Exhibit 10.59
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made as of February
27, 1998 (the "Effective Date"), by and between CYTEL CORPORATION, a Delaware
corporation (the "Company"), and X.X. XXXXXX & CO., a Delaware corporation (the
"Investor").
RECITALS
WHEREAS, Epimmune Inc., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Epimmune"), and the Investor have entered into that
certain License and Collaboration Agreement dated February 27, 1998 (the
"Collaboration Agreement") and, to the extent provided therein, have agreed to
the transactions and matters described therein; and
WHEREAS, the Investor desires to purchase from the Company, and the
Company desires to sell to the Investor, shares of the Company's Preferred Stock
on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and agreements contained herein, the parties hereto, intending
to be legally bound, do hereby agree as follows:
AGREEMENT
1. PURCHASE AND SALE OF SHARES.
1.1 PURCHASE AND SALE OF SHARES. Subject to the terms and conditions
hereof, at the Closing (as defined below), the Investor shall purchase from the
Company, and the Company shall issue and sell to the Investor, 659,898 shares of
Series B Preferred Stock of the Company, $0.01 par value (the "Shares") at a per
share purchase price equal to US$5.91, for an aggregate purchase price of
US$3,900,000, payable in cash.
2. CLOSING DATE; DELIVERY.
2.1 CLOSING. Subject to the terms of Section 5, the closing of the sale
and purchase of the Shares pursuant to Section 1.1 above (the "Closing") shall
be held on the date hereof or at such other time upon which the Company and the
Investor agree. The closing shall take place at the offices of Xxxxxx Godward
LLP, 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx 00000.
2.2 DELIVERY. At the Closing, subject to the terms and conditions
hereof, the Company shall deliver to the Investor a stock certificate,
registered in the name of the Investor, representing the Shares purchased
pursuant to Section 1.1 above and dated as of the Closing against payment of the
purchase price therefor by wire transfer, unless other means of payment shall
have been agreed upon by the Company and the Investor.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby makes the following representations and warranties
to the Investor, except as set forth in the Schedule of Exceptions attached
hereto as Exhibit A:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business. The Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the failure so to qualify would
have a material adverse effect on its business or properties.
3.2 AUTHORIZATION; DUE EXECUTION. The Company has the requisite
corporate power and authority to enter into this Agreement, an Investor Rights
Agreement substantially in the form attached hereto as Exhibit B (the "Investor
Rights Agreement") and a Voting Agreement substantially in the form attached
hereto as Exhibit C (the "Voting Agreement") (this Agreement, the Investor
Rights Agreement and the Voting Agreement are collectively referred to as the
"Agreements") and to perform its obligations under the terms of the Agreements
and, at the Closing, will have the requisite corporate power to sell the Shares.
All corporate action on the part of the Company, its officers, directors and
stockholders necessary for the authorization, execution and delivery of the
Agreements has been taken. Each of the Agreements has been duly authorized,
executed and delivered by the Company, and, upon due execution and delivery by
the Investor, will be a valid and binding agreement of the Company, enforceable
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by equitable principles.
3.3 CAPITALIZATION. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock, par value $.01, and 10,000,000
shares of Preferred Stock, par value $.01, of which 500,000 shares have been
designated Series A Junior Participating Preferred Stock and 659,898 shares have
been designated Series B Preferred Stock. As of the close of business on
February 26, 1998, there were 32,222,497 shares of Common Stock and no shares of
Preferred Stock issued and outstanding. Other than, as of the close of business
on February 26, 1998, (a) options to purchase 4,646,754 shares of Common Stock
issued, and 152,392 shares of Common Stock available for future option grants,
to certain employees, officers, directors, consultants and advisors of the
Company, (b) 47,666 shares of Common Stock to be issued under the Company's
Employee Stock Purchase Plan, (c) warrants to purchase 200,000 shares of Common
Stock issued to certain investors, (d) those shares of Common Stock to be issued
under the Company's Rights Agreement and (e) the rights to purchase equity
securities of the Company granted to Investor under this Agreement, there are no
subscriptions, options, warrants, rights or agreements (contingent or
otherwise), including without limitation, conversion rights, preemptive rights,
rights of first refusal or other rights or agreements, providing for the
issuance by the Company of Common Stock or other equity securities of the
Company. The Shares to be acquired by the Investor pursuant to Section 1.1 above
(on an as-converted basis), together with the shares of Common Stock of the
Company issued to the Investor pursuant to that certain Stock Purchase
Agreement, dated as of September 18, 1997 (the "Prior Agreement"), will
constitute (i) approximately 8.31% of the outstanding shares of Common Stock of
the Company on an as-converted, undiluted basis, and (ii) approximately 7.30% of
the outstanding Common Stock of the Company on an as-converted, fully diluted
basis, assuming exercise of all outstanding rights, warrants and options to
acquire Common Stock.
2.
3.4 VALID ISSUANCE OF SHARES. The Shares when issued, sold and
delivered in accordance with the terms hereof for the consideration set forth
herein, will be duly and validly authorized and issued, fully paid and
nonassessable, free of all taxes, liens and charges, and, based in part upon the
representations of the Investor in this Agreement, will be issued in compliance
with all applicable federal and state securities laws.
3.5 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state, local or provincial governmental authority on the part of the
Company is required in connection with the consummation of the transactions
contemplated by the Agreements, except for notices required or permitted to be
filed with certain state and federal securities commissions after the Closing,
which notices will be filed on a timely basis.
3.6 SEC FILINGS. The Company has timely filed all reports, registration
statements and other documents required to be filed by it (the "SEC Filings")
under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "Securities Act"), and the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder (the
"Exchange Act"). The SEC Filings were prepared in accordance and complied in all
material respects with the applicable requirements of the Securities Act or the
Exchange Act, as the case may be. None of such forms, reports and statements,
including, without limitation, any financial statements, exhibits and schedules
included therein and documents incorporated therein by reference, at the time
filed, declared effective or mailed, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except to the
extent information contained in any of the SEC Filings has been revised,
corrected or superseded by a later filing of any such form, report or document,
none of the SEC Filings currently contains an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Since September 30, 1997, (i) there
has been no material adverse change in the condition, financial or otherwise, of
the Company and its subsidiaries considered as a whole, or in the business,
operations, or prospects of the Company and its subsidiaries considered as a
whole, whether or not arising in the ordinary course of business, and (ii) there
has been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
3.7 NO CONFLICT. The execution, delivery and performance by the Company
of the Agreements do not and will not violate any provision of the Company's
Certificate of Incorporation or By-laws, any provision of any order, writ,
judgment, injunction, decree, determination or award to which the Company is a
party or by which it is bound, or to the Company's knowledge, any law, rule or
regulation (including, without limitation, the rules and regulations of the
Securities and Exchange Commission (the "SEC") or any regulatory commission of
any jurisdiction) currently in effect having applicability to the Company.
3.
3.8 ABSENCE OF LITIGATION. Except as disclosed in the SEC Filings,
there is no action, suit, proceeding or investigation (including any such matter
related to the Company's intellectual property) pending or currently threatened
against the Company or its properties before any court or governmental agency,
which would, singly or in the aggregate, have a material adverse effect on the
Company's business, operations or assets, taken as a whole (nor, to the best of
the Company's knowledge, is there any basis therefor). There is no action, suit,
proceeding or investigation which the Company currently intends to initiate.
3.9 CONFIDENTIALITY. The Company hereby represents, warrants and
covenants that it shall maintain in confidence, and shall not use or disclose
without prior written consent of the Investor, the terms of this Agreement and
any information identified in writing as confidential that is furnished to it by
the Investor in connection with this Agreement. This obligation of
confidentiality shall not apply, however, to any information (a) in the public
domain through no unauthorized act or failure to act by the Company, (b)
lawfully disclosed to the Company by a third party who possessed such
information without any obligation of confidentiality, (c) lawfully developed by
the Company independent of any disclosure by the Company as supported by the
Investor's written records, or (d) required to be disclosed pursuant to
applicable law, regulation or order or requirement of a court, administrative
agency or other government body (including the securities laws of any applicable
jurisdiction). The Company further covenants that it shall return to the
Investor all tangible materials containing such information upon request by the
Investor. The Company and the Investor acknowledge and agree that the Company
will be required to disclose the issuance of the Shares contemplated by this
Agreement pursuant to applicable securities laws and regulations.
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
The Investor hereby makes the following representations and warranties
to the Company as of the Effective Date and the Closing:
4.1 AUTHORIZATION; DUE EXECUTION. The Investor has the requisite
corporate power and authority to enter into the Agreements and to perform its
obligations under the terms of the Agreements and, at the Closing, will have the
requisite corporate power to purchase the Shares. All corporate action on the
part of the Investor, its officers, directors and stockholders necessary for the
authorization, execution and delivery of the Agreements has been taken. Each of
the Agreements has been duly authorized, executed and delivered by the Investor,
and, upon due execution and delivery by the Company, will be a valid and binding
agreement of the Investor, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally or by equitable
principles.
4.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with the
Investor in reliance upon such Investor's representation to the Company, which
by such Investor's execution of this Agreement such Investor confirms, that the
Shares to be purchased by such Investor will be acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same (subject to the disposition of the Investor's property
being at all times within its control). By executing this Agreement, the
Investor further represents that such Investor does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Shares.
4.
4.3 DISCLOSURE OF INFORMATION. The Investor has received all the
information that it has requested and that it considers necessary or appropriate
for deciding whether to enter into this Agreement and to purchase the Shares.
The Investor further represents that it has had an opportunity to ask questions
and receive answers from the Company regarding the terms and conditions of the
offering of the Shares.
4.4 INVESTMENT EXPERIENCE. The Investor is an investor in securities of
companies in the development stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Shares. The Investor also represents
it has not been organized solely for the purpose of acquiring the Shares.
4.5 ACCREDITED INVESTOR. The Investor is an "accredited investor" as
such term is defined in Rule 501 of the General Rules and Regulations prescribed
by the SEC pursuant to the Securities Act.
4.6 RESTRICTED SECURITIES. The Investor understands that (a) the Shares
have not been, registered under the Securities Act by reason of a specific
exemption therefrom, that such securities must be held by it indefinitely and
that the Investor must, therefore, bear the economic risk of such investment
indefinitely, unless in each case a subsequent disposition thereof is registered
under the Securities Act or is exempt from such registration; (b) each
certificate representing the Shares will be endorsed with the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
and (c) the Company will instruct any transfer agent not to register the
transfer of the Shares (or any portion thereof) unless the conditions specified
in the foregoing legends are satisfied, until such time as a transfer is made,
pursuant to the terms of this Agreement, and in compliance with Rule 144 or
pursuant to a registration statement or, if the opinion of counsel referred to
above is to the further effect that such legend is not required in order to
establish compliance with any provisions of the Securities Act or this
Agreement.
4.7 CONFIDENTIALITY. The Investor hereby represents, warrants and
covenants that it shall maintain in confidence, and shall not use or disclose
without prior written consent of the Company, the terms of this Agreement and
any information identified in writing as confidential that is furnished to it by
the Company in connection with this Agreement. This obligation of
confidentiality shall not apply, however, to any information (a) in the public
domain through no unauthorized act or failure to act by the Investor, (b)
lawfully disclosed to such Investor by a third party who possessed such
information without any obligation of confidentiality, (c) lawfully developed by
such Investor independent of any disclosure by the Company as supported by the
Investor's written records, or (d) required to be disclosed pursuant to
applicable law, regulation or order or requirement of a court, administrative
agency or other government body (including the securities laws of any applicable
jurisdiction). The Investor further covenants that it shall return to the
Company all tangible materials containing such information upon request by the
Company. The Company and the Investor acknowledge and agree that the Investor
will be required to disclose its investment in the Company and the terms of this
Agreement pursuant to filing of a Form 13D with the SEC under the Exchange Act.
5.
5. CONDITIONS OF THE INVESTOR'S OBLIGATIONS.
The obligations of the Investor under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, any of
which may be waived by the Investor (and which conditions shall be deemed to
have been fulfilled or waived upon the occurrence of the Closing):
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in Section 3 shall be true and correct in all material
respects on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of said date.
5.2 PERFORMANCE. The Company shall have performed and complied with all
agreements, obligations and conditions in this Agreement, if any, that are
required to be performed or complied with by it on or before the Closing.
5.3 DELIVERY OF SHARES. The Company shall have tendered delivery of the
Shares specified in Section 1.1 at the Closing.
5.4 INVESTOR RIGHTS AGREEMENT. An Investor Rights Agreement
substantially in the form attached hereto as Exhibit B shall have been executed
and delivered by Epimmune and the Company.
5.5 VOTING AGREEMENT. A Voting Agreement substantially in the form
attached hereto as Exhibit C shall have been executed and delivered by Epimmune
and the Company.
5.6 FILING OF CERTIFICATE OF DESIGNATION. The Certificate of
Designation of Series B Preferred Stock in the form attached hereto as Exhibit D
shall have been filed with the Secretary of State of Delaware.
5.7 LEGAL OPINION. An opinion of counsel to the Company in the form
attached hereto as Exhibit E shall have been delivered to the Investor at the
Closing.
5.8 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investor, and it shall have received all such counterpart original and certified
or other copies of such documents as it may reasonably request.
6.
6. CONDITIONS OF THE COMPANY'S OBLIGATIONS.
The obligations of the Company under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by such
Investor, any of which may be waived by the Company (and which conditions shall
be deemed to have been fulfilled or waived upon the occurrence of the Closing):
6.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Investor contained in Section 4 hereof shall be true and correct in all
material respects on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of said dates.
6.2 PERFORMANCE. The Investor shall have performed and complied with
all agreements, obligations and conditions in this Agreement, if any, that are
required to be performed or complied with by it on or before the Closing.
6.3 PAYMENT OF PURCHASE PRICE. The Investor shall have tendered
delivery of the purchase price for the Shares specified in Section 2.1 at the
Closing.
6.4 INVESTOR RIGHTS AGREEMENT. An Investor Rights Agreement
substantially in the form attached hereto as Exhibit B shall have been executed
and delivered by the Investor.
6.5 VOTING AGREEMENT. A Voting Agreement substantially in the form
attached hereto as Exhibit C shall have been executed and delivered by the
Investor.
6.6 FILING OF CERTIFICATE OF DESIGNATION. The Certificate of
Designation of Series B Preferred Stock in the form attached hereto as Exhibit D
shall have been filed with the Secretary of State of Delaware.
6.7 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Company, and it shall have received all such counterpart original and certified
or other copies of such documents as it may reasonably request.
7. COVENANTS.
7.1 DELIVERY OF FINANCIAL STATEMENTS. So long as the Investor (or any
transferee pursuant to Section 10.5) holds the Shares, the Company shall deliver
to the Investor (or any such transferee pursuant to Section 10.5) copies of its
Forms 10-K and 10-Q as filed with the SEC, and other public announcements and
releases made by the Company.
7.2 STANDSTILL AGREEMENT. The Investor hereby covenants and agrees
that, prior to December 31, 2000, it will not, nor will it permit any of its
affiliates (including parents, subsidiaries or other related entities) to,
purchase or otherwise acquire or offer or agree to acquire, directly or
indirectly, beneficial ownership of any additional equity securities of the
Company (or rights or options to purchase such securities) after the Closing in
an amount that would cause the Investor to own, on a fully diluted basis, more
than 19% of the outstanding shares of Common Stock of the Company, without the
prior written consent of the Company; provided, however, that this clause shall
not apply to any securities issued with respect to the Shares pursuant to a
stock split, stock dividend, recapitalization or reclassification approved by a
disinterested majority of the Company's Board of Directors.
7.
7.3 "MARKET STAND-OFF" AGREEMENT. The Investor hereby agrees that
during the period specified by the Company and an underwriter of Common Stock or
other securities of the Company following the effective date of a Registration
Statement of the Company filed under the Securities Act (which period shall not
exceed 120 days), to the extent requested by the Company and such underwriter,
it shall not, nor will it permit any of its affiliates (including parents,
subsidiaries or other related entities) to, directly or indirectly sell,
contract to sell (including, without limitation, any short sale), grant any
option to purchase or otherwise transfer or dispose of any securities of the
Company held by any of them during such period; provided, however, that any such
request will be made no more frequently than once every eight months.
7.4 REPORTING PERSON STATUS. For such period as the Investor or any
transferee pursuant to Section 10.5 owns all or part of the Shares, the Company
shall maintain its status as a reporting company under the Exchange Act and the
registration of its Common Stock pursuant to Section 12 of such Act and shall
timely file all forms, reports and documents required to be filed under the
Exchange Act, so as to ensure satisfaction of the condition contained in Rule
144(c) under the Securities Act relating to availability of adequate current
public information relating to the Company.
7.5 USE OF PROCEEDS. The Company agrees to use the purchase price of
the Shares paid pursuant to Section 1 hereof for the purpose of purchasing
Series B-1 Preferred Stock of Epimmune (the "Series B-1 Preferred") in order to
fund Epimmune.
8. RIGHT OF FIRST REFUSAL.
8.1 AMENDMENT AND RESTATEMENT OF SECTION 9 OF THE PRIOR AGREEMENT. The
parties agree that this Section 8 shall supersede, amend and restate Section 9
of the Prior Agreement so that this Section 8 is the sole agreement with respect
to the obligations and rights contained in this Section 8.
8.2 SUBSEQUENT OFFERINGS. The Investor 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
8.7 hereof. The Investor's pro rata share is equal to the ratio of (a) the
number of shares of Common Stock purchased pursuant to Sections 2.1 and 2.2 of
the Prior Agreement, plus the number of Shares purchased pursuant to Section 1,
plus the number of shares of Common Stock (and the number of shares of Common
Stock issued or issuable upon the conversion of any Equity Securities)
previously purchased pursuant to this Section 8, held by the Investor or any
transferee pursuant to Section 11.5, 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 warrant or right to
subscribe to or purchase any Common Stock, Preferred Stock or other security, or
(iv) any such warrant or right.
8.
8.3 EXERCISE OF RIGHT OF FIRST REFUSAL. If the Company proposes to
issue any Equity Securities, it shall give the Investor 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. The Investor shall
have forty five (45) days from the giving of such 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; provided,
however, if the Company reasonably requests in the Company's original notice
that the Investor respond within thirty (30) days (due to timing considerations
relating to the closing of the issuance of such Equity Securities), then the
Investor shall be required to respond to such notice within thirty (30) days.
Notwithstanding the foregoing, the Company shall not be required to offer or
sell such Equity Securities to the Investor 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.
8.4 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If the Investor
fails to exercise in full the right of first refusal, the Company shall have
ninety (90) days thereafter to sell the Equity Securities in respect of which
the Investor's right was not exercised, at a price and upon general terms and
conditions materially no more favorable to the purchasers thereof than specified
in the Company's notice to the Investor pursuant to Section 8.3 hereof. If the
Company has not sold such Equity Securities within ninety (90) days of the
notice provided pursuant to Section 8.3, the Company shall not thereafter issue
or sell any Equity Securities, without first offering such securities to the
Investor in the manner provided above.
8.5 TERMINATION OF RIGHT OF FIRST REFUSAL. The right of first refusal
established by this Section 8 shall terminate on the first to occur of (a)
September 17, 2002, or (b) the first date on which the Investor sells, assigns
or otherwise transfers any of the Shares, excluding, however, transfers pursuant
to Section 11.5.
8.6 NO TRANSFER OF RIGHT OF FIRST REFUSAL. The right of first refusal
established by this Section 8 may not be assigned or transferred, except as
otherwise provided in Section 11.5.
8.7 EXCLUDED SECURITIES. The right of first refusal established by
Sections 8.2, 8.3 and 8.4 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;
9.
(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 8
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 fifty percent (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) shares of Common Stock issued upon conversion of any Equity
Securities;
(f) any Equity Securities issued pursuant to any equipment leasing
arrangement; and
(g) 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.
Notwithstanding the foregoing, during the term of the right of first
refusal under this Section 8, if at any time or from time to time after the date
of this Agreement the Company issues, pursuant to one or more transactions
described in Sections 8.7(a) through (g), shares of its Common Stock (whether a
new issuance of Common Stock, or Common Stock issued upon the exercise of an
Equity Security, option, warrant or conversion or exchange right or other
similar right), and if upon such issuance the number of shares of Common Stock
purchased pursuant to Sections 2.1 and 2.2 of the Prior Agreement, plus the
number of Shares (on an as-converted basis) purchased pursuant to Section 1
hereof, plus the number of shares of Common Stock (and the number of shares of
Common Stock issued or issuable upon the conversion of any Equity Securities)
previously purchased pursuant to this Section 8 (collectively, the "Investor
Share Number"), in each case then held by the Investor or any transferee
pursuant to Section 11.5 as a percentage of the outstanding Common Stock of the
Company, is less than 95% of the Trigger Percentage (as defined below) (the date
of the consummation of each issuance of Common Stock causing such occurrence
being referred to herein as a "Trigger Date") as of such Trigger Date, the
Investor shall have the right, effective as of the next February 28 or August 31
immediately following such Trigger Date (such date being referred to herein as a
"Semi-Annual Exercise Date"), except as otherwise set forth in the first
immediately following paragraph, to purchase from the Company a number of shares
of Common Stock (the "Percentage Purchase Right") such that the sum of (a) the
Investor Share Number, plus (b) the number of shares to be purchased by the
Investor pursuant to the Percentage Purchase Right on such Semi-Annual Exercise
Date as a percentage of the outstanding Common Stock of the Company, shall equal
the Trigger Percentage as of such Semi-Annual Exercise Date. The "Trigger
10.
Percentage" shall mean, as to any date, 8.38% subject to the following
adjustments: in the case (i) the Company issues Common Stock after the date of
this Agreement pursuant to the exercise of any option, warrant or conversion or
exchange right outstanding as of the date of this Agreement (collectively,
"Later Share Issuances"), or (ii) the Investor waives, or elects not to
exercise, a right to purchase Common Stock or other Equity Securities under this
Section 8 (including Section 8.2 and this Section 8.7) (an "Unexercised Investor
Right"), then the applicable Trigger Percentage, as of the date of
determination, shall be adjusted to a percentage which equates to the quotient
of (A) the Investor Share Number as of the date of determining such Trigger
Percentage, divided by (B) the sum of 32,222,497, plus (x) the aggregate number
of shares of Common Stock of the Company issued pursuant to Later Shares
Issuances as of the date of determining such Trigger Percentage, plus (y) the
aggregate number of shares of Common Stock of the Company issued in transactions
involving an Unexercised Investor Right as of the date of determining such
Trigger Percentage.
The Investor shall have the right to waive its Percentage Purchase
Right for any Semi-Annual Exercise Date by giving express written notice of such
waiver to the Company not less than thirty (30) trading days prior to such
Semi-Annual Exercise Date.
The price per share of Common Stock of the Company to be purchased by
the Investor pursuant to the Percentage Purchase Right shall be the fair market
value per share of the Common Stock of the Company as of the applicable
Semi-Annual Exercise Date, determined by averaging the per share closing prices
on the Nasdaq Stock Market of the Common Stock of the Company for the ten (10)
consecutive trading days immediately prior to such Semi-Annual Exercise Date
(the "Market Valuation"). To the extent that the Company has outstanding or
issues Equity Securities, options, warrants or purchase or subscription rights
which convert into or can be exchanged for shares of Common Stock, the parties
agree that a Trigger Date shall not have occurred with respect to such
securities until such time as the Common Stock underlying such Equity
Securities, options, warrants, rights or other securities is issued.
If at any time or from time to time the Company issues additional
shares of Common Stock which gives rise to the occurrence of a Trigger Date, it
shall give the Investor written notice within ten (10) days after the next
following Semi-Annual Exercise Date, which notice shall include the number of
shares of Common Stock which are subject to the Percentage Purchase Right, the
Market Valuation of such shares and sufficient information in order to
reasonably substantiate the Market Valuation. Upon receipt of such notice, the
Investor shall have forty-five (45) days to give written notice to the Company
that it wishes to exercise its Percentage Purchase Right. The purchase and sale
of shares of Common Stock pursuant to exercise of the Percentage Purchase Right
shall occur within fifteen (15) days after such exercise pursuant to a stock
purchase agreement containing terms and conditions substantially the same as
those contained in this Agreement, with appropriate modifications to reflect the
terms of such purchase and sale as contemplated by this Section 8.7 and
appropriate updating of information. Notwithstanding the foregoing, the Company
shall not be required to offer or sell such shares of Common Stock to the
Investor if doing so would cause the Company to be in violation of applicable
federal securities laws by virtue of such offer and sale, PROVIDED that the
Company agrees to use reasonable best efforts to take whatever action may be
necessary or appropriate to comply with such federal securities laws.
11.
Unless the Investor has timely and expressly waived its Percentage
Purchase Right for any Semi-Annual Exercise Date as set forth above, by giving
express written notice of such waiver to the Company not less than thirty (30)
trading days prior to such Semi-Annual Exercise Date, the Investor hereby agrees
that during the period of thirty (30) trading days prior to such Semi-Annual
Exercise Date, it shall not, and will not permit any of its affiliates
(including parents, subsidiaries or other related entities) to, directly or
indirectly sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of any
securities of the Company held by any of them during such period.
9. CONVERSION COVENANTS.
9.1 OPTIONAL CONVERSION. The parties agree that, at the option of
Xxxxxx, all of the Shares may be, in whole or in part, (i) exchanged with the
Company at any time for 659,898 fully paid and nonassessable shares of Series
B-1 Preferred (which shall concurrently be converted into Common Stock of
Epimmune pursuant to the provisions of Epimmune's Restated Certificate of
Incorporation) (the "Exchange Option"), (ii) converted at any time commencing
three years after the Effective Date into shares of the Company's Common Stock
in accordance with the Certificate of Designation of Series B Preferred Stock
(the "Conversion Option"), or (iii) applied to the milestone payments due under
the Collaboration Agreement for (a) the start of any Phase III clinical trial
for a Product (as defined in the Collaboration Agreement), other than the first
Phase III clinical trial for such Product, (b) upon submission of a new drug
application or (c) Product launch (the "Milestone Option"); provided that in no
event shall less than 50% of any such milestone payment be made in cash.
9.2 AUTOMATIC CONVERSION. All of the Shares shall be exchanged pursuant
to the Exchange Option, converted pursuant to the Conversion Option or applied
to milestone payments pursuant to the Milestone Option upon the earlier to occur
of (i) the first closing of a firm commitment underwritten public offering
pursuant to an effective registration statement under the Securities Act
covering the offer and sale by Epimmune of Common Stock to the public in which
the Company receives gross proceeds of at least $15 million, or (ii) the first
product approval arising under the Collaboration Agreement (the date of such
event shall be referred to as the "Conversion Date"). The Company will provide
(or will cause Epimmune to provide) to the Investor at least 30 days' prior
written notice of the anticipated date of the applicable event described in (i)
or (ii) of the preceding sentence (the "Conversion Notice"). As promptly as
practicable (and in any event within 20 days) after the date of the Conversion
Notice, the Investor shall provide written notice to the Company of its election
of the Exchange Option, the Conversion Option or the Milestone Option. In the
event that the Investor does not provide such written notice by the end of such
20-day period, the Investor will be deemed to have elected the Exchange Option
for all of the Shares. The Company will cooperate in good faith in providing the
Investor with such information as the Investor may reasonably require in
determining which such option to elect.
9.3 MECHANICS OF CONVERSION.
(a) EXCHANGE OPTION. In the event that the Investor elects the
Exchange Option, it shall surrender the certificate or certificates representing
the Shares, duly endorsed, at the office of the Company or of any transfer agent
for the Company's Preferred Stock, and shall give written notice to the Company
12.
at such office that it elects to exchange the same pursuant to the Exchange
Option. The Company shall, as soon as practicable thereafter, (i) deliver to
Epimmune the certificate or certificates representing the Series B-1 Preferred
held by the Company, (ii) request the conversion of the Series B-1 Preferred to
Common Stock of Epimmune in accordance with the Restated Certificate of
Incorporation of Epimmune and the transfer of such shares to the Investor, and
(iii) upon receipt of the certificate or certificates representing the converted
shares, registered in such names as specified by the Investor, present such
certificate or certificates to the Investor. Such exchange shall be deemed to
have been made immediately prior to the close of business on the date of such
surrender of the Shares to be exchanged, and the person or persons entitled to
receive the shares of Common Stock of Epimmune issuable upon such exchange shall
be treated for all purposes as the record holder of such shares of Common Stock
on such date (except that under the circumstances described in Section 9.2, such
exchange shall be deemed to have been made immediately prior to the event
described in (i) or (ii) of Section 9.2).
(b) CONVERSION OPTION. In the event that the Investor elects the
Conversion Option, it shall surrender the certificate or certificates
representing the Shares, duly endorsed, at the office of the Company or of any
transfer agent for the Company's Preferred Stock, and shall give written notice
to the Company at such office that it elects to convert the same pursuant to the
Conversion Option. The Company shall, as soon as practicable thereafter, issue
and deliver to the Investor a certificate or certificates, registered in such
names as specified by the Investor, for the number of whole shares of Common
Stock to which such holder shall be entitled as aforesaid, and a check payable
to the holder in the amount of any amounts payable for any declared and unpaid
dividends on the converted Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Shares. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of such
surrender of the Shares to be converted, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date (except that under the circumstances described Section
9.2, such conversion shall be deemed to have been made immediately prior to the
event described in (i) or (ii) of Section 9.2).
(c) MILESTONE OPTION. In the event that the Investor elects the
Milestone Option, it shall surrender the certificate or certificates
representing the Shares, duly endorsed, at the office of the Company or of any
transfer agent for the Company's Preferred Stock, and shall give written notice
to the Company at such office of the milestone payments to which it elects to
apply the same pursuant to the Milestone Option. The Company shall, as soon as
practicable thereafter, surrender to Epimmune for cancellation the certificate
or certificates representing a number of shares of Series B-1 Preferred held by
the Company equal to the number of Shares applied toward milestone payments
pursuant to the Milestone Option. Such payment shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
Shares to be applied toward milestone payments pursuant to the Milestone Option
(except that under the circumstances described in Section 9.2, such payment
shall be deemed to have been made immediately prior to the event described in
(i) or (ii) of Section 9.2). All Shares shall be deemed cancelled as of such
date.
13.
(d) COMBINATION OF CONVERSION FEATURES. The Investor may elect a
combination of conversion mechanisms pursuant to Section 9.1 and 9.2 and shall
include information regarding the number of Shares with respect to which it
elects the Exchange Option, the Conversion Option and/or the Milestone Option in
any notice provided to the Company under this Section 9. In such event, the
procedures set forth in Sections 9.3(a), (b) and (c) shall be applied to the
appropriate number of Shares, as applicable.
10. INDEMNIFICATION.
10.1 INDEMNIFICATION OF THE INVESTOR. The Company agrees to indemnify
and hold harmless the Investor and its permitted successors and assigns from and
against any and all (i) liabilities, losses, costs or damages ("Loss") and (ii)
reasonable attorneys' and accountants' fees and expenses, court costs and all
other reasonable out-of-pocket expenses ("Expense") incurred by the Investor or
its permitted successors and assigns arising from (A) any breach or failure to
perform by the Company of any of its covenants or agreements contained in this
Agreement; or (B) any breach of any warranty or the inaccuracy of any
representation of the Company contained in this Agreement.
10.2 NOTICE OF CLAIMS BY THE INVESTOR. If any person indemnified under
Section 10.1 hereof believes it has suffered or incurred any Loss or incurred
any Expense as to which it is entitled to indemnification under Section 10.1
hereof, such person shall so notify the Company promptly in writing describing
such Loss or Expense, the amount thereof, if known, and the method of
computation of such Loss or Expense, all with reasonable particularity and
containing a reference to the provisions of this Agreement, or any agreement or
instrument contemplated hereby, or any certificate delivered pursuant hereto or
thereto in respect of which such Loss or Expense shall have occurred; and if any
action at law or suit in equity is instituted by or against a third party with
respect to which any such indemnified person intends to claim any Loss or
Expense under Section 10.1, such indemnified person shall promptly notify the
indemnifying party of such action or suit; provided that failure to give such
notice shall not abrogate or diminish the Company's obligations under Section
10.1 if the Company has or receives timely actual knowledge of the existence of
any such claim by any other means or except to the extent such failure
prejudices the Company.
10.3 INDEMNIFICATION OF THE COMPANY. The Investor agrees to indemnify
and hold harmless the Company and its permitted successors and assigns from and
against any and all Loss and Expense incurred by the Company and its permitted
successors and assigns arising from (i) any breach or failure to perform by the
Investor of any of its covenants or agreements contained in this Agreement; or
(ii) any breach of any warranty or the inaccuracy of any representation of the
Investor contained in this Agreement.
10.4 NOTICE OF CLAIMS BY THE COMPANY. If any person indemnified under
Section 10.3 believes that it has suffered or incurred any Loss or incurred any
Expense as to which it is entitled to indemnification under Section 10.3, such
person shall so notify the Investor or person responsible for such
indemnification promptly in writing describing such Loss or Expense, the amount
thereof, if known, and the method of computation of such Loss or Expense, all
with reasonable particularity and containing a reference to the provisions of
this Agreement, or any agreement or instrument contemplated hereby, or any
14.
certificate delivered pursuant hereto or thereto in respect of which such Loss
or Expense shall have occurred; and if any action at law or suit in equity is
instituted by or against a third party with respect to which any such
indemnified party intends to claim any Loss or Expense under Section 10.3, such
indemnified party shall promptly notify the indemnifying party of such action or
suit; provided that failure to give such notice shall not abrogate or diminish
the Investor's obligations under Section 10.3 if the Investor has or receives
timely actual knowledge of the existence of any such claim by any other means or
except to the extent such failure prejudices the Investor.
10.5 THIRD PARTY CLAIMS. The indemnifying party shall have the right to
participate in, and, to the extent the it so desires, jointly with any other
indemnitor similarly noticed, to assume the defense of any third party claim,
demand, action or other proceeding with counsel selected by the indemnifying
party; provided, however, that the 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 the indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between the indemnified party and any other party
represented by such counsel in such proceedings. So long as the indemnifying
party has received notice of any third party claim, demand, action or proceeding
for which any indemnified party intends to claim any Loss or Expense, and within
a reasonable period thereafter the indemnifying party has assumed the defense
thereof, the indemnity obligations under this Section 10 shall not apply to
amounts paid in settlement of such third party claim, demand, action or
proceeding if such settlement is effected without the consent of the
indemnifying party, which consent shall not be unreasonably withheld or delayed.
The indemnifying party may not settle or otherwise consent to an adverse
judgment in any such third party claim, demand, action or proceeding action that
diminishes the rights or interests of the indemnified party without the prior
express written consent of the indemnified party. The indemnified party, its
employees and agents, shall cooperate reasonably with the indemnifying party and
its legal representatives in the investigation of any third party claim, demand,
action or proceeding covered by this Section 10.
11. MISCELLANEOUS.
11.1 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective permitted
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective permitted successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
11.2 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California, as applied to contracts executed and
performed entirely within the State of California, without regard to conflicts
of laws rules.
11.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.
11.4 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
11.5 ASSIGNMENT. This Agreement may not be assigned or otherwise
transferred, nor, except as expressly provided hereunder, may any right or
obligations hereunder be assigned or transferred, by either party without the
written consent of the other party; provided, however, that either the Company
or the Investor may, without such consent, assign this Agreement and its rights
and obligations hereunder (a) in connection with the transfer or sale of all or
substantially all of its business, if such assets include substantially all of
the assets relating to its performance of its respective obligations hereunder
or (b) in the event of its merger or consolidation with another company at any
time during the term of this Agreement. Any purported assignment in violation of
the preceding sentence shall be void. Any other permitted assignee shall also
assume all obligations of its assignor under this Agreement.
11.6 NOTICES. Any notice or report required or permitted to be given or
made under this Agreement by one of the parties hereto to the other shall be in
writing, delivered personally or by facsimile (and promptly confirmed by
personal delivery or courier) or courier, postage prepaid, addressed to such
other party at its address indicated below, or to such other address as the
addressee shall have last furnished in writing to the addressor and shall be
effective upon receipt by the addressee.
The Company: Cytel Corporation
0000 Xxxx Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
Tel: (000) 000-0000 Fax: (000) 000-0000
with a copy to: Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
The Investor: X.X. Xxxxxx & Xx.
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Vice President, Business
Development
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to: X.X. Xxxxxx & Xx.
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
16.
11.7 FINDER'S FEE. Each party represents that it neither is nor will be
obligated for any finders' fee or commission in connection with this
transaction. The Investor agrees to indemnify and hold harmless the Company from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Investor or any of its officers, partners, employees or
representatives is responsible. The Company agrees to indemnify and hold
harmless the Investor from any liability for any commission or compensation in
the nature of a finder's fee (and the costs and expenses of defending against
such liability or asserted liability) for which the Company or any of its
officers, employees or representatives is responsible.
11.8 EXPENSES. Irrespective of whether the Closing is effected, each
party shall bear its own costs with respect to the negotiation, execution,
delivery and performance of this Agreement.
11.9 AMENDMENTS AND WAIVERS. Except as specified in this Section 11.9,
any term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the Investor.
11.10 SEVERABILITY. If one or more provisions of this Agreement is held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
11.11 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with regard to the subject matter hereof.
11.12 FURTHER ASSURANCES. Each party hereto agrees to do such further
actions and things, and to execute and deliver such additional agreements and
instruments, as either party may reasonably request of the other to effectuate
the transactions contemplated by this Agreement.
17.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CYTEL CORPORATION
By /s/ Xxxxxx Xxxxxxxx
--------------------------------------
Title President & CEO
------------------------------------
X.X. XXXXXX & CO.
By
---------------------------------------
Title Chairman and CEO
------------------------------------
EXHIBIT A
EXHIBIT A
SCHEDULE OF EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
This Schedule of Exceptions is made and given pursuant to Section 3 of the
Stock Purchase Agreement dated as of February 27, 1998 between Cytel Corporation
("Cytel") and X.X. Xxxxxx and Co.
3.3 CAPITALIZATION.
---------------
The Company recently entered a Non-Exclusive Sublicense and License
Agreement (the "Agreement") with Glycomed Incorporated ("Glycomed"), a
wholly-owned subsidiary of Ligand Pharmaceuticals, Inc. Pursuant to the terms of
the Agreement, Cytel is obligated to issue 591,327 shares of restricted Common
Stock to Glycomed. Cytel will also pay Glycomed milestone payments of $1.5
million upon the first new drug application filing and $3.5 million upon the
first FDA approval of each licensed product. Such milestone payments may be
made, at Cytel's option, in Common Stock of Cytel.
EXHIBIT B
EPIMMUNE INC.
INVESTOR RIGHTS AGREEMENT
This INVESTOR RIGHTS AGREEMENT (the "Investor Rights Agreement") is
entered into as of the 27th day of February, 1998, by and among EPIMMUNE INC., a
Delaware corporation (the "Company"), X.X. XXXXXX & CO., a Delaware corporation
("Xxxxxx"), CYTEL CORPORATION, a Delaware corporation ("Cytel") (collectively,
Xxxxxx and Cytel shall be referred to as the "Investors").
RECITALS
WHEREAS, the Company proposes to sell and issue 1,032,149 shares of its
Series B Preferred Stock, $0.001 par value (the "Series B Preferred"), to Xxxxxx
pursuant to the Series B Preferred Stock Purchase Agreement of even date
herewith (the "Series B Stock Purchase Agreement");
WHEREAS, the Company proposes to sell and issue 659,898 shares of its
Series B-1 Preferred Stock, $0.001 par value (the "Series B-1 Preferred"), to
Cytel pursuant to the Series B-1 Preferred Stock Purchase Agreement of even date
herewith (the "Series B-1 Stock Purchase Agreement");
WHEREAS, as a condition of entering into the Series B Stock Purchase
Agreement and the Series B-1 Stock Purchase Agreement, the Investors requested
that the Company extend to it registration rights and other rights as set forth
below; and
WHEREAS, this Investor Rights Agreement shall be effective only upon
the closing of the Series B Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the Series B Stock Purchase Agreement and the Series B-1 Stock
Purchase Agreement, the parties mutually agree as follows:
1. GENERAL.
1.1 DEFINITIONS. As used in this Investor Rights Agreement the
following terms shall have the following respective meanings:
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"HOLDER" means any person owning of record Registrable
Securities that have not been sold to the public or any assignee of record of
such Registrable Securities in accordance with Section 2.8 hereof.
"INITIAL OFFERING" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities
Act in which the Company receives gross proceeds of at least $15 million.
1.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.
"REGISTRABLE SECURITIES" means (i) Common Stock of the Company
issued or issuable upon conversion of the Shares; and (ii) any Common Stock of
the Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
above-described securities. Notwithstanding the foregoing, Registrable
Securities shall not include any securities sold by a person to the public
either pursuant to a registration statement or Rule 144 or sold in a private
transaction in which the transferor's rights under Section 2 of this Agreement
are not assigned.
"REGISTRATION EXPENSES" shall mean all expenses incurred by
the Company in complying with Sections 2.2 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements of
counsel for the Company, reasonable fees and disbursements not to exceed
twenty-five thousand dollars ($25,000) of a single special counsel for the
Holders, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SELLING EXPENSES" shall mean all underwriting discounts and
selling commissions applicable to the sale.
"SHARES" shall mean the Company's Series B Preferred and
Series B-1 Preferred.
"SEC" or "COMMISSION" means the Securities and Exchange
Commission.
2. RESTRICTIONS ON TRANSFER; REGISTRATION.
2.1 RESTRICTIONS ON TRANSFER.
(a) Each Holder agrees not to make any disposition of all or any
portion of the Shares or Registrable Securities 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) such Holder 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, such Holder 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
2.
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
(iii) Notwithstanding the provisions of paragraphs (a)(i) and
(a)(ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder which is (A) a partnership to its partners
or former partners in accordance with partnership interests, (B) a corporation
to its stockholders in accordance with their interest in the corporation, (C) a
limited liability company to its members or former members in accordance with
their interest in the limited liability company, or (D) to the Holder's family
member or trust for the benefit of an individual Holder, provided the transferee
will be subject to the terms of this Agreement to the same extent as if he were
an original Holder hereunder.
(b) Each certificate representing Shares or Registrable 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 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."
(c) 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.
(d) 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.
2.2 "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
Initial Offering, the Company shall notify all Holders of Registrable Securities
in writing at least thirty (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 such Registrable Securities 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 Registrable
3.
Securities held by it shall, within twenty (20) days after the above-described
notice from the Company, so notify the Company in writing.
(a) UNDERWRITING. If the registration statement under which the
Company gives notice under this Section 2.2 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder to be included in a registration pursuant to this
Section 2.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities 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
Registrable Securities 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.
(b) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.2 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration. The Registration
Expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 2.3 hereof.
2.3 EXPENSES OF REGISTRATION. Except as specifically provided herein,
all Registration Expenses incurred in connection with any registration under
Section 2.2 herein shall be borne by the Company. All Selling Expenses incurred
in connection with any registrations hereunder, shall be borne by the holders of
the securities so registered pro rata on the basis of the number of shares so
registered.
2.4 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to ninety (90) days or, if earlier,
until the Holder or Holders have completed the distribution related thereto.
(b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
4.
(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use all reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable Securities
are delivered to the underwriters for sale, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated as of such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and (ii) a letter dated as of
such date, from the independent certified public accountants of the Company, in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
underwriters, if any.
2.5 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted
to a Holder under this Section 2 shall terminate and be of no further force and
effect upon completion of the distribution of the Company's Common Stock in the
Company's Initial Offering.
2.6 FURNISHING INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 2.2 that the
selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them and the intended method of
disposition of such securities as shall be required to effect the registration
of their Registrable Securities.
5.
2.7 INDEMNIFICATION In the event any Registrable Securities are
included in a registration statement under Section 2.2:
(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, 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 2.7(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
Registrable Securities 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 or liabilities (joint or several) to which the
Company or any such director, officer, 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, controlling person, underwriter or other Holder, or
partner, officer, director or controlling person of such other Holder in
6.
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 2.7(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 2.7
exceed the proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 2.7 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 2.7, 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
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 2.7, 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 2.7.
(d) If the indemnification provided for in this Section 2.7 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
2.7 shall survive completion of any offering of Registrable Securities 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.
7.
2.8 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to this Section 2 may be assigned by
a Holder to a transferee or assignee of Registrable Securities which (i) is a
subsidiary, affiliate, parent, general partner, limited partner or retired
partner of a Holder, or (ii) is a Holder's family member, a trust for the
benefit of an individual Holder or such Holder's family members or a partnership
or other entity all of whose beneficial ownership is held by the Holder or such
Holder's family members; provided, however, (A) the transferor shall, within ten
(10) days after such transfer, furnish to the Company written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned and (B) such transferee shall
agree to be subject to all restrictions set forth in this Agreement.
2.9 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of
this Agreement, the Company shall not, enter into any agreement with any holder
or prospective holder of any securities of the Company that would grant such
holder registration rights senior to those granted to the Holders hereunder
unless the Company also grants such registration rights to the Holders.
2.10 "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 not to exceed one hundred eighty (180) days
following the effective date of a registration statement of the Company filed
under the Securities Act, provided that the Company, all officers and directors
of the Company and any other selling stockholders enter into similar agreements
(subject to customary exceptions).
The obligations described in this Section 2.10 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or 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 one
hundred eighty (180) day period.
2.11 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 Registrable Securities 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, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public;
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act; and
8.
(c) So long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request: a written statement by the 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.
3. CONVENANTS OF THE COMPANY
3.1 FINANCIAL INFORMATION AND REPORTING.
(a) As soon as practicable after the end of each fiscal year of the
Company, and in any event within one hundred twenty (120) days thereafter, the
Company will furnish to Xxxxxx a balance sheet of the Company, as at the end of
such fiscal year, and a statement of income and a statement of cash flows of the
Company, for such year, all prepared in accordance with generally accepted
accounting principles consistently applied and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail. Such financial statements shall be accompanied by (i) a report and
opinion thereon by independent public accountants of national standing selected
by the Company's Board of Directors and reasonably acceptable to Xxxxxx, and
(ii) a certificate executed by an officer of the Company certifying that the
terms of the Series B Preferred and the terms of all other material agreements
between Xxxxxx and the Company, other than that certain License and
Collaboration Agreement dated as of February 27, 1998 (the "Collaboration
Agreement") between the Company and Xxxxxx and any other agreements entered
between the Company and Xxxxxx in connection with the Collaboration Agreement,
have been complied with.
(b) So long as Xxxxxx shall own not less than 5% of the Company's
outstanding capital stock, the Company will furnish Xxxxxx prior to the
beginning of each fiscal year a budget on a monthly basis for such fiscal year
(and as soon as available, any subsequent revisions thereto);
(c) The Company will furnish to Xxxxxx promptly after distribution
(and in any event within 10 days after distribution) other reports of the
Company that are publicly distributed, including written communications made
generally available to the Company's Stockholders or the financial community.
(d) The Company will furnish to each member of the Company's Board
of Directors, as soon as practicable after the end of each month, and in any
event within thirty (30) days thereafter, a balance sheet of the Company as of
the end of each such month, and a statement of income of the Company for such
month and for the current fiscal year to date, prepared in accordance with
generally accepted accounting principles consistently applied, with the
exception that no notes need be attached to such statements and year-end audit
adjustments may not have been made.
3.2 INSPECTION RIGHTS. Xxxxxx shall have the right to visit and inspect
any of the properties of the Company or any of its subsidiaries, and to discuss
9.
the affairs, finances and accounts of the Company or any of its subsidiaries
with its directors, officers, employees and independent public accountants, and
to review such information as is reasonably requested all at such reasonable
times and as often as may be reasonably requested.
3.3 XXXXXX APPROVAL. The Company shall not without the prior written
consent of Xxxxxx enter into any agreement which by its terms restricts the
Company's performance of the terms of the Series B Preferred Stock, the Series B
Stock Purchase Agreement or this Investor Rights Agreement.
3.4 INSIDER TRANSACTIONS. The Company shall not without the approval of
a majority of the Board of Directors, with all non-interested Directors voting
and the approval of the Director designated by Xxxxxx (the "Designated
Director"), authorize or enter into any transactions with any director or
management employee, or such director's or employee's immediate family, other
than indemnification and employment related transactions on customary terms.
3.5 DIRECTORS' FEES AND EXPENSES. For so long as Xxxxxx is entitled to
designate a representative to the Company's Board of Directors, the Company
covenants to (i) reimburse the Designated Director for all reasonable costs
associated with attending meetings of the Board of Directors, and (ii) pay the
Designated Director any compensation paid to other members of the Company's
Board of Directors in connection with the performance of their duties as a
Director.
3.6 CONFIDENTIALITY OF RECORDS. Xxxxxx agrees to keep confidential, and
to use its best efforts to insure that its authorized representatives keep
confidential, any information furnished or made available to it hereunder in
accordance with Section 3.7 of the Series B Stock Purchase Agreement.
3.7 BY-LAWS. The Company shall not, without prior written consent of
Xxxxxx, take any action to amend the By-laws of the Company to (i) change the
designated number of directors from five members or (ii) amend Section 22(b) of
Article IV of such By-laws.
3.8 TERMINATION OF COVENANTS. The covenants of the Company set forth in
Sections 3.1(a) and (b), 3.2, 3.3 and 3.7 of this Agreement shall expire and
terminate on the earlier of (i) the effective date of the registration statement
pertaining to the Initial Offering, or (ii) the date on which Xxxxxx shall own
less than 5% of the Company's outstanding capital stock determined on a
fully-diluted, as-converted basis. The covenants of the Company set forth in
Sections 3.1(c) and (d) and 3.4 of this Agreement shall expire and terminate on
the date on which Xxxxxx shall own less than 5% of the Company's outstanding
capital stock.
4. RIGHT OF FIRST REFUSAL.
4.1 SUBSEQUENT OFFERINGS. Xxxxxx 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 4.6 hereof.
Xxxxxx'x pro rata share is equal to the ratio of (a) the number of shares of the
Company's Common Stock (including all shares of Common Stock issued or issuable
upon conversion of the Shares) which Xxxxxx is deemed to hold immediately prior
to the issuance of such Equity Securities to (b) the total number of shares of
10.
the Company's outstanding Common Stock (including all shares of Common Stock
issued or issuable upon conversion of the Shares or upon the 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 to purchase such a convertible security), (iii)
any security carrying any warrant or right to subscribe to or purchase any
Common Stock, Preferred Stock or other security or (iv) any such warrant or
right.
4.2 EXERCISE OF RIGHT. If the Company proposes to issue any Equity
Securities, it shall give Xxxxxx 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. Xxxxxx shall have forty-five (45) days from the
giving of such 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; provided, however, if the Company
reasonably requests in the Company's original notice that Xxxxxx respond within
thirty (30) days (due to timing considerations relating to the closing of the
issuance of such Equity Securities), then Xxxxxx shall be required to respond to
such notice within thirty (30) days. Notwithstanding the foregoing, the Company
shall not be required to offer or sell such Equity Securities to Xxxxxx if such
offer or sale 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.
4.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If Xxxxxx does not
elect to purchase its pro rata share of the Equity Securities, then the Company
shall have ninety (90) days thereafter to sell the Equity Securities in respect
of which Xxxxxx'x rights were not exercised, at a price and upon general terms
and conditions materially no more favorable to the purchasers thereof than
specified in the Company's notice to Xxxxxx pursuant to Section 4.2 hereof. If
the Company has not sold such Equity Securities within ninety (90) days of the
notice provided pursuant to Section 4.2, the Company shall not thereafter issue
or sell any Equity Securities, without first offering such securities to Xxxxxx
in the manner provided above.
4.4 TERMINATION OF RIGHT OF FIRST REFUSAL. The right of first refusal
established by this Section 4 shall terminate on the first to occur of (i) the
effective date of the registration statement pertaining to the Company's Initial
Offering or (ii) the first date on which Xxxxxx sells, assigns or otherwise
transfers any of the Shares (other than to a subsidiary, affiliate or parent or
in connection with an assignment as provided in Section 7.5 of the Series B
Purchase Agreement or Section 7.5 of the Series B-1 Purchase Agreement, as
applicable). The right of first refusal shall not apply to the Company's Initial
Offering.
4.5 TRANSFER OF RIGHT OF FIRST REFUSAL. The right of first refusal of
the Investor under this Section 4 may be transferred to the same parties,
subject to the same restrictions as any transfer of registration rights pursuant
to Section 2.8.
11.
4.6 EXCLUDED SECURITIES. The right of first refusal established by this
Section 4 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 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 rights of first refusal established by this Section
4 applied with respect 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 fifty percent (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) shares of Common Stock issued upon conversion of the Shares or
the Series A Preferred Stock;
(f) any Equity Securities issued pursuant to any equipment leasing
arrangement; and
(g) shares of the Company's Common Stock or Preferred Stock issued
in connection with strategic transactions involving the Company and other
entities, 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.
5. MISCELLANEOUS.
5.1 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California, as applied to contracts executed and
performed entirely within the State of California, without regard to conflicts
of laws rules.
5.2 SURVIVAL. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any Holder and
the closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
12.
5.3 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 hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate written
notice of the transfer of any Registrable Securities specifying the full name
and address of the transferee, the Company may deem and treat the person listed
as the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes, including the payment of dividends or any
redemption price.
5.4 SEVERABILITY. If one or more provisions of this Agreement is held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
5.5 AMENDMENT AND WAIVER.
(a) Except as otherwise expressly provided, any provision of this
Agreement (other than Sections 3 and 4) may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively) only upon the written consent of the Company and
the Holders of at least a majority of the Registrable Securities. Any amendment
or waiver of any provisions of this Agreement (other than Sections 3 and 4)
effected in accordance with this Agreement shall be binding upon each Holder and
the Company. By acceptance of any benefits under this Agreement, Holders of
Registrable Securities hereby agree to be bound by the provisions hereunder.
(b) Except as otherwise expressly provided, any provision of
Section 3 and 4 of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only upon the written consent of the Company and Xxxxxx.
5.6 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.
5.7 NOTICES. Any notice or report required or permitted to be given or
made under this Agreement by one of the parties hereto to the other shall be in
writing, delivered personally or by facsimile (and promptly confirmed by
personal delivery or courier) or courier, postage prepaid, addressed to such
other party at its address indicated below, or to such other address as the
13.
addressee shall have last furnished in writing to the addressor and shall be
effective upon receipt by the addressee.
THE COMPANY: Epimmune Inc.
0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
Tel: (000) 000-0000 Fax: (000) 000-0000
with a copy to: Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
XXXXXX: X.X. Xxxxxx & Xx.
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Vice President, Business
Development
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to: X.X. Xxxxxx & Xx.
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
CYTEL: Cytel Corporation
0000 Xxxx Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
5.8 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
14.
5.9 PRONOUNS. All pronouns contained herein and any variations thereof
shall be deemed to refer to the masculine, feminine or neuter, singular or
plural, as the identity of the parties hereto may require.
5.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.
IN WITNESS WHEREOF, the parties hereto have executed this Investor
Rights Agreement as of the date set forth in the first paragraph hereof.
COMPANY: INVESTORS:
EPIMMUNE INC. X.X. XXXXXX & CO.
By: By:
-------------------------------- -------------------------------
Title: Title:
----------------------------- ----------------------------
CYTEL CORPORATION
By:
-------------------------------
Title:
----------------------------
EXHIBIT C
EPIMMUNE INC.
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made and entered into this
27th day of February, 1998, by and among Epimmune Inc., a Delaware corporation
(the Company"), Cytel Corporation, a Delaware corporation (the "Key
Stockholder"), and X.X. Xxxxxx & Co., a Delaware corporation (the "Investor").
WITNESSETH:
WHEREAS, the Key Stockholder is the beneficial owner of an aggregate of
Six Million (6,000,000) shares of the Series A Preferred Stock (the "Series A
Preferred") of the Company;
WHEREAS, the Company proposes to sell shares (the "Investor Shares") of
its Series B Preferred Stock (the "Series B Preferred") to the Investor pursuant
to the Series B Preferred Stock Purchase Agreement (the "Series B Stock Purchase
Agreement") of even date herewith;
WHEREAS, the Company proposes to sell shares of its Series B-1
Preferred Stock (the "Series B-1 Preferred"), to the Key Stockholder pursuant to
the Series B-1 Preferred Stock Purchase Agreement (the "Series B-1 Stock
Purchase Agreement") of even date herewith (collectively, the sale of Series B
and Series B-1 Preferred Stock shall be referred to as the "Financing");
WHEREAS, in connection with the consummation of the Financing, the Key
Stockholder has agreed to provide for the future voting of its shares of the
Company's capital stock as set forth below; and
WHEREAS, this Agreement shall be effective only upon the closing of the
Series B Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. VOTING.
1.1 SHARES. The Key Stockholder agrees to hold all shares of voting
capital stock of the Company (including but not limited to all shares of Common
Stock issued upon conversion of the Company's Series A Preferred and Series B-1
Preferred) registered in its name or beneficially owned by it as of the date
hereof (and any and all other securities of the Company legally or beneficially
acquired by the Key Stockholder after the date hereof) (hereinafter collectively
referred to as the "Shares") subject to, and to vote the Shares in accordance
with, the provisions of this Agreement.
1.2 ELECTION OF DIRECTOR. On all matters relating to the election of
directors of the Company, the Key Stockholder agrees to vote all Shares held by
it (or the holders thereof shall consent pursuant to an action by written
1.
consent of the stockholders) so as to elect to the Company's Board of Directors
one (1) individual nominated by the holders of a majority in interest of the
Investor Shares. On all matters relating to the election of directors of the
Company, the Investor agrees to vote all Investor Shares held by it (or the
holders thereof shall consent pursuant to an action by written consent of the
stockholders) so as to elect to the Company's Board of Directors one (1)
individual nominated by the holders of a majority in interest of the Investor
Shares. Any vote taken to remove any director elected pursuant to this Section
1.2, or to fill any vacancy created by the resignation of a director elected
pursuant to this Section 1.2, shall also be subject to the provisions of this
Section 1.2.
1.3 LEGEND.
(a) Concurrently with the execution of this Agreement, there shall
be imprinted or otherwise placed, on certificates representing the Shares, the
following restrictive legend (the "Legend"):
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A VOTING AGREEMENT WHICH PLACES
CERTAIN RESTRICTIONS ON THE VOTING OF THE SHARES REPRESENTED
HEREBY. ANY PERSON ACCEPTING ANY INTEREST IN SUCH SHARES SHALL
BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE
PROVISIONS OF SUCH AGREEMENT. A COPY OF SUCH VOTING AGREEMENT
WILL BE FURNISHED TO THE RECORD HOLDER OF THIS CERTIFICATE
WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS
PRINCIPAL PLACE OF BUSINESS."
(b) The Company agrees that, during the term of this Agreement, it
will not remove, and will not permit to be removed (upon registration of
transfer, reissuance of otherwise), the Legend from any such certificate and
will place or cause to be placed the Legend on any new certificate issued to
represent Shares theretofore represented by a certificate carrying the Legend.
1.4 SUCCESSORS. The provisions of this Agreement shall be binding upon
the successors in interest to any of the Shares. The Company shall not permit
the transfer of any of the Shares on its books or issue a new certificate
representing any of the Shares unless and until the person to whom such security
is to be transferred shall have executed a written agreement, substantially in
the form of this Agreement, pursuant to which such person becomes a party to
this Agreement and agrees to be bound by all the provisions hereof as if such
person were a Key Stockholder or Investor, as applicable; provided that this
provision shall not apply to the extent of any sale or transfer of the Shares to
the Investor.
1.5 OTHER RIGHTS. Except as provided by this Agreement, the Key
Stockholder and Investor shall exercise the full rights of a stockholder with
respect to the Shares.
2.
2. TERMINATION
2.1 This Agreement shall continue in full force and effect from the
date hereof through (i) the date that all of the Shares are sold or otherwise
transferred to the Investor, or (ii) the later of the following dates, on which
it shall terminate in its entirety:
(a) two (2) years from the date of the closing of a firm commitment
underwritten public offering of the Company's Common Stock pursuant to a
registration statement filed with, and declared effective under, the Securities
Act of 1933, as amended, in which the Company receives gross proceeds of at
least $15 million; or
(b) at such time as the Investor holds less than five percent (5%)
of the total shares of Common Stock and Preferred Stock outstanding of the
Company on a fully-diluted, as-converted basis.
3. MISCELLANEOUS
3.1 OWNERSHIP. The Key Stockholder represents and warrants to the
Investor that (a) it now owns the Shares, free and clear of liens or
encumbrances, and has not, prior to or on the date of this Agreement, executed
or delivered any proxy or entered into any other voting agreement or similar
arrangement other than one which has expired or terminated prior to the date
hereof, and (b) it has full power and capacity to execute, deliver and perform
this Agreement, which has been duly executed and delivered by, and evidences the
valid and binding obligation of, the Key Stockholder enforceable in accordance
with its terms.
3.2 FURTHER ACTION. If and whenever the Shares are sold, the Key
Stockholder or the personal representative of the Key Stockholder shall do all
things and execute and deliver all documents and make all transfers, and cause
any transferee of the Shares to do all things and execute and deliver all
documents, as may be necessary to consummate such sale consistent with this
Agreement.
3.3 SPECIFIC PERFORMANCE. The parties hereto hereby declare that it is
impossible to measure in money the damages which will accrue to a party hereto
or to their heirs, personal representatives, or assigns by reason of a failure
to perform any of the obligations under this Agreement and agree that the terms
of this Agreement shall be specifically enforceable. If any party hereto or his
heirs, personal representatives, or assigns institutes any action or proceeding
to specifically enforce the provisions hereof, any person against whom such
action or proceeding is brought hereby waives the claim or defense therein that
such party or such personal representative has an adequate remedy at law, and
such person shall not offer in any such action or proceeding the claim or
defense that such remedy at law exists.
3.4 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California, as applied to contracts executed and
performed entirely within the State of California, without regard to conflicts
of laws rules.
3.5 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) only with
the written consent of the parties hereto.
3.
3.6 SEVERABILITY. If one or more provisions of this Agreement is held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
3.7 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective permitted
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective permitted successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
3.8 ADDITIONAL SHARES. In the event that subsequent to the date of this
Agreement any shares or other securities (other than any shares or securities of
another corporation issued to the Company's stockholders pursuant to a plan of
merger) are issued on, or in exchange for, any of the Shares by reason of any
stock dividend, stock split, consolidation of shares, reclassification or
consolidation involving the Company, such shares or securities shall be deemed
to be Shares for purposes of this Agreement.
3.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.10 ENTIRE AGREEMENT. This Agreement, along with the Series B Stock
Purchase Agreement and each of the Exhibits thereto and the Series B-1 Stock
Purchase Agreement and each of the Exhibits thereto, constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof and no party shall be liable or bound to any other
in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
[THIS SPACE INTENTIONALLY LEFT BLANK]
4.
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement as of the date first above written.
COMPANY: INVESTOR:
EPIMMUNE INC. X. X. XXXXXX & CO.
By: By:
-------------------------------------- --------------------------------
President Title:
-----------------------------
KEY STOCKHOLDER:
CYTEL CORPORATION
By:
---------------------------------------
Title:
------------------------------------
EXHIBIT D
CERTIFICATE OF DESIGNATION
OF THE
SERIES B CONVERTIBLE PREFERRED STOCK
(PAR VALUE $.001 PER SHARE)
OF
CYTEL CORPORATION
---------------
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
---------------
CYTEL CORPORATION, a company organized and existing under the General
Corporation Law of the State of Delaware (the "Company"), in accordance with the
provisions of Section 103 thereof, and pursuant to Section 151 thereof, DOES
HEREBY CERTIFY:
That the Certificate of Incorporation of the Company (the "Certificate
of Incorporation") authorizes the creation of up to 10,000,000 shares of the
Company's preferred stock, par value $.001 per share (such preferred stock,
together with all other preferred stock of the Company the creation of which is
in the future authorized by the Certificate of Incorporation, referred to herein
as the "Preferred Stock"); and
That pursuant to the authority conferred upon the Board of Directors
(the "Board") by the Certificate of Incorporation of the Company, the Board on
February 20, 1998, approved the creation, issuance and the voting powers of
shares of Preferred Stock to be issued in one Series and adopted the following
resolution creating a series of 659,898 shares of Preferred Stock designated as
set forth below:
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board by provisions of the Certificate of Incorporation of the
Company and the General Corporation Law of the State of Delaware, the issuance
of a series of Preferred Stock, which shall consist of 659,898 shares of the
10,000,000 shares of Preferred Stock which the Company now has authority to
issue, be, and the same hereby is, authorized, and the Board hereby fixes the
powers, designations, preferences and relative participating, optional or other
special rights, and the qualifications, limitations or restrictions thereof, of
the shares of such series (in addition to the powers, designations, preferences
and relative participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, set forth in the
Certificate of Incorporation which may be applicable to the Preferred Stock)
authorized by this resolution as follows:
SECTION 1. DESIGNATION OF SERIES B PREFERRED STOCK. The designation of such
series of Preferred Stock authorized by this resolution shall be Series B
Convertible Preferred Stock (the "Series B Preferred"). The Series B Preferred
is issuable solely in whole shares that shall entitle the holder thereof to
exercise the voting rights, to participate in the distributions and to have the
benefit of all other rights of holders of Series B Preferred, as set forth
herein and in the Certificate of Incorporation.
SECTION 2. DIVIDEND RIGHTS OF SERIES B PREFERRED. So long as any shares of
Series B Preferred shall be outstanding, no dividend, whether in cash or
property, shall be paid or declared nor shall any other distribution be made, on
any Common Stock (other than any dividend or distribution payable solely in
Common Stock of the Company), unless a dividend is paid with respect to all
outstanding shares of Series B Preferred in an amount per share (on an
as-if-converted to Common Stock basis) equal to the amount paid or set aside for
each share of Common Stock.
SECTION 3. LIQUIDATION PREFERENCE.
(a) SERIES B PREFERRED. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of Series B
Preferred then outstanding shall be entitled to be paid, pro rata, out of the
assets of the Company available for distribution to its stockholders, whether
from capital, surplus or earnings, before any payment shall be made in respect
of any other class or series of stock ranking junior to the Series B Preferred,
an amount equal to $5.91 per share (the "Series B Original Issue Price") (as
adjusted for any combinations, consolidations, stock distributions, stock
dividends or other recapitalizations with respect to such shares) plus any
declared but unpaid dividends on such shares; provided that the total amounts to
which the holders of Series B Preferred are entitled under this provision shall
not exceed the value of the outstanding securities of Epimmune Inc.("Epimmune")
then owned by the Company. If, upon liquidation, dissolution or winding up of
the Company, the assets of the Company available for distribution to its
stockholders shall be insufficient to pay the holders of the Series B Preferred
the full amounts to which they shall be entitled as set forth above, then the
entire assets of the Company legally available for distribution shall be
distributed pro rata among the holders of the Series B Preferred in proportion
to the preferential amount each such holder would otherwise be entitled to
receive. After setting apart or paying in full the preferential amounts due the
holders of the Series B Preferred, the holders of the Series B Preferred will
not be entitled to any further participation in any distribution of the assets
of the Company, and the entire remaining assets of the Company legally available
for distribution, if any, shall be distributed among the holders of Common Stock
in proportion to the shares of Common Stock then held by them.
(b) MERGERS, CONSOLIDATIONS NOT DEEMED LIQUIDATIONS. The merger or
consolidation of the Company into or with another company in which the Company
is not the surviving entity or in which the stockholders of this Company
immediately prior to such event shall own less than a majority of the voting
securities of the surviving company, or the sale, transfer, or lease (but not
including a transfer or lease by pledge or mortgage to a bona fide lender) of
all or substantially all of the assets of the Company, shall not be deemed a
liquidation, dissolution or winding up of the Company as those terms are used in
this Section 3.
SECTION 4. CONVERSION PRIVILEGES.
(a) RIGHTS OF CONVERSION. Subject to the other provisions of this
Certificate of Designation, each share of Series B Preferred shall be
convertible, without payment of any additional consideration by the holder
thereof and at the option of such holder, into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing the Series B
Original Issue Price by the Series B Conversion Price (as defined below) in
effect at the time of
2.
conversion, at any time and from time to time after February 27, 2001, at the
office of the Company or any transfer agent for such stock; provided that the
average of the closing prices per share of the Common Stock on the Nasdaq
National Market (or any other national securities exchange on which the Common
Stock is then traded) for the 10 consecutive trading days ending on the trading
date immediately preceding the date of conversion is $5.00 or greater. The price
at which shares of Common Stock shall be deliverable upon conversion of Series B
Preferred (the "Series B Conversion Price") shall initially equal $7.50 per
share, subject to adjustment as set forth below.
(b) MECHANICS OF CONVERSION. Before any holder of Series B Preferred
shall be entitled to convert the same into shares of Common Stock pursuant to
Section 4(a) hereof, such holder shall surrender the certificate or certificates
thereof, duly endorsed, at the office of the Company or of any transfer agent
for such stock, and shall give written notice to the Company at such office that
such holder elects to convert the same and shall state therein the name or names
in which such holder wishes the certificate or certificates for shares of Common
Stock to be issued. The Company shall, as soon as practicable thereafter, issue
and deliver at such office to such holder of Series B Preferred or its nominee
or nominees, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid, together with cash in
lieu of any fractional shares. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of surrender of the
shares of Series B Preferred to be converted. The person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date.
(c) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the Company shall at
any time or from time to time after the date that the first share of Series B
Preferred is issued (the "Original Issue Date") effect a subdivision of the
outstanding Common Stock without a corresponding subdivision of the Preferred
Stock, the Series B Conversion Price in effect immediately before that
subdivision shall be proportionately decreased. Conversely, if the Company shall
at any time or from time to time after the Original Issue Date combine the
outstanding shares of Common Stock into a smaller number of shares without a
corresponding combination of the Preferred Stock, the Series B Conversion Price
in effect immediately before the combination shall be proportionately increased.
Any adjustment under this Section 4(c) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(d) ADJUSTMENT FOR COMMON STOCK DIVIDENDS AND DISTRIBUTIONS. If the
Company at any time or from time to time after the Original Issue Date makes, or
fixes a record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in additional shares of Common
Stock, in each such event the Series B Conversion Price that is then in effect
shall be decreased as of the time of such issuance or, in the event such record
date is fixed, as of the close of business on such record date, by multiplying
the Series B Conversion Price then in effect by a fraction (i) the numerator of
which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date, and (ii) the denominator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
3.
of Common Stock issuable in payment of such dividend or distribution; provided,
however, that if such record date is fixed and such dividend is not fully paid
or if such distribution is not fully made on the date fixed therefor, the Series
B Conversion Price shall be recomputed accordingly as of the close of business
on such record date and thereafter the Series B Conversion Price shall be
adjusted pursuant to this Section 4(d) to reflect the actual payment of such
dividend or distribution.
(e) ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. If the Company at
any time or from time to time after the Original Issue Date makes, or fixes a
record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in securities of the Company
other than shares of Common Stock, in each such event provision shall be made so
that the holders of the Series B Preferred shall receive upon conversion
thereof, in addition to the number of shares of Common Stock receivable
thereupon, the amount of other securities of the Company which they would have
received had their Series B Preferred been converted into Common Stock on the
date of such event and had they thereafter, during the period from the date of
such event to and including the conversion date, retained such securities
receivable by them as aforesaid during such period, subject to all other
adjustments called for during such period under this Section 4 with respect to
the rights of the holders of the Series B Preferred or with respect to such
other securities by their terms.
(f) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If at any
time or from time to time after the Original Issue Date, the Common Stock
issuable upon the conversion of the Series B Preferred is changed into the same
or a different number of shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend or a reorganization, merger,
consolidation or sale of assets provided for elsewhere in Section 2 or this
Section 4), in any such event each holder of Series B Preferred shall have the
right thereafter to convert such stock into the kind and amount of stock and
other securities and property receivable upon such recapitalization,
reclassification or other change by holders of the maximum number of shares of
Common Stock into which such shares of Series B Preferred could have been
converted immediately prior to such recapitalization, reclassification or
change, all subject to further adjustment as provided herein or with respect to
such other securities or property by the terms thereof.
(g) REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. If at
any time or from time to time after the Original Issue Date, there is a capital
reorganization of the Common Stock (other than a subdivision or combination of
shares or stock dividend or a reorganization, merger, consolidation or sale of
assets provided for elsewhere in Section 2 or this Section 4), as a part of such
capital reorganization, provision shall be made so that the holders of the
Series B Preferred shall thereafter be entitled to receive upon conversion of
the Series B Preferred the number of shares of stock or other securities or
property of the Company to which a holder of the number of shares of Common
Stock deliverable upon conversion would have been entitled on such capital
reorganization, subject to adjustment in respect of such stock or securities by
the terms thereof. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 4 with respect to the rights of
the holders of Series B Preferred after the capital reorganization to the end
that the provisions of this Section 4 (including adjustment of the Series B
Conversion Price then in effect and the number of shares issuable upon
conversion of the Series B Preferred) shall be applicable after that event and
be as nearly equivalent as practicable.
4.
(h) CERTIFICATES AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the number of shares of Common Stock issuable upon
conversion of a share of Series B Preferred pursuant to this Section 4, the
Company at its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to each holder of
Series B Preferred 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 any holder of
Series B Preferred, furnish or cause to be furnished to such holder a like
certificate prepared by the Company setting forth (i) such adjustments and
readjustments, (ii) the Series B Conversion Price at the time in effect, and
(iii) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of the Series B
Preferred.
(i) NOTICES OF RECORD DATE. In the event of any taking by the Company of
a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any security or right convertible
into or entitling the holder thereof to receive additional shares of Common
Stock, or any right to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities or property, or to receive any
other right, the Company shall mail to each holder of Series B Preferred at
least 10 days prior to the date specified therein, a notice specifying the date
on which any such record is to be taken for the purpose of such dividend,
distribution, security or right, and the amount and character of such dividend,
distribution, security or right.
(j) ISSUE TAXES. The holders of Series B Preferred shall pay any and all
issue, transfer and other taxes that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of shares of Series B Preferred
pursuant hereto.
(k) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, solely for the purpose of effecting the conversion of the
shares of the Series B Preferred, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series B Preferred; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Series B Preferred, the
Company will take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose, including,
without limitation, engaging in best efforts to obtain the requisite stockholder
approval of any necessary amendment to the Certificate of Incorporation. All
shares of Common Stock which are issuable upon such conversion shall, when
issued, be duly and legally issued, fully paid and nonassessable and free of all
taxes, liens and charges.
(l) FRACTIONAL SHARES. No fractional share shall be issued upon the
conversion of any share or shares of Series B Preferred. All shares of Common
Stock (including fractions thereof) issuable upon conversion of more than one
share of Series B Preferred by a holder thereof shall be aggregated for purposes
5.
of determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of a fraction of a share of Common Stock, the Company
shall, in lieu of issuing any fractional share, pay the holder otherwise
entitled to such fraction a sum in cash equal to the fair market value of such
fraction on the date of conversion (as determined in good faith by the Board).
(m) NOTICES. Any notice required by the provisions of this Section 4
shall be in writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified, (ii) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient; if not, then on
the next business day, (iii) five days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (iv) one day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All notices shall be addressed
to each holder of record at the address of such holder appearing on the books of
the Company.
SECTION 5. VOTING RIGHTS.
(a) Except as provided in this Section 5 or as otherwise from time to
time required by law, the Series B Preferred shall vote together with the Common
Stock as a single class. The holder of each share of Series B Preferred shall be
entitled to that number of votes equal to the number of shares of Common Stock
into which such share would then be converted upon the application of Section
4(a) above and shall be entitled to notice of all stockholders' meetings in
accordance with the By-laws of the Company. The foregoing voting provisions
shall not apply if, at or prior to the time when the act with respect to which
such vote would otherwise be required shall be effected, all outstanding shares
of Series B Preferred shall have been converted into Common Stock.
(b) Notwithstanding anything contained in Section 5(a) to the contrary,
if any shares of Series B Preferred held by X.X. Xxxxxx & Co. (the "Shares")
when aggregated with all other shares of voting capital stock of the Company or
its subsidiary Epimmune Inc. ("Epimmune") held by X.X. Xxxxxx & Co. would (if
not for this Section 5(b)) entitle X.X. Xxxxxx & Co. to vote more than 19.4% of
the outstanding common stock of Epimmune (assuming the conversion of all such
shares of such capital stock into common stock of Epimmune pursuant to the
respective terms thereof), then any such Shares in excess of 19.4% shall be
entitled to no vote.
In facilitation of the foregoing voting restriction, the following
formula shall be applied to determine the number of shares of Series B Preferred
held by Xxxxxx which shall be entitled to a vote:
X = PC + (((CE*SC-.194*TC*TE+SE*TC)/(.194*TE-SE-CE)) x R)
where:
TE = total number of shares of Epimmune common stock (on an
as-converted basis) outstanding
6.
CE = number of shares of Epimmune common stock (on an as-converted
basis) owned by Cytel
SE = number of shares of Epimmune common stock (on an as-converted
basis) owned by Xxxxxx
XX = total number of shares of Cytel Common Stock (on an
as-converted basis) outstanding
SC = total number of shares of Cytel Common Stock (on an
as-converted basis) owned by Xxxxxx
PC = total number of shares of Cytel Series B Preferred owned by
Xxxxxx
X = number of shares of Cytel Series B Preferred Stock owned by
Xxxxxx that will have voting rights, where 0
