EXHIBIT 7(2)
STOCK PURCHASE AGREEMENT
DATED NOVEMBER 1, 1999
BETWEEN
EPOCH PHARMACEUTICALS, INC.
AND
THE INVESTORS LISTED ON
SCHEDULE A HERETO
EPOCH PHARMACEUTICALS, INC.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of the 1st day
of November, 1999, by and between Epoch Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and the persons or entities listed on Schedule A
attached hereto (individually, an "Investor" and collectively, the "Investors").
WHEREAS, the Company and Investors wish to enter into this Agreement to set
forth the terms of Investors' purchase of Common Stock from the Company.
NOW THEREFORE, BE IT RESOLVED, that the parties hereto, intending to be
legally bound, hereby agree as follows:
1. PURCHASE AND SALE OF COMMON STOCK.
1.1 SALE AND ISSUANCE OF COMMON STOCK. Subject to the terms and conditions
of this Agreement, each Investor agrees to purchase, and the Company agrees to
sell and issue to each Investor, at the Initial Closing and the Second Closing
(collectively, the "Closings," defined in Section 1.2(a) below), that number of
shares of the Company's Common Stock set forth opposite such Investor's name on
Schedule A (the "Shares") for the purchase price set forth thereon, which shall
not be less than $2.50 per share.
1.2 CLOSINGS.
(a) Initial Closing. Subject to the satisfaction or waiver of the
conditions set forth in Sections 4 and 5 hereof, the purchase and sale of
2,080,000 of the Shares to the Investors shall take place at the offices of
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, a Professional Corporation, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 10:00 a.m., on November 1,
1999, or at such other time and place as the Company and Investors mutually
agree upon, either orally or in writing (which time and place is designated as
the "Initial Closing").
(b) Second Closing. Subject to the satisfaction or waiver of the
conditions set forth in Sections 4 and 5 hereof, the purchase and sale of up to
1,320,000 of the Shares to the Investors shall take place at the offices of
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, a Professional Corporation, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 10:00 a.m., on November 15,
1999, or at such other time and place as the Company and Investors mutually
agree upon, either orally or in writing (which time and place is designated as
the "Second Closing"), but in no event later than forty-five (45) days after the
date of the Initial Closing.
(c) Subject to the terms of this Agreement, at the Closings, the
Company shall deliver to each Investor a certificate representing that number of
Shares set forth opposite such Investor's name on Schedule A, against payment of
the purchase price therefor by check, wire transfer, evidence of the
cancellation of debt, or evidence of the cancellation of certain prepayments, as
set forth on Schedule A.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as disclosed in the Schedules attached hereto by reference to the
specific Section or Sections hereof to which the disclosure pertains, the
Company represents and warrants to the Investors as follows:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted. The Company is duly qualified and authorized to transact
business and is in good standing as a foreign corporation in each jurisdiction
where the nature of its activities and of its properties makes such
qualification necessary, except where failure to so qualify would not have a
material adverse effect upon the Company.
2.2 CAPITALIZATION. The authorized capital stock of the Company consists
of 50,000,000 shares of Common Stock, $.01 par value, and 10,000,000 shares of
Preferred Stock, $.01 par value. As of October 22, 1999, there were issued and
outstanding 15,132,669 shares of Common Stock and no shares of Preferred Stock.
Immediately following the Closings all issued and outstanding shares of the
Company's capital stock will have been duly authorized, validly issued, fully
paid and non-assessable and issued in compliance with federal and state
securities laws. The Company has reserved (a) an aggregate of 1,301,812 shares
of Common Stock for issuance upon the exercise of certain warrants at an
exercise price of $2.50 per share (the "Exchange Warrants"), (b) an aggregate of
2,500,000 shares of Common Stock for issuance upon the exercise of certain other
warrants at an exercise price of $2.50 per share (the "Private Placement
Warrants"), (c) an aggregate of 3,796,963 shares of Common Stock for issuance
upon the exercise of certain other warrants at an exercise price ranging from
$.30 to $9.21 per share (the "Other Warrants"), and (d) an aggregate of
1,936,470 shares of Common Stock for issuance pursuant to the Company's
Incentive Stock Option, Nonqualified Stock Option and Restricted Stock Purchase
Plans, of which 1,623,269 shares are subject to currently outstanding options.
Except as set forth in the immediately preceding sentence, none of the Common
Stock is subject to any preemptive or subscription right, any voting trust
agreement or other contract, agreement, arrangement, option, warrant, call,
commitment or other right of any character obligating or entitling the Company
to issue, sell, redeem or repurchase any of its securities, and there is no
outstanding security of any kind convertible into or exercisable or exchangeable
for Common Stock. Except as set forth on Schedule 2.2 attached hereto, there are
no
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agreements or arrangements pursuant to which the Company is or could be required
to register shares of the Company's capital stock or other securities under the
Securities Act of 1933, as amended (the "Securities Act"), or other agreements
or arrangements (including voting agreements) with or, to the knowledge of the
Company, among any security holders of the Company with respect to any
securities of the Company.
2.3 AUTHORIZATION. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement, the performance of the Company's obligations
hereunder and the authorization, issuance, sale and delivery of the Shares has
been taken or will be taken prior to the Closings. This Agreement when executed
and delivered by the Company, shall constitute a valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
its terms except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (b) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies, or (c) to the extent the indemnification provisions in Section 6.5
below may be limited by applicable federal or state securities law.
2.4 VALID ISSUANCE OF THE SHARES; COMPLIANCE WITH SECURITIES LAWS. When
issued, sold and delivered in compliance with the provisions of this Agreement
and the Company's certificate of incorporation, the Shares will be duly and
validly issued, fully paid and nonassessable and will be free of any liens,
encumbrances, and restrictions on transfer other than restrictions on transfer
under this Agreement and applicable state and federal securities laws. Assuming
the accuracy of the representations and warranties of the Investors set forth in
this Agreement, the offer, sale and issuance of the Shares as contemplated by
this Agreement are exempt from the registration requirements of the Securities
Act, and have been registered or qualified (or are exempt from registration or
qualification) under the registration, permit, or qualification requirements
under all applicable state securities laws.
2.5 GOVERNMENTAL CONSENTS. All consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations, declarations,
or filings with, any governmental authority, required on the part of the Company
in connection with the valid execution and delivery of this Agreement, the
offer, sale or issuance of the Shares, or the consummation of any other
transaction contemplated hereby have been obtained, or will be effective at the
Closings, except for notices required or permitted to be filed with certain
state and federal securities commissions after the Closings, which notices will
be filed by the Company on a timely basis.
2.6 SEC FILINGS. The Company has filed with the Securities and Exchange
Commission (the "SEC") all reports, schedules, forms, statements and other
documents required pursuant to the Securities Act and the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), since January 1, 1998
(collectively, and in each case
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including all exhibits and schedules thereto and documents incorporated by
reference therein, the "SEC Documents"). As of their respective dates, the SEC
Documents complied as to form in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such SEC Documents.
As of their respective dates, (i) none of the SEC Documents (including any and
all financial statements included therein) filed pursuant to the Securities Act
or any rule or regulation thereunder contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading, and (ii)
none of the SEC Documents (including any and all financial statements included
therein) filed pursuant to the Exchange Act or any rule or regulation thereunder
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any SEC Document
has been revised or superseded by a later filed SEC Document, none of the SEC
Documents (including any and all financial statements included therein) contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The consolidated financial statements of the Company included in all
SEC Documents filed since January 1, 1998 (the "SEC Financial Statements")
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited consolidated quarterly statements,
as permitted by Form 10-Q of the SEC), applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto). The SEC
Financial Statements fairly present the consolidated financial position of the
Company as of the dates thereof and the consolidated results of its operations
and cash flows for the periods then ended (subject, in the case of unaudited
quarterly statements, to normal recurring audit adjustments). The Company does
not have any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted accounting
principles to be recognized or disclosed on a consolidated balance sheet of the
Company or in the notes thereto, except (i) liabilities reflected in the
consolidated unaudited balance sheet of the Company as of December 31, 1998 or
the notes thereto (subject to ordinary year-end adjustments), (ii) liabilities
disclosed in any SEC Documents filed by the Company prior to the date of this
Agreement with respect to any period ending, or date occurring, after December
31, 1998, and (iii) liabilities incurred since December 31, 1998 in the ordinary
course of business consistent with past practice.
2.7 FULL DISCLOSURE. The Company has provided Investors with all the
information that Investors have requested for deciding whether to purchase the
Shares. Neither this Agreement nor the representations and warranties contained
herein, nor any
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other written statements or certificates made or delivered in connection
herewith, when read together, contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein or
therein not misleading.
2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed on Schedule
2.8 attached hereto, since December 31, 1998, the Company has conducted its
business only in the ordinary course consistent with past practice, and there is
not and has not been: (i) since December 31, 1998, any condition, event or
occurrence which has had a material adverse effect on the business, properties,
financial condition or results of operations of the Company (a "Material Adverse
Effect"); (ii) since December 31, 1998, any condition, event or occurrence which
as of the date of this Agreement, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect with respect to the
Company; or (iii) since December 31, 1998, any condition, event or occurrence
which, individually or in the aggregate, could reasonably be expected to prevent
or materially delay the ability of the Company to consummate the transactions
contemplated by this Agreement or perform its obligations hereunder.
2.9 LITIGATION. Except as disclosed on Schedule 2.9 attached hereto, there
is (a) no suit, action, arbitration or proceeding pending, and (b) to the
knowledge of the Company, no suit, action, arbitration or proceeding threatened
against or investigation pending with respect to the Company that, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect with respect to the Company or prevent or materially delay the ability of
the Company to consummate the transactions contemplated by this Agreement or to
perform its obligations hereunder, nor is there any judgment, decree, citation,
injunction, rule or order of any court or administrative or governmental body or
agency (a "Governmental Entity") or arbitrator outstanding against the Company
which, individually or in the aggregate, has or could reasonably be expected to
have, any such effect.
2.10 NO CONFLICTS OR DEFAULTS. The execution and delivery of this Agreement
by the Company and the consummation of the transactions contemplated hereby do
not and will not (a) contravene the certificate of incorporation or by-laws of
the Company or (b) with or without the giving of notice or the passage of time,
(i) violate, conflict with, or result in a breach of, or a default or loss of
rights under, any material covenant, agreement, mortgage, indenture, lease,
instrument, permit or license to which the Company is a party or by which the
Company or any of its assets is bound, or any judgment, order or decree, or any
law, rule or regulation to which the Company or any of its assets is subject, or
(ii) result in the creation of, or give any party the right to create, any lien,
charge, security interest, encumbrance or any other right or adverse interest
upon any of the capital stock or assets of the Company.
2.11 COMPLIANCE WITH LAWS. The Company holds all permits, licenses,
variances, exemptions, orders and approvals of all Governmental entities which
are material to the operation of the businesses of the Company (the "Company
Permits").
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The Company is in compliance with the terms of the Company Permits, except where
the failure so to comply, individually or in the aggregate, would not have a
Material Adverse Effect with respect to the Company. The businesses of the
Company are not being conducted in violation of any law (domestic or foreign),
ordinance or regulation of any Governmental Entity, except for possible
violations which, individually or in the aggregate, do not and could not
reasonably be expected to have a Material Adverse Effect with respect to the
Company.
3. REPRESENTATIONS AND WARRANTIES OF INVESTORS.
Each Investor, severally and not jointly, hereby represents and warrants to
the Company as follows:
3.1 LEGAL POWER. Investor has the power and authority to enter into this
Agreement, to purchase the Shares hereunder and to carry out and perform its
obligations under the terms of this Agreement.
3.2 DUE EXECUTION. This Agreement has been duly authorized, executed and
delivered by Investor, and, upon due execution and delivery by the Company, this
Agreement will be a valid and binding obligation of Investor, enforceable in
accordance with its terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally, (b) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies, or (c) to the extent the indemnification provisions in
Section 6.5 below may be limited by applicable federal or state securities law.
3.3 INFORMATION. Investor believes that it, or its representatives, have
received all information Investor considers necessary for evaluating the risks
and merits of acquiring the Shares. Investor further represents that Investor
has had the opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the Shares and the business, properties,
prospects and financial condition of the Company. The foregoing, however, does
not limit or modify the representations and warranties of the Company in Section
2 of this Agreement or the right of Investor to rely thereon.
3.4 INVESTMENT REPRESENTATIONS.
(a) Investor is acquiring the Shares for its own account, not as
nominee or agent, for investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the Securities Act.
(b) Investor understands that (i) the Shares have not been registered
under the Securities Act by reason of a specific exemption therefrom, that the
securities
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are "restricted securities" and the Investor must hold the Shares indefinitely,
and that it must, therefore, bear the economic risk of such investment
indefinitely, unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration; (ii) each certificate
representing the Shares will be endorsed with the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
(THE "1933 ACT") AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE 1933 ACT COVERING SUCH SECURITIES OR IF
THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF
THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY,
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE 1933 ACT."
and (iii) the Company will instruct any transfer agent not to register the
transfer of any of the Shares unless the conditions specified in the foregoing
legend are satisfied; provided, however, that no such opinion of counsel shall
be necessary if the sale, transfer or assignment is made pursuant to SEC Rule
144 and the Investor provides the Company with evidence reasonably satisfactory
to the Company and its counsel that the proposed transaction satisfies the
requirements of Rule 144. The Company agrees to remove the foregoing legend from
any securities if the requirements of SEC Rule 144(k) (or any successor rule or
regulation) apply with respect to such securities and the Company and its
counsel are provided with reasonably satisfactory evidence that the requirements
of Rule 144(k) apply.
(c) Investor has not been offered the Shares by any form of
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by such media.
(d) Investor acknowledges that it is able to fend for itself, can
bear the economic risk of its investment and has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of acquisition of the Shares and of making an informed investment
decision with respect thereto.
(e) Investor's principal place of business or address is as set forth
on the signature page hereto, and, if it is an individual, it does not reside in
any state of the United States other than the state, if any, specified in its
address on the signature page.
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(f) Investor acknowledges that an investment in the Shares is
speculative and involves a high degree of risk of loss of all or part of
Investor's investment therein.
(g) Investor understands that the foregoing representations and
warranties are to be relied upon by the Company as a basis for exemption of the
sale of the Shares under the Securities Act, under the securities laws of all
applicable states and for other purposes. In the event any of such
representations and warranties become inaccurate or untrue prior to the
Closings, the Investor will promptly notify the Company.
(h) Investor was not formed for the specific purpose of acquiring the
Shares.
3.5 FURTHER REPRESENTATIONS BY FOREIGN INVESTORS. If Investor is not a
U.S. person or entity such Investor hereby represents that it is satisfied as to
the full observance of the laws of such Investor's jurisdiction in connection
with the purchase of the Shares or any use of this Agreement, including (i) the
legal requirements with such Investor's jurisdiction for the purchase of the
Shares, (ii) any foreign exchange restrictions applicable to such purchase,
(iii) any governmental or other consents that may need to be obtained, and (iv)
the income tax and other tax consequences, if any, which may be relevant to the
purchase, holding, redemption, sale, or transfer of the Shares. Such Investor's
purchase of and payment for, and such Investor's continued beneficial ownership
of, the Shares will not violate any applicable securities or other laws of such
Investor's jurisdiction.
4. CONDITIONS OF THE INVESTORS' OBLIGATIONS AT CLOSINGS.
The obligations of Investors under subsection 1.1 of this Agreement are
subject to the fulfillment on or before the Closings of each of the following
conditions, the waiver of which shall not be effective against Investors unless
consented to by Investors in writing thereto:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained in Section 2 shall be true and correct in all material
respects on and as of the Closings, except those representations and warranties
qualified by materiality, which shall be true and correct in all respects, with
the same force and effect as though such representations and warranties had been
made on and as of the Closings.
4.2 PERFORMANCE OF OBLIGATIONS. The Company shall have performed and
complied in all material respects with all agreements, obligations and
conditions contained herein that are required to be performed or complied with
by it on or prior to the Closings.
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4.3 COMPLIANCE CERTIFICATE. The Company shall deliver to Investors at the
Closings a Certificate, executed by the President of the Company, certifying
that the conditions specified in subsections 4.1 and 4.2 have been fulfilled.
4.4 QUALIFICATIONS. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body of the United States, of any state
or any foreign country that are required in connection with the lawful sale and
issuance of the Shares pursuant to this Agreement shall have been duly obtained
and shall be effective on and as of the Closings. No stop order or other order
enjoining the sale of the Shares shall have been issued and no proceedings for
such purpose shall be pending or, to the knowledge of the Company, threatened by
the SEC, the California Commissioner of Corporations, or any commissioner of
corporations or similar officer of any other state or foreign country having
jurisdiction over this transaction. At the time of the Closings, the sale and
issuance of the Shares shall be legally permitted by all laws and regulations to
which Investor and the Company are subject.
4.5 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Closings and all documents
and instruments incident thereto shall be reasonably satisfactory in form and
substance to Investor, which shall have received all such counterpart original
and certified or other copies of such documents as it may reasonably request.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSINGS.
The obligations of the Company to Investors under this Agreement are
subject to the fulfillment, on or before the Closings, of each of the following
conditions by Investor:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Investors contained in Section 3 hereof shall be true and correct in all
material respects on and as of the Closings, except those representations and
warranties qualified by materiality, which shall be true and correct in all
respects, with the same force and effect as though such representations and
warranties had been made on and as of the Closings.
5.2 QUALIFICATIONS. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body of the United States, of any state
or any foreign country that are required in connection with the lawful sale and
issuance of the Shares pursuant to this Agreement shall have been duly obtained
and shall be effective on and as of the Closings. No stop order or other order
enjoining the sale of the Shares shall have been issued and no proceedings for
such purpose shall be pending or, to the knowledge of the Company, threatened by
the SEC, the California Commissioner of Corporations, or any commissioner of
corporations or similar officer of any other state or foreign country having
jurisdiction over this transaction. At the time of the Closings, the
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sale and issuance of the Shares shall be legally permitted by all laws and
regulations to which Investor and the Company are subject.
5.3 CANCELLATION OF PROMISSORY NOTE. The Company hall have received from
Bay City Fund I, LLP ("Bay City") (one of the Investors hereunder) satisfactory
evidence of the cancellation of that certain $3,000,000 promissory note from the
Company in favor of Bay City, dated February, 1998 (the "Note"), as referenced
in Schedule A.
5.4 CANCELLATION OF PRE-PAYMENT. The Company shall have received from PE
Corporation (formerly known as The ▇▇▇▇▇▇-▇▇▇▇▇ Corporation) ("PE") (one of the
Investors hereunder) satisfactory evidence acknowledging the cancellation of
$1,000,000 in pre-payments made by PE for future purchases of MGB
Oligonucleotides and MGB Intermediates, pursuant to Section 5.11 of that certain
License and Supply agreement by and between the Company and PE dated as of the
January 11, 1999 (the "License Agreement"), as referenced in Schedule A.
5.5 PERFORMANCE. All covenants, agreements and conditions contained in
this Agreement to be performed by Investors on or prior to the Closings shall
have been performed or complied with in all material respects.
6. REGISTRATION OF SHARES.
The Company hereby grants to each of the Investors the registration
rights set forth in this Section 6 with respect to the Registrable Securities
(as hereinafter defined) owned by such Investors. The Company and the Investors
agree that the registration rights provided herein set forth the sole and entire
agreement on the subject matter between the Company and the Investors.
6.1 DEFINITIONS.
(a) The terms "register," "registered," and "registration" refer to a
registration effected by filing with SEC a registration statement (the
"Registration Statement") in compliance with the Securities Act, and the
declaration or ordering by the SEC of the effectiveness of such Registration
Statement.
(b) The term "Registrable Shares" means the Shares issued to the
Investors pursuant to this Agreement, as well as the Warrant Shares to be issued
to Bay City (as set forth in Schedule A) and any Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant, right, or
other security that is issued as) a dividend or other distribution with respect
to, or in exchange or in replacement of, such Registrable Shares. In the event
of any recapitalization by the Company, whether by stock split, reverse stock
split, stock dividend or the like, the number of shares of Registrable Shares
used throughout this Agreement for various
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purposes shall be proportionately increased or decreased, provided, however,
that any such security shall cease to be a Registrable Share at such time as it
is publicly saleable without restriction, pursuant to Rule 144(k) of the SEC, or
otherwise.
(c) The term "Initiating Investors" means any Investor or Investors
of not less than fifty percent (50%) of the Registrable Shares held by all of
the Investors then outstanding and not registered pursuant to paragraph 6.2 of
this Agreement.
6.2 DEMAND REGISTRATION. If the Company shall receive from the Initiating
Investors a written demand (a "Demand Registration") that the Company effect any
registration under the Securities Act with respect to all or a part of the
Registrable Shares held by the Initiating Investors the Company will (i) as soon
as reasonably practicable, give written notice of such request to all Investors;
(ii) use its best efforts to effect such registration as soon as practicable and
as will permit or facilitate the sale and distribution of all or such portion of
the Initiating Investors' Registrable Shares as are specified in such demand
(including any Registrable Shares which are held by Investors, which such
Investors request to include in such registration within twenty (20) days after
the receipt of the notice given pursuant to (i) above), and (iii) use its best
efforts to cause such registration to remain effective until the earlier to
occur of the date (A) the Registrable Shares covered thereby have been sold, or
(B) the Investors are able to use Rule 144 of the Securities Act to sell the
Shares without restriction, provided that the Company shall not be obligated to
take any action to effect any such registration, pursuant to this Section 6.2:
(a) At any time prior to six (6) months following the Closings;
(b) After the Company has effected one registration pursuant to this
Section 6.2; or
(c) If the Company shall furnish to the Initiating Investors a
certificate signed by the President of the Company, stating that in the good
faith judgment of the Board of Directors of the Company it would be seriously
detrimental to the Company and its shareholders for such Registration Statement
to be filed at the date filing would be required, in which case the Company
shall have an additional period of not more than 180 days within which to file
such Registration Statement.
6.3 REGISTRATION PROCEDURES. When the Company effects the registration of
the Registrable Shares under the Securities Act pursuant to Section 6.2 hereof,
the Company will, at its expense, as expeditiously and as reasonably possible,
use its reasonable best efforts, to:
(a) In accordance with the Securities Act and the rules and
regulations of the SEC, prepare and file with the SEC a Registration Statement
with respect to such securities and use its best efforts to cause such
Registration Statement to become and
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remain effective for the period described in Section 6.2, and prepare and file
with the SEC such amendments to such Registration Statement and supplements to
the prospectus contained therein as may be necessary to keep such Registration
Statement effective for such period and such Registration Statement and
prospectus accurate and complete for such period;
(b) Furnish to Investors such reasonable number of copies of the
Registration Statement, preliminary prospectus, final prospectus and such other
documents as Investor may reasonably request in order to facilitate the public
offering of such securities;
(c) Use its best efforts to register or qualify the securities
covered by such Registration Statement under such state securities or blue sky
laws of such jurisdictions as Investor may reasonably request within twenty (20)
days following the original filing of such Registration Statement, except that
the Company shall not for any purpose be required to execute a general consent
to service of process or to qualify to do business as a foreign corporation in
any jurisdiction where it is not so qualified;
(d) Notify Investors, promptly after it shall receive notice thereof,
of the date and time when such Registration Statement and each post-effective
amendment thereto has become effective or a supplement to any prospectus forming
a part of such Registration Statement has been filed;
(e) Notify Investors promptly of any request by the SEC for the
amending or supplementing of such Registration Statement or prospectus or for
additional information;
(f) Notify Investors promptly if, at the time when a prospectus
relating to such securities is required to be delivered under the Securities
Act, any event has occurred as the result of which any such prospectus or any
other prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and prepare and
promptly file with the SEC, and promptly notify Investors of the filing of, such
amendments or supplements to such Registration Statement or prospectus as may be
necessary to correct such statements or omissions;
(g) In case any Investor is required to deliver a prospectus at a
time when the prospectus then in circulation is not in compliance with the
Securities Act or the rules and regulations of the SEC, prepare promptly upon
request such amendments or supplements to such Registration Statement and such
prospectus as may be necessary in order for such prospectus to comply with the
requirements of the Securities Act and such rules and regulations;
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(h) Advise Investors, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of such Registration Statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued;
(i) Use its best efforts to obtain a comfort letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by comfort letters with respect to
offerings of such type as the Investors may reasonably request; and
(j) Cause all such securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed,
provided that the applicable listing requirements are satisfied.
6.4 EXPENSES. With respect to any registration effected pursuant to
Section 6.2 hereof, the Company agrees to bear all fees, costs and expenses of
and incidental to such registration and the public offering in connection
therewith, provided however, that Investors shall bear all underwriting
discounts and commissions, state transfer taxes and brokerage commissions. The
fees, costs and expenses of registration to be borne by the Company as provided
in this Section 6.4 shall include, without limitation, all registration, filing
and NASD fees, printing expenses, fees and disbursements of counsel and
accountants for the Company, and all legal fees and disbursements and other
expenses of complying with state securities or blue sky laws of any
jurisdictions in which the securities to be offered are to be registered or
qualified.
6.5 INDEMNIFICATION.
(a) The Company will, and does hereby undertake to, indemnify and
hold harmless each Investor, each of such Investor's officers, directors,
partners and agents, and each person controlling such Investor, with respect to
any registration, qualification, or compliance effected pursuant to this Section
6, and each underwriter, if any, and each person who controls within the meaning
of Section 15 of the Securities Act any underwriter, of the Registrable Shares
held by or issuable to such Investor, against all claims, losses, damages, and
liabilities (or actions in respect thereto) to which they may become subject
under the Securities Act, the Exchange Act, or other federal or state law
arising out of or based on (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular, or
other similar document (including any related Registration Statement,
notification, or the like) incident to any such registration, qualification, or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any violation or alleged violation by the
Company of any federal, state or common law rule or regulation applicable to the
Company in connection with any such registration, qualification, or compliance,
and will
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reimburse, as incurred, each Investor, each underwriter, and each director,
officer, partner, agent and controlling person, for any legal and any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability, or action; provided that the Company will
not be liable in any such case to the extent that any such claim, loss, damage,
liability or expense, arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by an
instrument duly executed by any of the Investors or underwriter and stated to be
specifically for use therein.
(b) Each Investor will, if Registrable Securities held by or issuable
to such Investor are included in such registration, qualification, or
compliance, severally and not jointly, indemnify the Company, each of its
directors, officers, legal counsel and accountants and each underwriter, if any,
of the Company's securities covered by such Registration Statement, each person
controlling the Company or such underwriter, within the meaning of Section 15 of
the Securities Act, against all claims, losses, damages, and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such Registration
Statement, prospectus, offering circular, or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse,
as incurred, the Company, and each such underwriter or other person, for any
legal or any other expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability, or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) was made in such
Registration Statement, prospectus, offering circular, or other document, in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Investor and stated to be
specifically for use therein; provided, however, that the liability of each such
Investor hereunder shall be limited to the gross proceeds received by such
Investor from the sale of securities under such Registration Statement. In no
event will any Investor be required to enter into any agreement or undertaking
in connection with any registration under this Section 6 providing for any
indemnification or contribution obligations on the part of such Investor greater
than such Investor's obligations under this Section 6.
(c) Promptly after receipt by a party indemnified pursuant to the
provisions of paragraph (a) or (b) of this Section 6.5 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party shall, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of such Sections
6.5(a) or 6.5(b), notify the indemnifying party of the commencement thereof;
provided, however, that the failure to so notify the indemnifying party shall
not relieve the indemnifying party from any liability which it may have to the
indemnified party otherwise than hereunder unless the failure to give such
notice is materially prejudicial to the indemnifying party's ability to defend
such
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action. In case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party shall have the right to participate in, and to the extent that it may
wish, jointly assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election to so assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party pursuant to the
provisions of Section 6.5(a) or 6.5(b) for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation (except if representation
of such indemnified party by counsel to the indemnifying party would be
inappropriate due to actual or potential conflicting interests between the
indemnified party and any other party represented by such counsel). No
indemnifying party shall be liable to an indemnified party for any settlement of
any action or claim without the consent of the indemnifying party.
6.6 REPORTING REQUIREMENTS UNDER THE EXCHANGE ACT. The Company shall
timely file such information, documents and reports as the SEC may require or
prescribe under Section 13 or 15(d) of the Exchange Act. The Company
acknowledges and agrees that the purposes of the requirements contained in this
Section 6.6 are to enable Investors to comply with the current public
information requirement contained in paragraph (c) of Rule 144 should any
Investor ever wish to dispose of any of the Registrable Shares without
registration under the Securities Act in reliance upon Rule 144 (or any other
similar exemptive provision).
6.7 INVESTOR INFORMATION. The Company may require Investors to furnish the
Company such information with respect to Investors and the distribution of the
Registrable Shares as the Company may from time to time reasonably request in
writing as shall be required by law or by the SEC in connection therewith.
6.8 TRANSFER OF REGISTRATION RIGHTS. The registration rights of the
Investors under this Agreement may be transferred (i) in the case of an
individual, to any member of the immediate family of such individual or to any
trust for the benefit of the individual or any such family member or members,
(ii) to any partner or affiliate of such Investor, (iii) to any transferee
provided (1) that the transferee receives the lesser of (A) at least 800,000
Registrable Shares (as constituted on the date hereof) or (B) all of the
Registrable Shares held by such Investor; (2) the transferee is bound by the
terms of this Agreement; and (3) the Company is given written notice prior to
such transfer. Notwithstanding the foregoing, the registration rights of
Investors under this Agreement may not be transferred to an entity, or a person
controlled by, under common control with or controlling such entity, which is a
direct competitor of the Company.
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7. AFFIRMATIVE COVENANTS OF COMPANY
7.1 ATTENDANCE AT BOARD MEETINGS. So long as PE (or an affiliate of PE)
continues to hold at least fifty percent (50%) of the total number of shares of
Common Stock originally purchased by PE pursuant to this Agreement, PE will be
entitled to appoint a representative (the "PE Representative") to attend all
meetings of the Board of Directors of the Company, and the Company will provide
the PE Representative with copies of all notices of such meetings and all other
written materials provided to the Directors of the Company at the same time as
such notices and written materials are provided to the Directors of the Company.
PE acknowledges and agrees that the Company's management will have the right to
exclude the PE Representative from all or portions of meetings of the Board of
Directors, or omit to provide the PE Representative with certain information, if
the Company's management believes it is necessary in order to preserve the
attorney-client privilege, or fulfill the Company's obligations with respect to
confidential or proprietary information of third parties, or if such meeting or
information involves matters concerning the Company's relationship or
prospective relationship with PE or its affiliates or competitors of PE or its
affiliates, or other situations where a director would customarily not
participate in a meeting or be provided such information. In addition, PE and
the PE Representative will maintain the confidentiality of all information
obtained through the PE Representative's position, except to the extent that (i)
such information is already in PE's position, (ii) such information becomes
public knowledge other than as a result of PE's actions or inactions, (iii) PE
rightfully obtains such information subsequently from a third party, (iv) PE
develops such information independently and without use of the information
provided by the Company or (v) such information is approved in writing for
release by the Company.
8. MISCELLANEOUS.
8.1 ENTIRE AGREEMENT. This Agreement, the Schedules hereto, and the
documents referred to herein constitute the full and entire understanding and
agreement between the parties and no party shall be liable or bound to any to
any other party in any manner by any warranties, representations or covenants
except as specifically set forth herein or therein.
8.2 SURVIVAL OF WARRANTIES. Unless otherwise set forth in this Agreement,
the warranties, representations and agreements of the Company and Investors
contained herein shall survive the execution and delivery of this Agreement and
the Closings and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of Investors or the Company.
8.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
permitted transferees of any Shares sold hereunder). Nothing in this Agreement,
express or
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implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
8.4 GOVERNING LAW; JURISDICTION AND VENUE; ATTORNEY'S FEES. This Agreement
and all acts and transactions pursuant hereto and the rights and obligations of
the parties hereto shall be governed by and construed under the laws of the
State of Washington without reference to principles of conflicts of laws. The
parties hereby consent and agree that the United States District Court for the
Western District of Washington will have exclusive jurisdiction over any legal
action or proceeding arising out of or relating to this Agreement, and each
party consents to the in personam jurisdiction of such courts for the purpose of
any such action or proceeding and agrees that venue is proper in such courts. If
any action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorney's
and expert witness fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
8.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
8.6 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
8.7 NOTICES. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery, delivery by nationally recognized overnight
courier or five days after deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereto,
or at such address as such party may designate by ten days advance written
notice to the other party.
8.8 FINDERS' FEES. Each Investor agrees to indemnify and to hold harmless
the Company from any liability for any commission or compensation in the nature
of a finders' fee to any broker or other person or firm (and the costs and
expenses of defending against such liability or asserted liability) for which
such Investor or any of its officers, partners, employees or representatives is
responsible. The Company agrees to indemnify and hold harmless Investors from
any liability for any commission or compensation in the nature of a finders' fee
to any broker or other person or firm (and the costs and expenses of defending
against such liability or asserted liability) for which the Company or any of
its officers, employees or representatives is responsible.
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8.9 EXPENSES. Irrespective of whether the Closings are effected, the
Company and each Investor shall each pay all costs and expenses that it incurs
with respect to the negotiation, execution, delivery and performance of this
Agreement.
8.10 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and Investors holding a majority of the
Shares purchased hereunder. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon all the Investors and the securities
purchased under this Agreement at the time outstanding (including securities
into which such securities have been converted), each future holder of all such
securities and the Company. Notwithstanding the foregoing, Section 7.1 of this
Agreement shall only be amended or waived by the written consent of PE and the
Company.
8.11 SEVERABILITY. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and the balance of the Agreement shall be enforceable
in accordance with its terms.
8.12 INFORMATION CONFIDENTIAL. Each Investor acknowledges that the
information received by it pursuant hereto is confidential and for such
Investor's use only, and it will refrain from using such information or
reproducing, disclosing, or disseminating such information to any other person
(other than its employees, affiliates, agents, or partners having a need to know
the contents of such information and its attorneys), except in connection with
the exercise of rights under this Agreement, unless the Company has made such
information available to the public generally or it is required by a
governmental body to disclose such information.
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IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
Address: EPOCH PHARMACEUTICALS, INC.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇, #▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Chief Executive Officer
Address: THE BAY CITY CAPITAL FUND I, L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ Craves
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▇▇▇▇ Craves
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LTD.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
General Partner
Address: PE CORPORATION
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Senior Vice President
Address: HILSPEN CAPITAL MANAGEMENT
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇
Chief Operating Officer
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Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
General Partner
Address: PE Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Senior Vice President
Address: Hilspen Capital Management
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇
Chief Operating Officer
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