EXHIBIT 10.6
STOCK PURCHASE AGREEMENT
THIS AGREEMENT (this "Agreement") is entered into as of the 21st day of
July, 1997, by and between GENVEC, INC., a Delaware corporation, with its
principal place of business at 00000 Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000
(the "Company"), and XXXXXX-XXXXXXX COMPANY, a Delaware corporation, with its
principal place of business at 000 Xxxxx Xxxx, Xxxxxx Xxxxxx, Xxx Xxxxxx 00000
(the "Investor"), with reference to the following recitals:
WHEREAS, the Company and the Investor have entered into a Research,
Development and Collaboration Agreement, dated as of the date hereof (the
"Collaboration Agreement"), pursuant to which the Company and the Investor have
agreed to enter into a collaborative effort, as defined in the Collaboration
Agreement (the "Collaboration"), and have established a framework for their
collaboration, as described in the Collaboration Agreement; and
WHEREAS, the Investor agrees to purchase certain shares of the capital
stock of the Company on and pursuant to the terms hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual agreements, undertakings and
covenants set forth in this Agreement and in the Collaboration Agreement, and
for other good and valuable consideration, the receipt, sufficiency and adequacy
of which are hereby acknowledged, the parties, intending to be legally bound,
hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement the following terms shall
have the meanings ascribed to them in this Section 1 except as otherwise
expressly indicated or limited by the context in which they appear in this
Agreement. All terms defined in Section 1 or in the Preamble to this Agreement
in the singular form shall have the same meaning when used in the plural form
and vice versa.
(a) "Affiliate" shall mean a person or entity that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, the person or entity specified.
(b) "Aggregate Purchase Price" shall mean, in each instance of a
Tranche Event (as defined below), the cash consideration as specified by the
Company in a Sale Notice (as defined below) or Amended Sale Notice (as defined
below) to be paid by the Investor for the Securities (as defined below)
specified therein; provided however, the amount of such cash consideration shall
not exceed Two Million Dollars ($2,000,000) for the Tranche Event described in
Section l(mm)(1), Three Million Dollars ($3,000,000) for the Tranche Event
described in Section l(mm)(2), Five Million Dollars ($5,000,000) for the Tranche
Event described in Section I (mm)(3), Five Million Dollars ($5,000,000) for the
Tranche Event described in Section 1(mm)(4), Five Million Dollars ($5,000,000)
for the Tranche Event described in Section 1(mm)(5), and Five Million Dollars
($5,000,000) for the Tranche Event described in Section l(mm)(6).
(c) "Amended Sale Notice" shall mean the written notice given under
certain circumstances by the Company to the Investor in accordance with Section
2(b)(i)(C) of this Agreement that (i) indicates that the Investor must acquire
Securities in accordance with this Agreement and (ii) provides the information
set forth in Section 2(b)(i)(C) hereof, as appropriate.
(d) "Bylaws" shall mean the Company's Amended and Restated By-Laws as
set forth in Exhibit B hereto, as amended from time to time.
(e) "Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day when the banking institutions in Maryland
are authorized or obligated by law or proclamation to close or be closed.
(f) "CAD" shall have the meaning ascribed thereto in the Collaboration
Agreement.
(g) "CAD Milestone I" shall mean with respect to a Collaboration
Product (as defined below) for the treatment of CAD, the enrollment of the first
human patient in a clinical trial.
(h) "CAD Milestone II" shall mean with respect to a Collaboration
Product (as defined below) for the treatment of CAD the earliest of: (x) the
first completion, as determined by the Executive Committee (as defined below),
of the initial Phase I (as defined in the Collaboration Agreement) clinical
trial, (y) the treatment of all patients in a Phase I (as defined in the
Collaboration Agreement) clinical trial per the initial clinical protocol or
thirty (30) days after the administration of a Collaboration Product to three
(3) patients at a dose of ten to the ninth power (10/9/) plaque forming units
(or equivalent), or (z) the enrollment of the first patient in the initial Phase
II (as defined in the Collaboration Agreement) or Phase III (as defined in the
Collaboration Agreement) or Pivotal (as defined in the Collaboration Agreement)
clinical trial (whichever is earliest) which (i) is intended to include thirty
(30) or more patients, or (ii) is approved by the Drug Development Committee (as
defined in the Collaboration Agreement).
(i) "Charter" shall mean the Company's Restated Certificate of
Incorporation as set forth in Exhibit A hereto, as amended from time to time.
(j) "Class A Preferred Stock" shall mean the Company's Class A
Convertible Preferred Stock, par value $.01 per share.
(k) "Class B Preferred Stock" shall mean the Company's Class B
Convertible Preferred Stock, par value $.01 per share.
(l) "Class C Preferred Stock" shall mean the Company's Class C
Convertible Preferred Stock, par value $.01 per share, and the shares of Common
Stock (as defined below) that have been issued upon conversion of the Class C
Preferred Stock.
-2-
(m) "Class D Preferred Stock" shall mean the Company's Class D
Convertible Preferred Stock, par value $.01 per share.
(n) "Collaboration Product" shall have the meaning ascribed thereto in
the Collaboration Agreement.
(o) "Commission" shall mean the United States Securities and Exchange
Commission.
(p) "Common Stock" shall mean the Company's common stock, par value
$.01 per share, or any common stock issued by the Company in exchange for such
Common Stock.
(q) "Executive Committee" shall have the meaning ascribed thereto in
the Collaboration Agreement.
(r) "Fair Market Value" shall mean, if the Company has sold shares of
Common Stock in an IPO (as defined below), the average of the daily closing bid
and ask prices for a share of the Common Stock for the Trading Period (as
defined below) on the principal national securities exchange or quotation system
on which the Common Stock is listed or quoted. "Fair Market Value" shall mean,
if the closing bid and ask prices of a share of Common Stock are not so listed
or quoted or if the Company has not sold shares of Common Stock in an IPO, the
fair market value of a share of Common Stock or Preferred Stock (as defined
below), respectively, as reasonably determined by the Company's board of
directors on a date no more than fifteen (15) Business Days prior to the date
that the applicable Sale Notice or Amended Sale Notice is to be sent to the
Investor. The Company will provide to the Investor notice of the Fair Market
Value no less than ten (10) Business Days prior to the date the applicable Sale
Notice is to be sent to the Investor. If the Investor disagrees with the
board's determination of the Fair Market Value, it must provide to the Company
notice within five (5) Business Days of receiving the Company's notice of the
Fair Market Value that the Investor disagrees with the board's determination of
the Fair Market Value in which case the Fair Market Value shall be determined by
an appraiser that is selected and paid for by the Company and is reasonably
acceptable to the Investor. The Fair Market Value will then be the amount
determined by the appraiser as of the same date as of which the Company's board
of directors determined the Fair Market Value with which the Investor disagreed.
(s) "GAAP" shall mean generally accepted accounting principles in the
United States.
(t) "Investment Company Act" shall mean the Investment Company Act of
1940, as amended.
-3-
(u) "IPO" shall mean an initial underwritten public offering of shares
of Common Stock through the registration of the shares on a registration
statement filed under the Securities Act (as defined below).
(v) "Lock-up Period" shall mean each of: (i) the period commencing on
the date of this Agreement and ending two (2) years after the Company sells
shares of Common Stock in an IPO; (ii) the period commencing ninety (90) days
prior to the anticipated date of the occurrence of any Tranche Event and ending
on the day the Investor receives the Sale Notice regarding such Tranche Event
from the Company, and (iii) with respect to Securities sold to the Investor in
connection with each Tranche Event occurring after the Company sells shares of
Common Stock in an IPO, the period commencing on the date the Investor becomes
the holder of record of the Securities purchased in connection with such Tranche
Event and ending on the latter of the lock-up period in this Section 1(v)(i) or
eighteen (18) months after the date the Investor becomes the holder of record of
such Securities determined on a Tranche Event-by-Tranche Event basis.
(w) "Manufacturing Milestone" shall mean the reproducible
demonstration, as shown by the preparation of three (3) consecutive lots of the
first Collaboration Product, of a process for the production and purification of
Bulk Product (as defined in the Collaboration Agreement) at the scale and in a
GMP facility agreed to by the Executive Committee that is usable for the conduct
of a Pivotal (as defined in the Collaboration Agreement) study of such
Collaboration Product.
(x) "Original Registration Stock" shall mean the shares of the Class A
Preferred Stock and the Class B Preferred Stock, the shares of Common Stock that
have been issued upon conversion of the Class A Preferred Stock and the Class B
Preferred Stock, and any shares of Common Stock or other securities issued in
respect of any such securities upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event.
(y) "Other Shares" shall mean the issued and outstanding shares of
Common Stock proposed to be included in the Piggyback Registration Statement (as
defined below) and held by holders of shares other than the Investor and holders
of any of the Original Registration Stock, the Class C Preferred Stock, and the
Warrant Shares (as defined below).
(z) "PVD" shall have the meaning ascribed thereto in the Collaboration
Agreement.
(aa) "PVD Milestone" shall mean with respect to a Collaboration
Product for the treatment of PVD, the earlier of (i) the first completion, as
determined by the Executive Committee, of the initial Phase I (as defined in the
Collaboration Agreement) clinical trial which comprises less than twelve (12)
patients, or (ii) the administration of a Collaboration Product to the first
twelve (12) patients in any clinical trial.
(bb) "Piggyback Registration Statement" shall have the meaning
ascribed thereto in Section 8(a) herein.
-4-
(cc) "Preferred Stock" shall mean shares of any of one or more series
of convertible preferred stock which the Company's board of directors shall
authorize for issuance pursuant to the terms of this Agreement and which the
Investor must purchase pursuant to this Agreement. Each share of Preferred
Stock shall have the designations, limitations and rights specified in
subsections B(l), (2)(a) and (4) of Article Ninth of the Charter. Each share of
Preferred Stock (i) shall be entitled to liquidation rights pursuant to the
provisions of B(3) of Article Ninth of the Charter except that the Liquidation
Preference (as defined in the Charter) of the Preferred Stock shall be the same
as the purchase price and (ii) shall be convertible at the option of the
Investor pursuant to the provisions of subsection B(5)(b) of Article Ninth of
the Charter into shares of the Common Stock of the Company at a rate of one
share of Common Stock for each share of Preferred Stock, subject to adjustment
pursuant to the provisions of subsection B(5)(d)(iv) and (v) of Article Ninth of
the Charter, provided, however, that such conversion shall be mandatory upon an
IPO pursuant to the provisions of subsection (B)(6) of Article Ninth of the
Charter.
(dd) "Restriction Period" shall mean the period commencing on the
date the Company sells Common Stock in an IPO and ending one year after the
Company receives notice from the Investor or otherwise becomes aware of the
occurrence of (i) all of the Tranche Events or (ii) the Tranche Event that is
the last of the Tranche Events that is reasonably likely to occur, as mutually
agreed to by the Investor and the Company.
(ee) "Sale Notice" shall mean the written notice given by the Company
to the Investor that (i) indicates that the Investor must acquire Securities in
accordance with this Agreement and (ii) provides the information set forth in
Section 2(a) or 2(b) hereof, as appropriate.
(ff) "Security" shall mean a share of Common Stock or Preferred Stock
issued by the Company to the Investor pursuant to this Agreement.
(gg) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(hh) "Selling Stockholders" shall mean the holders of shares of
Common Stock which seek to have their shares registered for sale on a
registration statement.
(ii) "Subsidiary" shall mean any corporation the majority of the
voting capital stock of which is owned directly or indirectly beneficially or of
record by the Company or the Investor, as applicable.
(jj) "Term of the Research Program" shall have the meaning ascribed
thereto in the Collaboration Agreement.
(kk) "Third Indication Milestone" shall mean the first indication
other than PVD or CAD for which a Collaboration Product achieves either (i) the
first completion, as determined by the Executive Committee, of the initial Phase
I (as defined in the Collaboration Agreement) clinical trial
-5-
which comprises less than twelve (12) patients or (ii) the administration of a
Collaboration Product to the first twelve (12) patients in any clinical trial.
(ll) "Trading Period" shall mean the twenty (20) consecutive trading
days ending one Business Day prior to the Business Day on which the Investor
must pay the Aggregate Purchase Price for the shares of Common Stock being sold.
(mm) "Tranche Event" shall mean each of the events specified below.
The occurrence of each Tranche Event, independently and without regard to
whether any one of the other Tranche Events has or has not occurred, entitles
the Company to sell Securities to the Investor for the Aggregate Purchase Price,
provided that, prior to such occurrence, Pre-Clinical Activities (as defined in
the Collaboration Agreement) or Development (as defined in the Collaboration
Agreement) with respect to all Development Candidates (as defined in the
Collaboration Agreement) (and corresponding Collaboration Products) for the
related clinical indication set forth in subparagraphs (1), (2) and (4) below
have not been terminated under the Collaboration Agreement:
(1) CAD Milestone I;
(2) CAD Milestone II;
(3) An IPO;
(4) PVD Milestone;
(5) Third Indication Milestone; and
(6) Manufacturing Milestone.
(nn) "Transfer" or "Transferred" shall mean to sell, assign, pledge,
hypothecate, encumber or in any other manner transfer or dispose of or to have
sold, assigned, pledged, hypothecated, encumbered or in any other manner
transferred or disposed of
(oo) "Transferee" shall mean a person or entity to which this
Agreement or the Securities are Transferred.
(pp) "Warrant Shares" shall mean any shares of Common Stock acquired
by Scios Inc. pursuant to the Warrant Agreement entered into by the Company with
Scios Inc. as of May 31, 1996
2. PURCHASE OF STOCK. As set forth below, the Investor agrees to
purchase Securities issued by the Company for an aggregate amount not to exceed
Twenty-Five Million Dollars ($25,000,000) subject to the terms and conditions
contained in this Agreement. Such purchase will be made in up to six (6)
separate transactions with each such transaction occurring simultaneously with
or after the occurrence of a Tranche Event and after receipt by the Investor of
a Sale Notice for
-6-
each such purchase. The Investor agrees to purchase shares of Common Stock at
the time the Company sells shares of Common Stock in an IPO and, thereafter,
after the occurrence of each of the other Tranche Events. Prior to the sale of
shares of Common Stock in an IPO, the Investor agrees to purchase shares of
Preferred Stock after each Tranche Event. The Company's right to sell Securities
and the Investor's obligation to purchase Securities are subject to the right of
the Investor to refuse to acquire any portion of the Securities specified in the
Sale Notice, if, at the time of such acquisition, and after taking into account
the conversion into shares of Common Stock of any and all outstanding shares of
the Company's preferred stock and the shares of Preferred Stock specified in the
Sale Notice, the purchase of such portion of Securities would result in the
Investor owning twenty percent (20%) or more of the outstanding shares of Common
Stock and the shares of Common Stock into which the Company's outstanding shares
of preferred stock and the shares of Preferred Stock specified in the Sale
Notice are convertible.
(a) PURCHASE OF COMMON STOCK UPON AN IPO. If the Company intends to
sell shares of Common Stock to the Investor at the time of the sale of shares of
Common Stock in an IPO, at least thirty (30) days before the effectiveness of
the registration statement filed under the Securities Act in connection with the
IPO, the Company will provide a Sale Notice to the Investor to inform the
Investor that it must purchase shares of Common Stock in accordance with this
Agreement.
(i) The Sale Notice will advise the Investor of the Aggregate
Purchase Price and the estimated range of prices at which the shares of Common
Stock may be sold in the IPO. The Investor agrees to pay a purchase price for
each share of Common Stock equal to one-hundred twenty-five percent (125%) of
the price at which a share of Common Stock is sold to the public in the IPO. The
number of shares of Common Stock that the Investor will purchase will equal the
Aggregate Purchase Price divided by the product of 1.25 times the price at which
a share of Common Stock is sold to the public in the IPO, rounded down, if
necessary, to the next whole number of shares. The Aggregate Purchase Price
shall be reduced by the purchase price of the fractional share not issued.
(ii) The purchase and sale of the shares of Common Stock shall
take place simultaneously with the closing of the IPO or on a Business Day no
more than one full Business Day after the closing of the IPO. The Investor
shall deliver the payment for the shares of Common Stock by a wire transfer of
immediately available funds or by a certified bank check payable to the order of
the Company in the amount of the Aggregate Purchase Price. Upon receipt of such
payment by the Company, the Investor will be deemed to be the holder of record
of the shares of Common Stock and the Company will promptly execute and provide
to the Investor a certificate or certificates evidencing issuance to the
Investor of the appropriate number of fully-paid and non-assessable shares of
Common Stock purchased. The Company and the Investor shall comply with the
conditions to the sale set forth in Sections 9 and 10 hereof.
(iii) The Company agrees to advise the Investor periodically
as to the expected timing of the closing of the IPO. If shares of Common Stock
are not sold in the IPO with
-7-
respect to which the Sale Notice is given, the Company shall continue to have
the right to provide a Sale Notice and sell shares of the Common Stock pursuant
to this Section 2(a) in connection with any future IPO.
(b) PURCHASE OF SECURITIES UPON THE OCCURRENCE OF A TRANCHE EVENT
OTHER THAN AN IPO. If the Company intends to sell Securities after the
occurrence of a Tranche Event other than an IPO, the Company will provide a Sale
Notice to the Investor to inform the Investor that it must acquire the
Securities in accordance with this Agreement. The Sale Notice will advise the
Investor to purchase shares of either Common Stock or Preferred Stock as set
forth below.
(i) PURCHASE OF SECURITIES BEFORE AN IPO.
(A) The Sale Notice will be sent to the Investor no more
than ninety (90) days after the Company receives notice from the Investor or
otherwise becomes aware of the occurrence of a Tranche Event that occurs before
the sale of shares of Common Stock in an IPO, or such longer period of time to
enable the Company to obtain an appraisal of the Fair Market Value of the
Preferred Stock, if required. The Sale Notice will advise the Investor of the
number of shares of Preferred Stock that the Company has determined to sell to
the Investor, the Fair Market Value of each such share of Preferred Stock, the
purchase price for each such share of Preferred Stock and the Aggregate Purchase
Price. The Investor agrees to pay a purchase price for each share of Preferred
Stock equal to one-hundred twenty-five percent (125%) of the Fair Market Value
of a share of such Preferred Stock. Within thirty (30) days of the Investor's
receipt of the Sale Notice, the Investor shall deliver the payment for such
shares of Preferred Stock by a wire transfer of immediately available funds or
by a certified bank check payable to the order of the Company in the amount of
the Aggregate Purchase Price. Upon receipt of such payment by the Company on a
Business Day, the Investor will be deemed to be the holder of record of such
shares of Preferred Stock and the Company will promptly execute and provide to
the Investor a certificate or certificates evidencing issuance to the Investor
of the appropriate number of fully-paid and non-assessable shares of such
Preferred Stock. The Company and the Investor shall comply with the conditions
to the sale set forth in Sections 9 and 10 hereof.
(B) Notwithstanding paragraph (A) of this Section 2(b)(i),
if the Company sends a Sale Notice in connection with a Tranche Event other than
an IPO after it has filed a registration statement for an IPO which is being
reviewed by the Commission, the Sale Notice shall advise the Investor that the
Investor will purchase shares of Common Stock and will specify the Aggregate
Purchase Price and the estimated range of prices at which such shares of Common
Stock may be sold in the IPO. The Investor agrees to pay a purchase price for
each share of Common Stock equal to one-hundred twenty-five percent (125%) of
the price at which a share of Common Stock is sold to the public in the IPO. The
number of shares of Common Stock that the Investor will purchase will equal the
Aggregate Purchase Price divided by the product of 1.25 times the price at which
a share of Common Stock is sold to the public in the IPO, rounded down, if
necessary, to the next whole number of shares. The Aggregate Purchase Price
shall be reduced by the purchase price of the fractional share not issued. The
purchase and sale of the shares of Common Stock shall take
-8-
place simultaneously with the closing of the IPO or on a Business Day no more
than one full Business Day after the closing of the IPO. The Investor shall
deliver the payment for the shares of Common Stock by a wire transfer of
immediately available funds or by a certified bank check payable to the order of
the Company in the amount of the Aggregate Purchase Price. Upon receipt of such
payment by the Company, the Investor will be deemed to be the holder of record
of the shares of Common Stock and the Company will promptly execute and provide
to the Investor a certificate or certificates evidencing issuance to the
Investor of the appropriate number of fully-paid and non-assessable shares of
Common Stock. The Company and the Investor shall comply with the conditions to
the sale set forth in Sections 9 and 10 hereof.
(C) If the Company has sent a Sale Notice pursuant to
paragraph (B) of this Section 2(b)(i), the Company agrees to advise the Investor
periodically as to the expected timing of the closing of the IPO. If at any time
the Company reasonably believes that shares of Common Stock will not be sold in
an IPO within the next thirty (30) days, the Company may send to the Investor an
Amended Sale Notice which will supersede the Sale Notice delivered under
2(b)(i)(B). Such Amended Sale Notice shall advise the Investor of the number of
shares of Preferred Stock that the Company has determined to sell to the
Investor, the Fair Market Value of each such share of Preferred Stock, the
purchase price for each such share of Preferred Stock and the Aggregate Purchase
Price. The Investor agrees to pay a purchase price for each share of Preferred
Stock equal to one-hundred twenty-five percent (125%) of the Fair Market Value
of a share of such Preferred Stock within thirty (30) days of the Investors
receipt of the Amended Sale Notice. The Investor shall deliver the payment for
such shares of Preferred Stock by a wire transfer of immediately available funds
or by a certified bank check payable to the order of the Company in the amount
of the Aggregate Purchase Price. Upon receipt of such payment by the Company on
a Business Day, the Investor will be deemed to be the holder of record of such
shares of Preferred Stock and the Company will promptly execute and provide to
the Investor a certificate or certificates evidencing issuance to the Investor
of the appropriate number of fully-paid and non-assessable shares of such
Preferred Stock. The Company and the Investor shall comply with the conditions
to the sale set forth in Sections 9 and 10 hereof.
(ii) PURCHASE OF COMMON STOCK AFTER AN IPO.
(A) The Sale Notice relating to a Tranche Event that occurs
after an IPO will be sent to the Investor no sooner than fifty (50) days and no
later than sixty (60) days after the issuance of an announcement, a press
release or other publicity regarding the occurrence of the related Tranche Event
or twenty-five (25) Business Days after the Investor has reasonably withheld
consent to the issuance of the announcement, the press release or the other
publicity regarding the occurrence of the Tranche Event. The Sale Notice will
advise the investor that it must purchase shares of Common Stock in accordance
with this Agreement, that the Fair Market Value will be determined based upon
the Trading Period beginning on the specific date that was ten (10) Business
Days prior to the date of the Sale Notice and that the Investor must pay the
Aggregate Purchase Price on the tenth (10th) Business Day after the date of the
Sale Notice. The Investor agrees to pay a purchase price for each share of
Common Stock equal to one-hundred twenty-five percent (125%) of
-9-
the Fair Market Value of a share of Common Stock. The number of shares of Common
Stock that the investor will purchase will equal the Aggregate Purchase Price
divided by the product of 1.25 times the Fair Market Value of a share of Common
Stock, rounded down, if necessary, to the next whole number of shares.
(B) On the tenth (10th) Business Day after the date of the
Sale Notice the Investor shall deliver the payment for the shares of Common
Stock by a wire transfer of immediately available funds or by a certified bank
check payable to the order of the Company in the amount of the Aggregate
Purchase Price. Upon receipt of such payment by the Company, the Investor will
be deemed to be the holder of record of the shares of Common Stock and the
Company will promptly execute and provide to the Investor a certificate or
certificates evidencing issuance to the Investor of the appropriate number of
fully-paid and non-assessable shares of Common Stock. In addition, the Company
will advise the Investor of the calculation of the Fair Market Value of each
share of Common Stock, the purchase price paid by the Investor for each such
share of Common Stock and the number of shares of Common Stock that the Investor
has purchased and will remit to the Investor the difference, if any, between the
Aggregate Purchase Price and the product of the purchase price for each share of
Common Stock purchased by the Investor under this Section 2(b)(ii)(A) multiplied
by the number of shares of Common Stock purchased by the Investor. The Company
and the Investor shall comply with the conditions to the sale set forth in
Sections 9 and 10 hereof.
(c) NONPERFORMANCE BY THE INVESTOR. Any failure by the Investor to
acquire the Securities in compliance with the provisions of this Agreement,
including as a result of any failure of the Investor to satisfy the conditions
of Section 10 hereof, but excluding as a result of any failure of the Company to
satisfy the conditions of Section 9 hereof, may result in a termination of the
Collaboration Agreement in accordance with Section 19.2 of the Collaboration
Agreement; provided that no such termination shall occur if the Investor's
failure to pay for the Securities in accordance with the Agreement is caused by
a circumstance outside of the control of the Investor and the Investor's payment
for the Securities is delivered as soon as practicable but no later than twenty
(20) Business Days, or a period of time that is otherwise reasonably agreed to
by the parties, after delivery is required pursuant to this Section 2.
3. AUTHORIZATION OF SECURITIES. At the time the Company provides the
Sale Notice or the Amended Sale Notice to the Investor, the Securities shall be
duly and validly authorized and reserved for issuance.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants that, as of the date of this Agreement:
(a) CORPORATE ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is duly qualified to conduct its business as a foreign corporation
in all jurisdictions where the failure to be so qualified would have an adverse
effect on the Company or its business.
-10-
(b) CORPORATE AUTHORITY. The Company has all necessary corporate power
to execute, deliver and perform this Agreement subject to, in each instance, the
due authorization of the issuance of the Securities and the taking of all
required steps to effect the same.
(c) CAPITALIZATION. The Company's authorized capital stock consists
of (i) 52,005,095 shares of Common Stock, 5,672,475 of which are outstanding;
(ii) 1,334,000 shares of Class A Preferred Stock, 1,334,000 of which are
outstanding; (iii) 11,800,468 shares of Class B Preferred Stock, 11,320,314 of
which are outstanding; (iv) 21,065,000 shares of Class C Preferred Stock,
21,065,000 of which are outstanding; and (v) 2,000,000 shares of Class D
Preferred Stock, 571,429 of which are outstanding. All outstanding shares of
capital stock are validly issued and outstanding, fully-paid and non-assessable.
Except as contemplated by this Agreement and as set forth on Schedule 4(c)
hereto, there are no outstanding rights of first refusal, warrants, options,
conversion privileges, preemptive rights, or other rights or agreements to
purchase or otherwise acquire or issue any equity securities of the Company.
(d) SUBSIDIARIES. The Company does not presently own, have any
investment in, or control, directly or indirectly, any Subsidiaries,
corporations, associations or other business entities.
(e) VALIDITY OF SECURITIES. The Securities, when issued, sold and
delivered in accordance with the terms of this Agreement and for the Aggregate
Purchase Price specified in the applicable Sale Notice or Amended Sale Notice,
shall be duly and validly issued, fully-paid and nonassessable. If the
Securities are shares of Preferred Stock, the Common Stock issuable upon
conversion of such Preferred Stock, in accordance with the Company's Charter,
shall be, upon such issuance, duly and validly issued, fully-paid and non-
assessable.
(f) FINANCIAL STATEMENTS. The Company has made available to the
Investor the Company's audited financial statements for its most recent fiscal
year and unaudited financial statements for its most recent interim period, in
each case, to the extent available. As of the date of this Agreement, the
financial statements provided are attached hereto as EXHIBIT C. The annual
financial statements have been prepared in accordance with GAAP and the interim
financial statements have been prepared in a manner consistent with the annual
financial statements (subject to normal year-end audit adjustments and the
omission of footnotes required by GAAP).
(g) AGREEMENTS; ACTIONS.
(i) Schedule 4(g)(i) hereto sets forth a list of agreements
and proposed agreements between the Company and any of its officers, directors,
Affiliates or any Affiliate thereof
(ii) Except as set forth in Schedule 4(g)(ii) hereto, there are
no agreements,
-11-
instruments or contracts to which the Company is a party or by which it is bound
which involve (A) obligations of, or payments to, the Company in excess of Two-
Hundred Fifty Thousand Dollars ($250,000), (B) the license for commercial
purposes of any patent, copyright, trade secret or other proprietary rights to
or by the Company or (C) any other material agreement.
(iii) Except as set forth in Schedule 4(g)(iii) hereto, the
Company has not (A) declared or paid any dividends, or authorized or made any
distribution upon or with respect to any class or series of its capital stock,
(B) incurred any indebtedness for money borrowed, (C) incurred any other
liabilities individually in excess of One-Hundred Twenty-Five Thousand Dollars
($125,000) or in excess of Two-Hundred Fifty Thousand Dollars ($250,000) in the
aggregate, other than obligations or liabilities of the Company for compensation
under employment, advisor or consulting agreements, (D) made any loans or
advances to any person, other than ordinary advances for travel expenses, (E)
sold, exchanged or otherwise disposed of any of its material assets or rights or
(F) agreed to any of the foregoing.
(h) LITIGATION. To the Company's knowledge, there are neither any
pending nor threatened suits, legal proceedings, claims or governmental
investigations against or with respect to the Company or its properties or
assets, or that question the validity of this Agreement or the right of the
Company to enter into this Agreement. There is no judgment, decree or order of
any court in effect against the Company and the Company is not in default with
respect to any order of any governmental authority to which the Company is a
party or by which it is bound.
(i) NO CONFLICT WITH OTHER INSTRUMENTS; COMPLIANCE WITH LAWS. Subject
to obtaining authorization of the issuance of the Securities and subject to
Section 9 hereof, the execution, delivery and performance of this Agreement will
not result in any material violation of, be in material conflict with, or
constitute a material default under, with or without the passage of time or the
giving of notice (i) any provision of the Charter or the Bylaws; (ii) any
provision of any judgment, decree or order to which the Company is a party or by
which it is bound; (iii) any material contract, obligation or commitment to
which the Company is a party or by which it is bound; or (iv) any material
statute, rule or governmental regulation applicable to the Company. The Company
is conducting its business in compliance with all material statutes, rules and
governmental regulations applicable to the Company, and has obtained all
licenses, permits and other governmental authorizations required thereby, where
the failure to do so would have a material adverse effect on the Company or its
business.
(j) TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. Except as set forth
in the Company's financial statements or Schedule 4(j) hereto, the Company has
good and marketable title to all of its properties and assets, both real and
personal, and has good title to all of its leasehold interests, in each case
subject to no mortgage, pledge, lien, security interest, conditional sale
agreement, encumbrance or charge.
(k) CONFIDENTIAL AND PROPRIETARY INFORMATION. Each employee of and
consultant to the Company with access to confidential or proprietary
-12-
information has executed a proprietary information agreement obligating such
employee or consultant to hold all of such information in confidence.
(l) NO DEFAULTS; VIOLATIONS OR CONFLICTS. Except as set forth in
Schedule 4(l) hereto, the Company is not in violation of any term or provision
of the Charter, the Bylaws, or any term or provision of any document
representing indebtedness or any mortgage, indenture, contract, agreement or
judgment which would have a material adverse effect on the Company or its
business.
(m) INSURANCE. The Company has in effect insurance covering risks
associated with its business in such amounts as are customary in its industry.
(n) PRIOR REGISTRATION RIGHTS. Except as set forth in Schedule 4(n)
hereto, the Company is under no contractual obligation to register under the
Securities Act any of its presently outstanding securities or any shares of
Common Stock into which such securities are convertible.
(o) FULL DISCLOSURE. The representations and warranties of the
Company contained in this Agreement and the answers to the questions provided to
Section 5(b)(i) hereof do not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made herein, in
light of the circumstances under which they were made, not misleading.
(p) GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, local or provincial governmental authority on
the part of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement, except for any filing required by
federal or state securities laws and except, under certain circumstances, for
filings and notifications under the Xxxx-Xxxxx-Xxxxxx Improvements Act of 1976,
as amended, where applicable.
(q) CORPORATE DOCUMENTS. The Charter and the Bylaws of the Company in
effect as of the date of this Agreement are in the forms attached hereto as
Exhibits A and B, respectively.
5. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor hereby
represents and warrants that, as of the date of this Agreement:
(a) AUTHORIZATION. The Investor has all corporate power to enter into
this Agreement and to carry out all of the transactions contemplated hereby,
including the purchase of Securities for an aggregate amount of Twenty-Five
Million Dollars ($25,000,000) and in up to six (6) separate transactions. The
execution, delivery and performance of this Agreement by the Investor and the
consummation of the transactions contemplated hereby have been duly authorized
by all requisite corporate action on the part of the Investor. This Agreement
constitutes a valid and binding instrument of the Investor, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
-13-
(b) SECURITIES REPRESENTATIONS. The Investor will acquire the
Securities for purposes of investment for its own account and not with a view
to, or for resale in connection with, the distribution thereof, as those terms
are used in the Securities Act, and the rules and regulations promulgated
thereunder. The Investor has been advised and acknowledges that it will not be
able to dispose of the Securities, or any interest therein, without first
complying with the relevant provisions of this Agreement, the Securities Act and
any applicable state securities laws. The Investor also understands that the
provisions of Rule 144 promulgated under the Securities Act, permitting routine
sales of securities of certain issuers subject to the terms and conditions
thereof, are not currently available to it with respect to the Securities. The
Investor acknowledges that, except as set forth in this Agreement, the Company
is under no obligation to register the Securities or to take any action to
assist the Investor in complying with the terms and conditions of any exemption
that might be available under the Securities Act or any state securities laws
with respect to sales of the Securities by the Investor in the future.
(i) The Investor believes that, as of the date of this
Agreement, it has received all of the information it considers necessary or
appropriate for deciding whether to purchase the Securities. The Investor
further represents that it has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of the offering of
the Securities pursuant to this Agreement and the business, properties,
prospects and financial condition of the Company.
(ii) The Investor represents that: (A) the Investor has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of the Investor's prospective investments in the
Securities; (B) the Investor has the ability to bear the economic risk of its
prospective investments; and (C) the Investor is able, without materially
impairing its financial condition, to hold the Securities for an indefinite
period of time and to suffer complete loss on its investments.
(iii) The Investor is an "accredited investor," as that term is
defined in Rule 501 promulgated under the Securities Act.
(iv) The Investor either is (A) not an "Investment Company," as
that term is defined in the Investment Company Act or (B) excluded from the
definition of an Investment Company under Section 3(c)(1) of the Investment
Company Act.
(v) The Investor acknowledges that the representations,
agreements and acknowledgments set forth above are being given by the Investor
with the understanding that they will be relied upon by the Company and its
board of directors to claim the availability of the exemption from the
registration provisions of the Securities Act contained in Section 4(2) thereof
or Regulation D promulgated thereunder.
-14-
6. COVENANTS OF THE COMPANY. The Company hereby covenants that, so long
as (x) the Investor owns any shares of Preferred Stock and (y) the Company has
not consummated an IPO, the Company shall furnish to the Investor the financial
statements and reports described in (a) and (b) of this section, such annual
financial statements to be prepared in accordance with GAAP and such interim
financial statements to be prepared in a manner consistent with the annual
financial statements (subject to normal year-end audit adjustments and the
omission of footnotes required by GAAP):
(a) As soon as available, and in any event within one-hundred twenty
(120) days after the end of each fiscal year of the Company, a balance sheet of
the Company as of the end of such fiscal year and related statements of
operations, stockholders' equity and cash flows for such fiscal year, all in
reasonable detail and setting forth in comparative form the figures as of the
end of and for that fiscal year, which financial statements shall have been
audited; and
(b) As soon as available, and in any event within sixty (60) days
after the end of each fiscal quarter of the Company, an unaudited balance sheet
and unaudited statements of operations and cash flows.
7. COVENANTS OF THE INVESTOR.
(a) NOTIFICATION OF THE OCCURRENCE OF A TRANCHE EVENT, The Investor
agrees to promptly notify the Company when it becomes aware of the occurrence of
any Tranche Event other than through the receipt of notice from the Company.
(b) TRANSFER OF SECURITIES.
(i) The Investor agrees that it will not Transfer Securities
at any time during any Lock-up Period unless (A) the Investor receives the
express prior written consent of the Company, at the Company's sole discretion
and subject to appropriate Transfer restrictions, (B) the Transfer is a Transfer
to a holder of any of the Company's capital stock and the Transfer takes place
after the Investor provides the Company with prior notice of the Transfer and
before (x) the sale of shares of Common Stock in an IPO and (y) the earlier of
the end of the Term of the Research Program or the delivery by the Investor to
the Company of a notice of termination of the Term of the Research Program, (C)
the Transfer is a Transfer after the end of the Term of the Research Program and
prior to the sale of shares of Common Stock in an IPO to the Company at the
purchase price that a bona fide third party offered to pay the Investor for the
Securities or to the third party if the Company determines not to purchase the
Securities and expresses prior written consent to the Transfer of the Securities
to the third party, which consent shall not be unreasonably withheld, and the
third party agrees to restrictions of Transfer in this Section 7, in a written
agreement reasonably acceptable to the Company, or (D) the Transfer is a
Transfer to the purchaser of all of the outstanding capital stock of the
Investor or all or substantially all of the assets of the Investor, including
every right and interest such entity may have in the Collaboration Agreement, or
to a Subsidiary of the Investor and the Transferee assumes all of the Investor's
obligations, covenants and
-15-
agreements under this Agreement, including the restrictions on Transfer in this
Section 7, in a written agreement reasonably acceptable to the Company. Upon
such a Transfer to a Subsidiary, the Investor agrees to repurchase the
Securities from the Subsidiary immediately prior to a cessation of the
Subsidiary's status as a Subsidiary of the Investor. If any Lock-up Period is in
effect at the time the Collaboration Agreement is terminated pursuant to its
terms, the Lock-up Period shall terminate one year after such termination.
(ii) In addition to Section 7(b)(i), until the end of the
Restriction Period, the Investor agrees that any sales of shares of Common Stock
acquired under this Agreement, or shares of Common Stock obtained upon the
conversion of Preferred Stock acquired under this Agreement, will be in an
amount that does not exceed in any ninety (90) day period the greater of' (i)
two and one-half percent (2 1/2%) of the Investor's ownership of shares of
Common Stock at the time of the sale or (ii) the average weekly reported volume
of trading in shares of Common Stock on all national securities exchanges and/or
reported through the automated quotation system of a registered securities
association during the four calendar weeks preceding the sale except as
otherwise agreed to in writing by the Company.
(iii) The Investor agrees to hold the Securities subject to
all of the applicable provisions of the Securities Act and the Charter and the
Bylaws in effect as of the date of this Agreement.
(iv) Until the first approval of a PLA (as defined in the
Collaboration Agreement) by an Agency (as defined in the Collaboration
Agreement) of a Collaboration Product, the Investor shall give the Company
prompt written notice of any proposed Transfer of the Securities and shall not
proceed with any such proposed Transfer unless otherwise permitted under this
Agreement.
(v) The Investor agrees that certificates representing the
Securities issued to it pursuant hereto may bear the following or a similar
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL
LIMITATION ON THEIR SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, ENCUMBRANCE,
TRANSFER OR OTHER DISPOSITION DESCRIBED IN THE STOCK PURCHASE AGREEMENT
DATED JULY ___, 1997. IN ADDITION, THE SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE.
NEITHER THE SHARES NOR ANY INTEREST OR PARTICIPATION IN THE SHARES MAY BE
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER
TRANSFERRED OR DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT, UNLESS, IN THE OPINION
(WHICH SHALL BE IN FORM AND
-16-
SUBSTANCE SATISFACTORY TO THE CORPORATION) OF COUNSEL SATISFACTORY TO THE
CORPORATION, SUCH REGISTRATION IS NOT REQUIRED.
(c) CONFIDENTIAL INFORMATION. The Investor's obligations with respect
to disclosure of certain information are set forth in Article 17 of the
Collaboration Agreement.
(d) AGREEMENTS WITH UNDERWRITERS. In connection with any public
offering of shares of Common Stock, the Investor agrees to enter into a written
agreement with the underwriter(s) if the managing underwriter(s) demands or
requests such an agreement from the Investor and in such form and containing
such provisions as are required by the managing underwriter(s) (except that such
provisions will not be less favorable to the Investor than the provisions of any
agreements entered into by the managing underwriter(s) with other holders of
securities issued by the Company) to preclude the Investor from directly or
indirectly offering to sell, contracting
-17-
to sell or otherwise disposing of any shares of Common Stock, or any securities
convertible into or exchangeable for shares of Common Stock for a specified
period of time after completion of the public offering.
(e) ACQUISITIONS OF SECURITIES OF THE COMPANY. The Investor agrees
that from the date hereof until the expiration of the Collaboration Agreement
(or, if the Collaboration Agreement is terminated earlier pursuant to its terms,
one year after such termination), it will not, directly or indirectly, acquire,
offer to acquire, agree to acquire, become the beneficial owner of or obtain any
rights in respect of any capital stock of the Company, by purchase or otherwise,
except as contemplated by this Agreement or as otherwise agreed to in writing by
the Company, and except through the acquisition for business purposes unrelated
to the Company of all of the outstanding capital stock or all or substantially
all of the assets of a holder of any of the Company's capital stock.
8. REGISTRATION RIGHTS.
(a) PIGGYBACK REGISTRATION RIGHTS. Subject to Section 7(b)(i) and
Section 7(b)(ii) hereof, if the Company plans to file a registration statement
under the Securities Act on a Form S-3 to register any shares of Common Stock
for sale by it in an underwritten public offering during the Restriction Period
or for sale by it (except in connection with any dividend reinvestment plan,
stock option plan stock purchase plan, savings or similar plan) or any of its
stockholders at any time after the end of the Restriction Period other than on a
shelf registration statement (the "Piggyback Registration Statement"), the
Company shall provide to the Investor and any Transferee under Section
7(b)(i)(D) (referred to jointly in this Section 8 as the "Investor") hereof the
right to include the shares of Common Stock acquired under this Agreement on the
Piggyback Registration Statement, if the Investor is the stockholder of record
of the shares of Common Stock at such time and is unable to sell any shares of
Common Stock acquired under this Agreement pursuant to Rule 144(k) (or any
successor rule) under the Securities Act by providing the Investor with at least
twenty (20) days notice prior to the effectiveness of such registration
statement. At the written request of the Investor, given within ten (10) days
after receipt of such notice, the Company will use reasonable efforts to cause
all of the shares of Common Stock for which registration shall have been
requested to be included in the Piggyback Registration Statement.
(b) DEMAND REGISTRATION. If the Investor is unable to sell shares of
Common Stork within eighteen (18) months after the end of the Restriction Period
pursuant to Rule 144(k) (or a successor rule) under the Securities Act or on a
Piggyback Registration Statement, the Investor shall have the right to require
the Company to file one registration statement under the Securities Act on a
Form S-3, provided such registration form is available to the Company, to
register shares of Common Stock acquired under this Agreement for sale in a
public offering that is not to be made on a continuous or delayed basis pursuant
to Rule 415 (or a successor rule) under the Securities Act and that is expected
to yield net proceeds to the Investor of at least Five Million Dollars
($5,000,000), as specified in a written notice from the Investor to the Company.
-18-
(i) Following the Company's receipt of any notice under this
Section 8(b), the Company shall use its best efforts to register under the
Securities Act, as soon as reasonably practicable, the number of shares of
Common Stock specified by the Investor in such notice (or such lesser number as
the managing underwriter(s) in such offering believes will not unduly jeopardize
the success of the offering); provided, however, that the Company may delay the
filing of the registration statement for as long as
(A) the request for registration pursuant to this Section
8(b) would require the Company to include in the registration statement on the
filing date or on the expected effective date audited financial statements which
are not yet required to be filed with the Commission under the Exchange Act; or
(B) the Company's board of directors reasonably
determines that the disclosure required in the registration statement or the
pricing of the offering would adversely affect the Company or its ability to
engage in a planned registered public offering or in any other planned activity.
(ii) In the event that the Investor makes a demand for
registration as described in this Section 8(b), the Company shall have the right
to register other shares of Common Stock in the registration statement;
PROVIDED, HOWEVER, that such shares shall not be included to the extent provided
in Section 8(f) below, if applicable, and in all other situations, such shares
(other than the Original Registration Stock) shall not be included to the extent
that the Investor determines in good faith that the inclusion of such shares
will interfere with the successful marketing of the Investor's shares to be
included therein; PROVIDED, FURTHER, that, if the number of shares to be so
included exceeds the number of the Investor's shares included therein, such
registration shall be deemed to be a registration pursuant to Section 8(a)
hereof.
(iii) The managing underwriter(s) for any underwritten public
offering pursuant to this Section 8(b), shall be mutually acceptable to the
Company and the Investor.
(c) In connection with any registration statement prepared pursuant to
this Section 8:
(i) the Company shall:
(A) use its best efforts to prepare and file with the
Commission the registration statement and use its best efforts to cause such
registration statement to become effective as soon as practicable, provided that
before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company shall furnish to the counsel selected by the
Investor, which shall be reasonably acceptable to the Company, and the counsel
selected by any managing underwriter(s) copies of all such documents proposed to
be filed, which documents will be subject to the review of such counsel;
-19-
(B) use its best efforts to prepare and file with the
Commission such amendments and supplements to such registration statement as may
be necessary to comply with the provisions of the Securities Act;
(C) furnish, or instruct the printer to furnish, to the
Investor such number of copies of the registration statement, each amendment and
supplement thereto, the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as the Investor
may reasonably request in order to facilitate the disposition of the registered
shares of Common Stock;
(D) use its best efforts to register or qualify the
registered shares of Common Stock under such other securities or blue sky laws
of such jurisdictions as the Investor or the managing underwriter(s) in the
offering reasonably deems appropriate, provided that the Company will not be
required to subject itself to taxation in any such jurisdiction, qualify itself
to do business as a foreign corporation in any such jurisdiction, or consent to
general service of process in any such jurisdiction, where it would not
otherwise be so subject, need to be so qualified or need to so consent but for
this requirement;
(E) use its best efforts to cause all of such registered
shares of Common Stock to be listed on each securities exchange on which
securities of the same class as the registered shares of Common Stock are then
listed;
(F) take all actions Customary for such offerings as the
Investor or any managing underwriter(s) reasonably request in order to expedite
or facilitate the disposition of the registered shares of Common Stock being
sold; and
(G) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any security included in such registration statement for sale
in any jurisdiction, use its best efforts promptly to obtain the withdrawal of
such order, and
(ii) the Investor shall be required to furnish the Company with
all relevant information concerning the proposed method of sale of the shares of
Common Stock, and such other information as may be reasonably required by the
Company properly to prepare and file such registration statement in accordance
with applicable provisions of the Securities Act and the rules and regulations
thereunder. Upon request of the Company, such information shall be furnished by
the Investor in writing.
(d) The Investor shall bear all of its expenses in connection with any
registration statement under this Section 8, including the fees and expenses of
its counsel. The Investor shall also bear its pro rata share of all of the
other expenses in connection with the preparation and filing of any registration
statement under this Section 8, any registration or qualification under the
securities laws of states in which the offering will be made under such
registration statement, any
-20-
filing fee of the National Association of Securities Dealers, Inc. relating to
such offering and any underwriters' or brokers' commission, provided, however,
that the Company shall pay half of the Investor's pro rata share of such other
expenses, except for any brokers' commissions, in an offering that is not
underwritten.
(e) In connection with any public underwritten offering in which the
Investor's shares are registered, the Company and the Investor shall enter into
a written agreement with the managing underwriter(s) in such form and containing
such provisions as are customary in the securities business for such an
arrangement between such managing underwriter(s) and companies of the Company's
size and investment stature, including indemnification.
(f) In the event that the proposed offering under this Section 8 is an
offering by the Company that is, in whole or in part, an underwritten public
offering of shares of Common Stock, and the managing underwriter(s) determines
and advises in writing that the inclusion in the underwritten public offering of
all of the shares of Common Stock owned by the Selling Stockholders would
interfere with the successful marketing (including pricing) of the shares, the
number of the Selling Stockholders' shares to be included in such underwritten
public offering shall be reduced, based upon the number of shares requested by
the Selling Stockholders to be registered in such underwritten public offering
first, pro rata among the holders of Other Shares; second, if necessary, by the
Investor's shares of Common Stock; third, if necessary, pro rata, among the
holders of the Class C Preferred Stock and the Warrant Shares; fourth, if
necessary, pro rata among the holders of the Original Registration Stock; and
lastly, if necessary, among the Company's shares requested by the Company to be
registered.
9. CONDITIONS OF THE INVESTOR'S OBLIGATIONS TO ACQUIRE THE SECURITIES.
The obligations of the Investor to acquire the Securities in connection with
each Tranche Event are subject to the following, any of which the Investor may
waive in its discretion:
(a) OPINION OF` COUNSEL. The Company shall provide to the Investor
with the Sale Notice or the Amended Sale Notice, as applicable, an opinion of
the Company's counsel, in form and substance reasonably acceptable to the
Investor, that the Securities, when sold and delivered in accordance with this
Agreement, will be duly authorized, validly issued, fully-paid and non-
assessable and, if the Securities are shares of Preferred Stock, the Common
Stock issuable upon conversion of the Preferred Stock, when issued and delivered
upon such conversion in accordance with the Charter, as amended, will be duly
authorized, validly issued, fully-paid and non-assessable.
(b) REPRESENTATIONS AND WARRANTIES. The Company shall update the
representations and warranties in Section 4 hereof as of the date of the Sale
Notice or the Amended Sale Notice, as applicable.
(c) SECURITIES LAWS. The Company shall have complied with the federal
and state securities laws applicable to the offer and sale of the Securities to
the Investor.
-21-
(d) COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Investor a certificate, dated as of the date of the Sale Notice or the Amended
Sale Notice, as applicable, signed by the Company's President, certifying that
the conditions to be performed by the Company set forth in this Section 9 have
been satisfied.
(e) CERTIFIED DOCUMENTS. There shall have been delivered to the
Investor copies of the Charter and the Bylaws (in each case, as amended or
restated through the date of the Sale Notice), certified by the Secretary of the
Company as complete and correct copies thereof as of the date of the Sale Notice
or the Amended Sale Notice, as applicable.
(f) COURT ORDERS. There shall not be in effect any injunction or
restraining order issued by any court of competent jurisdiction in any action or
proceeding against the consummation of the sale and purchase of the Securities
under this Agreement.
(g) THIRD PARTY AND GOVERNMENTAL CONSENTS AND APPROVALS. The Company
shall have obtained any third party and governmental consents and approvals
necessary for the consummation of the transactions contemplated hereby.
10. CONDITIONS OF THE COMPANY'S ISSUANCE OF SECURITIES UPON RECEIPT OF
INVESTOR'S PAYMENT THEREFOR. The obligations of the Company to issue
certificates for the Securities upon receipt of the Aggregate Purchase Price in
connection with each Tranche Event are subject to the following, any of which
the Company may waive in its discretion:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investor contained in Section 5 shall be true on and as of the
date that payment for the Securities is given to the Company.
(b) COVENANTS OF THE INVESTOR. The Investor shall be in compliance
with its covenants in Section 7 hereof.
(c) THIRD PARTY AND GOVERNMENTAL CONSENTS AND APPROVALS. The Investor
shall have obtained any third party and governmental consents and approvals
necessary for the consummation of the transactions contemplated hereby.
(d) COMPLIANCE CERTIFICATES. The Investor shall have delivered to the
Company dated as of the date of the payment of the Aggregate Purchase Price,
signed by an authorized representative of the Investor, certifying that the
conditions set forth in this Section 10 have been satisfied.
11. POST-SALE COVENANTS OF THE COMPANY.
(a) SECURITIES LAWS COMPLIANCE. The Company shall make any filings
required by the securities laws of any applicable jurisdiction within the
required time period.
-22-
(b) CONFIDENTIAL AND PROPRIETARY INFORMATION. Unless otherwise
determined by the board of directors, the Company shall require all future
officers, directors and employees of the Company and its Subsidiaries to execute
the Company's standard form of proprietary information agreement.
12. TERMINATION AND SURVIVAL.
This Agreement shall terminate upon a termination of the Collaboration
Agreement. Sections 7, 12 and 13(f) of this Agreement shall survive any
termination of this Agreement which results from a termination of the
Collaboration Agreement by the Company for cause pursuant to Section 19.2 of the
Collaboration Agreement as a result of actions taken by the Investor. If the
Collaboration Agreement shall be terminated for any other reason, Sections
7(b)(iii), 7(b)(iv), 7(b)(v), 7(c), 7(d), 8(a), 8(c), 8(d), 8(e), 9(c), 11(a),
12 and 13(f) of this Agreement shall survive such termination.
13. MISCELLANEOUS.
(a) EXISTING OWNERSHIP OF COMMON STOCK AND CLASS B PREFERRED STOCK.
The parties acknowledge and agree that the shares of Common Stock and Class B
Preferred Stock, and the right to acquire shares of Common Stock upon the
conversion of such Class B Preferred Stock, owned by the Investor as of the date
of this Agreement, and any other rights arising as a result of such ownership of
shares of Common Stock or Class B Preferred Stock, are not subject to this
Agreement.
(b) AMENDMENTS AND WAIVERS. Except as otherwise provided in this
Agreement, any provision hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the Company and the Investor. Any
change, waiver, discharge or termination effected in accordance with this
subsection shall be binding upon the Company and the Investor and upon any
Transferee to which this Agreement or the Securities are Transferred pursuant to
Section 13(d) hereof or Section 7(b) of this Agreement, respectively.
(c) NECESSARY ACTION TO EFFECT THE AGREEMENT. The parties agree to
take all necessary action to effect the transactions contemplated by this
Agreement including making all of the required filings and notifications under
the Xxxx-Xxxxx-Xxxxxx Improvements Act of 1976, as amended, if applicable, and
any other required filings or notices with other governmental agencies Each
party will bear its own expenses associated with any such filings and
notifications.
(d) TRANSFERABILITY. Neither the Investor nor the Company may
Transfer this Agreement, or any of the rights or obligations hereunder, unless
it is Transferred to the purchaser of all of the outstanding capital stock of
the entity or all or substantially all of the assets of the entity, including
every right and interest such entity may have in the Collaboration Agreement.
The Investor and the Company further agree that, prior to any Transfer of this
Agreement in accordance
-23-
with this Section 13(d), the Investor or the Company, as applicable, will give
written notice to the other party. This Agreement will be binding upon any
Transferees to which this Agreement is Transferred.
(e) PUBLICITY. The parties agree to cooperate with respect to the
issuance of any publicity about the occurrence of a Tranche Event. Within five
(5) Business Days after the Company receives notice from the Investor or
otherwise becomes aware of the occurrence of a Tranche Event, the Company shall
give notice to the Investor of a request for the consent of the Investor to an
announcement, press release or other publicity about the occurrence of a Tranche
Event. The Investor shall advise the Investor whether it consents to the
requested disclosure, which consent may not be unreasonably withheld, within
five (5) Business Days after its receipt of the notice. Notwithstanding the
Investors' failure to consent, the Company shall have the right to announce,
issue a press release or otherwise publicize the occurrence of a Tranche Event
to the extent necessary to comply with securities laws or listing or similar
requirements. Once the Investor has consented to an announcement, press release
or other publicity of the occurrence of a Tranche Event, the announcement, press
release or other publicity must be issued within ten (10) Business Days of such
consent unless otherwise agreed to by the parties and either party may make
disclosures which do not differ materially from the agreed upon disclosure.
(f) LAW GOVERNING. This Agreement will be governed by, and construed
and enforced in accordance with, the internal laws of the State of Delaware.
(g) NOTICES. Unless otherwise provided, all notices, requests,
demands and other communications required or permitted under this Agreement will
be in writing and will be deemed to have been duly made and received: (i) upon
personal delivery or confirmed facsimile to the party to be notified; (ii) three
(3) Business Days after deposit with the United States Post Office, by
registered or certified mail, postage prepaid, addressed as set forth below; or
(iii) one (1) Business Day after deposit for overnight delivery with Federal
Express or another reputable overnight courier, shipping prepaid, addressed as
set forth below:
(i) If to the Company, then to:
GenVec, Inc.
00000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: President
With a copy to:
Attn: Chief Financial Officer
(ii) If to the Investor, then to:
Xxxxxx-Xxxxxxx Company
-24-
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxx 00000
Attn: Vice President and Chairman
Xxxx-Xxxxx Research Division
With a copy to:
Xxxxxx-Xxxxxxx Company
000 Xxxxx Xxxx
Xxxxxx Xxxxxx, XX 00000
Attn: Vice President and General Counsel
Either party may change the address to which communications are to be sent by
giving five (5) Business Days' advance notice of such change of address to the
other party in conformity with the provisions of this Section 13(g).
(h) HEADINGS. The headings in this Agreement are for purposes of
reference only and will not affect the meaning or construction of any of the
provisions hereof
(i) EXECUTION; COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which will be deemed to be an original as
against any party whose signature appears on such counterpart, and all of which
will together constitute one and the same instrument. This Agreement will become
binding when one or more counterparts of this Agreement, individually or taken
together, bear the signatures of all of the parties to this Agreement.
IN WITNESS WHEREOF, the parties have executed this Stock Purchase Agreement as
of the date first above written.
XXXXXX-XXXXXXX COMPANY
By:
-------------------------------------
Name: Xxxxxxx Wild, Ph.D.
Title: President
Worldwide Pharma Sector
GENVEC
By:
-------------------------------------
Xxxx X. Xxxxxxx, Ph.D..
President and Chief Executive Officer
-25-
