EXHIBIT 4.1
UNIT PURCHASE AGREEMENT
This UNIT PURCHASE AGREEMENT (this "AGREEMENT"), dated as of September 18,
2003, is made by and among EPIMMUNE INC., a Delaware corporation (the
"COMPANY"), and the Purchasers listed on EXHIBIT A, together with their
permitted transferees (each, a "PURCHASER" and collectively, the "PURCHASERS").
RECITALS:
A. The Company has retained the services of Jefferies & Company, Inc.
("JEFFERIES") pursuant to the terms of an engagement letter dated July 17, 2003,
as amended on September 12, 2003 (the "ENGAGEMENT LETTER"), to assist the
Company in connection with a private placement of the Company's Securities (the
"OFFERING").
B. The Company and the Purchasers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act and Rule 506 under Regulation D.
C. The Purchasers desire to purchase and the Company desires to sell, upon
the terms and conditions stated in this Agreement, up to a maximum of
$10,000,000 of Common Stock and warrants to purchase Common Stock of the
Company.
D. The capitalized terms used herein and not otherwise defined have the
meanings given them in Article 8 hereof.
AGREEMENT
In consideration of the premises and the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Purchasers (severally and not
jointly) hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF UNITS
1.1 PURCHASE AND SALE OF UNITS. At the Closing the Company will issue and
sell to each Purchaser, and each Purchaser will, severally and not jointly,
purchase from the Company the number of shares of Common Stock of the Company
(the "SHARES") and the number of warrants (the "WARRANTS") to purchase shares of
Common Stock set forth opposite such Purchaser's name on EXHIBIT A (the Shares
and Warrants referred to collectively as the "UNITS"). The purchase price for
each Unit shall be $1.86725, which is the sum of (i) $1.836, the average of the
closing bid price of the Common Stock as reported on the Nasdaq National Market
(symbol "EPMN"), as the 4:00 closing bid price, for the five trading days
preceding September 18, 2003 and (ii) $0.03125 (the "PURCHASE PRICE"). For each
four Shares purchased by a Purchaser, such Purchaser shall receive a Warrant to
purchase one share of Common Stock of the Company at an exercise price equal to
$2.33406, which represents 125% of the Purchase
1.
Price, and the Warrants shall be exercisable for three years from the Closing
Date pursuant to the Warrant substantially in the form attached as EXHIBIT B.
1.2 PAYMENT. At the Closing, each Purchaser will pay the aggregate
Purchase Price set forth opposite its name on EXHIBIT A hereof by wire transfer
of immediately available funds in accordance with the Company's wire
instructions set forth on EXHIBIT C hereto. The Company will deliver stock
certificates to the Purchasers representing the Shares and Warrants representing
the Warrant Shares against delivery of the aggregate Purchase Price within three
business days of the Closing Date.
1.3 CLOSING DATE. The execution of this Agreement and the closing of the
transaction contemplated by this Agreement will take place on September 18, 2003
(the "CLOSING DATE") and the closing (the "CLOSING") will be held at the offices
of the Company or at such other place as the parties agree.
ARTICLE 2
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Each Purchaser represents and warrants to the Company, severally and not
jointly with respect to itself and its purchase hereunder, that:
2.1 INVESTMENT PURPOSE. The Purchaser is purchasing the Units for its own
account and not with a present view toward the public sale or distribution
thereof.
2.2 ACCREDITED PURCHASER STATUS. The Purchaser is an "ACCREDITED INVESTOR"
as defined in Rule 501(a) of Regulation D. The Purchaser has delivered the
applicable Accredited Investor Questionnaire in the form of EXHIBIT D to the
Company. The Purchaser hereby represents that, either by reason of the
Purchaser's business or financial experience, the Purchaser has the capacity to
protect the Purchaser's own interests in connection with the purchase of the
Units. In addition, the Purchaser is capable of evaluating the merits and risks
of its investment in the Company and has the capacity to protect its own
interest.
2.3 RELIANCE ON EXEMPTIONS. The Purchaser understands that the Units are
being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Purchaser's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of the Purchaser to acquire
the Units.
2.4 INFORMATION. The Purchaser has been furnished with all relevant
materials relating to the business, finances and operations of the Company
necessary to make an investment decision, and materials relating to the offer
and sale of the Units, that have been requested by the Purchaser, including,
without limitation, the Company's SEC Documents and the Purchaser has read the
SEC Documents. The Purchaser has been afforded the opportunity to ask questions
of the Company.
2.
2.5 ACKNOWLEDGEMENT OF RISK. The Purchaser acknowledges and understands
that its investment in the Units involves a significant degree of risk,
including, without limitation, (i) the Company remains a development stage
business with limited operating history and requires substantial funds in
addition to the proceeds from the sale of the Units; (ii) an investment in the
Company is speculative, and only Purchasers who can afford the loss of their
entire investment should consider investing in the Company and the Units; (iii)
the Purchaser may not be able to liquidate its investment; (iv) transferability
of the Units is extremely limited; (v) in the event of a disposition of the
Units, the Purchaser could sustain the loss of its entire investment; and (vi)
the Company has not paid any dividends on its Common Stock since inception and
does not anticipate the payment of dividends in the foreseeable future. Such
risks are more fully set forth in the SEC Documents.
2.6 GOVERNMENTAL REVIEW. The Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Units or an
investment therein.
2.7 TRANSFER OR RESALE. The Purchaser understands that:
(A) the Units have not been and are not being registered under the
Securities Act or any applicable state securities laws and, consequently, the
Purchaser may have to bear the risk of owning the Units for an indefinite period
of time because the Units may not be transferred unless (i) the resale of the
Units is registered pursuant to an effective registration statement under the
Securities Act, as contemplated in Article 6; (ii) the Purchaser has delivered
to the Company an opinion of counsel (in form, substance and scope customary for
opinions of counsel in comparable transactions) to the effect that the Units to
be sold or transferred may be sold or transferred pursuant to an exemption from
such registration; or (iii) the Units are sold or transferred pursuant to Rule
144;
(B) any sale of the Units made in reliance on Rule 144 may be made
only in accordance with the terms of Rule 144 and, if Rule 144 is not
applicable, any resale of the Units under circumstances in which the seller (or
the person through whom the sale is made) may be deemed to be an underwriter (as
that term is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and regulations of the SEC
thereunder; and
(C) except as set forth in Article 6, neither the Company nor any
other person is under any obligation to register the resale of the Shares or the
Warrant Shares under the Securities Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.
2.8 LEGENDS. The Purchaser understands the certificates representing the
Units will bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates for such
Units):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES. THE SECURITIES MAY
3.
NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS.
2.9 AUTHORIZATION; ENFORCEMENT. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Purchaser and represents the
valid and binding obligations of the Purchaser enforceable in accordance with
its terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and the application of general principles of equity.
2.10 RESIDENCY. The Purchaser is a resident of the jurisdiction set forth
immediately below such Purchaser's name on the signature pages hereto.
2.11 ACKNOWLEDGEMENTS REGARDING PLACEMENT AGENT. The Purchaser
acknowledges that Jefferies (the "PLACEMENT AGENT") is acting as the exclusive
Placement Agent for the Units being offered hereby and will be compensated by
the Company for acting in such capacity. The Purchaser represents that (i) the
Purchaser was contacted regarding the sale of the Units by the Placement Agent
(or an authorized agent or representative thereof) with whom the Purchaser had a
prior substantial pre-existing relationship and (ii) no Units were offered or
sold to it by means of any form of general solicitation or general advertising,
and in connection therewith the Purchaser did not: (A) receive or review any
advertisement, article, notice or other communication published in a newspaper
or magazine or similar media or broadcast over television or radio whether
closed circuit, or generally available; or (B) attend any seminar meeting or
industry investor conference whose attendees were invited by any general
solicitation or general advertising.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers, that:
3.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of Delaware,
the jurisdiction in which it is incorporated, with full power and authority
(corporate and other) to own, lease, use and operate its properties and to carry
on its business as and where now owned, leased, used, operated and conducted.
The Company is duly qualified to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect.
3.2 AUTHORIZATION; ENFORCEMENT. (i) The Company has all requisite
corporate power and authority to enter into and to perform its obligations under
this Agreement, to consummate the transactions contemplated hereby and to issue
the Units in accordance with the terms hereof; (ii) the execution, delivery and
performance of this Agreement by the Company
4.
and the consummation by it of the transactions contemplated hereby (including
without limitation the issuance of the Units) have been duly authorized by the
Company's Board of Directors and no further consent or authorization of the
Company, its Board of Directors, or its stockholders is required, (iii) this
Agreement has been duly executed by the Company; and (iv) this Agreement
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to the effect of any
applicable bankruptcy, insolvency, reorganization, or moratorium or similar laws
affecting the rights of creditors generally and the application of general
principles of equity.
3.3 CAPITALIZATION. The capitalization of the Company is described in the
Company's SEC Documents. The Company has not issued any capital stock since June
30, 2003 other than pursuant to employee benefit plans disclosed in the
Company's SEC Documents. All of such outstanding shares of capital stock have
been duly authorized, validly issued, fully paid and nonassessable. No shares of
capital stock of the Company, including the Units issuable pursuant to this
Agreement, are subject to preemptive rights or any other similar rights of the
stockholders of the Company or any liens or encumbrances imposed through the
actions or failure to act of the Company. There are no (i) outstanding options,
warrants, rights to subscribe for, puts, calls, rights of first refusal,
agreements, understandings, claims or other commitments or rights of any
character whatsoever relating to, or securities or rights convertible into,
exercisable for, or exchangeable for any shares of capital stock of the Company,
or arrangements by which the Company is or may become bound to issue additional
shares of capital stock of the Company (excluding those rights that have been
waived); (ii) agreements or arrangements under which the Company is obligated to
register the sale of any of its securities under the Securities Act (except as
contemplated under Article 6) or the resale of its securities (except those
obligations that have been complied with) and (iii) anti-dilution or price
adjustment provisions contained in any security issued by the Company (or in any
agreement providing rights to security holders) that will be triggered by the
issuance of the Units other than (a) rights created in connection with the
transactions contemplated by this Agreement; (b) the conversion privileges of
the Series S and S-1 Preferred Stock; (c) the anti-dilution adjustment to the
shares of Series S Preferred Stock that will occur as a result of the issuance
of the Units; (d) rights held by Xxxxx Xxxxxx and Genencor International, Inc.
to each purchase up to 500,000 shares of Common Stock of the Company under
certain conditions; (e) 2,154,875 shares of Common Stock issuable upon exercise
of options granted under the Company's equity incentive plan (635,000 of which
were recently granted to officers of the Company in connection with a general
retention plan); (f) 200 shares reserved for future issuance under the Company's
equity incentive plan; (g) 173,749 shares reserved for issuance under the
Company's Employee Stock Purchase Plan; (h) 4,960 shares reserved for issuance
upon the exercise of existing warrants; and (i) registration rights under the
Securities Purchase Agreement dated July 9, 2001 between the Company and
Genencor International, Inc. and under the Investor Rights Agreement dated July
1, 1999 between the Company and Pharmacia. The Company has furnished to the
Purchasers true and correct copies of the Company's Amended and Restated
Certificate of Incorporation, as amended (the "CERTIFICATE OF INCORPORATION"),
as in effect on the date hereof, and the Company's Amended and Restated Bylaws
(the "BYLAWS") as in effect on the date hereof.
3.4 ISSUANCE OF UNITS. The Shares and all of the shares of Common Stock
issuable upon exercise of the Warrants (the "WARRANT SHARES") are duly
authorized and, upon issuance in
5.
accordance with the terms of this Agreement (and in case of the Warrant Shares,
the Warrants) will be validly issued, fully paid and non-assessable, free from
all taxes, liens, claims, encumbrances and charges with respect to the issue
thereof, will not be subject to preemptive rights or other similar rights of
stockholders of the Company.
3.5 NO CONFLICTS; NO VIOLATION.
(A) The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby (including, without limitation, the issuance of the Units) will not (i)
conflict with or result in a violation of any provision of its Certificate of
Incorporation or Bylaws, (ii) violate or conflict with, or result in a breach of
any provision of, or constitute a default (or an event which with notice or
lapse of time or both could become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, or instrument to which the Company is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including United States federal and state securities laws and regulations and
regulations of any self-regulatory organizations to which the Company or its
securities are subject) applicable to the Company, except for such conflicts,
breaches, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect.
(B) The Company is not in violation of its Certificate of
Incorporation or Bylaws and the Company is not in default under any agreement,
indenture or instrument to which the Company is a party or by which any property
or assets of the Company is bound or affected, except for possible defaults as
would not, individually or in the aggregate, have a Material Adverse Effect.
(C) The Company is not conducting its business in violation of any
law, ordinance or regulation of any governmental entity, the failure to comply
with which would, individually or in the aggregate, have a Material Adverse
Effect.
(D) The Company is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement in accordance
with the terms hereof, or to issue and sell the Units in accordance with the
terms hereof other than such as have been made or obtained, and except for any
filings required to be made under federal or state securities laws. All
consents, authorizations, orders, filings and registrations that the Company is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the Closing Date.
3.6 SEC DOCUMENTS, FINANCIAL STATEMENTS. The Company has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC since January 1, 2003, pursuant to the reporting requirements
of the Exchange Act (all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements and schedules thereto and
documents (other than exhibits) incorporated by reference therein, being
hereinafter referred to herein as the "SEC DOCUMENTS"). The Company has
delivered to each Purchaser, or each Purchaser has had access to, true and
complete copies of the SEC
6.
Documents. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act or the Securities
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any 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. As of their respective
dates, the financial statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance with
accounting principles generally accepted in the United States, consistently
applied, during the periods involved (except (i) as may be otherwise indicated
in such financial statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the financial position of the Company as of the dates thereof and the
results of its operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments). Except
as set forth in the financial statements included in the SEC Documents, the
Company has no liabilities, contingent or otherwise, other than liabilities
incurred in the ordinary course of business subsequent to June 30, 2003, and
liabilities of the type not required under generally accepted accounting
principles to be reflected in such financial statements. Such liabilities
incurred subsequent to June 30, 2003, are not, in the aggregate, material to the
financial condition or operating results of the Company.
3.7 ABSENCE OF LITIGATION. There is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its officers or
directors acting as such that if determined adversely to the Company could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
3.8 INTELLECTUAL PROPERTY RIGHTS. To the Company's knowledge, the Company
owns or possesses licenses or sufficient rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets, trademarks,
trademark applications, service marks, service names, trade names and copyrights
necessary to enable it to conduct its business as now operated and as proposed
to be operated as described in the SEC Documents, except where the failure to
currently own or posses could not reasonably be expected to have a Material
Adverse Effect (the "INTELLECTUAL PROPERTY"). Except as set forth in the SEC
Documents, there are no material options, licenses or agreements relating to the
Intellectual Property, nor is the Company bound by or a party to any material
options, licenses or agreements relating to the patents, patent applications,
patent rights, inventions, know-how, trade secrets, trademarks, trademark
applications, service marks, service names, trade names or copyrights of any
other person or entity. Except as disclosed in the SEC Documents, there is no
claim or action or proceeding pending or, to the Company's knowledge, threatened
that challenges the right of the Company with respect to any Intellectual
Property.
3.9 TAX STATUS. The Company has timely made or filed all federal, state
and foreign income and all other tax returns, reports and declarations required
by any jurisdiction to which it
7.
is subject (unless and only to the extent that the Company has set aside on its
books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has timely paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith, and has set aside on its books provisions reasonably adequate for
the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. To the Company's knowledge, there are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction. The Company has not executed a waiver with respect to the
statute of limitations relating to the assessment or collection of any foreign,
federal, state or local tax. None of the Company's tax returns is presently
being audited by any taxing authority.
3.10 ENVIRONMENTAL LAWS. The Company (i) is in compliance in all material
respects with all applicable foreign federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) has received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
its business and (iii) is in compliance with all terms and conditions of any
such permit, license or approval where, in each of the three foregoing clauses,
the failure to so comply would have, individually or in the aggregate, a
Material Adverse Effect
3.11 PLACEMENT AGENT. The Company has taken no action that would give rise
to any claim by any person for brokerage commissions, placement agent's fees or
similar payments relating to this Agreement or the transactions contemplated
hereby, except for dealings with the Placement Agent, whose commissions and fees
will be paid by the Company.
3.12 EMPLOYMENT MATTERS. The Company is in compliance with all federal,
state, local and foreign laws and regulations respecting employment and
employment practices, terms and conditions of employment and wages and hours
except where failure to be in compliance would not have a Material Adverse
Effect. The Company is not bound by or subject to (and none of its assets or
properties is bound by or subject to) any written or oral, express or implied,
contract, commitment or arrangement with any labor union, and no labor union has
requested or, to the Company's knowledge, has sought to represent any of the
employees, representatives or agents of the Company. There is no strike or other
labor dispute involving the Company pending, or to the Company's knowledge,
threatened, that could have a Material Adverse Effect nor is the Company aware
of any labor organization activity involving its employees. The Company is not
aware that any officer or key employee intends to terminate his or her
employment with the Company, nor does the Company have a present intention to
terminate the employment of any officer or key employee.
3.13 SUBSIDIARIES. The Company does not presently own or control, directly
or indirectly, any interest in any other corporation, association, joint
venture, partnership or other business entity and the Company is not a direct or
indirect participant in any joint venture or partnership.
3.14 NO CONFLICT OF INTEREST. The Company is not indebted, directly or
indirectly, to any of its officers or directors or to their respective spouses
or children, in any amount
8.
whatsoever other than in connection with expenses or advances of expenses
incurred in the ordinary course of business or relocation expenses of employees.
None of the Company's officers, directors or employees, or any members of their
immediate families, are directly, or indirectly, indebted to the Company (other
than as described in the SEC Documents) or, to the Company's knowledge, have any
direct or indirect ownership interest in any entity with which the Company is
affiliated or with which the Company has a business relationship, or any entity
which competes with the Company, except that officers, directors, employees
and/or stockholders of the Company may own stock in any publicly traded company
that may compete with the Company. To the Company's knowledge, none of the
Company's officers, directors or employees or any members of their immediate
families are, directly or indirectly, interested in any material contract with
the Company. The Company is not a guarantor or indemnitor of any indebtedness of
any other person or entity.
3.15 S-3 STATUS. The Company currently meets the "registrant eligibility"
requirements set forth in the general instructions to Form S-3 to enable the
registration of the resale of the Registrable Securities and, to the Company's
knowledge, there exist no facts or circumstances that could reasonably be
expected to prohibit or delay the filing or effectiveness of a registration
statement on Form S-3 covering the resale of the Registrable Securities;
provided, however, the Company does not currently meet the requirements for a
primary offering.
3.16 NO REGISTRATION. Assuming the accuracy of the representations and
warranties made by, and compliance with the covenants of, the Purchasers in
Article 2 hereof, no registration of the Units under the Securities Act is
required in connection with the offer and sale of the Units by the Company to
the Purchasers as contemplated by the Agreement.
3.17 NASDAQ COMPLIANCE. The Company's Common Stock is registered pursuant
to Section 12(g) of the Exchange Act and is listed on The Nasdaq National Market
(the "NASDAQ NATIONAL MARKET"), and the Company has taken no action designated
to, or which is reasonably likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from The Nasdaq National Market. Except for that certain Letter dated
August 21, 2003, the Company has not, in the 12 months preceding the date
hereof, received notice from The Nasdaq National Market to the effect that the
Company is not in compliance with the listing or maintenance requirements
thereof, and the Company is, and has no reason to believe that it will not in
the foreseeable future continue to be in, in compliance with all such listing
and maintenance requirements (or in the case of the minimum stockholder equity
standard, regain compliance with such listing requirement). The sale and
issuance of the Units does not require stockholder approval, including, without
limitation, pursuant to the Nasdaq Marketplace Rules.
3.18 NO MANIPULATION OF STOCK. The Company has not taken and will not, in
violation of applicable law, take any action outside the ordinary course of
business designated to or that might reasonably be expected to cause or result
in unlawful manipulation of the price of the Common Stock to facilitate the sale
or resale of the Units.
3.19 LISTING. The Company shall comply with all requirements of the
National Association of Securities Dealers, Inc. (the "NASD") with respect to
the issuance of the Shares and the listing of the Registrable Securities on the
Nasdaq Stock Market.
9.
ARTICLE 4
COVENANTS
4.1 REPORTING STATUS. The Company's Common Stock is registered under
Section 12 of the Exchange Act. During the Registration Period (as defined in
Section 6.4(a)), the Company will timely file all documents with the SEC, and
the Company will not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would permit such termination.
4.2 EXPENSES. The Company and each Purchaser is liable for, and will pay,
its own expenses incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement, including, without limitation,
attorneys' and consultants' fees and expenses.
4.3 FINANCIAL INFORMATION. The financial statements of the Company to be
included in any documents filed with the SEC will be prepared in accordance with
accounting principles generally accepted in the United States, consistently
applied, and will fairly present in all material respects the consolidated
financial position of the Company and results of its operations and cash flows
as of, and for the periods covered by, such financial statements (subject, in
the case of unaudited statements, to normal year-end audit adjustments).
4.4 COMPLIANCE WITH LAW. As long as a Purchaser owns any of the Units, the
Company will conduct its business in compliance with all applicable laws, rules
and regulations of the jurisdictions in which it is conducting business
(including, without limitation, all applicable local, state and federal
environmental laws and regulations), the failure to comply with which would have
a Material Adverse Effect.
4.5 SALES BY PURCHASERS. Each Purchaser will sell any Units and Warrant
Shares held by it in compliance with applicable prospectus delivery
requirements, if any, or otherwise in compliance with the requirements for an
exemption from registration under the Securities Act and the rules and
regulations promulgated thereunder. No Purchaser will make any sale, transfer or
other disposition of the Units in violation of federal or state securities laws.
4.6 NASDAQ. Based on the Company's pro forma (assuming completion of the
Offering) unaudited financials as of August 31, 2003, the Company shall be in
compliance with the listing and maintenance requirements of The Nasdaq National
Market including, but not limited to, the stockholders' equity requirement for
continued listing on The Nasdaq National Market set forth in NASD Rule
4450(a)(3).
ARTICLE 5
CONDITIONS TO CLOSING
5.1 PURCHASERS' OBLIGATIONS - LEGAL OPINION. The Purchasers' obligations
to purchase the Units at the Closing are subject to the Company's counsel having
delivered a legal opinion to each Purchaser in substantially the form set forth
as EXHIBIT E.
10.
ARTICLE 6
REGISTRATION RIGHTS
6.1 As used in this Agreement, the following terms shall have the
following meanings:
(A) "AFFILIATE" means, with respect to any Person (as defined
below), any other Person controlling, controlled by or under direct or indirect
common control with such Person (for the purposes of this definition "CONTROL,"
when used with respect to any specified Person, shall mean the power to direct
the management and policies of such person, directly or indirectly, whether
through ownership of voting securities, by contract or otherwise; and the terms
"CONTROLLING" and "CONTROLLED" shall have meanings correlative to the
foregoing).
(B) "BUSINESS DAY" means a day Monday through Friday on which banks
are generally open for business in New York.
(C) "FILING DATE" has the meaning set forth in Section 6.2.
(D) "FINAL PROSPECTUS" has the meaning set forth in Section 6.6(a).
(E) "HOLDERS" means any person holding Registrable Securities or any
person to whom the rights under Article 6 have been transferred in accordance
with Section 6.9 hereof.
(F) "INDEMNIFIED PARTY" has the meaning set forth in Section 6.6(c).
(G) "INDEMNIFYING PARTY" has the meaning set forth in Section
6.6(c).
(H) "PERSON" means any person, individual, corporation, limited
liability company, partnership, trust or other nongovernmental entity or any
governmental agency, court, authority or other body (whether foreign, federal,
state, local or otherwise).
(I) The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to
the registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(J) "REGISTRABLE SECURITIES" means (i) the Shares and (ii) the
Warrant Shares; provided, however, that securities shall only be treated as
Registrable Securities if and only for so long as they (A) have not been
disposed of pursuant to a registration statement declared effective by the SEC,
(B) have not been sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale or (C) are held by a Holder or a permitted transferee
pursuant to Section 6.9.
(K) "REGISTRATION EXPENSES" means all expenses incurred by the
Company in complying with Section 6.2 hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and expenses of counsel for the Company,
11.
blue sky fees and expenses and the expense of any special audits incident to or
required by any such registration (but excluding the fees of legal counsel for
any Holder).
(L) "REGISTRATION STATEMENT" has the meaning set forth in Section
6.2.
(M) "REGISTRATION PERIOD" has the meaning set forth in Section
6.4(a).
(N) "SELLING EXPENSES" means all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
expenses of legal counsel for any Holder.
6.2 As soon as reasonably practicable, but in no event later than 30 days
after the Closing Date (the "FILING DATE"), the Company shall file a
registration statement covering the resale of the Registrable Securities on a
Form S-3 Registration Statement (the "REGISTRATION STATEMENT") with the SEC and
effect the registration, qualifications or compliances (including, without
limitation, the execution of any required undertaking to file post-effective
amendments, appropriate qualifications or exemptions under applicable blue sky
or other state securities laws and appropriate compliance with applicable
securities laws, requirements or regulations) as promptly as possible after the
filing thereof, but in any event prior to the date which is 120 days after the
Closing Date. The Company shall not be obligated to enter into any underwriting
agreement for the sale of any of the Registrable Securities.
6.3 All Registration Expenses incurred in connection with any
registration, qualification, exemption or compliance pursuant to Section 6.2
shall be borne by the Company. All Selling Expenses relating to the sale of
securities registered by or on behalf of Holders shall be borne by such Holders
pro rata on the basis of the number of securities so registered.
6.4 The Company further agrees that, in the event that the Registration
Statement has not (i) been filed with the SEC within 30 days after the Closing
Date or (ii) been declared effective by the SEC within 120 days after the
Closing Date (each such event referred to in clauses (i) and (ii), (a
"REGISTRATION DEFAULT")), for all or part of any one week period (a "PENALTY
PERIOD") during which the Registration Default remains uncured, the Company
shall pay to each Purchaser 0.5% of such Purchaser's aggregate purchase price of
his or her Units for each Penalty Period during which the Registration Default
remains uncured. The Company shall deliver said cash payment to the Purchaser by
the fifth Business Day after the end of such Penalty Period.
6.5 In the case of the registration, qualification, exemption or
compliance effected by the Company pursuant to this Agreement, the Company
shall, upon reasonable request, inform each Holder as to the status of such
registration, qualification, exemption and compliance. At its expense the
Company shall:
(A) use its commercially reasonable efforts to keep such
registration, and any qualification, exemption or compliance under state
securities laws which the Company determines to obtain, continuously effective
until the earlier of the following: (i) the second anniversary of the Effective
Date or (ii) the date all Shares and Warrant Shares may be sold under Rule 144
during any 90 day period. The period of time during which the Company is
12.
required hereunder to keep the Registration Statement effective is referred to
herein as "THE REGISTRATION PERIOD."
(B) advise the Holders within five Business Days:
(I) when the Registration Statement or any amendment thereto has
been filed with the SEC and when the Registration Statement or any
post-effective amendment thereto has become effective;
(II) of any request by the SEC for amendments or supplements to
the Registration Statement or the prospectus included therein or for additional
information;
(III) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for such purpose;
(IV) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities
included therein for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(V) of the occurrence of any event that requires the making of any
changes in the Registration Statement or the prospectus so that, as of such
date, the statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the statements
therein (in the case of the prospectus, in the light of the circumstances under
which they were made) not misleading;
(C) use its commercially reasonable efforts to obtain the withdrawal
of any order suspending the effectiveness of any Registration Statement at the
earliest possible time;
(D) promptly furnish to each Holder, without charge, at least one
copy of such Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so requests in
writing, all exhibits in the form filed with the SEC;
(E) during the Registration Period, promptly deliver to each Holder,
without charge, as many copies of the prospectus included in such Registration
Statement and any amendment or supplement thereto as such Holder may reasonably
request; and the Company consents to the use, consistent with the provisions
hereof, of the prospectus or any amendment or supplement thereto by each of the
selling Holders of Registrable Securities in connection with the offering and
sale of the Registrable Securities covered by the prospectus or any amendment or
supplement thereto. In addition, upon the reasonable request of the Holder and
subject in all cases to confidentiality protections reasonably acceptable to the
Company, the Company will meet with a Holder or a representative thereof at the
Company's headquarters to discuss all information relevant for disclosure in the
Registration Statement covering the Registrable Securities, and will otherwise
cooperate with any Holder conducting an investigation for the purpose of
reducing or eliminating such Holder's exposure to liability under the Securities
Act, including the reasonable production of information at the Company's
headquarters;
13.
(F) during the Registration Period, promptly deliver to each Holder,
without charge, (i) as soon as practicable (but in the case of the annual report
of the Company to its stockholders, within 120 days after the end of each fiscal
year of the Company) one copy of the following documents, other than those
documents available via XXXXX: (A) its annual report to its stockholders, if any
(which annual report shall contain financial statements audited in accordance
with generally accepted accounting principles in the United States of America by
a firm of certified public accountants of recognized standing); (B) if not
included in substance in its annual report to stockholders, its annual report on
Form 10-K (or similar form); (C) each of its quarterly reports to its
stockholders, and, if not included in substance in its quarterly reports to
stockholders, its quarterly report on Form 10-Q (or similar form), and (D) a
copy of the full Registration Statement (the foregoing, in each case, excluding
exhibits); and (ii) upon reasonable request, all exhibits excluded by the
parenthetical to the immediately preceding clause (D), and all other information
that is generally available to the public;
(G) prior to any public offering of Registrable Securities pursuant
to any Registration Statement, promptly take such actions as may be necessary to
register or qualify or obtain an exemption for offer and sale under the
securities or blue sky laws of such jurisdictions as any such Holders reasonably
request in writing, provided that the Company shall not for any such purpose be
required to qualify generally to transact business as a foreign corporation in
any jurisdiction where it is not so qualified or to consent to general service
of process in any such jurisdiction, and do any and all other acts or things
reasonably necessary or advisable to enable the offer and sale in such
jurisdictions of the Registrable Securities covered by such Registration
Statement;
(H) upon the occurrence of any event contemplated by Section
6.4(b)(v) above, the Company shall use its commercially reasonable efforts to
promptly prepare a post-effective amendment to the Registration Statement or a
supplement to the related prospectus, or file any other required document so
that, as thereafter delivered to purchasers of the Registrable Securities
included therein, the prospectus will not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(I) otherwise use its commercially reasonable efforts to comply with
all applicable rules and regulations of the SEC which could affect the sale of
the Registrable Securities;
(J) use its commercially reasonable efforts to cause all Registrable
Securities to be listed on each securities exchange or market, if any, on which
equity securities issued by the Company have been listed; and
(K) use its commercially reasonable efforts to take all other steps
necessary to effect the registration of the Registrable Securities contemplated
hereby and to enable the Holders to sell Registrable Securities under Rule 144.
6.6 The Holders shall have no right to take any action to restrain, enjoin
or otherwise delay any registration pursuant to Section 6.2 hereof as a result
of any controversy that may arise with respect to the interpretation or
implementation of this Agreement.
14.
6.7 (A) To the extent permitted by law, the Company shall indemnify each
Holder, each underwriter of the Registrable Securities and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
with respect to which any registration that has been effected pursuant to this
Agreement, against all claims, losses, damages and liabilities (or action in
respect thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened (subject to Section 6.6(c) below), arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in the Registration Statement, prospectus, any amendment
or supplement thereof, or other document incident to any such registration,
qualification or compliance or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in light of the circumstances in which
they were made, or any violation by the Company of any rule or regulation
promulgated by the Securities Act applicable to the Company and relating to any
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will reimburse each Holder, each
underwriter of the Registrable Securities and each person controlling such
Holder, for reasonable legal and other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action as incurred; provided that the Company will not be liable in
any such case to the extent that any untrue statement or omission or allegation
thereof is made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Holder and stated to be
specifically for use in preparation of such Registration Statement, prospectus;
provided that the Company will not be liable in any such case where the claim,
loss, damage or liability arises out of or is related to the failure of the
Holder to comply with the covenants and agreements contained in this Agreement
respecting sales of Registrable Securities, and except that the foregoing
indemnity agreement is subject to the condition that, insofar as it relates to
any such untrue statement or alleged untrue statement or omission or alleged
omission made in the preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the SEC at the time the Registration Statement
becomes effective or in the amended prospectus filed with the SEC pursuant to
Rule 424(b) or in the prospectus subject to completion under Rule 434 of the
Securities Act, which together meet the requirements of Section 10(a) of the
Securities Act (the "FINAL PROSPECTUS"), such indemnity shall not inure to the
benefit of any such Holder, any such underwriter or any such controlling person,
if a copy of the Final Prospectus furnished by the Company to the Holder for
delivery was not furnished to the person or entity asserting the loss,
liability, claim or damage at or prior to the time such furnishing is required
by the Securities Act and the Final Prospectus would have cured the defect
giving rise to such loss, liability, claim or damage.
(B) Each Holder will severally, if Registrable Securities held by
such Holder are included in the securities as to which such registration is
being effected, indemnify the Company, each of its directors and officers, each
underwriter of the Registrable Securities and each person who controls the
Company within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened (subject to Section 6.6(c) below), arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in the Registration Statement, prospectus, or any amendment or
supplement thereof, incident to any such registration, or based on any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to
15.
make the statements therein not misleading, in light of the circumstances in
which they were made, and will reimburse the Company, such directors and
officers, each underwriter of the Registrable Securities and each person
controlling the Company for reasonable legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action as incurred, in each case to the extent, but only to
the extent, that such untrue statement or omission or allegation thereof is made
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Holder and stated to be specifically for use in
preparation of the Registration Statement, prospectus; provided that the
indemnity shall not apply to the extent that such claim, loss, damage or
liability results from the fact that a current copy of the prospectus was not
made available to the person or entity asserting the loss, liability, claim or
damage at or prior to the time such furnishing is required by the Securities Act
and the Final Prospectus would have cured the defect giving rise to such loss,
claim, damage or liability. Notwithstanding the foregoing, (x) a Holder's
aggregate liability pursuant to this subsection (b) and subsection (d) shall be
limited to the net amount received by the Holder from the sale of the
Registrable Securities and (y) the Holder shall not be liable to the Company for
any consequential damages, including lost profits, solely with respect to
losses, claims, damages, liabilities or expenses to which the Company (or any
officer, director or controlling person as set forth above) may become subject
(under the Securities Act or otherwise), arising out of, or based upon, any
failure to comply with the covenants and agreements concerning its sale or other
disposition of the Registrable Securities.
(C) Each party entitled to indemnification under this Section 6.6
(the "INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party (at its expense) to assume the defense of any such
claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such Indemnified Party's expense, and provided further that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Agreement, unless
such failure is materially prejudicial to the Indemnifying Party in defending
such claim or litigation. An Indemnifying Party shall not be liable for any
settlement of an action or claim effected without its written consent (which
consent will not be unreasonably withheld). No Indemnifying Party, in its
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.
(D) If the indemnification provided for in this Section 6.6 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party thereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
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 statements or omissions which
16.
resulted in such loss, liability, claim, damage or expense as well as any other
relevant equitable considerations. The relative fault of the Indemnifying Party
and of the Indemnified Party shall be determined 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.
6.8 (A) Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event requiring the preparation of a supplement
or amendment to a prospectus relating to Registrable Securities so that, as
thereafter delivered to the Holders, such prospectus shall not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, each
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the Registration Statement and prospectus contemplated by Section 6.2 until
its receipt of copies of the supplemented or amended prospectus from the Company
and, if so directed by the Company, each Holder shall deliver to the Company all
copies, other than permanent file copies then in such Holder's possession, of
the prospectus covering such Registrable Securities current at the time of
receipt of such notice.
(B) Each Holder shall suspend, upon request of the Company, any
disposition of Registrable Securities pursuant to the Registration Statement and
prospectus contemplated by Section 6.2 during (i) any period not to exceed two
90-day periods within any one 12-month period the Company requires in connection
with a primary underwritten offering of equity securities and (ii) any period,
not to exceed one 45-day period per circumstance or development, when the
Company determines in good faith that offers and sales pursuant thereto should
not be made by reason of the presence of material undisclosed circumstances or
developments with respect to which the disclosure that would be required in such
a prospectus is premature or would have an adverse effect on the Company.
(C) As a condition to the inclusion of its Registrable Securities,
each Holder shall furnish to the Company such information regarding such Holder
and the distribution proposed by such Holder as the Company may request in
writing, including completing a Registration Statement Questionnaire in the form
provided by the Company, or as shall be required in connection with any
registration referred to in this Article 6.
(D) Each Holder hereby covenants with the Company (i) not to make
any sale of the Registrable Securities without effectively causing the
prospectus delivery requirements under the Securities Act to be satisfied, and
(ii) if such Registrable Securities are to be sold by any method or in any
transaction other than on a national securities exchange, Nasdaq or in the
over-the-counter market, in privately negotiated transactions, or in a
combination of such methods, to notify the Company at least five business days
prior to the date on which the Holder first offers to sell any such Registrable
Securities.
(E) Each Holder acknowledges and agrees that the Registrable
Securities sold pursuant to the Registration Statement are not transferable on
the books of the Company unless the stock certificate submitted to the transfer
agent evidencing such Registrable Securities is
17.
accompanied by a certificate reasonably satisfactory to the Company to the
effect that (i) the Registrable Securities have been sold in accordance with
such Registration Statement and (ii) the requirement of delivering a current
prospectus has been satisfied.
(F) Each Holder agrees not to take any action with respect to any
distribution deemed to be made pursuant to such Registration Statement which
would constitute a violation of Regulation M under the Exchange Act or any other
applicable rule, regulation or law.
(G) At the end of the Registration Period the Holders shall
discontinue sales of shares pursuant to such Registration Statement upon receipt
of notice from the Company of its intention to remove from registration the
shares covered by such Registration Statement which remain unsold, and such
Holders shall notify the Company of the number of shares registered which remain
unsold immediately upon receipt of such notice from the Company.
6.9 With a view to making available to the Holders the benefits of certain
rules and regulations of the SEC which at any time permit the sale of the
Registrable Securities to the public without registration, so long as the
Holders still own Registrable Securities, the Company shall use its reasonable
best efforts to:
(A) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times;
(B) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and
(C) so long as a Holder owns any Registrable Securities, furnish to
such Holder, upon any reasonable request, a written statement by the Company as
to its compliance with Rule 144 under the Securities Act, and of the Exchange
Act, a copy of the most recent annual or quarterly report of the Company, and
such other reports and documents of the Company as such Holder may reasonably
request in availing itself of any rule or regulation of the SEC allowing a
Holder to sell any such securities without registration.
6.10 The rights to cause the Company to register Registrable Securities
granted to the Holders by the Company under Section 6.1 may be assigned in full
by a Holder in connection with a transfer by such Holder of its Registrable
Securities, provided, however, that such transfer must be made at least ten days
prior to the Filing Date and that (i) such transfer may otherwise be effected in
accordance with applicable securities laws; (ii) such Holder gives prior written
notice to the Company at least ten days prior to the Filing Date; and (iii) such
transferee agrees to comply with the terms and provisions of this Agreement, and
such transfer is otherwise in compliance with this Agreement. Except as
specifically permitted by this Section 6.9, the rights of a Holder with respect
to Registrable Securities as set out herein shall not be transferable to any
other Person, and any attempted transfer shall cause all rights of such Holder
therein to be forfeited.
6.11 With the written consent of the Company and the Holders holding at
least a majority of the Registrable Securities that are then outstanding, any
provision of this Article 6 may be waived (either generally or in a particular
instance, either retroactively or prospectively
18.
and either for a specified period of time or indefinitely) or amended. Upon the
effectuation of each such waiver or amendment, the Company shall promptly give
written notice thereof to the Holders, if any, who have not previously received
notice thereof or consented thereto in writing.
ARTICLE 7
INDEMNIFICATION
In consideration of each Purchaser's execution and delivery of this
Agreement and its acquisition of the Units hereunder, and in addition to all of
the Company's other obligations under this Agreement, the Company will indemnify
and hold harmless each Purchaser and each other holder of the Units and all of
their stockholders, officers, directors, employees and direct or indirect
Purchasers and any of the foregoing person's agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "INDEMNITEES")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (regardless of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by
an Indemnitee as a result of, or arising out of, or relating to (a) any breach
of any representation or warranty made by the Company in Section 3 of this
Agreement (b) any breach of any covenant, agreement or obligation of the Company
contained in Section 4 of this Agreement or (c) any cause of action, suit or
claim brought against such Indemnitee and arising out of or resulting from the
execution, delivery, performance, breach or enforcement of this Agreement by the
Company. To the extent that the foregoing undertaking by the Company is
unenforceable for any reason, the Company will make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities that is
permissible under applicable law.
ARTICLE 8
DEFINITIONS
8.1 "BYLAWS" has the meaning set forth in Section 3.3.
8.2 "CERTIFICATE OF INCORPORATION" has the meaning set forth in Section
3.3.
8.3 "CLOSING" has the meaning set forth in Section 1.3.
8.4 "CLOSING DATE" has the meaning set forth in Section 1.3.
8.5 "COMMON STOCK" means the common stock, par value $.01 per share, of
the Company.
8.6 "COMPANY" means Epimmune Inc.
8.7 "ENGAGEMENT LETTER" has the meaning set forth in Recital A.
8.8 "ENVIRONMENTAL LAWS" has the meaning set forth in Section 3.10.
19.
8.9 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
8.10 "INDEMNITEES" has the meaning set forth in Section 7.
8.11 "INDEMNIFIED LIABILITIES" has the meaning set forth in Section 7.
8.12 "INTELLECTUAL PROPERTY" has the meaning set forth in Section 3.8.
8.13 "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, assets or financial condition of the Company or (b) the
ability of the Company to perform its obligations pursuant to the transactions
contemplated by this Agreement.
8.14 "NASD" has the meaning set forth in Section 3.2.
8.15 "NASDAQ" means the Nasdaq National Market.
8.16 "OFFERING" has the meaning set forth in Recital A.
8.17 "PENALTY PERIOD" has the meaning set forth in Section 6.4.
8.18 "PLACEMENT AGENT" has the meaning set forth in Section 2.11(a).
8.19 "PURCHASERS" mean the Purchasers whose names are set forth on the
signature pages of this Agreement, and their permitted transferees.
8.20 "PURCHASE PRICE" has the meaning set forth in Section 1.1.
8.21 "REGISTRATION DEFAULT" has the meaning set forth in Section 6.4.
8.22 "REGULATION D" means Regulation D as promulgated under by the SEC
under the Securities Act.
8.23 "RULE 144" means Rule 144 promulgated under the Securities Act, or
any successor rule.
8.24 "SEC" means the United States Securities and Exchange Commission.
8.25 "SEC DOCUMENTS" has the meaning set forth in Section 3.6.
8.26 "SECURITIES ACT" means the Securities Act of 1933, as amended, and
the rules and regulations thereunder, or any similar successor statute.
8.27 "SHARES" has the meaning set forth in Section 1.1.
8.28 "TO THE COMPANY'S KNOWLEDGE" and variations thereon mean to the
actual knowledge of Xx. Xxxxx Xxxxx and Xxx De Vaere.
8.29 "UNITS" has the meaning set forth in Section 1.1.
20.
8.30 "WARRANT SHARES" has the meaning set forth in Section 3.4.
8.31 "WARRANTS" has the meaning set forth in Section 1.1.
ARTICLE 9
GOVERNING LAW; MISCELLANEOUS
9.1 GOVERNING LAW; JURISDICTION. This Agreement will be governed by and
interpreted in accordance with the laws of the State of California without
regard to the principles of conflict of laws. The parties hereto hereby submit
to the exclusive jurisdiction of the United States federal and state courts
located in the County of San Diego, State of California with respect to any
dispute arising under this Agreement or the transactions contemplated hereby or
thereby.
9.2 COUNTERPARTS; SIGNATURES BY FACSIMILE. This Agreement may be executed
in two or more counterparts, all of which are considered one and the same
agreement and will become effective when counterparts have been signed by each
party and delivered to the other parties. This Agreement, once executed by a
party, may be delivered to the other parties hereto by facsimile transmission of
a copy of this Agreement bearing the signature of the party so delivering this
Agreement.
9.3 HEADINGS. The headings of this Agreement are for convenience of
reference only, are not part of this Agreement and do not affect its
interpretation.
9.4 SEVERABILITY. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified in order to conform with such statute or rule of law.
Any provision hereof that may prove invalid or unenforceable under any law will
not affect the validity or enforceability of any other provision hereof.
9.5 ENTIRE AGREEMENT; AMENDMENTS. This Agreement (including all schedules
and exhibits hereto) constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement supersedes all prior agreements
and understandings among the parties hereto with respect to the subject matter
hereof. No provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the party to be charged with enforcement.
9.6 NOTICES. Any notices required or permitted to be given under the terms
of this Agreement must be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier (including a recognized
overnight delivery service) and will be effective five days after being placed
in the mail, if mailed by regular U.S. mail, or upon receipt, if delivered
personally, or by courier (including a recognized overnight delivery service),
in each case addressed to a party. The addresses for such communications are:
21.
If to the Company: Epimmune Inc.
0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Chief Financial Officer
With a copy to: Xxxxxx Godward LLP
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
Attn: Xxxx Xxxx, Esq.
If to a Purchaser: To the address set forth immediately below such
Purchaser's name on the signature pages hereto. Each party will provide written
notice to the other parties of any change in its address.
9.7 SUCCESSORS AND ASSIGNS. This Agreement is binding upon and inures to
the benefit of the parties and their successors and assigns. The Company will
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Purchasers, and no Purchaser may assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Company.
9.8 THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.
9.9 FURTHER ASSURANCES. Each party will do and perform, or cause to be
done and performed, all such further acts and things, and will execute and
deliver all other agreements, certificates, instruments and documents, as
another party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
9.10 NO STRICT CONSTRUCTION. The language used in this Agreement is deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
9.11 EQUITABLE RELIEF. The Company recognizes that, if it fails to perform
or discharge any of its obligations under this Agreement, any remedy at law may
prove to be inadequate relief to the Purchasers. The Company therefore agrees
that the Purchasers are entitled to seek temporary and permanent injunctive
relief in any such case. Each Purchaser also recognizes that, if it fails to
perform or discharge any of its obligations under this Agreement, any remedy at
law may prove to be inadequate relief to the Company. Each Purchaser therefore
agrees that the Company is entitled to seek temporary and permanent injunctive
relief in any such case.
22.
IN WITNESS WHEREOF, the undersigned Purchasers and the Company have caused
this Agreement to be duly executed as of the date first above written.
EPIMMUNE INC.
By /s/ Xxxxxx De Vaere
-----------------------------------------
Name: Xxxxxx De Vaere
--------------------------------------
Title: Vice President, Finance & Admin., CFO
-------------------------------------
Address: 0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
XXXXX XXXXXX
By: /s/ Xxxxx Xxxxxx Xxxxxx
----------------------------------------
Address: Seaview
Chancery Xxxx
Xxxxxx Church
Barbados
UNIT PURCHASE AGREEMENT
SIGNATURE PAGE
By: /s/ Xxx Xxxxxxxx
----------------------------------------
Name: Xxx Xxxxxxxx
--------------------------------------
Title:
--------------------------------------
Address:
-----------------------------------
Aggregate Purchase Price: $500,000
------------------
Name in which to issue the shares of Common
Stock and the Warrant to Purchase Common
Stock:
Xxxxxx Capital
--------------------------------------------
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxxxx
--------------------------------------
Title:
-------------------------------------
Address: Chateau Perigord II, Glacet
-----------------------------------
Saint Xxxx Bloc F Etage 11,
-----------------------------------
Xxxxx Xxxxx 00000 Xxxxxx
-----------------------------------
Aggregate Purchase Price: $150,000
------------------
Name in which to issue the shares of Common
Stock and the Warrant to Purchase Common
Stock:
Xxxxxxx Xxxxxxxx
--------------------------------------------
By: /s/ Xxxxx X. Xxxx
-----------------------------------------
Name: Xxxxx X. Xxxx
--------------------------------------
Title: XX Xxxxxxx Capital Management, LLC
-------------------------------------
Investment Advisor to RAM TRADING Ltd.
Address: c/x Xxxxxxx Capital Management LLC
-----------------------------------
0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, XX 00000
--------------------------------------------
Aggregate Purchase Price: $1,500,000
------------------
Name in which to issue the shares of Common
Stock and the Warrant to Purchase Common
Stock:
RAM TRADING Ltd.
--------------------------------------------
By: /s/ Xxxx Xxxxxxx, M.D.
----------------------------------------
Name: Xxxx Xxxxxxx, M.D.
--------------------------------------
Title:
-------------------------------------
Address: 0000 Xxxxx Xxxx
-----------------------------------
Xxxxxxxxxxx, XX 00000
-----------------------------------
Aggregate Purchase Price: $200,000
------------------
Name in which to issue the shares of Common
Stock and the Warrant to Purchase Common
Stock:
Xxxx Xxxxxxx, M.D.
--------------------------------------------
By: /s/ Xxxx Xxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxxx
--------------------------------------
Title: President
-------------------------------------
Address: 000 Xxxxx Xxxxxxxxx, 0xx Xxxxx
-----------------------------------
P.O. Box 30543SMB, Grand Cayman BWL
--------------------------------------------
Aggregate Purchase Price: $200,000
------------------
Name in which to issue the shares of Common
Stock and the Warrant to Purchase Common
Stock:
Vitel Ventures Corp.
--------------------------------------------
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxxxx
--------------------------------------
Title: Manager
-------------------------------------
Address: 00 Xxxxxxxxx Xxxxxx, 00xx Floor
-----------------------------------
Xxx Xxxx, XX 00000
-----------------------------------
Aggregate Purchase Price: $500,000
------------------
Name in which to issue the shares of Common
Stock and the Warrant to Purchase Common
Stock:
Vertical Ventures Investments, LLC
--------------------------------------------
By: /s/ Xxxx Xxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxxx
--------------------------------------
Title:
-------------------------------------
Address: 00 Xxxx Xxxxxx, Xxx. 0X
-----------------------------------
Xxx Xxxx, XX 00000
-----------------------------------
Aggregate Purchase Price: $100,000
------------------
Name in which to issue the shares of Common
Stock and the Warrant to Purchase Common
Stock:
Xxxx Xxxxxxxx
--------------------------------------------
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
--------------------------------------
Title: President - SCL
-------------------------------------
Address: 000 Xxxxx Xxxx Xxxxx
-----------------------------------
Xxxx Xxxxxxx, XX 00000
-----------------------------------
Aggregate Purchase Price: $400,000
------------------
Name in which to issue the shares of Common
Stock and the Warrant to Purchase Common
Stock:
Xxxxxx X. Xxxxx
--------------------------------------------
EXHIBIT A
SCHEDULE OF PURCHASERS
AGGREGATE
PURCHASER SHARES WARRANTS PURCHASE PRICE
--------- ------ -------- --------------
Xxxxx Xxxxxx 267,773 66,943 $ 500,000
Xxxxxx Capital 267,773 66,943 $ 500,000
Xxxx Xxxxxxxx 80,332 20,083 $ 150,000
RAM TRADING Ltd. 803,320 200,830 $ 1,500,000
Xxxx Xxxxxxx 107,109 26,777 $ 200,000
Vitel Ventures Corp. 107,109 26,777 $ 200,000
Vertical Ventures Investments LLC 267,773 66,943 $ 500,000
Xxxx Xxxxxxxx 53,554 13,388 $ 100,000
Xxxxxx X. Xxxxx 214,218 53,554 $ 400,000
TOTAL 2,168,961 542,238 $4,050,000.00
EXHIBIT B
WARRANT
EXHIBIT C
WIRE TRANSFER INSTRUCTIONS
EXHIBIT D
ACCREDITED INVESTOR QUALIFICATION QUESTIONNAIRE (ENTITY)
This Questionnaire is being distributed to certain entities, which may be
offered the opportunity to purchase shares of Common Stock and warrants to
purchase Common Stock of Epimmune Inc., a Delaware corporation (the "COMPANY").
This Questionnaire should be completed by the person who will be making the
investment decision on behalf of the entity (the "DECISION-MAKER"). All
questions should be completed with respect to the entity (i.e., "you" means the
entity), unless otherwise directed. The purpose of this Questionnaire is to
assure the Company that all such offers and purchases will meet the standards
imposed by the Securities Act of 1933, as amended (the "ACT"), and applicable
state securities laws.
Your answers will be kept confidential. However, by signing this Questionnaire
you agree that the Company and its counsel may rely on the information set forth
in this Questionnaire for purposes of complying with all applicable securities
laws and may present this Questionnaire to such parties as it reasonably deems
appropriate if called upon to establish its compliance with such securities
laws.
Please complete, sign, date and fax one copy of this Questionnaire to the
Company's legal counsel, Xxxxxx Godward llp, Attn: Xxxxxx Xxxxxxx at (858)
550-6420. If the answer to a question is "none" or "not applicable," please so
state.
1. RESIDENCE INFORMATION. Please provide the entity's full legal name,
primary business address, phone number, fax number, name and e-mail
address of contact person, and federal tax I.D. number.
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2. DOMICILE INFORMATION. Please indicate the form of the entity and the
state and date of its organization (e.g., corporation, state and date
of incorporation).
Form
-----------------------------------------------
State of Organization
-----------------------------------------------
Date of Organization
-----------------------------------------------
D-1.
3. ACCREDITED INVESTOR CERTIFICATION. The undersigned makes one of the
following representations regarding its net worth and certain related
matters AND HAS CHECKED THE APPLICABLE REPRESENTATION:
( ) (I) The undersigned is a trust with total assets in excess of
$5,000,000 whose purchase is directed by a person with
such knowledge and experience in financial and business
matters that such person is capable of evaluating the
merits and risks of the prospective investment.
( ) (II) The undersigned is a bank, insurance company, investment
company registered under the United States Investment
Company Act of 1940, as amended, a broker or dealer
registered pursuant to Section 15 of the United States
Securities Exchange Act of 1934, as amended, a business
development company, a Small Business Investment Company
licensed by the United States Small Business
Administration, a plan with total assets in excess of
$5,000,000 established and maintained by a state for the
benefit of its employees, or a private business
development company as defined in Section 202(a)(22) of
the United States Investment Advisers Act of 1940, as
amended.
( ) (III) The undersigned is an employee benefit plan and either all
investment decisions are made by a bank, savings and loan
association, insurance company, or registered investment
advisor, or the undersigned has total assets in excess of
$5,000,000 or, if such plan is a self-directed plan,
investment decisions are made solely by persons who are
accredited investors.
( ) (IV) The undersigned is a corporation, partnership, business
trust, not formed for the purpose of acquiring the Shares
, or an organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended (the "CODE"), in
each case with total assets in excess of $5,000,000.
( ) (V) The undersigned is an entity in which ALL of the equity
owners (in the case of a revocable living trust, its
grantor(s)) qualify under any of the above subparagraphs,
or, if an individual, each such individual has a net
worth(1), either individually or upon a joint basis with
such individual's spouse, of at least $1,000,000 (within
the meaning of such terms as used in the definition of
"accredited investor" contained in Rule 501 under the
Act), or has had an
----------
(1) For purposes of this Questionnaire, "net worth" means the excess of total
assets at fair market value over total liabilities, except that the principal
residence owned by a natural person shall be valued either (a) at cost,
including the cost of improvements, net of current encumbrances upon the
property, or (b) at the appraised value of the residence as determined upon a
written appraisal used by an institutional lender making a loan to the
individual secured by the property, including the cost of subsequent
improvements, net of current encumbrances upon the property. As used in the
preceding sentence, "institutional lender" means a bank, savings and loan
company, industrial loan company, credit union or personal property broker or a
company whose principal business is as a lender of loans secured by real
property and which has such loans receivable in the amount of $2,000,000 or
more.
D-2.
individual income(2) in excess of $200,000 for each of the
two most recent years, or a joint income with such
individual's spouse in excess of $300,000 in each of those
years, and has a reasonable expectation of reaching the
same income level in the current year.
( ) (VI) The undersigned cannot make any of the representations set
forth in paragraphs "i" through "v" above.(3)
The undersigned represents that the information contained herein is
complete and accurate and may be relied upon by the Company, and that the
undersigned will notify the Company of any material change in any of such
information prior to the undersigned's investment in the Company.
IN WITNESS WHEREOF, the undersigned has executed this Investor
Qualification Questionnaire this day of __________, 2003.
----------------------------------------
NAME OF ENTITY
By:
-------------------------------------
----------------------------------------
TITLE OR ASSOCIATION WITH ENTITY
----------
(2) For purposes of this Questionnaire, "income" means adjusted gross income, as
reported for federal income tax purposes, increased by the following amounts:
(a) the amount of any tax exempt interest income received, (b) the amount of
losses claimed as a limited partner in a limited partnership, (c) any deduction
claimed for depletion, (d) amounts contributed to an XXX or Xxxxx retirement
plan, (e) alimony paid, and (f) any amounts by which income from long-term
capital gains has been reduced in arriving at adjusted gross income pursuant to
the provisions of Section 1202 of the Internal Revenue Code.
(3) See footnote 1.
D-3.
ACCREDITED INVESTOR QUALIFICATION QUESTIONNAIRE (INDIVIDUAL)
This Questionnaire is being distributed to certain individuals who may be
offered the opportunity to purchase shares of Common Stock and warrants to
purchase Common Stock of Epimmune Inc., a Delaware corporation (the "COMPANY").
The purpose of this Questionnaire is to assure the Company that all such offers
and purchases will meet the standards imposed by the Securities Act of 1933, as
amended, and applicable state securities laws.
Your answers will be kept confidential. However, by signing this Questionnaire
you agree that the Company and its counsel may rely on the information set forth
in this Questionnaire for purposes of complying with all applicable securities
laws and may present this Questionnaire to such parties as it reasonably deems
appropriate if called upon to establish its compliance with such securities
laws.
Please complete, sign, date and fax one copy of this Questionnaire to the
Company's legal counsel, Xxxxxx Godward llp, Attn: Xxxxxx Xxxxxxx at (858)
550-6420. If the answer to a question is "none" or "not applicable," please so
state.
1. RESIDENCE INFORMATION. Please provide your full legal name, residence
address, phone and fax numbers, e-mail address and social security
number.
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2. PERSONAL INFORMATION. Please indicate the state which issued your
driver's license and the state in which you are registered to vote.
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D-4.
3. MY INCOME.
Do you reasonably expect either your income,(4) from all sources during
this year, to exceed $200,000 or, if you are married, the joint income of you
and your spouse from all sources during this year to exceed $300,000?
_____ Yes _____ No
If no, please specify amount of expected income:_______________________
Was your yearly individual income from all sources during each of the
last two years in excess of $200,000 or, if you are married, was the joint
income of you and your spouse during each of those years in excess of $300,000?
_____ Yes _____ No
If no, please specify amount of your total individual and/or joint
income in the last two years:___________________________________________________
4. MY NET WORTH.
Is your net worth, including the net worth(5) of your spouse, in excess
of $1,000,000? Please remember that your net worth should include the value of
your principal residence if owned(2), any other shares of stock or options held
by you and your spouse and your and your spouse's owned personal property (e.g.
furniture, jewelry, other valuables, etc.).
_____ Yes _____ No
If no, please specify your net worth:__________________________________
----------
(4) For purposes of this Questionnaire, "income" means adjusted gross income, as
reported for federal income tax purposes, increased by the following amounts:
(a) the amount of any tax exempt interest income received, (b) the amount of
losses claimed as a limited partner in a limited partnership, (c) any deduction
claimed for depletion, (d) amounts contributed to an XXX or Xxxxx retirement
plan, (e) alimony paid, and (f) any amounts by which income from long-term
capital gains has been reduced in arriving at adjusted gross income pursuant to
the provisions of Section 1202 of the Internal Revenue Code.
(5) For purposes of this Questionnaire, "net worth" means the excess of total
assets at fair market value over total liabilities, except that the principal
residence owned by a natural person shall be valued either (a) at cost,
including the cost of improvements, net of current encumbrances upon the
property, or (b) at the appraised value of the residence as determined upon a
written appraisal used by an institutional lender making a loan to the
individual secured by the property, including the cost of subsequent
improvements, net of current encumbrances upon the property. As used in the
preceding sentence, "institutional lender" means a bank, savings and loan
company, industrial loan company, credit union or personal property broker or a
company whose principal business is as a lender of loans secured by real
property and which has such loans receivable in the amount of $2,000,000 or
more.
D-5.
The undersigned represents that the information contained herein is
complete and accurate and may be relied upon by the Company and that the
undersigned will notify the Company of any material change in any of such
information prior to the undersigned's investment in the Company.
IN WITNESS WHEREOF, the undersigned has executed this Investor
Qualification Questionnaire this day of __________, 2003.
----------------------------------------
(Signature)
----------------------------------------
(Printed Name)
D-6.
EXHIBIT E
FORM OF LEGAL OPINION
