT TO SELL AND PURCHASE THE UNITS. At the Closing (as defined
in Section 3), the Company will sell to the Purchaser, and the Purchaser will
buy from the Company, upon the terms and conditions hereinafter set forth, the
number of Units (at the purchase price) shown below:
NUMBER OF UNITS TO BE PRICE PER UNIT IN AGGREGATE
PURCHASED DOLLARS PURCHASE PRICE
--------------------- ----------------- --------------
$4.00
The Company proposes to enter into this same form of purchase agreement with
certain other investors (the "Other Purchasers") and expects to complete sales
of
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Units to them. The Purchaser and the Other Purchasers are hereinafter sometimes
collectively referred to as the "Purchasers," and this Agreement and the
agreements executed by the Other Purchasers are hereinafter sometimes
collectively referred to as the "Agreements."
3. CLOSING DATE; DELIVERY.
3.1 CLOSING. The completion of the purchase and sale of the Units to be
issued pursuant to this Agreement (the "Initial Closing") shall occur as soon as
practicable after the date on which the Company receives subscriptions for Units
in the Minimum Amount, as such term is defined in the Company's Private
Placement Memorandum dated September 3, 1996 (the "Memorandum"), and the date on
which the Merger Agreement, as defined in the Company's Supplement to Private
Placement Memorandum dated September 18, 1996, is executed, or on such other
date or dates as may be agreed to by the Company and the Purchaser, but in any
event no later than October 15, 1996. The Company may from time to time schedule
additional closings (the "Additional Closings") until the Company has sold the
Maximum Amount, as such term is defined in the Memorandum, but in any event any
and all Additional Closings shall have occurred no later than October 31, 1996.
The Initial Closing and any and all Additional Closings are referred to herein
as the "Closing."
All funds received by the Company for the purchase of Units will be
held by the Company in an account in the Company's name (the "Escrow Account")
established for such purpose by the Company at Union Bank of California until
the earlier of the date on which the Company and PRP execute a definitive merger
agreement (the "Merger Agreement") and October 15, 1996. Upon receipt of the
Minimum Amount and the execution of the Merger Agreement by the Company and PRP
on or before October 15, 1996, the Closing will occur and all funds will be
released to the Company from the Escrow Account. In the event that the Company
and PRP have not executed the Merger Agreement on or before October 15, 1996,
all funds held in the Escrow Account will be promptly refunded to subscribers
for Units.
3.2 DELIVERY PAYMENTS. At the Closing, or as soon as practicable
following the Closing, the Company shall deliver or cause to be delivered to the
Purchaser or the Purchaser's custodian bank, in accordance with the Purchaser's
delivery instructions, one or more stock and warrant certificates registered in
the name of the Purchaser, or in such nominee name(s) as designated by the
Purchaser, representing the number of Shares and Warrants comprising the Units
set forth in Section 2 above, dated as of the date of Closing. The Company's
obligation to complete the purchase and sale of the Units and deliver such stock
and warrant certificates to the Purchaser at the Closing shall be subject to the
following conditions, any one or more of which may be waived by the Company:
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(a) receipt by the Company of a signed and completed Agreement, (b) receipt by
the Company, either contemporaneously with the receipt of a signed and completed
Agreement or prior to Closing, of immediately available funds, by check or wire
transfer, in the full amount of the purchase price for the Units being purchased
hereunder; (c) receipt by the Company of a completed Stock and Warrant
Certificates and Funds Transfer Questionnaire attached hereto as Appendix I; (d)
receipt by the Company of a completed Registration Statement Questionnaire
attached hereto as Appendix II; (e) receipt by the Company of a signed and dated
Investor Qualification Questionnaire attached hereto as Appendix III; (f) the
accuracy of the representations and warranties made by the Purchaser herein as
of the Closing; and (g) the fulfillment of those undertakings of the Purchaser
to be fulfilled prior to the Closing. The Purchaser's obligation to accept
delivery of such stock and warrant certificates and to pay for the Units
evidenced thereby shall be subject to the following conditions: (i) the accuracy
of the representations and warranties made by the Company herein as of the
Closing; and (ii) the fulfillment in all material respects of those undertakings
of the Company to be fulfilled prior to the Closing. The Purchaser's obligations
hereunder are expressly conditioned on the sale and issuance by the Company of
the Units equal to the Minimum Amount and, so long as the Minimum Amount is
issued and sold, are not conditioned on the purchase by any or all of the Other
Purchasers of the Units, if any, that such Other Purchasers have agreed to
purchase from the Company.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company hereby represents and warrants to, and covenants with, the Purchaser as
follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to conduct its
business as currently conducted.
4.2 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS. The
Company's execution, delivery and performance of the Agreements (a) have been
duly authorized under Delaware law by all requisite corporate action by the
Company, and (b) will not violate any law or the Certificate of Incorporation or
Bylaws of the Company or any provision of any material indenture, mortgage,
agreement, contract or other material instrument to which the Company or any
subsidiary is a party or by which the Company or any subsidiary or any of their
respective properties or assets is bound as of the date hereof, or result in a
breach of or constitute (upon notice or lapse of time or both) a default under
any such indenture, mortgage, agreement, contract or other material instrument
or result in the creation or imposition of any lien, security interest,
mortgage, pledge, charge or other encumbrance, of any material nature
whatsoever, upon any
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properties or assets of the Company or any subsidiary. Upon their execution and
delivery, and assuming the valid execution thereof by the respective Purchasers,
the Agreements will constitute valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' and contracting parties' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Company in
Section 7.4 hereof may be legally unenforceable.
4.3 ISSUANCE, SALE AND DELIVERY OF THE UNITS. When issued and paid for,
the Securities to be sold hereunder by the Company will be validly issued and
outstanding, fully paid and non-assessable.
4.4 ADDITIONAL INFORMATION. The Company represents and warrants that
the information contained in the following documents, which the Company has
furnished to the Purchaser, or will furnish if requested by the Purchaser prior
to the Closing, is or will be true and correct in all material respects as of
their respective final dates:
(a) the Company's Annual Report on Form 10-K/A for the fiscal
year ended December 31, 1995 (without exhibits);
(b) the Company's Current Report on Form 8-K dated as of
February 2, 1996;
(c) the Company's Quarterly Reports on Form 10-Q for the
periods ended March 31 and June 30, 1996;
(d) the Company's Current Report on Form 8-K dated as of March
8, 1996;
(e) the Company's Proxy Statement dated March 15, 1996 for the
Company's 1996 Annual Meeting of Stockholders;
(f) the Company's Current Report on Form 8-K dated April 1,
1996; and
(g) the Memorandum.
4.5 NO MATERIAL CHANGE. As of the date hereof, except as may be
reflected in the Memorandum, there has been no material adverse change in the
financial condition or results of operations of the Company since June 30, 1996.
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5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
The Purchaser hereby represents, warrants and covenants with the
Company as follows:
5.1 The Purchaser represents and warrants to, and covenants with, the
Company that: (i) the Purchaser, taking into account the personnel and resources
it can practically bring to bear on the purchase of the Units contemplated
hereby, is knowledgeable, sophisticated and experienced in making, and is
qualified to make, decisions with respect to investments in securities
presenting an investment decision like that involved in the purchase of the
Units, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Units; (ii) the Purchaser is
acquiring the number of Units set forth in Section 2 above in the ordinary
course of its business and for its own account for investment (as defined for
purposes of the Xxxx- Xxxxx-Xxxxxx Antitrust Improvement Act of 1976 and the
regulations thereunder) only and with no present intention of distributing any
of such Units or any arrangement or understanding with any other persons
regarding the distribution of such Units (this representation and warranty not
limiting the Purchaser's right to sell in the future); (iii) 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 Units except in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations promulgated
thereunder; (iv) the Purchaser has completed or caused to be completed the Stock
and Warrant Certificates and Funds Transfer Questionnaire and the Registration
Statement Questionnaire, both attached hereto as Appendix I and Appendix II,
respectively, for use in preparation of the registration statement to be filed
by the Company pursuant to Section 7.2 (the "Registration Statement") and the
answers thereto are true and correct to the best knowledge of the Purchaser as
of the date hereof and will be true and correct as of the effective date of the
Registration Statement (provided that the Purchaser shall be entitled to update
such information by providing notice thereof to the Company prior to the
effective date of the Registration Statement); (v) the Purchaser has, in
connection with its decision to purchase the number of Units set forth in
Section 2 above, relied solely upon the information delivered to the Purchaser
as described in Section 4.4 above and the representations and warranties of the
Company contained herein; and (vi) the Purchaser is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act and has completed or caused to be completed the Investor Qualification
Questionnaire attached hereto as Appendix III.
5.2 The Purchaser hereby covenants with the Company as follows: (i)
prior to the effective date of the Registration Statement (the "Effective
Date"), the Purchaser shall
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not transfer any Securities except in compliance with the Securities Act and the
rules and regulations promulgated thereunder, and any transferee of Securities
prior to the Effective Date shall agree in advance in a writing acceptable to
the Company to be subject to all of the provision of this Agreement with respect
to the Securities; and (ii) commencing as of the Effective Date, the Purchaser
shall not make any sale of the Securities without effectively causing the
prospectus delivery requirements under the Securities Act to be satisfied,
except sales otherwise made in compliance with the Securities Act and the rules
and regulations thereunder. In the event the Purchaser sells Securities by
delivery of a prospectus, the Purchaser acknowledges and agrees that on and
after the Effective Date, such Securities are not transferable on the books of
the Company unless the certificate submitted to the transfer agent evidencing
the Securities is accompanied by a separate certificate: (i) in the form of
Appendix IV hereto, (ii) executed by the Purchaser or by an officer of, or other
authorized person designated by, the Purchaser, and (iii) to the effect that (A)
the Securities have been sold in accordance with the Registration Statement and
(B) the requirement of delivering a current prospectus has been satisfied. The
Purchaser acknowledges that there may occasionally be times when the Company
must suspend the use of the prospectus forming a part of the Registration
Statement until such time as an amendment to the Registration Statement has been
filed by the Company and declared effective by the Securities and Exchange
Commission (the "Commission"), or until such time as the Company has filed an
appropriate report with the Commission pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), which suspension shall endure for such
period as deemed necessary by the Company upon advice of counsel. The Purchaser
hereby covenants that it will not sell any Securities pursuant to said
prospectus during the period commencing at the time at which the Company gives
the Purchaser notice of the suspension of the use of said prospectus and ending
at the time the Company gives the Purchaser notice that the Purchaser may
thereafter effect sales pursuant to said prospectus. In the event the Company
shall give any such notice, the Registration Period, as defined in Section
7.2(c), shall be extended by the number of days during the period from and
including the date of the giving of such notice hereunder to and including the
date when Purchaser shall then be entitled to sell the Securities pursuant to
said prospectus. The Purchaser further covenants to notify the Company promptly
of the sale of all of its Securities.
5.3 The Purchaser further represents and warrants to, and covenants
with, the Company that (i) 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, and (ii) upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of the Purchaser enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
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contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
the indemnification agreements of the Purchaser in Section 7.4 hereof may be
legally unenforceable.
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 Securities being purchased and the payment therefor.
7. REGISTRATION OF THE SECURITIES; COMPLIANCE WITH THE
SECURITIES ACT.
7.1 RESTRICTIONS ON TRANSFER. The Purchaser understands that:
(a) each Warrant and each certificate representing the
Securities shall (unless 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 or as provided elsewhere in the Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR CERTAIN STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE COMPANY SHALL
HAVE RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL
FOR THE COMPANY, THAT SUCH AN EXEMPTION FROM REGISTRATION UNDER THE ACT
IS AVAILABLE.
(b) the Company shall be obligated to reissue promptly
unlegended certificates at the request of any holder thereof if the 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 without registration,
qualification or legend.
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(c) 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.
7.2 REGISTRATION PROCEDURES AND EXPENSES. The Company shall:
(a) within twenty-five (25) days after the release to the
Company of the funds held in the Escrow Account, prepare and file with the
Commission a Registration Statement in order to register with the Commission the
sale of Securities by the Purchaser from time to time through underwriters,
agents or otherwise, in negotiated or market transactions or through the
automated quotation system of the Nasdaq or the facilities of any national
securities exchange on which the Company's common stock is then traded or in
privately negotiated transactions;
(b) use commercially reasonable efforts, subject to the
receipt of necessary information from the Purchasers, to cause the Registration
Statement to become effective promptly after the Registration Statement is filed
by the Company,
(c) use commercially reasonable efforts to prepare and file
with the Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection therewith as may be necessary to
keep the Registration Statement effective for a period of three years following
the Closing (the "Registration Period") or, if earlier, until all of the
Securities have been sold pursuant thereto (provided that the Company shall not
be deemed to have used its best efforts to keep the Registration Statement
effective if it voluntarily takes any action that would result in Purchaser not
being able to sell any of its Securities pursuant to the Registration Statement
unless (i) such action is the redemption of the Warrants by the Company; (ii)
such action is required under applicable law or taken by the Company in good
faith and for valid business reasons, including without limitation the
acquisition or divestiture of assets and (iii) the Company promptly complies
with the requirements of this Section 7.2(c), if applicable);
(d) furnish to the Purchaser with respect to the Securities
registered under the Registration Statement such number of copies of
prospectuses and preliminary prospectuses in conformity with the requirements of
the Securities Act, in order to facilitate the public sale or other disposition
of all or any of the Securities by the Purchaser; provided, however, that the
obligation of the Company to deliver copies of prospectuses or preliminary
prospectuses to the Purchaser shall be subject to the receipt by the Company of
reasonable assurances from the Purchaser that the Purchaser will comply with the
applicable provisions of the Securities Act and of such other securities or
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blue sky laws as may be applicable in connection with any use of such
prospectuses or preliminary prospectuses;
(e) file documents required of the Company for normal blue sky
clearance in states specified in writing by the Purchaser; provided, however,
that the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented;
(f) bear all expenses in connection with the procedures in
paragraphs (a) through (e) of this Section 7.1 and the registration of the
Securities pursuant to the Registration Statement; and
(g) file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the
SEC thereunder (or, if the Company is not required to file such reports, it
will, upon the request of Purchaser, make publicly available other information
so long as necessary to permit sales pursuant to Rule 144 under the Securities
Act) and it will take such further action as the Purchaser may reasonably
request, all to the extent required from time to time to enable the Purchaser to
sell its Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of the Purchaser, the
Company shall deliver to Purchaser a written statement as to whether it has
complied with such requirements.
7.3 TRANSFER OF SECURITIES AFTER REGISTRATION. The Purchaser agrees
that it will not effect any disposition of the Securities or its right to
purchase the Securities that would constitute a sale within the meaning of the
Securities Act except as contemplated in Section 5(b) and that it will promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding the Purchaser or its plan of distribution.
7.4 INDEMNIFICATION.
(a) the term "Selling Shareholder" shall mean the Purchaser
and, if the Purchaser is an institution, the Purchaser's directors or trustees,
officers and employees and each person who controls the Purchaser within the
meaning of the Securities Act;
(b) the term "Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in or relating to the
Registration Statement referred to in Section 7.2; and
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(c) the term "untrue statement" shall include any untrue
statement or alleged untrue statement, or any omission or alleged omission to
state in the Registration Statement a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
The Company agrees to indemnify and hold harmless each Selling
Shareholder from and against any losses, claims, damages or liabilities to which
such Selling Shareholder 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 untrue
statement of a material fact contained in the Registration Statement on the
effective date thereof, or arise out of any failure by the Company to fulfill
any undertaking included in the Registration Statement, and the Company will
reimburse such Selling Shareholder for any reasonable legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim; provided, however, that the Company shall not be
liable in any such case to the extent that such loss, claim, damage or liability
arises out of, or is based upon, an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Selling Shareholder specifically for use
in preparation of the Registration Statement, or the failure of such Selling
Shareholder to comply with the covenants and agreements contained in Section
5(b) or 7.3 hereof respecting sale of the Securities or any statement or
omission in any prospectus that is corrected in any subsequent prospectus that
was delivered to the Purchaser prior to the pertinent sale or sales by the
Purchaser.
The Purchaser agrees to indemnify and hold harmless the Company (and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act, each officer of the Company who signs the Registration
Statement and each director of the Company) from and against any losses, claims,
damages or liabilities to which the Company (or any such officer, director or
controlling person) 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 failure to
comply with the covenants and agreements contained in Section 5(b) or 7.3 hereof
respecting sale of the Securities, or any untrue statement of a material fact
contained in the Registration Statement on the Effective Date if such untrue
statement was made in reliance upon and in conformity with written information
furnished by or on behalf of the Purchaser specifically for use in preparation
of the Registration Statement, and the Purchaser will reimburse the Company (or
such officer, director or controlling person), as the case may be, for any legal
or other expenses reasonably incurred in investigating, defending or preparing
to defend any such action, proceeding or claim. In no event shall the liability
of the Purchaser hereunder be greater in amount than the dollar
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amount of the proceeds received by the Purchaser upon the sale of Securities
giving rise to such indemnification obligation.
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 this Section 7.4, 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 such
indemnifying person shall have been notified thereof, such indemnifying person
shall be entitled to participate therein, and, to the extent it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person. After notice from the indemnifying person to such
indemnified person of its election to assume the defense thereof, such
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, however, that if there exists or shall exist a
conflict of interest that would make it inappropriate, in the opinion of counsel
to the indemnified person, for the same counsel to represent both the
indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel at
the expense of such indemnifying person; provided, however, that no indemnifying
person shall be responsible for the fees and expenses of more than one separate
counsel for all indemnified parties.
7.5 TERMINATION OF CONDITIONS AND OBLIGATIONS. Notwithstanding anything
stated herein to the contrary, the conditions precedent imposed by Section 5 or
this Section 7 upon the transferability of the Securities shall cease and
terminate as to any particular number of the Securities when such Securities
shall have been effectively registered under the Securities Act and sold or
otherwise disposed of in accordance with the intended method of disposition set
forth in the Registration Statement covering such Securities or at such time as
an opinion of counsel satisfactory to the Company shall have been rendered to
the effect that such conditions are not necessary in order to comply with the
Securities Act.
7.6 INFORMATION AVAILABLE. So long as the Registration Statement is
effective covering the resale of Securities owned by the Purchaser, the Company
will furnish to the Purchaser:
(a) as soon as practicable after available (but, in the case
of the Company's Annual Report to Stockholders, within 120 days after the end of
each fiscal year of the Company), one copy of (i) its Annual Report to
Stockholders (which Annual Report shall contain financial statements audited in
accordance with generally accepted
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accounting principles by a national firm of certified public accountants), (ii)
its Annual Report on Form 10-K, (iii) its quarterly reports on Form 10-Q, and
(iv) a full copy of the particular Registration Statement covering the
Securities (the foregoing, in each case, excluding exhibits);
(b) upon the reasonable request of the Purchaser, all exhibits
excluded by the parenthetical to paragraph (a) of this Section 7.6; and
(c) upon the reasonable request of the Purchaser, an adequate
number of copies of the prospectuses to supply to any other party requiring such
prospectuses.
8. BROKER'S FEE.
(a) Each of the parties hereto hereby represents that, except
as provided in Section 8(b), on the basis of any actions and agreements by it,
there are no brokers or finders entitled to compensation in connection with the
sale of the Units to the Purchaser; and
(b) The Company shall pay to Xxxxx and Company Incorporated
and certain other parties (each a "Broker") a fee in an amount of up to eight
percent (8%) of the total sales price of any Units sold by such Broker on behalf
of the Company.
9. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing, shall be sent by 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 by
facsimile or mailed and shall be delivered as follows:
(a) if to the Company, to:
Cypress Bioscience, Inc.
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
with a copy so mailed to:
12.
15
Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxx, Esq.
or to such other person at such other place as the Company
shall designate to the Purchaser in writing; and
(b) if to the Purchaser, at its 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.
10. CHANGES. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Purchaser.
11. 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.
12. 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.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware as applied to contracts
entered into and performed entirely in Delaware by Delaware residents.
14. 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.
15. REMEDIES. In addition to being entitled to exercise all rights and
remedies provided herein or granted by law for any breach by the Company
hereunder, the Purchaser will be entitled to specific performance of its rights
under this Agreement. In that regard, the Company acknowledges and agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate.
13.
16
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.
CYPRESS BIOSCIENCE, INC. PURCHASER
By_______________________________ By:_________________________________
Name:____________________________ Name:_______________________________
Title:___________________________ Title:_______________________________
Address:_____________________________
_____________________________
_____________________________
_____________________________
Telephone:___________________________
Telecopier:__________________________
14.
17
SUMMARY INSTRUCTION SHEET FOR PURCHASER
(TO BE READ IN CONJUNCTION WITH THE ENTIRE
PURCHASE AGREEMENT WHICH FOLLOWS)
1. Complete the following items on the Purchase Agreement:
1.1 (a) Page 1 - Fill in the number of Units to be Purchased
(b) Page 14 - Signature
(i) Name of Purchaser (Individual or Institution)
(ii) Name of Individual representing Purchaser (if an
Institution)
(iii) Title of Individual representing Purchaser (if
an Institution)
(iv) Signature of Individual Purchaser or Individual
representing Purchaser
1.2 Appendices I and II - Stock and Warrant Certificates and Funds
Transfer Questionnaire and the Registration Statement
Questionnaire, respectively:
Provide the information requested by the Stock and
Warrant Certificates and Funds Transfer Questionnaire
and the Registration Statement Questionnaire.
1.3 Appendix III - Investor Qualification Questionnaire:
Provide the information requested by the Investor
Qualification Questionnaire. Ensure that you execute
the signature page of the Investor Qualification
Questionnaire.
1.4 Return the properly completed and signed Purchase Agreement
including properly completed Appendix I, Appendix II and
Appendix III to:
Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
T: (000) 000-0000
F: (000) 000-0000
PLEASE RETURN THE COMPLETED AND SIGNED AGREEMENT BY FACSIMILE
WITH THE ORIGINAL FOLLOWING BY OVERNIGHT COURIER.
18
2. Upon the resale of the Securities by the Purchasers
after the Registration Statement covering the
Securities is effective, as described in the Purchase
Agreement, the Purchaser:
(c) must deliver a current prospectus, and
annual and quarterly reports of the Company
(Forms 10-K and 10-Q) to the buyer
(prospectuses and annual and quarterly
reports must be obtained from the Company at
the Purchaser's request); and
(d) must send a letter in the form of Appendix
IV to the Company so that the Securities may
be properly transferred.
19
APPENDIX I
APPENDIX II
CYPRESS BIOSCIENCE, INC.
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement,
please provide us with the following information:
1. Please state your or your organization's name exactly as it should
appear in the Registration Statement:__________________________________________.
2. Please provide the following information, as of ______________,
1996:
(1) (2)
Number of Shares
and Warrants, if any,
which you will own
after completion of
Number of Shares sale of Shares and
and Warrants which Warrants you wish
you wish to be to be included in the
included in the Registration Statement
Registration
Statement
3. Have you or your organization had any position, office or other
material relationship within the past three years with the Company or its
affiliates other than as disclosed in the Proxy Statement prepared in connection
with the Company's 1996 Annual Meeting of Stockholders?
/ / Yes / / No
If yes, please indicate the nature of any such relationships below:
_______________________________________________________________________________
_______________________________________________________________________________
20
APPENDIX III
CYPRESS BIOSCIENCE, INC.
INVESTOR QUALIFICATION QUESTIONNAIRE
[INDIVIDUALS]
In connection with a proposed offer to the undersigned of securities of
Cypress Bioscience, Inc., a Delaware corporation (the "Company"), the
undersigned makes the following representations on which the Company shall be
entitled to rely:
1. The undersigned makes the following representations regarding his or
her net worth and/or income, AND HAS CHECKED THE APPLICABLE REPRESENTATION:
( ) a. The undersigned has a net worth, either individually or
upon a joint basis with the undersigned's spouse, of at
least $1,000,000.
( ) b. The undersigned has had an individual income in excess
of $200,000 for each of the two most recent years, or
joint income with the undersigned's spouse in excess of
$300,000 in each of those years, and has a reasonable
expectation of reaching the same income level in the
current year.
( ) c. The undersigned is a director or executive officer of
the Company.
( ) d. The undersigned cannot make any of the representations
set forth above.
In addition, the undersigned represents as follows:
2. My full name and primary business address and phone number are
______________________________________________________________
3. I am a resident of the state of ___________________________.
21
4. I am acquiring the securities solely for my own account and not
directly or indirectly for the account of any other person whatsoever, for
investment and not with a view to, or for sale in connection with, any
distribution of the securities. I do not have any contract, undertaking or
arrangement with any person to sell, transfer or grant a participation to any
person with respect to the securities.
____________________________________
(Signature)
____________________________________
(Date)
22
APPENDIX III
CYPRESS BIOSCIENCE, INC.
INVESTOR QUALIFICATION QUESTIONNAIRE
[PARTNERSHIP, TRUST OR OTHER ENTITY]
In connection with a proposed offer to the undersigned of securities of
Cypress Bioscience, Inc., a Delaware corporation (the "Company"), the
undersigned makes the following representations on which the Company shall be
entitled to rely:
1. The undersigned makes one of the following representations regarding
its net worth and certain related matters, AND HAS CHECKED THE APPLICABLE
REPRESENTATION:
( ) a. The undersigned is a trust with total assets in excess
of $5,000,000, whose purchase is directed by a person
with such knowledge and experience in financial and
business matters that he is capable of evaluating the
merits and risks of the prospective investment.
( ) b. The undersigned represents that it is a bank, insurance
company, investment company registered under the
Investment Company Act of 1940, a business development
company, Small Business Investment Company licensed by
the U.S. Small Business Administration, or a private
business development company.
( ) c. If the undersigned is an employee benefit plan, the
undersigned represents either that all investment
decisions are made by a bank, insurance company,
or registered investment advisor, or that the
undersigned has total assets in excess of $5,000,000.
( ) d. If the undersigned is a corporation, partnership or
business trust, the undersigned represents that it has
total assets in excess of $5,000,000.
( ) e. If the undersigned is not an entity described in
paragraphs "a" through "d", the undersigned represents
that each of its equity owners is either (i) an entity
described in paragraphs "b" through "d"; or (ii) an
individual who (A) has an individual net worth, or a
joint net worth with such individual's spouse, in excess
of $1,000,000, or (B) has had an individual income in
excess of $200,000 in each of the two most recent years
and reasonably expects an income in excess of $200,000
23
in the current year, or (C) is a director or executive
officer of the Company.
( ) f. The undersigned cannot make any of the representations
set forth in paragraphs "a" through "e" above.
In addition, the undersigned represents as follows:
2. Its full name and primary business address and phone number are:
______________________________________________________________________________
______________________________________________________________________________
3. Its form, state and date of organization are (i.e., partnership,
corporation or trust, state where organized, date of organization):
______________________________________________________________________________
4. The entity has sufficient profits and net assets that it does not
contemplate disposing of any investment in the Company to satisfy other
undertakings or indebtedness. It has made other investments in early stage
privately-held companies and the person(s) making the investment decision on its
behalf understand the risks attendant with such investments. The knowledge and
experience in financial and business matters of the person(s) making the
investment decision on its behalf are such that he/she/they are capable of
evaluating the merits and risks of an investment in the Company. It is able to
bear the economic risk of an investment in the Company as well as the
restriction on its ability to sell or transfer the investment for an indefinite
period of time. It has had access to such information concerning the Company and
the securities as it considered necessary to make an informed decision
concerning the proposed investment.
5. It was not formed for the specific purpose of making an investment
in the Company.
24
6. It is acquiring the securities solely for its own account and not
directly or indirectly for the account of any other person whatsoever, for
investment and not with a view to, or for sale in connection with, any
distribution of the securities. It does not have any contract, undertaking or
arrangement with any person to sell, transfer or grant a participation to any
person with respect to the securities.
Name of Entity:
By:_____________________________________
(Signature)
_____________________________________
(Name)
_____________________________________
(Title)
_____________________________________
(Date)
25
APPENDIX IV
Attention:
CERTIFICATE OF SUBSEQUENT SALE
The undersigned, an officer of, or other person duly authorized by
__________________________________________________________________
[fill in official name of individual or institution]
hereby certifies that he/she sold the units evidenced by the attached
certificate on ________ in accordance with registration statement
[date]
number ______________________________________ and the requirement of
[fill in the number of or otherwise identify registration statement]
delivering a current prospectus has been complied with in connection
with such sale.
Print or Type: ___________________________
Name (Individual or Institution): ___________________________
Name of Individual representing Institution
(if applicable) ___________________________
Title of Individual representing Institution
(if applicable): ___________________________
Signature by:
Individual Purchaser or Individual
representing Institution: ___________________________
