STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("Agreement") is entered into this 12th
day of January, 1998, by and between HealthMed, Inc., a Nevada corporation
("Purchaser") and Xxxxx Xxxx, M.D. ("Seller").
RECITALS
X. XXXXX Pharmaceuticals, a California corporation (the "Corporation")
presently has outstanding two classes of common stock (individually, "Class A
Shares" and "Class B Shares" and collectively, the "Shares"), of which 1,027,003
Class A Shares and 234,000 of Class B Shares have been issued to Seller.
B. The Shares are collectively the only issued and outstanding capital
stock of the Corporation held by Seller.
C. The parties hereto are parties to that certain Purchase Rights
Agreement dated of even date herewith, which agreement is appended hereto as
Exhibit A and incorporated herein by this reference.
D. The Purchaser desires to purchase from Seller and Seller desires to
sell to the Purchaser 308,100 of the Class A Shares and 70,200 of the Class B
Shares owned by Seller on the terms and subject to the conditions set forth
herein.
AGREEMENT
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Purchase of Shares.
1.1 Purchase of Shares. Subject to the terms and conditions
set forth herein, at the Closing (as defined below) Seller will sell 308,100 of
the Class A Shares and 70,200 of the Class B Shares owned by Seller to the
Purchaser and the Purchaser will purchase all of such Shares owned by Seller
from Seller, such Shares constituting thirty percent (30%) of all of the issued
and outstanding capital stock of the Corporation owned by Seller as of the
Closing.
1.2 Purchase Price. The Purchase Price shall be One Million
Five Hundred Twenty Eight Thousand Two Hundred Thirty Four and 98/100 Dollars
($1,528,234.98) for the Shares purchased hereby (referred herein to as the
"Purchase Price").
1.3 Payment of Purchase Price. The Purchase Price will be paid
to Seller by Purchaser's delivery to Seller of a promissory note in the
principal sum of the Purchase Price and in substantially the form of Exhibit 1.3
hereto at the Closing (the "Note"), such Note to be at the
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rate of ten percent (10%) per annum computed on the basis of a year of 360 days
for the actual number of days elapsed and shall additionally provide for annual
payments of interest only with principal due and payable on the second (2nd)
anniversary of such Note, and the Note shall not be subject to any prepayment
penalties; provided, however, that in the event the last stock purchase price on
the first (1st) anniversary date of this Agreement of the Company's Class A
common stock on the public market equals or exceeds Nine and No/100 Dollars
($9.00), then Seven Hundred Seventy One Thousand Eight Hundred Thirty Two and
98/100 ($771,832.98) of the amount due on the Note shall be accelerated from the
maturity date thereof and shall be due and payable no later than fifteen (15)
days thereafter.
2. Representations and Warranties of Seller. As a material inducement
to the Purchaser to enter into this Agreement and purchase the Shares, the
Seller represents and warrants that:
2.1 Ownership of the Shares. Seller is the owner, beneficially
and of record, of the Shares being transferred pursuant to this Agreement free
and clear of all liens, charges, claims, encumbrances, security interests,
equities, restrictions on transfer or other defects in title of any kind or
description.
2.2 Authority to Enter into Agreements; Enforceability. Seller
has the right, power and authority to enter into and to carry out the terms and
provisions of this Agreement, including the transfer and delivery of the Shares
being transferred pursuant to this Agreement, without obtaining the approval or
consent of any other party or authority, and this Agreement is a legal, valid
and binding agreement of Seller, enforceable in accordance with its terms.
2.3 No Conflict. The execution and performance of this
Agreement by Seller will not violate any agreement, promissory note, security
arrangement, order or other instrument to which Seller is a party or by which
Seller may be bound.
2.4 Litigation. To the best knowledge of Seller, there are no
suits, actions or legal, administrative, arbitration or other proceedings
pending, filed or initiated by or against the Corporation occurring since the
issuance of the Corporation's Form 10K dated September 30, 1997.
2.5 Disclosure. Neither this Agreement nor any of the
schedules, attachments, written statements, documents, certificates, or other
items prepared or supplied to the Purchaser by or on behalf of the Seller with
respect to this purchase contain any untrue statement of a material fact or omit
a material fact necessary to make each statement contained herein or therein not
misleading. The Seller has not intentionally concealed any fact known by him to
have a material adverse effect upon the Corporation's existing or expected
financial condition, operating results, assets, customer relations, employee
relations, or business prospects taken as a whole.
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3. Representations and Warranties of Purchaser. As a material
inducement to the Seller to enter into this Agreement and sell the Shares, the
Purchaser hereby represents and warrants to the Seller as follows:
3.1 Organization; Power. The Purchaser is a corporation duly
incorporated and validly existing under the laws of the State of California, and
has all requisite corporate power and authority to enter into this Agreement and
perform its obligations hereunder.
3.2 Authorization. The execution, delivery, and performance by
the Purchaser of this Agreement and all other agreements contemplated hereby to
which the Purchaser is a party have been duly and validly authorized by all
necessary corporate action of the Purchaser, and this Agreement and each such
other agreement, when executed and delivered by the parties thereto, will
constitute the legal, valid, and binding obligation of the Purchaser enforceable
against it in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, and similar statutes affecting creditors'
rights generally and judicial limits on equitable remedies.
3.3 No Conflict with Other Instruments or Agreements. The
execution, delivery, and performance by the Purchaser of this Agreement and all
other agreements contemplated hereby to which the Purchaser is a party will not
result in a breach or violation of, or constitute a default under, its Articles
of Incorporation or Bylaws or any material agreement to which the Purchaser is a
party or by which the Purchaser is bound.
3.4 Litigation. There are no actions, suits, proceedings, or
governmental investigations or inquiries pending or, to the knowledge of the
Purchaser, threatened against the Purchaser or its properties, assets,
operations, or businesses that might delay, prevent, or hinder the consummation
of this purchase.
3.5 Investment Representations.
3.5.1 The Purchaser is an "accredited investor" as
defined by the SEC's Rule 501(a), and the Purchaser has substantial experience
in evaluating and investing in private placement transactions of securities in
companies similar to the Corporation so that the Purchaser is capable of
evaluating the merits and risks of the Purchaser's investment in the Corporation
and has the capacity to protect the Purchaser's own interests.
3.5.2 The Purchaser is acquiring the Shares for
investment for the Purchaser's own account, not as a nominee or agent, and not
with the view to, or for resale in connection with, any distribution thereof.
The Purchaser understands that the Shares to be purchased have not been, and
will not be, registered under the Securities Act or the securities laws of any
state by reason of a specific exemption from the registration provisions of the
Securities Act and the applicable state securities laws, the availability of
which depends upon, among other things, the bona fide nature of the investment
intent and the accuracy of the Purchaser's representations as expressed herein.
The Purchaser is acquiring the Shares without
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expectation, desire, or need for resale and not with the view toward
distribution, resale, subdivision, or fractionalization of the Shares.
3.5.3 During the course of the negotiation of this
Agreement, the Purchaser has had an opportunity to discuss the Corporation's
business, management and financial affairs with the Corporation's management and
the opportunity to review the Corporation's financial statements, books and
records, facilities and business plan. The Purchaser has also had an opportunity
to ask questions of officers of the Corporation, which questions were answered
to the Purchaser's satisfaction.
3.5.4 The Purchaser understands that the Shares to be
purchased have not been registered under Securities Act of 1933 ("1933 Act"), or
under any state securities law.
3.5.5 The Purchaser understands that the Shares cannot
be resold in a transaction to which the 1933 Act and state securities laws apply
unless (i) subsequently registered under the 1933 Act and applicable state
securities laws or (ii) exemptions from such registrations are available. The
Purchaser is aware of the provisions of Rule 144 promulgated under the 1933 Act
which permit limited resale of shares purchased in a private transaction subject
to the satisfaction of certain conditions.
3.5.6 The Purchaser understands that no public market
now exists for the Shares and that it is uncertain that a public market will
ever exist for the Shares.
3.5.7 The Purchaser understands that the certificates
for the Shares will bear the following legend:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THE CORPORATION WILL NOT TRANSFER THIS
CERTIFICATE UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION
COVERING THE SHARES REPRESENTED BY THIS CERTIFICATE UNDER THE
SECURITIES ACT OF 1933 AND ALL APPLICABLE STATE SECURITIES
LAWS, (ii) IT FIRST RECEIVES A LETTER FROM AN ATTORNEY,
ACCEPTABLE TO THE BOARD OF DIRECTORS OF THE CORPORATION OR ITS
AGENTS, STATING THAT IN THE OPINION OF THE ATTORNEY THE
PROPOSED TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933 AND UNDER ALL APPLICABLE STATE
SECURITIES LAWS, OR (iii) THE TRANSFER IS MADE PURSUANT TO
RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
3.6 Tax Liability. To the extent the Purchaser deems
necessary, the Purchaser has reviewed with the Purchaser's own tax advisors the
federal, state, local and foreign tax
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consequences of this investment and the transactions contemplated by this
Agreement. The Purchaser relies solely on such advisors and not on any
statements or representations of the Seller or any of its agents. The Purchaser
understands that the Purchaser (and not the Seller) shall be responsible for the
Purchaser's own tax liability that may arise as a result of this investment or
the transactions contemplated by this Agreement.
3.7 Disclosure. To the Purchaser's knowledge, this Agreement,
with the Exhibits hereto, when taken as a whole, does not contain any untrue
statement of a material fact concerning the Purchaser or omit to state a
material fact necessary in order to make the statements concerning the Purchaser
contained herein not misleading in light of the circumstances under which they
were made.
3.8 Compliance with Other Instruments. The execution, delivery
and performance of and compliance with this Agreement, and the issuance of
shares will not result in any material violation of, or conflict with, or
constitute a material default under, any Purchaser's articles of incorporation
or bylaws or any of the Purchaser's material agreements nor result in the
creation of any mortgage, pledge, lien, encumbrance or charge against any of the
assets or properties of the Corporation or the Shares.
4. Covenants of Seller. The Seller covenants and agrees with the
Purchaser as follows:
4.1 Satisfaction of Conditions. The Seller will use reasonable
efforts to obtain as promptly as practicable the satisfaction of the conditions
to Closing described in this Agreement and any necessary consents or waivers
under or amendments to agreements by which the Seller is bound.
4.2 Supplements to Schedules. From time to time prior to the
Closing, the Seller will promptly supplement or amend the Exhibits and Schedules
with respect to any matter hereafter arising that, if existing or occurring at
the date of this Agreement, would have been required to be set forth or
described in any Exhibit or Schedule and will promptly notify the Purchaser of
any breach by either of them that either of them discovers of any
representation, warranty, or covenant contained in this Agreement. No supplement
or amendment of any Exhibit or Schedule made pursuant to this Section will be
deemed to cure any breach of any representation of or warranty made in this
Agreement unless the Purchaser specifically agrees thereto in writing; provided,
however, that if this purchase is closed, the Purchaser will be deemed to have
waived its rights with respect to any breach of a representation, warranty, or
covenant or any supplement to any Schedule of which it shall have been notified
pursuant to this Subsection.
4.3 No Solicitation. Until the Closing or termination pursuant
to Section 9 of this Agreement, the Seller shall not encourage, solicit,
initiate, or enter into any discussions or negotiations concerning any
disposition of any of the capital stock of Seller (other than pursuant to this
Agreement), or any proposal therefor. The Seller will promptly inform the
Purchaser of any inquiry (including the terms thereof and the person making such
inquiry) received by the
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Seller after the date hereof and believed by such person to be a bona fide,
serious inquiry relating to any such proposal.
5. Covenant of Purchaser. The Purchaser will use its best efforts to
cause the conditions set forth in Section 7 to be satisfied.
6. Conditions Precedent to the Obligations of Purchaser; Legal Opinion.
Each and every obligation of the Purchaser under this Agreement is subject to
the delivery, at or before the Closing, of an opinion of Xxxx, Forward, Xxxxxxxx
& Scripps LLP, in form and content reasonably acceptable to the Purchaser and
its legal counsel, to the effect that (i) this Agreement has been duly executed
and delivered by Seller; (ii) this Agreement and each other agreement
contemplated hereby, when executed and delivered by the parties thereto, will
constitute the legal, valid, and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms except as the enforceability
thereof may be limited by the application of bankruptcy, insolvency, moratorium,
or similar laws affecting the rights of creditors generally or judicial limits
on the right of specific performance; (iii) except as set forth in Schedule 6,
the execution and delivery by the Seller of this Agreement and all other
agreements contemplated hereby to which the Seller is a party, the offering and
sale of the Shares hereunder and the fulfillment of and compliance with the
respective terms hereof and thereof by the Seller, do not and will not (a)
conflict with or result in a breach of the terms, conditions or provisions of,
(b) constitute a default under, (c) result in the creation of any lien, security
interest, charge, or encumbrance upon the capital stock or assets of the Seller,
(d) give any third party the right to accelerate any obligation under, (e)
result in a violation of, or (f) require any authorization, consent, approval,
exemption, or other action by or notice to any court or administrative or
governmental body, or any law, statute, rule, or regulation to which the Seller
is subject, or any agreement, instrument, order, judgment, or decree to which
the Seller is subject; and (iv) to such counsel's knowledge, Seller owns the
Shares.
7. Conditions Precedent to the Obligations of Seller. Each and every
obligation of the Seller under this Agreement is subject to the satisfaction, at
or before the Closing, of each of the following conditions:
7.1 Representations and Warranties; Performance. Each of the
representations and warranties made by the Purchaser herein will be true and
correct in all material respects as of the Closing with the same effect as
though made at that time except for changes contemplated, permitted, or required
by this Agreement; the Purchaser will have performed and complied with all
agreements, covenants, and conditions required by this Agreement to be performed
and complied with by it prior to the Closing; and the Seller will have received,
at the Closing, a certificate of the Purchaser, signed by the President and the
Secretary or the Chief Financial Officer of the Purchaser, stating that each of
the representations and warranties made by the Purchaser herein is true and
correct in all material respects as of the Closing except for changes
contemplated, permitted, or required by this Agreement and that the Purchaser
has performed and complied with all agreements, covenants, and conditions
required by this Agreement to be performed and complied with by it prior to the
Closing.
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7.2 Corporate Action. The Purchaser will have furnished to the
Seller a copy, certified by the Secretary of an Assistant Secretary of the
Purchaser, of the resolutions of the Purchaser authorizing the execution,
delivery, and performance of this Agreement.
8. Closing.
8.1 Time, Place, and Manner of Closing. Unless this Agreement
has been terminated and this purchase has been abandoned pursuant to the
provisions of Section 9, the closing ("Closing") will be held at the offices of
Xxxxx Xxxxxxx & Xxxx, or such other place as the parties may agree, on January
12, 1998, or as soon as practicable after the satisfaction of the various
conditions precedent to the Closing set forth herein. At the Closing the parties
to this Agreement will exchange certificates, Notes, and other instruments and
documents in order to determine whether the terms and conditions of this
Agreement have been satisfied. Upon the determination of each party that its
conditions to consummate this purchase have been satisfied or waived, the Seller
shall deliver to the Purchaser the certificate(s) evidencing the Shares, duly
endorsed for transfer, and the Purchaser shall deliver to the Seller the Note
referred to in Section 1.3, in a manner to be agreed upon by the parties. After
the Closing, the Seller, at the Purchaser's cost, will execute, deliver, and
acknowledge all such further instruments of transfer and conveyance and will
perform all such other acts as the Purchaser may reasonably request to
effectively transfer the Shares.
8.2 Consummation of Closing. All acts, deliveries, and
confirmations comprising the Closing regardless of chronological sequence shall
be deemed to occur contemporaneously and simultaneously upon the occurrence of
the last act, delivery, or confirmation of the Closing and none of such acts,
deliveries, or confirmations shall be effective unless and until the last of the
same shall have occurred. The time of the Closing has been scheduled to
correspond with the close of business at the principal office of the Corporation
and, regardless of when the last act, delivery, or confirmation of the Closing
shall take place, the transfer of the Shares shall be deemed to occur as of the
close of business at the principal office of the Corporation on the date of the
Closing.
9. Termination.
9.1 Termination for Cause. If, pursuant to the provisions of
Section 6 or 7 of this Agreement, the Seller or the Purchaser is not obligated
at the Closing to consummate this Agreement, then the party who is not so
obligated may terminate this Agreement.
9.2 Termination Without Cause. Anything herein or elsewhere to
the contrary notwithstanding, this Agreement may be terminated and abandoned at
any time without further obligation or liability on the part of any party in
favor of any other by mutual consent of the Purchaser and the Seller.
9.3 Termination Procedure. Any party having the right to
terminate this Agreement due to a failure of a condition precedent contained in
Sections 6 or 7 hereto may
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terminate this Agreement by delivering to the other party written notice of
termination, and thereupon, this Agreement will be terminated without obligation
or liability of any party.
10. Miscellaneous Provisions.
10.1 Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified, or supplemented only by a written
agreement signed by the Purchaser and the Seller.
10.2 Waiver of Compliance; Consents
10.2.1 Any failure of any party to comply with any
obligation, covenant, agreement, or condition herein may be waived by the party
entitled to the performance of such obligation, covenant, or agreement or who
has the benefit of such condition, but such waiver or failure to insist upon
strict compliance with such obligation, covenant, agreement, or condition will
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
10.2.2 Whenever this Agreement requires or permits
consent by or on behalf of any party hereto, such consent will be given in a
manner consistent with the requirements for a waiver of compliance as set forth
above.
10.3 Payment of Fees and Expenses. Each party to this
Agreement will be responsible for, and will pay, all of its own fees and
expenses, including those for its own counsel and accountants, incurred in the
negotiation, preparation, and consumption of this Agreement and this purchase
and sale.
10.4 Costs. Each party hereto shall bear, pay and discharge
all of his/its respective expenses incurred in connection with the execution and
performance of this Agreement, except as otherwise provided specifically herein.
10.5 Entire Agreement; Successors and Assigns; and Amendment;
Third Parties. Except for that certain Voting Trust Agreement executed
concurrently herewith and appended hereto as Exhibit B and the Purchase Rights
Agreement executed concurrently herewith and appended hereto as Exhibit A, this
Agreement and the exhibits appended hereto constitute the entire agreement
between the parties concerning the subject matter hereof and no party shall be
liable or bound to the other in any manner by any warranties, representations or
covenants except as specifically set forth herein. Any previous or concurrent
agreement among the parties with respect to the subject matter hereof is
superseded by this Agreement and the exhibits appended hereto. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective executors, administrators, heirs, successors and assigns of the
parties. Except as expressly provided herein, nothing in this Agreement, express
or implied, is intended to confer upon any party, other than the parties hereto,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
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10.6 Governing Law and Consent to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of
California. The parties irrevocably (i) submit to the exclusive jurisdiction of
the state courts of the State of California over any action or proceeding
arising out of a breach of this Agreement, (ii) agree that all claims in respect
of such action or proceeding may be heard and determined in such courts, (iii)
waive, to the fullest extent they may effectively do so, the defense of an
inconvenient or inappropriate forum to the maintenance of such action or
proceeding, (iv) agree that any communication given in accordance with Section
10.9, to the fullest extent permitted by law, shall be taken and held to be
valid personal service and personal delivery to such party for the purposes set
forth in this Section, and (v) waive any defense based on lack of personal
jurisdiction for any such purpose.
10.7 Legal Action and Fees. In the event of any controversy,
claim or dispute between the parties hereto arising out of or relating to this
Agreement, the prevailing party shall be entitled to recovery from the
non-prevailing party its reasonable expenses, including but not limited to its
reasonable attorneys' fees.
10.8 Headings. The headings of the sections of this Agreement
are for convenience only and shall not determine the interpretation of this
Agreement.
10.9 Notices. Any notice required or permitted hereunder shall
be given in writing and shall be deemed effectively given upon personal
delivery, 24 hours after transmission by telecopy, telex, or five (5) days after
deposit in the United States mail by registered or certified mail, addressed as
set forth below or at such other address as such party may designate by ten (10)
days' advance written notice to the other party:
If to Seller: Xxxxx Xxxx, M.D.
0000 Xx Xxxxx Xxxxxx Xxxx
Xx Xxxxx, XX 00000
If to Purchaser: HealthMed, Inc.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
10.10 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.11 Other Documents. Seller shall, at any time after the
Closing and upon the request of the Purchaser, execute and deliver to the
Purchaser such documents or instruments of conveyance, license or assignment or
take such other action as is reasonably necessary to complete the transfer of
the Shares or other transactions contemplated by this Agreement or to perfect
the interest of the Purchaser therein. Further, the parties agree to take all
actions and file such documents required to comply with California securities
laws.
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10.12 Legal Advice. The parties hereby acknowledge that they
have received independent legal advice from attorneys of their choice with
respect to the advisability of executing this Agreement and the related
documents affecting this transaction. Prior to the execution of this Agreement,
each of the parties' attorneys reviewed this Agreement and discussed the
Agreement with such party, and each party made all desired changes. Each of the
parties and their attorneys have made such investigation of the facts pertaining
to this Agreement and all of the matters appertaining thereto as they deemed
necessary. Each of the parties certifies that it has read this Agreement, and
fully understands this Agreement and that it has executed it voluntarily, free
of any duress, force or undue influence of any party or any person.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first set forth above.
SELLER:
---------------------------------
XXXXX XXXX, M.D.
PURCHASER:
HEALTHMED, INC.
By:_________________________________
Xxxxxxxx X. Xxxxx
Its: President & Secretary
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CONSENT OF SPOUSE, COHABITANT OR DOMESTIC PARTNER
The undersigned spouse, cohabitant or domestic partner of the Shareholder
acknowledges on her behalf that: I have read the foregoing Agreement and I know
its contents. I am aware that by its provisions that my spouse, cohabitant or
domestic partner sells to Purchaser thirty percent (30%) of his Shares in the
Company, including my community interest in them. I hereby consent to and
approve of the provisions of the Agreement, and agree that those Shares and my
interest in them are subject to the provisions of the Agreement and that I will
take no action at any time to hinder operation of the Agreement on those Shares
or my interest in them.
Signature:__________________________________
Print Name:____________________________
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EXHIBITS 1.3
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EXHIBIT A
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EXHIBIT B
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