Exhibit 10.1
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VAXGEN, INC.
$31,500,000
5 1/2% Convertible Senior Subordinated Notes due 2010
NOTE PURCHASE AGREEMENT
March 30, 2005
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VAXGEN, INC.
NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT, INCLUDING ANNEX I HERETO (this "Agreement")
is made as of the 30(th) day of March 2005 by and among VAXGEN, INC. (the
"Company"), a Delaware corporation, with its principal offices at 0000 Xxxxxx
Xxxx., Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx, and ____________________ (the
"Purchaser").
In consideration of the mutual covenants contained in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Purchaser hereby agree as follows:
A. The Company has authorized the sale and issuance of $31,500,000 aggregate
principal amount of the Company's 5 1/2% Convertible Senior Subordinated Notes
due 2010 (the "Notes"), subject to adjustment by the Company's Board of
Directors, to certain investors in a private placement (the "Offering").
B. The Notes are to be issued pursuant to an indenture to be executed and dated
as of the Closing (as defined in Annex I) (the "Indenture") between the Company
and U.S. Bank, National Association, as trustee (the "Trustee"), and the form of
such Notes will be an exhibit to the Indenture. The Indenture will conform in
all material respects to the respective statements relating thereto in the
Memorandum (as defined below) and will be substantially in the form last
delivered to the Purchaser prior to the execution and delivery of this
Agreement.
C. The Notes will be convertible into shares of common stock, par value $0.01
per share, of the Company (the "Common Stock") in accordance with the terms of
the Notes and the Indenture and will be subject to such other terms as are set
forth herein and therein.
D. The Company and the Purchaser agree that the Purchaser will purchase from the
Company and the Company will issue and sell to the Purchaser, a Note for the
principal amount of $___________, at a purchase price of one hundred percent
(100%) of the principal amount, pursuant to the Terms and Conditions for
Purchase of the Notes attached hereto as Annex I and incorporated herein by
reference as if fully set forth herein. The Purchaser acknowledges that the
offering is not being underwritten by CIBC World Markets Corp. or Punk, Xxxxxx &
Company, L.P., who are each acting solely as placement agents in connection
herewith (the "Placement Agents").
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose.
AGREED AND ACCEPTED: Purchaser: _____________________________
By: _________________________
Name: _________________________
Title: _________________________
Address: _________________________
Fax Number: _________________________
Exact name that your Notes are to be
registered in (This is the name that will
appear on your Note)*: _________________________
(Registered Holder)
The Tax ID No. of the Registered Holder: _________________________
Contact Name for Registered Holder (if
different than above): _________________________
Mailing Address of Registered Holder (if
different than above): _________________________
Affiliated Purchasers: _________________________
_________________________
VAXGEN, INC.,
a Delaware corporation
By: ____________________________
Name: __________________________
Title: _________________________
*Please use Annex II attached hereto if the Notes are to be issued to more than
one Registered Holder.
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ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF THE NOTES
1. PURCHASE AND SALE OF NOTES.
1.1 Subject to the terms and conditions of the Agreement, on the
Closing Date (as defined herein), the Purchaser agrees to purchase and the
Company agrees to issue and sell to the Purchaser, at a purchase price of one
hundred percent (100%) of the principal amount, the principal amount of Notes
set forth in this Agreement.
2. CLOSING.
2.1 Closing.
(a) The purchase and sale of the Notes upon the terms and
conditions hereof will take place at a closing (the "Closing") to be held at the
offices of Cooley Godward LLP, 0000 Xxxxxxx Xxxxxx, Xxxx Xxxx, XX 00000, on the
date hereof or on such other date as may be agreed to by the parties (the
"Closing Date").
(b) The Company shall provide wire transfer instructions for
the payment of the purchase price for the Notes prior to the Closing.
(c) At the Closing, the Purchaser and the Company shall
satisfy all of the conditions set forth in Sections 2.2(a) and 2.2(b),
respectively.
2.2 Conditions to Closing.
(a) The Company's obligation to complete the purchase and sale
of the Notes and deliver the Notes to the Purchaser is subject to the
fulfillment to the Company's satisfaction on or prior to the Closing of the
following conditions, any of which may be waived by the Company:
(i) The receipt by the Company of an executed copy of
this Agreement by the Purchaser;
(ii) The receipt by the Company of immediately available
funds in the full amount of the purchase price for the Notes being purchased by
the Purchaser as set forth in the Agreement, in accordance with the wire
transfer instructions delivered by the Company pursuant to Section 2.1(b);
(iii) The receipt by the Company of at least $31,500,000
for the Notes being purchased in the Offering by the Purchaser and other
purchasers (together the "Investors");
(iv) The Purchaser's performance, satisfaction, and
compliance, in all material respects, with all covenants, agreements and
conditions required by Section 4 of this Agreement at or prior to the Closing
Date;
1.
(v) The representations and warranties of the Purchaser
made pursuant to Section 4 shall be true and correct in all material respects as
of the Closing Date, except for representations and warranties that are
expressly made as of a particular date, which shall be true and correct in all
material respects as of such date; and
(vi) No statute, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority or competent jurisdiction and shall be in
effect which prohibits the consummation of the transactions contemplated by this
Agreement.
(b) The Purchaser's obligation to complete the purchase and
sale of the Notes is subject to the fulfillment to the Purchaser's satisfaction,
on or prior to the Closing, of all of the following conditions, any of which may
be waived by the Purchaser:
(i) The receipt by the Purchaser of an executed copy of
this Agreement by the Company;
(ii) The Company's performance, satisfaction, and
compliance, in all material respects, with all covenants, agreements and
conditions required by Section 3 of this Agreement to be performed, at or prior
to the Closing Date;
(iii) The representations and warranties of the Company
hereunder shall be true and correct in all material respects as of the Closing
Date as though made at that time, except for representations and warranties that
speak as of a particular date, which shall be true and correct in all material
respects as of such date;
(iv) The delivery by the Company to the Purchaser of an
opinion, dated as of the Closing Date, from Xxxxxx Godward LLP, counsel to the
Company, in the form attached as Appendix A hereto;
(v) The delivery by the Company to the Purchaser of an
opinion, dated as of the Closing Date, from Xxxxxxxxx & Xxxxxxx LLP, regulatory
counsel to the Company, in the form attached as Appendix B hereto;
(vi) The receipt by the Company of at least $31,500,000
for the Notes being purchased by all the Investors;
(vii) The Company's delivery of a Note in the principal
amount set forth in the Agreement to the Purchaser or, if requested by the
Purchaser, one or more Notes, in such denominations ($1,000 or integral
multiples thereof) and registered in such names as the Purchaser may request in
writing at lease one full business day before the Closing Date; and
(viii) No statute, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction and shall be in
effect which prohibits the consummation of the transactions contemplated by this
Agreement.
2.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
The Company hereby represents and warrants to, and covenants with, the
Purchaser as of the Closing Date (or such other date specified below) as
follows:
3.1 No Material Misstatements. The Private Placement Memorandum
dated March 30, 2005, relating to the offering of the Notes, including all
exhibits and annexes thereto, all documents incorporated by reference therein,
as the same may be amended or supplemented (the "Memorandum"), did not, as of
its date, and does not, as of the date hereof, contain any untrue statement of a
material fact or omit 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 that no representation is
given as to whether the absence of Summary Financial Statements, Selected
Financial Data, Supplementary Financial Information, Capitalization, Dilution,
Management's Discussion and Analysis of Financial Condition and Results of
Operations, Quantitative and Qualitative Disclosures about Market Risk, Annual
Financial Statements for the fiscal years ended December 31, 2001, 2002, 2003
and 2004 and the notes thereto, and Quarterly Financial Statements for the
quarters ended March 31, 2004, June 30, 2004, and September 30, 2004, from the
Memorandum constitutes a material omission. The Indenture, registration rights
contained in this Agreement and the Notes conform to the descriptions thereof
contained in the Memorandum.
3.2 SEC Filings. With the exception of the financial statements and
related financial disclosure in the Company's Annual report on Form 10-K for the
year ended December 31, 2003 (the "Form 10-K") (including but not limited to
Management's Discussion and Analysis of Financial Condition and Results of
Operations and Selected Financial Data), the documents that the Company has
filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), since December 31, 2003 (including all exhibits
included therein and documents incorporated by reference therein hereinafter
being referred to as the "Reports" and together with the Form 10-K the "SEC
Documents") complied in all material respects with the requirements of the
Exchange Act, and the rules and regulations of the Securities and Exchange
Commission (the "SEC") promulgated thereunder as of their respective filing
dates, and except as to the financial statements and related financial
disclosure (including but not limited to Management's Discussion and Analysis of
Financial Condition and Results of Operations and Selected Financial Data), none
of the SEC Documents, when filed, 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, except that no representation is
given as to whether the absence of Summary Financial Statements, Selected
Financial Data, Supplementary Financial Information, Management's Discussion and
Analysis of Financial Condition and Results of Operations, Quantitative and
Qualitative Disclosures about Market Risk, Annual Financial Statements for the
fiscal years ended December 31, 2001, 2002, 2003 and 2004 and the notes thereto,
and Quarterly Financial Statements for the quarters ended March 31, 2004, June
30, 2004, and September 30, 2004, from the Memorandum constitutes a material
omission. The Company agrees to use reasonable best efforts to become current in
its reporting requirements under the Exchange Act as soon as practicable, and it
will notify each Purchaser promptly after the Compliance Date (as defined in
Section 6.2(a)(i)).
3.
3.3 Book and Records; Internal Controls. The books, records and
accounts of the Company and its subsidiary accurately and fairly reflect, in
reasonable detail, the transactions in, and dispositions of, the assets of, and
the results of operations of, the Company and its subsidiary. The Company and
its subsidiary maintain a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences; with
respect to the Company's filed SEC Documents, the chief executive officer and
the chief financial officer of the Company have made all certifications required
by the Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx Act") and any related
rules and regulations promulgated by the SEC, and the statements contained in
any such certification are complete and correct; the Company maintains
"disclosure controls and procedures" (as defined in Rule 13a-14(c) under the
Exchange Act).
3.4 Brokers or Finders. Based upon arrangements made by or on behalf
of the Company, no broker, investment banker, financial advisor or other
individual, corporation, general or limited partnership, limited liability
company, firm, joint venture, association, enterprise, joint securities company,
trust, unincorporated organization or other entity (each a "Person"), other than
the Placement Agents, the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement.
3.5 Use of Proceeds. The Company intends to use the net proceeds
from the sale of the Notes hereunder as described in the Memorandum.
3.6 Organization; Good Standing. The Company and its subsidiary, are
duly incorporated, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization. The Company and its
subsidiary are duly qualified to do business and are in good standing as a
foreign corporation in each jurisdiction in which the nature of the business
conducted by them or location of the assets or properties owned, leased or
licensed by them requires such qualification, except for such jurisdictions
where the failure to so qualify individually or in the aggregate would not
result in a material adverse effect on the assets, properties, condition,
financial or otherwise, or in the results of operations, business affairs or
business prospects of the Company and its subsidiary considered as a whole (a
"Material Adverse Effect"); and to the Company's knowledge, no proceeding has
been instituted in any such jurisdiction revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or qualification.
3.7 Absence of Litigation. Except as set forth in the Memorandum or
SEC Documents, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the actual knowledge of the executive
officers of the Company or its subsidiary, threatened in writing against the
Company or its subsidiary or any of the Company's or the subsidiary's officers
or
4.
directors in their capacities as such, that, either individually or in the
aggregate, would result in a Material Adverse Effect.
3.8 Due Authorization and Delivery. All necessary corporate action
has been duly and validly taken by the Company to authorize the execution,
delivery and performance of this Agreement, the Indenture, and the issuance and
sale of the Notes by the Company. The Agreement, the Indenture, and Notes have
been duly and validly authorized, executed and delivered by the Company and will
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles.
3.9 Authentication of Notes; TIA. The Notes have been duly
authenticated in accordance with the provisions of the Indenture and when
delivered and paid for by the Investor in accordance with the terms of this
Agreement, the Notes will be entitled to the benefits of the Indenture. On the
Closing Date, the Indenture will conform in all material respects to the
requirements of the Trust Indenture Act of 1939, as amended (the "TIA" or "Trust
Indenture Act"), and the rules and regulations of the SEC applicable to an
indenture which is qualified thereunder.
3.10 Conversion of Notes; Authorization and Reservation of Shares.
The Notes are convertible into Common Stock in accordance with the terms of the
Indenture; the shares of Common Stock initially issuable upon conversion of the
Notes have been duly authorized and reserved for issuance upon such conversion
and, when issued upon such conversion, will be validly issued, fully paid and
nonassessable, will conform in all material respects to the description thereof
contained in the Memorandum, and we will use our reasonable best efforts to
cause the shares of Common Stock issuable upon conversion of the Notes to be
duly authorized for listing on the Nasdaq National Market or list its Common
Stock on any national exchange or the Nasdaq SmallCap Market, subject to notice
of official issuance, as reasonably as practicable following the Compliance
Date. The stockholders of the Company or other holders of the Company's
securities have no pre-emptive or similar rights with respect to the Notes or
the shares of Common Stock issuable upon conversion of the Notes. The
certificates evidencing the shares of Common Stock issuable upon conversion of
the Notes will be in due and proper legal form.
3.11 Exemption from Registration. Assuming the accuracy of the
representations and warranties of the Purchaser contained in Section 4 hereof,
the sale and issuance of the Notes (and the shares of Common Stock issuable upon
conversion thereof) in accordance with the terms of this Agreement will be
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act").
3.12 No Default. Neither the execution, delivery and performance of
this Agreement, the Notes or the Indenture by the Company nor the consummation
of any of the transactions contemplated hereby (including, without limitation,
the issuance and sale by the Company of the Notes or the issuance of the shares
of Common Stock issuable upon conversion thereof) will give rise to a right to
terminate or accelerate the due date of any payment due under,
5.
or conflict with or result in the breach of any term or provision of, or
constitute a default (or an event which with notice or lapse of time or both
would constitute a default) under, or require any consent or waiver under, or
result in the execution or imposition of any lien, charge or encumbrance upon
any properties or assets of the Company or its subsidiary, or result in any
dilutive adjustments to securities or instruments of the Company or trigger the
requirement to register any securities of the Company with the SEC, pursuant to
the terms of, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or its subsidiary are a party or by which either
the Company or its subsidiary or any of their properties or businesses is bound,
or any franchise, license, permit, judgment, decree, order, statute, rule or
regulation applicable to the Company or its subsidiary or violate any provision
of the certificate of incorporation or by-laws of the Company or its subsidiary.
3.13 Consents. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of the Company is required in connection with the valid execution and delivery
of this Agreement or the offer, sale or issuance of the Notes or the
consummation of any other transaction contemplated by this Agreement (other than
any filings which may be required to be made by the Company with the SEC, or
pursuant to any state or "blue sky" securities laws, and, any registration
statement which may be filed pursuant to this Agreement).
3.14 Listing. As soon as reasonably practicable after the Compliance
Date, the Company shall file an application to re-list its Common Stock on the
Nasdaq National Market or list its Common Stock on any national exchange or the
Nasdaq SmallCap Market, and shall use all reasonable commercial efforts to have
such application approved and have its Common Stock listed on the Nasdaq
National Market or any national exchange or the Nasdaq SmallCap Market, and will
comply in all material respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Nasdaq National Market or any
national exchange or the Nasdaq SmallCap Market. The Company will notify each
Purchaser when its Common Stock is re-listed on the Nasdaq National Market or is
listed on any national exchange or the Nasdaq SmallCap Market.
3.15 Licenses; Leases. The Company and its subsidiary have all
requisite corporate power and authority, and all necessary authorizations,
approvals, consents, orders, licenses, certificates and permits of and from all
governmental or regulatory bodies or any other person or entity (collectively,
the "Permits"), to own, lease and license its assets and properties and conduct
its business, all of which are valid and in full force and effect, except where
the lack of such Permits, individually or in the aggregate, would not result in
a Material Adverse Effect. The Company and its subsidiary have fulfilled and
performed in all material respects all of its obligations with respect to such
Permits and no event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the Company thereunder. Except as may be required
under the Securities Act and state and foreign Blue Sky laws, no other Permits
are required to enter into, deliver and perform this Agreement and to issue and
sell the Notes.
3.16 Intellectual Property. (i) To the Company's knowledge, each of
the Company and its subsidiary own, or hold under license, and will have on and
after the Closing Date full, legally enforceable rights to use, all patents,
patent rights, patent applications, licenses,
6.
trade secrets, know-how, copyrights (whether registered or unregistered),
trademarks (whether registered or unregistered), trademark applications, service
marks and trade names (collectively, the "Intellectual Property") that are
material and necessary to conduct and operate the business of the Company as
currently conducted and as proposed to be conducted, as described in the
Memorandum (the "Company Business"), (ii) to the Company's knowledge, neither
the conduct and operations of the Company Business, nor the use or exploitation
of any of the Intellectual Property owned by the Company or, to the Company's
knowledge, the use or exploitation of any Intellectual Property licensed by the
Company, infringes upon, misappropriates, violates or conflicts in any way with
the Intellectual Property rights of any other Person, (iii) to the Company's
knowledge, neither the conduct and operation of the Company Business nor the use
or exploitation of any of the Intellectual Property owned by the Company, or, to
the Company's knowledge, the use or exploitation of the Intellectual Property
licensed by the Company will infringe upon, misappropriate, violate or conflict
in any way with the Intellectual Property rights of any other Person, (iv) there
is no pending or, to the Company's knowledge, threatened assertion or claim
related to the use or exploitation of the Intellectual Property used in the
conduct or operation of the Company Business involving the infringement,
misappropriation, or violation of, or conflict with, in any way the Intellectual
Property rights of any other Person, (v) the Company is not a party to any
action, suit, proceeding or investigation which involves a claim of infringement
or misappropriation of any Intellectual Property of any Person, (vi) the Company
has no actual knowledge of, any claims which challenge the validity,
enforceability or ownership of any of its Intellectual Property and (vii) to the
Company's knowledge, there have been no unauthorized uses, disclosures,
infringements, or misappropriations by any Person of any of the Intellectual
Property used in the conduct or operation of the Company Business or any
breaches by any Person, including the Company, of any licenses or other
agreements involving its Intellectual Property.
3.17 Real Property. The Company and its subsidiary have good and
marketable title in fee simple to all real property, and good and marketable
title to all other property owned by it, in each case free and clear of all
liens, encumbrances, claims, security interests and defects, except such as do
not materially affect the value of such property and do not materially interfere
with the use made or proposed to be made of such property by the Company and its
subsidiary. All property held under lease by the Company and its subsidiary are
held by them under valid, existing and enforceable leases, free and clear of all
liens, encumbrances, claims, security interests and defects, except such as are
not material and do not materially interfere with the use made or proposed to be
made of such property by the Company and its subsidiary. Neither the Company nor
its subsidiary have sustained any loss or interference with its assets,
businesses or properties (whether owned or leased) from fire, explosion,
earthquake, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or any court or legislative or other governmental action,
order or decree which would result in a Material Adverse Effect.
3.18 Issuance of Securities. Except for the exchange of the warrants
to purchase shares of the Company's Common Stock issued in connection with the
sale of the Company's Series A Preferred Stock for new warrants to purchase
common stock on September 21, 2004, and the sale of 3,018,870 shares of the
Company's Common Stock to certain investors on November 22, 2004 and except as
disclosed in the SEC Documents, since the filing date of the Form 10-K, neither
the Company nor its subsidiary have (i) issued any unregistered securities
7.
or incurred any liability or obligation, direct or contingent, for borrowed
money, except such liabilities or obligations incurred in the ordinary course of
business, (ii) entered into any transaction not in the ordinary course of
business or (iii) declared or paid any dividend or made any distribution on any
shares of its stock or redeemed, purchased or otherwise acquired or agreed to
redeem, purchase or otherwise acquire any shares of its capital stock.
3.19 Material Contracts. With the exception of Contract No.
HHSO100200500001C between the Company and the Department of Health and Human
Services, dated November 4, 2004 (the "Anthrax Contract"), all material
documents, contracts or other agreements are included in the exhibits to the SEC
Documents. Each description of such contracts, documents or other agreements
reflects in all material respects the terms of the underlying contract, document
or other agreement and is in full force and effect and is valid and enforceable
by and against the Company or its subsidiary, as the case may be, in accordance
with its terms. Neither the Company nor its subsidiary, if the subsidiary is a
party, is in default in the observance or performance of any term or obligation
to be performed by it under any such agreement, and no event has occurred which
with notice or lapse of time or both would constitute such a default, in any
such case which default or event, individually or in the aggregate, would result
in a Material Adverse Effect. No default exists, and no event has occurred which
with notice or lapse of time or both would constitute a default, in the due
performance and observance of any term, covenant or condition, by the Company of
the Anthrax Contract, which default or event, individually or in the aggregate,
would result in a Material Adverse Effect.
3.20 No Violation. With the exception of the Company's failure to
file its amended Annual Report on Form 10-K for the fiscal year ended December
31, 2003, its Annual Report on Form 10-K for the fiscal year ended December 31,
2004, and its Quarterly Reports for the quarters ended March 31, 2004, June 30,
2004 and September 30, 2004, neither the Company nor its subsidiary is in
violation of any term or provision of its charter or by-laws or of any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation, where the consequences of such violation, individually or in the
aggregate, would result in a Material Adverse Effect.
3.21 Capitalization. The authorized capital stock of the Company
consists of (i) 40,000,000 shares of Common Stock, of which 29,606,523 shares
were outstanding as of February 28, 2005 and (ii) 20,000,000 shares of Preferred
Stock, none of which are outstanding. As of February 28, 2005, we had options
and warrants exercisable for 5,701,855 shares of common stock, 2,586,490 shares
of our common stock reserved for future grant under our stock option plans; and
472,356 shares of our common stock reserved for future issuance under our 2001
Employee Stock Purchase Plan. The Notes are in due and proper legal form and
have been duly authorized for issuance by the Company. All of the issued and
outstanding shares of Common Stock have been duly and validly issued and are
fully paid and nonassessable. Except for warrants to purchase 959,331 shares of
Common Stock (the "Warrants") and as set forth in this Agreement and the
Company's filings with the SEC, as of the date hereof, no shares of Common Stock
are entitled to preemptive rights or registration rights and there are no
outstanding options, warrants, rights to subscribe to, or securities or rights
convertible into, any shares of capital stock of the Company, other than rights
granted to employees or consultants of the Company pursuant to equity incentive
and stock purchase plans adopted by the Company's
8.
board of directors and disclosed in the Company's filings with the SEC.
Furthermore, except for the Warrants, and as set forth in this Agreement and the
Company's filings with the SEC, as of the date hereof, there are no contracts,
commitments, understandings, or arrangements by which the Company is or may
become bound to issue additional shares of the capital stock of the Company or
options, securities or rights convertible into shares of capital stock of the
Company, other than rights granted to employees or consultants of the Company
pursuant to equity incentive and stock purchase plans adopted by the Company's
board of directors and disclosed in the SEC Documents, and except for customary
transfer restrictions contained in agreements entered into by the Company in
order to sell restricted securities, as of the date hereof, the Company is not a
party to any agreement granting registration rights to any person with respect
to any of its equity or debt securities. All outstanding shares of capital stock
of the Company's subsidiary have been duly authorized and validly issued, and
are fully paid and nonassessable and are owned directly by the Company free and
clear of any security interests, liens, encumbrances, equities or claims.
3.22 Employees. Neither the Company nor its subsidiary is involved
in any labor dispute nor, to the knowledge of the Company, is any such dispute
threatened, which dispute would result in a Material Adverse Effect. The Company
is not aware of any existing or imminent labor disturbance by the employees of
any of its principal suppliers or contractors which would result in a Material
Adverse Effect.
3.23 Market Stabilization. The Company has not taken, nor will it
take, directly or indirectly, any action designed to or which might reasonably
be expected to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the Common Stock or any security of the Company to facilitate the sale
of the Notes.
3.24 Taxes. The Company and its subsidiary has filed all federal,
state, local and foreign tax returns which are required to be filed through the
date hereof, which returns are true and correct in all material respects or has
received timely extensions thereof, and has paid all taxes shown on such returns
and all assessments received by it to the extent that the same are material and
have become due. There are no tax audits or investigations pending, which if
adversely determined would result in a Material Adverse Effect; nor are there
any material proposed additional tax assessments against the Company or its
subsidiary.
3.25 Insurance. The Company and its subsidiary are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are customary in the businesses in which they are
engaged; all policies of insurance and fidelity or surety bonds insuring the
Company or its subsidiary or the Company's or its subsidiary's respective
businesses, assets, employees, officers and directors are in full force and
effect; the Company and its subsidiary are in compliance with the terms of such
policies and instruments in all material respects; and neither the Company nor
any subsidiary of the Company has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that is not materially greater than the current cost.
9.
3.26 Environmental Laws. Except where failure to comply would not
result in a Material Adverse Effect (i) each of the Company and its subsidiary
is in compliance in all material respects with all rules, laws and regulation
relating to the use, treatment, storage and disposal of toxic substances and
protection of health or the environment ("Environmental Laws") which are
applicable to its business; (ii) neither the Company nor its subsidiary has
received any notice from any governmental authority or third party of an
asserted claim under Environmental Laws; (iii) each of the Company and its
subsidiary has received all permits, licenses or other approvals required of it
under applicable Environmental Laws to conduct its business as described in the
Memorandum and is in compliance with all terms and conditions of any such
permit, license or approval; and (iv) no property which is or has been owned,
leased or occupied by the Company or its subsidiary has been designated as a
Superfund site pursuant to the Comprehensive Environmental Response,
Compensation of Liability Act of 1980, as amended (42 U.S.C. Section 9601, et.
seq.) or otherwise designated as a contaminated site under applicable state or
local law. Neither the Company nor its subsidiary has been named as a
"potentially responsible party" under the CERCLA 1980.
3.27 Regulatory Compliance. The human clinical trials, animal
studies and other preclinical tests conducted by the Company or in which the
Company has participated or that are described in the Memorandum or SEC
Documents or the results of which are referred to in the Memorandum or SEC
Documents, and such studies and tests conducted on behalf of the Company or that
the Company intends to rely on in support of regulatory approval by the United
States Food and Drug Administration (the "FDA") or foreign regulatory agencies,
were and, if still pending, are being conducted in all material respects in
accordance with experimental protocols, procedures and controls generally used
by qualified experts in the preclinical or clinical study of new drugs or
diagnostics as applied to comparable products to those being developed by the
Company; the descriptions of the results of such studies, test and trials
contained in the SEC Documents are accurate and complete in all material
respects, and, except as set forth in the SEC Documents, the Company has no
knowledge of any other trials, studies or tests, the results of which the
Company believes reasonably call into question the clinical trial results
described or referred to in the SEC Documents when viewed in the context in
which such results are described and the clinical state of development; and the
Company has not received any notices or correspondence from the FDA or any other
domestic or foreign governmental agency requiring the termination, suspension or
material modification of any animal studies, preclinical tests or clinical
trials conducted by or on behalf of the Company or in which the Company has
participated that are described in the SEC Documents or the results of which are
referred to in the SEC Documents.
3.28 Investment Company. The Company is not and, after giving effect
to the offering and sale of the Notes, will not be an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
3.29 Solicitation; Other Issuances of Securities. Neither the
Company nor its subsidiary or affiliate, (i) has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the Notes, (ii) has,
within the last 6 months directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under any circumstances
that would require registration of the Notes under the Securities Act or (iii)
has taken or will take any action
10.
or steps that would require registration of any of the Notes, or the shares of
Common Stock issuable upon conversion thereof, under the Securities Act.
3.30 Lock-Ups
(a) For a period of one hundred twenty (120) days from the
date on which the Securities are priced, the Company will not, without the prior
written consent of CIBC World Markets, sell, contract to sell or otherwise
dispose of or issue any equity or equity-linked securities of the Company,
except pursuant to previously issued options or warrants, any agreements
providing for anti-dilution or other stock purchase or share issuance rights in
existence on the date hereof, any employee benefit or similar plan of the
Company in existence on the date hereof or duly adopted hereafter, or any
technology license agreement, strategic alliance or joint venture in existence
on the date hereof or which the Company may enter into hereafter.
(b) The Company shall, prior to or concurrently with the
execution of this Agreement, deliver an agreement executed by each of the
directors and executive officers of the Company to the effect that such person
will not, during the period commencing on the date such person signs such
agreement and ending one hundred twenty (120) days after the date hereof,
without the prior written consent of the Purchaser, directly or indirectly, make
any offer, sale, assignment, transfer, encumbrance, contract to sell, grant of
an option to purchase or other disposition of any Common Stock beneficially
owned (within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended) on the date of such agreement or thereafter acquired, other
than Common Stock transferred as a gift or gifts (provided that any donee
thereof agrees in writing to be bound by the terms thereof).
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
The Purchaser hereby represents and warrants to, and covenants with, the
Company, and the Placement Agents (as third party beneficiaries of the
representations, warranties and covenants hereunder) as of the Closing Date (or
such other date specified below) as follows:
4.1 Organization. If the Purchaser is an entity, Purchaser is duly
organized and validly existing in good standing under the laws of its
jurisdiction of organization. The Purchaser has all requisite corporate power
and authority and all necessary governmental approvals to carry on its business
as now being conducted, except as would not result in a material adverse effect
on the Purchaser's ability to consummate the transactions and perform the
obligations contemplated by this Agreement.
4.2 Authorization, Enforcement, and Validity. The Purchaser has the
requisite power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The Purchaser has taken all necessary action
to authorize the execution, delivery and performance of this Agreement. Upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of the Purchaser enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
11.
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity.
4.3 Consents and Approvals; No Violation. The execution, delivery
and performance of this Agreement by the Purchaser and the consummation by the
Purchaser of the transactions contemplated hereby will not (i) result in a
violation of the Purchaser's organizational documents; (ii) conflict with, or
constitute a default or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Purchaser is a party (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, result in a material adverse effect on the
Purchaser's ability to consummate the transactions contemplated by this
Agreement); or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Purchaser or its subsidiary, except for
such violations as would not, individually or in the aggregate, result in a
material adverse effect on the Purchaser's ability to consummate the
transactions contemplated by this Agreement. The Purchaser 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 or contemplated by this Agreement, except where the failure to
obtain such consents, authorization or orders or to make such filings or
registrations would not, individually or in the aggregate, result in a material
adverse effect on the Purchaser's ability to consummate the transactions
contemplated by this Agreement.
4.4 Investment Experience. The Purchaser is an accredited investor
within the meaning of Rule 501(a) of Regulation D promulgated under the
Securities Act, is knowledgeable, sophisticated and experienced in making, and
is qualified to make, decisions with respect to investments in securities
representing an investment decision like that involved in the purchase of the
Notes.
4.5 Investment Intent And Limitation On Dispositions. The Purchaser
is acquiring the Notes for its own account for investment only and has no
intention of selling or distributing any of such Notes or any arrangement or
understanding with any other Persons regarding the sale or distribution of such
Notes, or the shares of Common Stock issuable upon conversion thereof, except in
accordance with the provisions of Section 6 and except as would not result in a
violation of the Securities Act. The Purchaser will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Notes, or the
shares of Common Stock issuable upon conversion thereof, except in accordance
with the provisions of Section 6 or pursuant to and in accordance with the
Securities Act.
4.6 Information And Risk.
(a) The Purchaser has reviewed the Memorandum carefully and
has requested, received, reviewed and considered all other information the
Purchaser deems relevant in making an informed decision to purchase the Notes.
The Purchaser has had an opportunity to discuss the Company's business,
management and financial affairs with its management and also had an opportunity
to ask questions of officers of the Company that were answered to the
Purchaser's satisfaction.
12.
(b) The Purchaser recognizes that an investment in the Notes
involves a high degree of risk, including a risk of total loss of the
Purchaser's investment. The Purchaser is able to bear the economic risk of
holding the Notes, and the shares of Common Stock issuable upon conversion
thereof, for an indefinite period, and has knowledge and experience in the
financial and business matters such that it is capable of evaluating the risks
of the investment in the Notes.
(c) The Purchaser has not, in connection with the Purchaser's
decision to purchase Notes, relied upon any representations or other information
(whether oral or written) other than as set forth in the representations and
warranties of the Company contained herein and the Memorandum, and the Purchaser
has, with respect to all matters relating to this Agreement and the offer and
sale of the Notes, relied solely upon the advice of the Purchaser's own counsel
and has not relied upon or consulted any counsel to the Placement Agents or
counsel to the Company. The Purchaser has not relied upon the Placement Agents
in negotiating the terms of its investment in the Notes and has made its own
decision to invest in the Notes, without the assistance of the Placement Agents.
The Purchaser is not relying on any representation or warranty by the Placement
Agents or any of their agents or affiliates. Further, the Purchaser has not
relied on any investigation that the Placement Agents, or any person acting on
their behalf, may have conducted with respect to the Company or the Notes.
(d) The Purchaser acknowledges that the Placement Agents are
not responsible for the contents of the Memorandum. In addition, the Purchaser
acknowledges that the Placement Agents may facilitate the exchange of
information between the Purchaser and the Company, but that such information is
not being provided by the Placement Agents.
4.7 Lack of Financial Statements and Ability to File Registration
Statement. The Purchaser understands that the Company does not currently have
current financial statements as required under the Exchange Act, and is
therefore not presently in compliance with the filing requirements of Sections
13 and 15(d) of the Exchange Act. The Purchaser understands that the Company may
never produce current financial statements and that a failure to do so would
mean the Company would continue to not be in compliance with the filing
requirements under the Exchange Act. The Purchaser understands that until the
Company is in compliance with the requirements under the Exchange Act, the
Company will not be able to file a Registration Statement (as defined in Section
6 hereto). The Purchaser further understands that the Company may never regain
compliance with the requirements of the Exchange Act, and thus may never file a
Registration Statement. Furthermore, the Purchaser understands that the Company
is not in compliance with the requirements under Rule 144 promulgated under the
Securities Act ("Rule 144"), and is not in compliance with the requirements
under Rule 144A promulgated under the Securities Act ("Rule 144A") and may never
gain compliance therewith. The Purchaser understands that until, if ever, the
Company regains compliance with Rule 144, the Purchaser will not be able to use
the benefits of Rule 144 to sell the Notes or the shares of Common Stock
issuable upon conversion thereof to the public without registration and will not
be able to use the benefits of Rule 144A to sell the Notes.
4.8 Securities Not Listed. The Purchaser understands that the
Company's securities, including its Common Stock, are not currently listed or
traded on any established stock exchange or on The Nasdaq National Stock Market
or the Nasdaq SmallCap Market.
13.
Furthermore, the Purchaser understands that the Company's securities, including
its Common Stock, have been de-listed from The Nasdaq National Stock Market and
may never be listed or traded on any established stock exchange or on The Nasdaq
National Stock Market or the Nasdaq SmallCap Market. The Purchaser is aware of
the risks involved with the Company's securities, including its Common Stock,
not being listed on any established stock exchange or on The Nasdaq National
Stock Market or the Nasdaq SmallCap Market.
4.9 Disclosures to the Company. The Purchaser understands that the
Company is relying on the statements contained herein to establish an exemption
from registration under federal and state securities laws. The Purchaser will
promptly notify the Company of any changes in the information set forth in the
Registration Statement (as defined in Section 6.1(c) below) regarding the
Purchaser.
4.10 Nature of Purchaser. To the knowledge of the Purchaser, except
as set forth on the signature page to the Agreement under the caption
"Affiliated Purchasers", the Purchaser: (i) is not an affiliate (as such term is
defined pursuant to Rule 12b-2 promulgated under the Exchange Act) of any of the
Investors, (ii) is not constituted as a partnership, association, joint venture
or any other type of joint entity with any of the Investors, and (iii) is not
acting as part of a group (as such term is defined under Section 13(d) of the
Exchange Act) with any of the Investors. If at any time after the Closing Date
the Purchaser becomes an affiliate (as defined herein) of any of the Investors,
the Purchaser will provide prompt written notice to the Company.
4.11 Ownership. Such Purchaser (including any Person controlling,
controlled by, or under common control with such Purchaser, as the term
"control" is defined pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and its implementing regulations (the "HSR Act")) does
not, and upon the consummation of the transactions contemplated by this
Agreement will not, hold voting securities of the Company exceeding an aggregate
fair market value as of the Closing Date of fifty- three million, one hundred
thousand dollars ($53,100,000), calculated pursuant to the HSR Act.
4.12 Brokers or Finders. No broker, investment banker, financial
advisor or other Person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the
Purchaser.
4.13 Acknowledgement. The Purchaser acknowledges and agrees that the
Company does not make and has not made any representations or warranties with
respect to the transactions contemplated by this Agreement other than those
specifically set forth in Section 3.
4.14 No Short Sales. Between the time such Purchaser learned about
the Offering and the public announcement of the Offering, such Purchaser has not
taken, and prior to the public announcement of the Offering will not take, any
action that has caused or will cause such Purchaser to have, directly or
indirectly, sold or agreed to sell any shares of Common Stock, effected any
short sale, whether or not against the box, established any "put equivalent
position" (as defined in Rule 16a-1(h) under the Securities Exchange Act of
1934, as amended) with respect to the Common Stock, granted any other right
(including, without limitation, any
14.
put or call option) with respect to the Common Stock or with respect to any
security that includes, relates to or derived any significant part of its value
from the Common Stock, whether or not, directly or indirectly, in order to hedge
its position in the Shares, nor has such Purchaser, directly or indirectly,
caused any Person to engaged in any short sales or similar transactions with
respect to the Common Stock.
4.15 Release of Placement Agents. The Purchaser hereby expressly
releases the Placement Agents and their affiliates, and their respective
officers, employees, agents and controlling persons from any and all liabilities
arising from in or in connection with an investment in the Notes and the Common
Stock issuable upon conversion thereof (including, without limitation, with
respect to the accuracy of information or the failure to disclose information)
or any other transaction the Purchaser may undertake with respect to the Notes
or the Common Stock issuable upon conversion thereof, and the Purchaser hereby
agrees to make no claim (and hereby waives and releases all claims that the
Purchaser may otherwise have) with respect to such investment in the Notes or
the shares of Common Stock issuable upon conversion thereof against the
Placement Agents, their affiliates and their respective officers, employees,
agents and controlling persons. The Purchaser hereby agrees that the release and
waiver contained in this paragraph is unconditional and irrevocable.
4.16 Third Party Beneficiary Reliance. The Purchaser hereby
understands and agrees that the Placement Agents shall each be a third party
beneficiary of the representations, warranties and covenants made by the
Purchaser, pursuant to this Section 4, and shall be able to rely on, and the
Purchaser shall be liable for any breach of, the representations, warranties and
covenants made by the Purchaser, to the same extent as the Company.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Notwithstanding any investigation made by any party to this Agreement or
by the Placement Agents, all representations and warranties made by the Company
and the Purchaser herein shall survive for a period of one (1) year following
the Closing Date.
6. REGISTRATION RIGHTS; COMPLIANCE WITH THE SECURITIES ACT.
6.1 Definitions. As used in Sections 6 and 8, the following terms
shall have the following respective meanings:
(a) "Holder" shall mean the holders of Registrable Securities
or securities convertible into Registrable Securities and any person holding
such securities to whom the rights under this Agreement have been transferred in
accordance with Section 6.7 hereof.
(b) "Registrable Securities" means the Notes until such Notes
have been converted into or exchanged for Underlying Common Stock and, at all
times subsequent to any such conversion, the Underlying Common Stock or other
securities into or for which such Underlying Common Stock has been converted or
exchanged, and any securities issued with respect thereto upon any stock split,
stock dividend, recapitalization, subdivision or similar event; provided,
however, that (A) the foregoing definition shall exclude in all cases any
Registrable Securities sold by a person in a transaction in which their rights
under this Agreement are not assigned pursuant to Section 6.7 hereof; (B) the
Notes and the Underlying
15.
Common Stock or other securities shall only be treated as Registrable Securities
if and as long as they have not been (1) sold to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction or
(2) sold in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions, and restrictive legends with respect thereto, if any, are
removed upon the consummation of such sale; (C) any Note or Underlying Common
Stock held by a Holder shall cease to be included in the definition of
Registrable Securities upon the earliest to occur of: (i) the effective
registration under the Securities Act and resale in accordance with the
Registration Statement covering it, (ii) when the Registrable Securities then
held by the Holder are eligible for sale by the Holder pursuant to Rule 144(k),
and (iii) the date such security ceases to be outstanding (whether as a result
of redemption, repurchase and cancellation, conversion or otherwise); and (D)
the Notes and the Underlying Common Stock shall no longer be Registrable
Securities if, as a result of the event or circumstance described in any of the
foregoing clauses (C)(i) and (C)(ii), the legend with respect to transfer
restrictions required under the Indenture is removed or removable in accordance
with the terms of the Indenture or such legend, as the case may be.
(c) "Registration Statement" shall mean a registration
statement on Form S-1 or Form S-3 (or any successor form to Form S-3), filed by
the Company with the SEC pursuant to the Securities Act.
(d) "Underlying Common Stock" means the Common Stock of the
Company issuable or issued with respect to, or in exchange for or in replacement
of, the Notes.
6.2 Registration Procedures And Expenses.
(a) Except for such times as the Company may be required to
suspend the use of a prospectus forming a part of the Registration Statement,
the Company will:
(i) as soon as reasonably practicable, but in no event
later than thirty (30) days following the first date the Company becomes current
in its reporting requirements under the Exchange Act (the "Compliance Date"),
the Company will file a registration statement on Form S-1, for an offering to
be made on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act, registering the resale of the Registrable Securities by the
Holders thereof. To further clarify the intent of the parties, the "first date
the Company becomes current in its reporting requirements under the Exchange
Act" shall mean the first date on which the Company has filed with the SEC all
delinquent periodic reports pursuant to Sections 13 and 15(d) of the Exchange
Act (regardless of any deficiency thereof or comments that may be received with
respect thereto). The Company covenants and agrees to notify each Holder in
writing of the Compliance Date within five (5) business days thereof. The
Company shall use commercially reasonable efforts, subject to receipt of
necessary information from the Holders of the Registrable Securities, to cause
the SEC to declare such Registration Statement effective within (1) ninety (90)
days after the filing of such Registration Statement if there is no review of
the Registration Statement by the SEC or (2) one hundred twenty (120) days after
the filing of such Registration Statement if there is a review of the
Registration Statement by the SEC. The Company will file a post-effective
amendment to such Registration Statement on Form S-1 to convert such
Registration Statement to Form S-3 (or any successor form to Form S-
16.
3) within thirty (30) days after the Company becomes eligible to register the
Registrable Securities on Form S-3 (or any successor form to Form S-3) for
resale by the Holders thereof;
(ii) prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus used in connection
therewith (A) as may be necessary to keep the Registration Statement
continuously effective until the earlier of (i) the second anniversary of the
Closing Date, or (ii) such time as all Registrable Securities held by the
Holders have been sold pursuant to the Registration Statement and (B) as may be
reasonably requested by a Holder in order to incorporate information concerning
such Holder or such Holder's intended method of distribution;
(iii) so long as the Registration Statement is effective
covering the resale of Registrable Securities owned by the Holders, furnish to
each Holder with respect to the Registrable Securities registered under the
Registration Statement such reasonable number of copies of prospectuses and such
other documents as such Holder may reasonably request in order to facilitate the
public sale or other disposition of all or any of the Registrable Securities by
such Holder;
(iv) use commercially reasonable efforts to file
documents required of the Company for normal Blue Sky clearance in states
specified in writing by the Holders; provided, however, that the Company shall
not be required to qualify to do business or consent to service of process
generally in any jurisdiction in which the Company is not now so qualified or
has not so consented;
(v) bear all expenses in connection with the procedures
in this Section 6.2 and the registration of the Registrable Securities pursuant
to the Registration Statement, other than fees and expenses, if any, of counsel
or other advisers to the Holders or, brokerage fees and commissions incurred by
the Holders, if any in connection with the offering of the Registrable
Securities;
(vi) use all commercially reasonable efforts to prevent
the issuance of any stop order or other order suspending the effectiveness of
such Registration Statement and, if such an order is issued, to obtain the
withdrawal thereof at the earliest possible time and to notify each Holder of
the issuance of such order and the resolution thereof; and
(vii) permit counsel for the Holders to review the
Registration Statement and all amendments and supplements thereto, and any
comments made by the staff of the SEC and the Company's responses thereto,
within a reasonable period of time prior to the filing thereof with the SEC (or,
in the case of comments made by the staff of the SEC, within a reasonable period
of time following the receipt thereof by the Company);
provided, that in the case of clauses (vi) and (vii) above, the Company
shall not be required to provide, and shall not provide, any Holder with
material, non-public information unless the Purchaser agrees to receive such
information and enters into a written confidentiality agreement with the
Company.
(b) If (i) a Registration Statement covering all the
Registrable Securities required to be covered thereby and required to be filed
by the Company pursuant to
17.
this Section 6.2 is (A) not filed with the SEC on or before thirty (30) days
after the Compliance Date (a "Filing Failure") or (B) if the Company fails to
use reasonable best efforts to cause such Registration Statement to be declared
effective by the SEC on or before (1) ninety (90) days after the filing of such
Registration Statement if there is no review of the Registration Statement by
the SEC or (2) one hundred twenty (120) days after the filing of such
Registration Statement if there is a review of the Registration Statement by the
SEC (each an "Effectiveness Failure") or (ii) on any day after the effective
date of the Registration Statement sales of all the Registrable Securities
required to be included on such Registration Statement cannot be made (other
than as permitted during a Suspension pursuant to Section 6.6(b) of this
Agreement) pursuant to such Registration Statement (including, without
limitation, because of a failure to keep such Registration Statement effective,
to disclose such information as is necessary for sales to be made pursuant to
such Registration Statement or to register sufficient number of Registrable
Securities) (a "Maintenance Failure"), then, the Company shall pay as liquidated
damages (the "Liquidated Damages") for such failure and not as a penalty to any
Holder of Registrable Securities an amount equal to 1% of the purchase price
paid to the Company for all the Registrable Securities (which for the Underlying
Common Stock shall be equal to the principal amount of Notes that would then be
convertible into such number of shares of Underlying Common Stock) then held by
such Holder for each thirty (30) day period following a Filing Failure,
Effectiveness Failure or Maintenance Failure (pro rated for any period less than
thirty (30) days) until the applicable failure has been cured. Payments to be
made pursuant to this Section 6.2(c) shall be due and payable semi-annually in
arrears, with the first semi-annual payment due on the first interest payment
date in respect of the Registrable Securities following the date on which such
Liquidated Damages begin to accrue. The parties agree that the Liquidated
Damages represent a reasonable estimate on the part of the parties, as of the
date of this Agreement, of the amount of damages that may be incurred by the
Holders of Registrable Securities if a Filing Failure, Effectiveness Failure or
Maintenance Failure occurs. The parties agree that Liquidated Damages shall be
the exclusive monetary damages under this Agreement with respect to any Filing
Failure, Effectiveness Failure or Maintenance Failure.
(c) With a view to making available to the Purchaser the
benefits of Rule 144 (or its successor rule) and any other rule or regulation of
the SEC that may at any time permit the Purchaser to sell the Registrable
Securities to the public without registration, the Company covenants and agrees
to, after the Compliance Date: (i) make and keep public information available,
as those terms are understood and defined in Rule 144, until the earlier of (A)
six months after such date as all of the Purchaser's Registrable Securities may
be resold pursuant to Rule 144(k) or any other rule of similar effect or (B)
such date as all of the Purchaser's Registrable Securities shall have been
resold; (ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and (iii) furnish to
the Purchaser upon request, as long as the Purchaser owns any Registrable
Securities, such other information as may be reasonably requested in order to
avail the Purchaser of any rule or regulation of the SEC that permits the
selling of any such Registrable Securities without registration.
(d) In connection with the Registration Statement, the
following provisions shall apply:
18.
(i) Not less than 30 calendar days prior to the date on
which the SEC declares the Registration Statement effective or on which the
Registration Statement otherwise becomes effective (the "Effective Time"), the
Company shall mail a Notice and Questionnaire to the holders of Registrable
Securities. No holder shall be entitled to be named as a selling securityholder
in the Registration Statement as of the Effective Time, and no holder shall be
entitled to use the prospectus for resales of Registrable Securities at any
time, unless such holder has returned a completed and signed Notice and
Questionnaire to the Company by the deadline for response set forth therein;
provided, however, holders of Registrable Securities shall have at least 20
calendar days from the date on which the Notice and Questionnaire is first
mailed to such holders to return a completed and signed Notice and Questionnaire
to the Company.
(ii) After the Effective Time, the Company shall, upon
the request of any holder of Registrable Securities that is not then an Electing
Holder, promptly send a Notice and Questionnaire to such holder. The Company
shall not be required to take any action to name such holder as a selling
securityholder in the Registration Statement or to enable such holder to use the
Prospectus for resales of Registrable Securities until such holder has returned
a completed and signed Notice and Questionnaire to the Company.
(iii) The term "Electing Holder" shall mean any holder
of Registrable Securities that has returned a completed and signed Notice and
Questionnaire to the Company in accordance with Section 6.2(d)(i) or 6.2(d)(ii)
hereof.
(iv) The Company shall furnish to each Electing Holder,
and counsel to the Electing Holders, if any, no fewer than five Business Days
prior to the initial filing of the Registration Statement, a copy of such
Registration Statement, and shall furnish to such holders, and counsel to the
Electing Holders, if any, no fewer than two Business Days prior to the filing of
any amendment to the Registration Statement, a copy of such amendment or
supplement, as the case may be, and shall use its reasonable best efforts to
reflect in each such document when so filed with the SEC such comments as such
holders and their respective counsel reasonably may propose.
(v) Not later than the Effective Time, the Company shall
cause the Indenture to be qualified under the Trust Indenture Act; in connection
with such qualification, the Company shall cooperate with the Trustee under the
Indenture and the Holders (as defined in the Indenture) to effect such changes
to the Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the Trust Indenture Act; and the Company shall
execute, and shall use its reasonable best efforts to cause the Trustee to
execute, all documents that may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner.
6.3 Restrictions on Transferability.
(a) Each Holder agrees that it will not effect any disposition
of the Registrable Securities that would constitute a sale within the meaning of
the Securities Act or pursuant to any applicable state securities or Blue Sky
laws of any state, except (i) as
19.
contemplated in the Registration Statement referred to in Section 6.2 above,
(ii) pursuant to the requirements, if then-permitted, of Rule 144 (in which case
the Purchaser will provide the Company with reasonable evidence of the
Purchaser's compliance therewith) or Rule 144A (after the Rule 144A Eligibility
Date, as defined below) or (iii) pursuant to a written opinion of legal counsel
reasonably satisfactory to the Company and addressed to the Company to the
effect that registration under the Securities Act is not required in connection
with the proposed transfer; whereupon the holder of such securities shall be
entitled to transfer such securities. Each certificate evidencing the securities
transferred as above provided shall bear the appropriate restrictive legends as
may be required by Section 7.
(b) None of the Registrable Securities shall be transferable
except upon the conditions specified in this Section 6, which are intended to
ensure compliance with the provisions of the Securities Act. Each Holder will
cause any proposed transferee of the Registrable Securities held by such Holder
to agree to take and hold such Registrable Securities subject to the provisions
and upon the conditions specified in this Section 6 if and to the extent that
such Registrable Securities continue to be restricted securities in the hands of
the transferee.
6.4 Termination Of Conditions And Obligations. The conditions and
obligations imposed on a Holder under this Section 6 shall remain in force and
effect as to such Holder until the first date upon which (a) all the Registrable
Securities held by such Holder have been sold or otherwise transferred pursuant
to the Registration Statement or otherwise in a transaction in which the
Holder's rights pursuant to this Section 6 have not been assigned; or (b) the
earlier to occur of: (i) two years from the date of Closing, or (ii) when the
Registrable Securities then held by the Holder are eligible for sale by the
Holder pursuant to Rule 144(k).
6.5 Compliance. Each Holder, severally and not jointly, covenants
and agrees that it will comply with the prospectus delivery requirements of the
Securities Act as applicable to it in connection with the sales of the
Registrable Securities pursuant to the Registration Statement.
6.6 Suspension Period
(a) Except in the event that paragraph (b) below applies, the
Company shall: (i) if necessary to keep any registration statement filed
pursuant to this Section 6 current and effective and, to convert such
registration statement to Form S-3 (or any successor form to Form S-3), promptly
prepare and file from time to time with the SEC post-effective amendments to a
registration statement or supplements to the related prospectus or supplements
or amendments to any document incorporated therein by reference or file any
other required document (x) so that the registration statement will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and so that, as thereafter delivered to purchasers of the Registrable Securities
being sold thereunder, such prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading and (y) with respect to the registration
statement filed pursuant to Section 6.2, to convert such registration statement
to Form S-3 (or any successor form to Form S-3); (ii) provide the Holders of
Registrable Securities registered under the applicable registration
20.
statement with copies of any documents filed pursuant to Section 6.6(a)(i); and
(iii) inform the Holders of Registrable Securities registered under the
applicable registration statement that the Company has complied with its
obligations in Section 6.6(a)(i) (or that, if the Company has filed a
post-effective amendment to the registration statement that has not yet been
declared effective, the Company will notify such Holders to that effect, will
use its commercially reasonable efforts to secure the effectiveness of such
post-effective amendment as promptly as possible and will promptly notify the
Holders pursuant to Section 6.6(a)(i) hereof when the amendment has become
effective).
(b) Subject to Section 6.6(c) below, in the event: (i) of any
request by the SEC or any other federal or state governmental authority during
the period of effectiveness of a registration statement filed pursuant to this
Section 6 for amendments or supplements to the registration statement or related
prospectus or for additional information so that the registration statement will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or otherwise fail to comply with the applicable rules and
regulations of the federal securities laws; (ii) of the issuance by the SEC or
any other federal or state governmental authority of any stop order suspending
the effectiveness of the registration statement or the initiation of any
proceedings for that purpose; (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for such purpose, provided
that, considering the advice of counsel, the Company reasonably believes that it
must qualify in such jurisdiction; (iv) of any event or circumstance that,
considering the advice of counsel, the Company reasonably believes necessitates
the making of any changes in the registration statement or related prospectus,
or any document incorporated or deemed to be incorporated therein by reference,
so that, in the case of the registration statement, it will not contain any
untrue statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and that in the case of a related prospectus, it will not contain
any untrue statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; (v)
that the Company reasonably believes, considering the advice of counsel, that
the Company may, in the absence of a suspension described hereunder, be required
under state or federal securities laws to disclose any corporate development,
the disclosure of which could reasonably be expected to have a material adverse
effect upon the Company, its stockholders, a potentially material transaction or
event involving the Company, or any negotiations, discussions or proposals
directly relating thereto or (vi) that, with respect to the registration
statement filed pursuant to Section 6.2, the Company can convert such
registration statement to Form S-3 (or any successor form to Form S-3); then the
Company shall deliver a certificate in writing to each Holder of Registrable
Securities registered under the applicable registration statement (the
"Suspension Notice") to the effect of the foregoing and, upon receipt of such
Suspension Notice, the Holder will refrain from selling any Registrable
Securities pursuant to the Registration Statement (a "Suspension") until the
Holder's receipt of copies of a supplemented or amended prospectus prepared and
filed by the Company or until the Holder is advised in writing by the Company
that the current prospectus may be used and the Holder has received copies of
any additional or supplemental filings that are incorporated or deemed
incorporated by reference in any such prospectus. In the event of any
Suspension, the Company will use its commercially reasonable
21.
efforts to cause the use of the prospectus so suspended to be resumed as soon as
reasonably practicable after delivery of a Suspension Notice to the Holders.
(c) Notwithstanding the foregoing paragraphs of this Section
6.6, no Holder shall be prohibited from selling Registrable Securities under a
registration statement filed pursuant to Section 6.2 after such time as the
registration statement is converted to Form S-3 (or any successor form to Form
S-3) as a result of Suspensions on more than two occasions of not more than 45
days each in any 12-month period; provided, however, that, in each case, in no
event shall any Suspension pursuant to Section 6.6(b)(v) exceed twenty (20)
business days. The Company shall use commercially reasonable efforts to limit
the duration of any Suspension that occurs prior to the time the registration
statement filed pursuant to Section 6.2 is converted to Form S-3.
(d) Provided that a Suspension is not then in effect, each
Holder may sell Registrable Securities under an effective registration
statement, provided that it arranges for delivery of a current prospectus to the
transferee of such Registrable Securities.
6.7 Covenant to Provide Information. Each Holder of Registrable
Securities hereby agrees to provide to the Company, upon request, the
information required to be included about such Holder in a Registration
Statement where such Holder's Registrable Securities are included, no later than
10 days prior to the date upon which the Company intends to file such
Registration Statement or amendment or supplement thereto.
7. LEGENDS.
(a) The Purchaser understands and agrees that each certificate
or other document evidencing any of the Notes or Underlying Common Stock shall
be endorsed with the legend in the form set forth below, and the Purchaser
covenants that the Purchaser will not transfer the Notes or Underlying Common
Stock represented by any such document or certificate without complying with the
restrictions on transfer described in the legend endorsed on such certificate or
document (unless there is in effect a registration statement under the
Securities Act covering such proposed transfer, such securities have been sold
under Rule 144 or as otherwise permitted by the provisions of Section 6 above)
and understands that the Company will refuse to register a transfer of any Notes
or Underlying Common Stock unless the conditions specified in the following
legend are satisfied:
"THE NOTES EVIDENCED HEREBY AND THE SHARES OF COMMON STOCK ISSUABLE
UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR OTHER
SECURITIES LAWS. NONE OF THIS NOTE, THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION HEREOF OR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE
HOLDER OF THIS
22.
SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT IT IS AN
"ACCREDITED INVESTOR" (AS DEFINED IN REGULATION D UNDER SECURITIES
ACT), (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO
YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(K)
UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER)
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY
PREDECESSOR OF THIS NOTE) OR THE LAST DAY ON WHICH VAXGEN, INC. (THE
"COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
NOTE (OR ANY PREDECESSOR OF THIS NOTE) AND (Y) SUCH LATER DATE, IF
ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE "RESALE RESTRICTION
TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE OR
THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF EXCEPT
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) WHEN AND
FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR
(D) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE
TO EACH PERSON TO WHOM THIS NOTE OR THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION HEREOF ARE TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE
COMPANY, THE TRUSTEE AND THE REGISTRAR SHALL HAVE THE RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (II) IN EACH OF
THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATION OF TRANSFER IN
THE FORM APPEARING ON THE OTHER SIDE OF THE NOTE IS COMPLETED AND
DELIVERED BY THIS TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
THIS NOTE, ANY SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION
HEREOF AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED
FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON RESALES AND OTHER
TRANSFERS OF THIS NOTE AND ANY SUCH SHARES TO REFLECT ANY CHANGE IN
APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION
23.
THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF
RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS NOTE AND SUCH
SHARES SHALL BE DEEMED BY THE ACCEPTANCE OF THIS NOTE AND ANY SUCH
SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.
(b) Any legend referred to in Section 7(a) hereof stamped on
the Notes or Underlying Common Stock and the stock transfer instructions and
record notations with respect to such Notes or Underlying Common Stock shall be
removed and the Company shall issue a certificate without such legend to the
holder of such Notes or Underlying Common Stock if (i) a Registration Statement
covering the resale of the Notes or Underlying Common Stock is effective under
the Securities Act, (ii) such holder provides the Company with an opinion of
counsel reasonably acceptable to the Company to the effect that a public sale or
transfer of such securities may be made without registration under the
Securities Act or (iii) such holder provides the Company with reasonable
assurances, which may, at the option of the Company, include an opinion of
counsel satisfactory to the Company, that such securities can be sold pursuant
to Section (k) of Rule 144 under the Securities Act. Following the receipt by
the Company of such opinion or reasonable assurances, the Company will, no later
than five trading days following the delivery by a holder to the Company or the
Company's transfer agent of a legended certificate representing such securities,
deliver or cause to be delivered to such holder a certificate representing such
securities that is free from all restrictive and other legends.
(c) The Purchaser covenants that the Purchaser will not
transfer the Notes or Underlying Common Stock represented by any such document
or certificate without complying with any applicable requirements under the
Securities Act to deliver the final prospectus included in the effective
Registration Statement to any offeree of such Notes or Underlying Common Stock.
8. INDEMNIFICATION.
(a) For purposes of this Section 8:
(i) the term "Prospectus" shall mean the prospectus and
any amendment or supplement thereto in the form first filed with the SEC
pursuant to Rule 424(b) promulgated under the Securities Act or, if no Rule
424(b) filing is required, filed as part of the Registration Statement at the
time of effectiveness, as supplemented or amended from time to time; and
(ii) the term "Registration Statement" shall include any
final prospectus, exhibit, supplement or amendment included in or relating to a
Registration Statement filed pursuant to Section 6 of this Agreement.
(b) The Company agrees to indemnify and hold harmless each of
the Holders and each Person, if any, who controls any Holder, within the meaning
of the Securities Act (each such person being sometimes referred to as an
"Indemnified Person"), against any losses, claims, damages, liabilities or
expenses, joint or several, to which such Indemnified Person may become subject,
under the Securities Act, the Exchange Act, or any other federal or
24.
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, but only if such settlement is effected with the
written consent of the Company), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement or Prospectus, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, and will reimburse each Indemnified Person for any legal and other
expenses reasonably incurred as such expenses are reasonably incurred by such
Indemnified Person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the Company will not be liable for 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, and the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement or
Prospectus in reliance upon and in conformity with written information furnished
to the Company by or on behalf of the Indemnified Person expressly for use
therein, or (ii) any statement or omission in any Prospectus that is corrected
in any subsequent Prospectus that was delivered to the Indemnified Person a
reasonable time prior to the pertinent sale or sales by the Indemnified Person,
and provided that the Indemnified Person has been notified by the Company that
such earlier Prospectus should no longer be delivered by the Indemnified Person.
(c) Each Holder will severally, and not jointly, indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, each Person, if any, who controls the Company
within the meaning of the Securities Act, and each other Holder (together the
"Indemnitees"), against any losses, claims, damages, liabilities or expenses to
which each Indemnitee may become subject, under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any litigation, but only if such
settlement is effected with the written consent of such Holder) insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof
as contemplated below) arise out of or are based upon: (i) the inaccuracy of any
representation made by such Holder, (ii) any untrue or alleged untrue statement
of any material fact contained in the Registration Statement or the Prospectus,
(iii) the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, or (iv) any violation
or alleged violation by the Company of the Securities Act (collectively, a
"Holder Violation"), in each case to the extent, but only to the extent, that
such Holder Violation occurs in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Holder, and such
Holder, will reimburse each Indemnitee for any legal and other expense
reasonably incurred, as such expenses are reasonably incurred by such
Indemnitees in connection with investigating, defending, settling, compromising
or paying any such loss, claim, damage, liability, expense or action; provided,
however, the liability of each Holder, under this subsection (c) shall not
exceed the net proceeds received by such Holder, from the sale of Registrable
Securities covered by the Registration Statement unless such liability resulted
from willful misconduct by such Holder.
25.
(d) Promptly after receipt by an indemnified party under this
Section 8 of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 8, promptly notify the indemnifying party
in writing thereof, but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
hereunder or otherwise to the extent it is not prejudiced as a result of such
failure. In case any such action is brought against any indemnified party and
such indemnified party seeks or intends to seek indemnity from an indemnifying
party, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
the parties; provided, however, that an indemnified party shall have the right
to retain its own counsel (together with appropriate local counsel), with the
fees and expenses thereof 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 shall relieve such indemnifying party of any liability to the indemnified
party under this Section 8 to the extent, and only to the extent, prejudicial to
its ability to defend such action, 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 8.
(e) The obligations of the Company and Holders under this
Section 8 shall survive completion of any offering of Registrable Securities in
a Registration Statement and, with respect to liability arising from an offering
to which this Section 8 would apply that is covered by a Registration Statement
filed before termination of this Agreement, such termination. No indemnifying
party, in the defense of any such claim or litigation, shall, except with the
consent of each indemnified party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.
9. NOTICES.
(a) All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed by first-class registered or
certified airmail, confirmed facsimile or nationally recognized overnight
express courier postage prepaid, and shall be as addressed as follows:
if to the Company, to:
VaxGen, Inc.
0000 Xxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Telephone No.: 000-000-0000
26.
Telecopy No.: 000-000-0000
with a copy to:
Xxxxx X. Xxxxxxx, Esq.
Cooley Godward LLP
Five Palo Alto Sq.
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Telephone No.: 000-000-0000
Telecopy No.: 650-849-7400
and if to the Purchaser, at its address as set forth in the signature page to
the Agreement, or at such other address or addresses as may have been previously
furnished to the Company in writing in accordance with this Section 9.
(b) Such notices or other communications shall be deemed
delivered upon receipt, in the case of overnight delivery, personal delivery,
facsimile transmission (as evidenced by the confirmation thereof), or mail.
10. MISCELLANEOUS.
10.1 Amendments. 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 Purchaser; provided that, any amendment
of Section 6 "Registration Rights; Compliance with the Securities Act" shall
require only the consent of the Company and the Purchasers holding a majority in
aggregate principal amount of Registrable Securities then outstanding. Any
amendment or waiver effected in accordance with this Section 10.1 shall be
binding upon each holder of any securities purchased under this Agreement at the
time outstanding (including securities into which such securities are
convertible), each future holder of all such securities, and the Company.
10.2 Fees and Expenses. Except as set forth herein, each of the
Company and the Purchaser shall pay its respective fees and expenses related to
the transactions contemplated by this Agreement.
10.3 Headings. The headings of the various sections of this
Agreement are for convenience of reference only and shall not be deemed to be
part of this Agreement.
10.4 Severability. In the event that any provision in this Agreement
is held to be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
10.5 Successors and Assigns. This Agreement shall be binding upon,
inure to the benefit of, and shall be enforceable by the parties hereto and
their respective successors and permitted assigns. The Company may not assign
this Agreement or any rights or obligations hereunder, other than the rights set
forth under Section 6 of this Agreement, without the prior written consent of
the Purchaser. Prior to the date upon which the Notes are eligible for sale
27.
pursuant to Rule 144A of the Securities Act (the "Rule 144A Eligibility Date"),
the Purchaser may assign its rights under this Agreement, including the rights
under Section 6 of this Agreement, to any person to whom the Purchaser assigns
or transfers any Notes or Underlying Common Stock, provided that (a) such
transferee agrees in writing to be bound, with respect to the transferred Notes
or Underlying Common Stock, by the provisions hereof that apply to the Purchaser
and (b) in the event Purchaser transfers any of its rights under Section 6 of
this Agreement, it shall give prompt written notice of such transfer (including
the name, address and telephone number of the transferee) to the Company. After
the Rule 144A Eligibility Date, in the event that any transferee of any
Purchaser shall acquire the Notes or Underlying Common Stock, in any manner,
whether by gift, bequest, purchase, operation of law or otherwise, such
transferee shall, without any further writing or action of any kind, be entitled
to receive the benefits of and, if an Electing Holder, be conclusively deemed to
be bound by and to perform all of the terms and provisions of this Agreement to
the aforesaid extent.
10.6 Governing Law And Forum. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
agreements made and to be fully performed therein. The parties hereto agree to
submit to the exclusive jurisdiction of the federal and state courts of the
State of New York with respect to the interpretation of this Agreement or for
the purposes of any action arising out of or related to this Agreement.
10.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, and all of which
together shall constitute one and the same instrument. In the event that any
signature is delivered via facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature page were an original hereof.
10.8 Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the matters covered herein,
supersedes all prior agreements and understandings with respect to such matters
and executed by and among the Company and the Purchaser, and, except as
specifically set forth herein or therein, neither the Company nor the Purchaser
makes any representation, warranty, covenant or undertaking with respect to such
matters.
28.
APPENDIX A
FORM OF COMPANY COUNSEL OPINION
29.
APPENDIX B
FORM OF COMPANY REGULATORY COUNSEL OPINION
30.
ANNEX II
Schedule of Registered Holders For Purchaser
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Registered Holder Principal Amount Address, Telephone and Tax ID Number Name of Broker (if
of Notes Contact Person any)
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31.
