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EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made as of September __,
1997 between CYPRESS BIOSCIENCE, INC., a Delaware corporation with its principal
place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (the "Company"), and the purchaser whose name and address is set forth on
the signature page hereof (the "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Company and the Purchaser agree as follows:
1. AUTHORIZATION OF SALE OF THE SHARES. Subject to the terms and conditions of
this Agreement, the Company has authorized the sale of up to three million five
hundred thousand (3,500,000) shares of Common Stock of the Company (the
"Shares") at a sales price of $1.50 per Share.
2. AGREEMENT TO SELL AND PURCHASE THE SHARES. At the Closing (as defined in
Section 3), the Company will sell to the Purchaser, and the Purchaser will buy
from the Company, upon the terms and conditions hereinafter set forth, the
number of Shares for the aggregate purchase price set forth below:
AGGREGATE
NUMBER OF SHARES PURCHASE PRICE PURCHASE
PURCHASED PER SHARE PRICE
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$1.50
3. DELIVERY OF THE SHARES AT THE CLOSING. The completion of the purchase and
sale of the Shares to be issued pursuant to this Agreement (the "Closing") shall
occur upon (i) receipt by the Company of (A) a signed copy of this Agreement,
(B) a completed Stock Certificate and Funds Transfer Questionnaire, the form of
which is attached hereto as Exhibit A, (C) a signed and dated Investor
Qualification Questionnaire, a form of which is attached hereto as Exhibit B,
and (D) the aggregate purchase price for the Shares, or (ii) on such other date
as may be agreed to by the Company and the Purchaser. At the Closing, the
Company shall deliver to the Purchaser or the Purchaser's custodian bank, in
accordance with the Purchaser's delivery instructions, one or more stock
certificates registered in the name of the Purchaser, or in such nominee name(s)
as designated by the Purchaser, representing the number of Shares set forth in
Section 2 above. The name(s) in which the stock certificates are to be issued
are set forth in the Stock Certificate and Funds Transfer Questionnaire attached
hereto as part of Exhibit A. The Company's obligation to complete the purchase
and sale of the Shares and deliver such stock certificate(s) to the Purchaser at
the Closing shall be subject to the following conditions, any one or more of
which may be waived by the Company: (a) subject to delivery of the share
certificates to the Purchaser or Purchaser's custodian bank, receipt by the
Company of immediately available funds, by check or wire transfer, in the full
amount of the purchase price for the Shares being purchased hereunder;
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(b) receipt by the Company of a signed and dated Investor Qualification
Questionnaire attached as Exhibit B hereto; (c) the accuracy of the
representations and warranties made by the Purchaser herein as of the Closing;
and (d) the fulfillment of those undertakings of the Purchaser to be fulfilled
prior to the Closing. The Purchaser's obligation to accept delivery of such
stock certificate(s) and to pay for the Shares evidenced thereby shall be
subject to the following conditions: (i) the accuracy of the representations and
warranties made by the Company herein as of the Closing; and (ii) the
fulfillment in all material respects of those undertakings of the Company to be
fulfilled prior to the Closing. Upon receipt by the Purchaser's custodian bank
of certificates evidencing the number of Shares being purchased hereunder, the
Purchaser shall cause its custodian bank to remit the full amount of the
aggregate purchase price to the Company in immediately available funds, by check
or wire transfer. The Purchaser's obligations hereunder are expressly not
conditioned on the purchase of any or all of the Shares by any other person or
entity.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Company hereby represents and
warrants to, and covenants with, the Purchaser as follows:
4.1 ORGANIZATION 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 conduct its
business as currently conducted.
4.2 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS. The
Company's execution, delivery and performance of this Agreement (a) has been
duly authorized by all requisite corporate action by the Company, and (b) will
not violate the Certificate of Incorporation or Bylaws of the Company or violate
or result in a breach of or constitute a default under, any provision of any
material indenture, mortgage, agreement, contract or other material instrument
to which the Company or any subsidiary is a party or by which the Company or any
subsidiary or any of their respective properties or assets is bound as of the
date hereof. Upon the execution and delivery, and assuming the valid execution
thereof by the Purchaser, this Agreement will constitute a valid and binding
obligation of the Company, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification agreements
of the Company in Section 7.8 hereof may be legally unenforceable.
4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES. The authorized capital stock
of the Company consists of sixty million (60,000,000) shares of Common Stock and
fifteen million (15,000,000) shares of Preferred Stock, $0.02 par value per
share. As of September 25, 1997, there were issued and outstanding 34,636,067
shares of the Company's Common Stock, which shares are duly authorized, validly
issued, fully paid and nonassessable. When issued, delivered to Purchaser or
Purchaser's custodian bank and paid for by Purchaser in accordance with the
terms and conditions of this Agreement, the Shares to be sold hereunder by the
Company will be validly issued, fully paid and nonassessable and will be
delivered to Purchaser free and clear of all liens, pledges, claims,
encumbrances, security interests or other restrictions, except for
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restrictions on transfer imposed to ensure compliance with the Securities Act of
1993, as amended (the "Securities Act").
4.4 ADDITIONAL INFORMATION. The Company represents and warrants that the
information contained in the following documents, which the Company has
furnished to the Purchaser, is true and correct in all material respects as of
their respective final dates:
(a) the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 (without exhibits);
(b) the Company's Quarterly Reports on Form 10-Q for the periods ended
March 31 and June 30, 1997 (the "Form 10-Qs");
(c) the Company's Current Report on Form 8-K dated as of January 17,
1997;
(d) the Company's Proxy Statement dated September 2, 1997 for the
Company's 1997 Annual Meeting of Stockholders;
(e) the Company's Press Releases dated June 30, 1997 and July 28, 1997
(collectively, the "Press Releases"); and
(f) the Company's Private Placement Memorandum dated September 8, 1997
(the "Memorandum") prepared in connection with the issuance of the Shares.
4.5 NO MATERIAL CHANGE. As of the date hereof, except as may be reflected
in the Form 10-Qs, the Memorandum or the Press Releases, there has been no
material adverse change in the financial condition or results of operations of
the Company since June 30, 1997.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
The Purchaser represents, warrants and covenants with the Company as
follows:
5.1 The Purchaser represents and warrants to, and covenants with, the
Company that: (i) the Purchaser, taking into account the personnel and resources
it can practically bring to bear on the purchase of the Shares contemplated
hereby, is knowledgeable, sophisticated and experienced in making, and is
qualified to make, decisions with respect to investments in shares presenting an
investment decision like that involved in the purchase of the Shares, including
investments in securities issued by the Company, and has requested, received,
reviewed and considered all information it deems relevant in making an informed
decision to purchase the Shares; (ii) the Purchaser is acquiring the number of
Shares set forth in Section 2 above for its own account for investment only and
with no present intention of distributing any of such Shares or any arrangement
or understanding with any other persons regarding the distribution of such
Shares; (iii) the Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act and the rules and regulations promulgated thereunder;
(iv) the Purchaser has completed or caused to be completed the Stock Certificate
and Funds Transfer Questionnaire, attached hereto as Exhibit A and the answers
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thereto are true and correct to the best knowledge of the Purchaser as of the
date hereof; (v) the Purchaser has, in connection with its decision to purchase
the number of Shares set forth in Section 2 above, relied solely upon the
information delivered to the Purchaser as described in Section 4.4 above and the
representations and warranties of the Company contained herein; and (vi) the
Purchaser is an "accredited investor" within the meaning of Rule 501 of
Regulation D promulgated under the Securities Act and has completed or caused to
be completed the relevant Investor Qualification Questionnaire attached hereto
as Exhibit B.
5.2 The Purchaser further represents and warrants to, and covenants with,
the Company that (i) the Purchaser has full right, power, authority and capacity
to enter into this Agreement and to consummate the transactions contemplated
hereby and has taken all necessary action to authorize the execution, delivery
and performance of this Agreement, and (ii) upon the execution and delivery of
this Agreement, this Agreement shall constitute a valid and binding obligation
of the Purchaser enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification agreements
of the Purchaser in Section 7.8 hereof may be legally unenforceable.
5.3 Purchaser acknowledges and agrees that the Shares acquired by Purchaser
must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. Purchaser
has been advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act, which permits limited resale of securities in a private
placement subject to the satisfaction of certain conditions, including, among
other things: the availability of certain current public information about the
Company, the resale occurring not less than one year after a party has purchased
and paid for the security to be sold, the sale being made through an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) and the number of shares being sold during any three-month
period not exceeding specified limitations.
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Notwithstanding any
investigation made by any party to this Agreement, all covenants, agreements,
representations and warranties made by the Company and the Purchaser herein and
in the certificates for the Shares delivered pursuant hereto shall survive the
execution of this Agreement, the delivery to the Purchaser of the Shares being
purchased and the payment therefor.
7. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.
7.1 DEFINITIONS. As used in this Section 7, the following terms shall have
the following respective meanings:
(a) The term "Holder" shall mean any person owning of record
Registrable Securities, including the original holder of Registrable Securities
and any and all concurrent or
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subsequent holders of Registrable Securities whom have received such Registrable
Securities in compliance with this Agreement.
(b) The term "Registrable Securities" shall mean (i) the Shares; and
(ii) any capital stock of the Company issued as (or issuable upon the conversion
or exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for, or in
replacement of, the Shares. Notwithstanding the foregoing, Registrable
Securities shall not include any securities sold by a person to the public
either pursuant to a registration statement or Rule 144 or sold in a private
transaction in which the transferor's rights under Section 7.9 of this Agreement
are not assigned.
(c) The term "Registration Expenses" shall mean all expenses incurred
by the Company in complying with Sections 7.3 and 7.4 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel and independent public accountants for the Company and
blue sky fees and expenses (but excluding underwriting and/or selling
commissions incurred with respect to the Registrable Securities).
(d) The term "Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in or relating to any
registration statement referred to in this Section 7.
(e) The term "SEC" or "Commission" shall mean the Securities and
Exchange Commission.
(f) The term "untrue statement" shall include any untrue statement or
alleged untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
7.2 RESTRICTIONS ON TRANSFER. Holder agrees not to make any disposition of
all or any portion of the Registrable Securities unless and until: (i) there is
then in effect a registration statement under the Securities Act covering such
proposed disposition and such disposition is made in accordance with such
registration statement; or (ii) there exists an applicable exemption under the
Securities Act.
7.3 PIGGY-BACK REGISTRATIONS.
(a) The Company shall notify all Holders of Registrable Securities in
writing of the proposed filing of any registration statement under the
Securities Act for purposes of a public offering of securities of the Company
(other than registration statements on Form S-8 or Form S-4) and will afford
each such Holder an opportunity to include in such registration statement (other
than registration statements on Form S-8 or Form S-4) all or part of any
Registrable Securities held by such Holder. Each Holder desiring to include in
any such registration statement all or any part of the Registrable Securities
held by it shall, within fifteen (15) days after the above-described notice from
the Company, so notify the Company in writing. If a Holder decides not to
include all of its Registrable Securities in any registration statement
thereafter filed by the Company, such Holder shall nevertheless continue to have
the right to
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include any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein.
(b) UNDERWRITING. If the registration statement under which the
Company gives notice under this Section 7.3 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder to be included in a registration pursuant to this
Section 7.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of this Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be decreased (i) first by the number of Registrable Securities held by
directors, officers or employees of the Company so seeking to have such
Registrable Securities included in the registration statement, and, if such
decrease is not sufficient, then (ii) by the number of Registrable Securities
and other securities of the Company so proposed to be sold and so requested by
Holders of Registrable Securities (other than directors, officers or employees
of the Company holding Registrable Securities) to be included in such
registration statement and any other holder of securities of the Company with
rights to have securities included in such registration statement (pro rata on
the basis of the percentage of the securities of the Company held by such
Holders of Registrable Securities and holders of other securities) to the extent
necessary to reduce the number of securities to be included in the registration
statement to the level recommended by the underwriter. No such reduction shall
reduce the securities being offered by the Company for its own account to be
included in the registration and underwriting.
(c) RIGHT TO TERMINATE REGISTRATION. The Company shall have the right
to terminate or withdraw any registration statement initiated by it under this
Section 7.3 prior to the effectiveness of such registration statement whether or
not any Holder has elected to include securities in such registration statement.
The Registration Expenses of such withdrawn registration statement shall be
borne by the Company in accordance with Section 7.6 hereof.
7.4 RESALE S-3 REGISTRATION RIGHTS.
The Company shall:
(A) upon the earlier to occur of (i) the day that is ninety (90) days
after the consummation of the next underwritten public offering of equity
securities of the Company, and (ii) three hundred (300) days following the
Closing, prepare and file with the Commission a Registration Statement on Form
S-3 in order to register the Registrable Securities with the Commission for
resale by the Holders from time to time through underwriters, agents or
otherwise, in negotiated or market transactions or through the automated
quotation system of the Nasdaq or the facilities of any national securities
exchange on which the Company's Common Stock is then traded or in privately
negotiated transactions;
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(B) use its best efforts, subject to the receipt of necessary
information from the Holders, to cause the Registration Statement to become
effective within sixty (60) days after the Registration Statement is filed by
the Company;
(C) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep the Registration Statement effective until
the earlier to occur of (i) the sale of all Registrable Securities registered
pursuant thereto, and (ii) the date that all Registrable Securities held by each
Holder may be sold under Rule 144 during any ninety (90) day period (provided
that the Company shall not be deemed to have used its best efforts to keep the
Registration Statement effective if it voluntarily takes any action that would
result in Holder not being able to sell any of its Registrable Securities
pursuant to the Registration Statement unless (i) such action is required under
applicable law or taken by the Company in good faith and for valid business
reasons, including without limitation the acquisition or divestiture of assets
and (ii) the Company promptly complies with the requirements of this Section
7.4, if applicable);
(D) furnish to the Holder with respect to the Registrable Securities
registered under the Registration Statement such number of copies of
prospectuses and preliminary prospectuses in conformity with the requirements of
the Securities Act, in order to facilitate the public sale or other disposition
of all or any of the Registrable Securities by the Holder; provided, however,
that the obligation of the Company to deliver copies of prospectuses or
preliminary prospectuses to the Holder shall be subject to the receipt by the
Company of reasonable assurances from the Holder that the Holder will comply
with the applicable provisions of the Securities Act and of such other
securities or blue sky laws as may be applicable in connection with any use of
such prospectuses or preliminary prospectuses; and
(E) file documents required of the Company for normal blue sky
clearance in states specified in writing by the Holder; provided, however, that
the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented.
7.5 TRANSFER OF SHARES AFTER REGISTRATION. The Holder agrees that it will
not effect any disposition of the Registrable Securities that would constitute a
sale within the meaning of the Securities Act except as contemplated in Section
7.2 and that it will promptly notify the Company of any changes in the
information set forth in the Registration Statement regarding the Holder or its
plan of distribution.
7.6 EXPENSES OF REGISTRATION. Except as specifically provided herein, all
Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Sections 7.3 and 7.4 herein shall be
borne by the Company.
7.7 TERMINATION OF REGISTRATION RIGHTS. A Holder's registration rights
under this Section 7 shall expire on the date that all Registrable Securities
held by and issuable to such Holder (and its affiliates) may be sold under Rule
144 during any ninety (90) day period.
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7.8 INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement under Sections 7.3 or 7.4:
(a) The Company agrees to indemnify and hold harmless each Holder from
and against any losses, claims, damages or liabilities to which such Holder may
become subject (under the Securities Act or otherwise), insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of, or are based upon, any untrue statement of a material fact
contained in the Registration Statement on the effective date of such
Registration Statement, or arise out of any failure by the Company to fulfill
any undertaking included in the Registration Statement, and the Company will
reimburse such Holder for any reasonable legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of, or is based upon, an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Holder specifically for use in
preparation of the Registration Statement, or the failure of such Holder to
comply with the covenants and agreements contained in Sections 5.1 and 7.5
hereof respecting the sale of the Shares or any statement or omission in any
prospectus that is corrected in any subsequent prospectus that was delivered to
the Holder prior to the pertinent sale or sales by the Holder.
(b) The Holder agrees to indemnify and hold harmless the Company (and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act, each officer of the Company who signs the Registration
Statement and each director of the Company) from and against any losses, claims,
damages or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any failure to
comply with the covenants and agreements contained in Sections 5.1 and 7.5
hereof respecting the sale of the Registrable Securities, or any untrue
statement of a material fact contained in the Registration Statement on the
effective date of such Registration Statement if such untrue statement was made
in reliance upon and in conformity with written information furnished by or on
behalf of the Holder specifically for use in preparation of the Registration
Statement, and the Holder will reimburse the Company (or such officer, director
or controlling person), as the case may be, for any legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim. In no event shall the liability of the Holder
hereunder be greater in amount than the dollar amount of the proceeds received
by the Holder upon the sale of Registrable Securities giving rise to such
indemnification obligation.
(c) Promptly after receipt by an indemnified party under this Section
7.8 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 7.8, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and
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expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
7.8, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 7.8.
(d) If the indemnification provided for in this Section 7.8 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any losses, claims, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the violation(s) that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by a court of law by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, that in no event shall any contribution by a Holder hereunder exceed
the proceeds from the offering received by such Holder.
(e) The obligations of the Company and Holders under this Section 7.8
shall survive completion of any offering of Registrable Securities in a
registration statement and the termination of this Agreement. No indemnifying
party, in the defense of any such claim or litigation, shall, except with the
consent of each indemnified party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.
7.9 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to
include Registrable Securities in a registration statement pursuant to this
Section 7 may be assigned by a Holder to a transferee or assignee of Registrable
Securities which (i) is a subsidiary, parent, general partner, limited partner
or retired partner of a Holder or (ii) is a Holder's family member or trust
created for the benefit of an individual Holder; provided, however, (A) the
transferor shall, within ten (10) days after such transfer, furnish to the
Company written notice of the name and address of such transferee or assignee
and the securities with respect to which such registration rights are being
assigned and (B) such transferee shall agree to be subject to all restrictions
set forth in this Agreement.
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7.10 RULE 144 REPORTING. With a view to making available to the Holders the
benefits of certain rules and regulations of the SEC which may permit the sale
of the Registrable Securities to the public without registration, the Company
agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act; and
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act.
8. BROKER'S FEE.
(a) Each of the parties hereto hereby represents that, except as
provided in Section 8(b), on the basis of any actions and agreements by it,
there are no brokers or finders entitled to compensation in connection with the
sale of Shares to the Purchaser.
(b) The Company has agreed to pay to certain persons or entities who
have been retained by the Company to assist it with the sale of Shares being
offered hereby a fee in an amount equal to six percent (6%) of the total sales
price of any Shares sold by any such person or entity.
9. NOTICES. All notices, requests, consents and other communications hereunder
shall be in writing, shall be sent by facsimile or mailed by first class
registered or certified airmail, or nationally recognized overnight express
courier postage prepaid, and shall be deemed given when so sent by facsimile or
mailed and shall be delivered as follows:
(a) if to the Company, to:
Cypress Bioscience, Inc.
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Attention: Director of Finance
with a copy so mailed to:
▇▇▇▇▇▇ Godward LLP
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Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and
(b) if to the Purchaser, at its address as set forth at the end of
this Agreement, or at such other address or addresses as may have been furnished
to the Company in writing.
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10. CHANGES. This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and the Purchaser.
11. HEADINGS. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
12. SEVERABILITY. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware as applied to contracts
entered into and performed entirely in Delaware by Delaware residents.
14. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one instrument.
15. REMEDIES. In addition to being entitled to exercise all rights and remedies
provided herein or granted by law for any breach by the Company hereunder, the
Purchaser will be entitled to specific performance of its rights under this
Agreement. In that regard, the Company acknowledges and agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
11.
12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
CYPRESS BIOSCIENCE, INC. PURCHASER
-----------------------------------
Print Name
By: By
-------------------------------- ---------------------------------
Name: Name
------------------------------ -------------------------------
Title: Title
----------------------------- ------------------------------
Address:
---------------------------
---------------------------
---------------------------
---------------------------
Telephone:
-------------------------
Telecopier:
------------------------
12.
13
SUMMARY INSTRUCTION SHEET FOR PURCHASER
(TO BE READ IN CONJUNCTION WITH THE ENTIRE
STOCK PURCHASE AGREEMENT WHICH FOLLOWS)
A. Complete the following items on the Purchase Agreement:
1. Page 11 - Signature:
(I) Name of Purchaser (Individual or Institution)
(II) Name of Individual representing Purchaser (if an Institution)
(III) Title of Individual representing Purchaser (if an Institution)
(IV) Signature of Individual Purchaser or Individual representing
Purchaser
2. Exhibit A - Stock Certificate and Funds Transfer Questionnaire:
Provide the information requested by the Stock Certificate and
Funds Transfer Questionnaire.
3. Exhibit B - Investor Qualification Questionnaire:
Two forms of Investor Qualification Questionnaires have been
included as Exhibit B, one to be completed by individual
purchasers and one to be completed by entity purchasers (e.g.,
corporation, trust, partnership). Please complete, sign and
return the appropriate Investor Qualification Questionnaire.
4. Return the properly completed and signed Stock Purchase Agreement
including properly completed Exhibit A and Exhibit B and, if paying by
check, a check for the full purchase price, to:
Cypress Bioscience, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
T: (▇▇▇) ▇▇▇-▇▇▇▇
F: (▇▇▇) ▇▇▇-▇▇▇▇
PLEASE RETURN THE FOREGOING DOCUMENTS BY FEDEX.
14
EXHIBIT A
CYPRESS BIOSCIENCE, INC.
STOCK CERTIFICATE AND FUNDS TRANSFER QUESTIONNAIRE
Pursuant to Section 3 of the Stock Purchase Agreement, please provide us
with the following information:
1. The exact name that your Shares are
to be registered in (this is the ------------------------------
name that will appear on your stock
certificate(s)). You may use a
nominee name if appropriate:
2. The relationship between the
Purchaser of the Shares and the ------------------------------
Registered Holder listed in
response to item 1 above:
3. The mailing address of the
Registered Holder listed in ------------------------------
response to item 1 above:
4. The Social Security Number or Tax
Identification Number of the ------------------------------
Registered Holder listed in the
response to item 1 above:
5. Whether you will be making payment Check [ ]
for the Shares with a check or wire
transfer (check appropriate box). Wire Transfer [ ]
If you will be sending a wire
transfer, please provide the name
of your bank and the proposed
initiation date of the wire: Name of your bank
-------------
------------------------------
------------------------------
Date of initiation
------------
------------------------------
2.
15
EXHIBIT B
CYPRESS BIOSCIENCE, INC.
INVESTOR QUALIFICATION QUESTIONNAIRE
[INDIVIDUALS]
In connection with a proposed offer to the undersigned of securities of
Cypress Bioscience, Inc., a Delaware corporation (the "Company"), the
undersigned makes the following representations on which the Company shall be
entitled to rely:
1. The undersigned makes on the following representations regarding his or
her net worth and/or income, and has checked the applicable representation:
( ) a. The undersigned has a net worth, either individually or upon a
joint basis with the undersigned's spouse, of at least
$1,000,000.
( ) b. The undersigned has had an individual income in excess of
$200,000 for each of the two most recent years, or joint income
with the undersigned's spouse in excess of $300,000 in each of
those years, and has a reasonable expectation of reaching the
same income level in the current year.
( ) c. The undersigned is a director or executive officer of the
Company.
( ) d. The undersigned cannot make any of the representations set forth
above.
In addition, the undersigned represents as follows:
2. My full name and primary business address and phone number are
---------
-----------------------------------------------------------------------
3. I am a resident of the state of
----------------------------------------
4. I am acquiring the securities solely for my own account and not directly
or indirectly for the account of any other person whatsoever, for investment and
not with a view to, or for sale in connection with, any distribution of the
securities. I do not have any contract, undertaking or arrangement with any
person to sell, transfer or grant a participation to any person with respect to
the securities.
------------------------------
(Signature)
------------------------------
(Date)
16
EXHIBIT B
CYPRESS BIOSCIENCE, INC.
INVESTOR QUALIFICATION QUESTIONNAIRE
[PARTNERSHIP, TRUST OR OTHER ENTITY]
In connection with a proposed offer to the undersigned of securities of
Cypress Bioscience, Inc., a Delaware corporation (the "Company"), the
undersigned makes the following representations on which the Company shall be
entitled to rely:
1. The undersigned makes one of the following representations regarding its
net worth and certain related matters, and has checked the applicable
representation:
( ) a. The undersigned is a trust with total assets in excess of
$5,000,000, whose purchase is directed by a person with such
knowledge and experience in financial and business matters that
he is capable of evaluating the merits and risks of the
prospective investment.
( ) b. The undersigned represents that it is a bank, insurance company,
investment company registered under the Investment Company Act of
1940, a business development company, Small Business Investment
Company licensed by the U.S. Small Business Administration, or a
private business development company.
( ) c. If the undersigned is an employee benefit plan, the undersigned
represents either that all investment decisions are ------ made
by a bank, insurance company, or registered investment advisor,
or that the undersigned has total assets in excess -- of
$5,000,000.
( ) d. If the undersigned is a corporation, partnership or business
trust, the undersigned represents that it has total assets in
excess of $5,000,000.
( ) e. If the undersigned is not an entity described in paragraphs "a"
through "d", the undersigned represents that each of its equity
owners is either (i) an entity described in paragraphs "b"
through "d"; or (ii) an individual who (A) has an individual net
worth, or a joint net worth with such individual's spouse, in
excess of $1,000,000, or (B) has had an individual income in
excess of $200,000 in each of the two most recent years and
reasonably expects an income in excess of $200,000 in the current
year, or (C) is a director or executive officer of the Company.
( ) f. The undersigned cannot make any of the representations set forth
in paragraphs "a" through "e" above.
In addition, the undersigned represents as follows:
17
2. Its full name and primary business address and phone number are:
-------
-------------------------------------------------------------------------------
3. Its form, state and date of organization are (i.e., partnership,
corporation or trust, state where organized, date of organization):
------------
-------------------------------------------------------------------------------
4. The entity has sufficient profits and net assets that it does not
contemplate disposing of any investment in the Company to satisfy other
undertakings or indebtedness. It has made other investments in early stage
privately-held companies and the person(s) making the investment decision on its
behalf understand the risks attendant with such investments. The knowledge and
experience in financial and business matters of the person(s) making the
investment decision on its behalf are such that he/she/they are capable of
evaluating the merits and risks of an investment in the Company. It is able to
bear the economic risk of an investment in the Company as well as the
restriction on its ability to sell or transfer the investment for an indefinite
period of time. It has had access to such information concerning the Company and
the securities as it considered necessary to make an informed decision
concerning the proposed investment.
5. It was not formed for the specific purpose of making an investment in
the Company.
6. It is acquiring the securities solely for its own account and not
directly or indirectly for the account of any other person whatsoever, for
investment and not with a view to, or for sale in connection with, any
distribution of the securities. It does not have any contract, undertaking or
arrangement with any person to sell, transfer or grant a participation to any
person with respect to the securities.
Name of Entity:
By:
--------------------------------
(Signature)
-----------------------------------
(Name)
-----------------------------------
(Title)
-----------------------------------
(Date)
18
EXHIBIT C
Attention:
CERTIFICATE OF SUBSEQUENT SALE
The undersigned, an officer of, or other person duly authorized by
------------------------------------------------------------------
[fill in official name of individual or institution]
hereby certifies that he/she sold the shares evidenced by the attached
certificate on ________ in accordance with registration statement
number
[date]
____________________________________________and the requirement of
[fill in the number of or otherwise identify registration statement]
delivering a current prospectus has been complied with in connection
with such sale.
Print or Type:
Name (Individual or Institution):
-----------------------------
Name of Individual representing Institution
(if applicable)
-----------------------------
Title of Individual representing Institution
(if applicable):
-----------------------------
Signature by:
Individual Purchaser or Individual
representing Institution:
-----------------------------
19
STOCK PURCHASE AGREEMENT
20
TABLE OF CONTENTS
1. AUTHORIZATION OF SALE OF THE SHARES......................................1
2. AGREEMENT TO SELL AND PURCHASE THE SHARES................................1
3. DELIVERY OF THE SHARES AT THE CLOSING....................................1
4. REPRESENTATIONS, WARRANTIES AND COVENANTS................................2
4.1 Organization and Qualification...............................2
4.2 Due Execution, Delivery and Performance of the Agreements....2
4.3 Issuance, Sale and Delivery of the Shares....................2
4.4 Additional Information.......................................3
4.5 No Material Change...........................................3
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER...............3
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS...................4
7. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT...........4
7.1 Definitions..................................................4
7.2 Restrictions on Transfer.....................................5
7.3 Piggy-back Registrations.....................................5
7.4 Resale S-3 Registration Rights...............................6
7.5 Transfer of Shares After Registration........................7
7.6 Expenses of Registration.....................................7
7.7 Termination of Registration Rights...........................7
7.8 Indemnification..............................................8
7.9 Assignment of Registration Rights............................9
7.10 Rule 144 Reporting..........................................10
8. BROKER'S FEE............................................................10
9. NOTICES.................................................................10
10. CHANGES.................................................................11
11. HEADINGS................................................................11
12. SEVERABILITY............................................................11
13. GOVERNING LAW...........................................................11
14. COUNTERPARTS............................................................11
15. REMEDIES................................................................11
21
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made as of October __,
1997 between CYPRESS BIOSCIENCE, INC., a Delaware corporation with its principal
place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (the "Company"), and the purchaser whose name and address is set forth on
the signature page hereof (the "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Company and the Purchaser agree as follows:
1. AUTHORIZATION OF SALE OF THE SHARES. Subject to the terms and conditions of
this Agreement, the Company has authorized the sale of up to three million five
hundred thousand (3,500,000) shares of Common Stock of the Company (the
"Shares") at a sales price of $1.50 per Share.
2. AGREEMENT TO SELL AND PURCHASE THE SHARES. At the Closing (as defined in
Section 3), the Company will sell to the Purchaser, and the Purchaser will buy
from the Company, upon the terms and conditions hereinafter set forth, the
number of Shares for the aggregate purchase price set forth below:
AGGREGATE
NUMBER OF SHARES PURCHASE PRICE PURCHASE
PURCHASED PER SHARE PRICE
--------- --------- -----
$1.50
3. DELIVERY OF THE SHARES AT THE CLOSING. The completion of the purchase and
sale of the Shares to be issued pursuant to this Agreement (the "Closing") shall
occur upon (i) receipt by the Company of (A) a signed copy of this Agreement,
(B) a completed Stock Certificate and Funds Transfer Questionnaire, the form of
which is attached hereto as Exhibit A, (C) a signed and dated Investor
Qualification Questionnaire, a form of which is attached hereto as Exhibit B,
and (D) the aggregate purchase price for the Shares, or (ii) on such other date
as may be agreed to by the Company and the Purchaser. At the Closing, the
Company shall deliver to the Purchaser or the Purchaser's custodian bank, in
accordance with the Purchaser's delivery instructions, one or more stock
certificates registered in the name of the Purchaser, or in such nominee name(s)
as designated by the Purchaser, representing the number of Shares set forth in
Section 2 above. The name(s) in which the stock certificates are to be issued
are set forth in the Stock Certificate and Funds Transfer Questionnaire attached
hereto as part of Exhibit A. The Company's obligation to complete the purchase
and sale of the Shares and deliver such stock certificate(s) to the Purchaser at
the Closing shall be subject to the following conditions, any one or more of
which may be waived by the Company: (a) subject to delivery of the share
certificates to the Purchaser or Purchaser's custodian bank, receipt by the
Company of immediately available funds, by check or wire transfer, in the full
amount of the purchase price for the Shares being purchased hereunder;
22
(b) receipt by the Company of a signed and dated Investor Qualification
Questionnaire attached as Exhibit B hereto; (c) the accuracy of the
representations and warranties made by the Purchaser herein as of the Closing;
and (d) the fulfillment of those undertakings of the Purchaser to be fulfilled
prior to the Closing. The Purchaser's obligation to accept delivery of such
stock certificate(s) and to pay for the Shares evidenced thereby shall be
subject to the following conditions: (i) the accuracy of the representations and
warranties made by the Company herein as of the Closing; and (ii) the
fulfillment in all material respects of those undertakings of the Company to be
fulfilled prior to the Closing. Upon receipt by the Purchaser's custodian bank
of certificates evidencing the number of Shares being purchased hereunder, the
Purchaser shall cause its custodian bank to remit the full amount of the
aggregate purchase price to the Company in immediately available funds, by check
or wire transfer. The Purchaser's obligations hereunder are expressly not
conditioned on the purchase of any or all of the Shares by any other person or
entity.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Company hereby represents and
warrants to, and covenants with, the Purchaser as follows:
4.1 ORGANIZATION 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 conduct its
business as currently conducted.
4.2 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS. The
Company's execution, delivery and performance of this Agreement (a) has been
duly authorized by all requisite corporate action by the Company, and (b) will
not violate the Certificate of Incorporation or Bylaws of the Company or violate
or result in a breach of or constitute a default under, any provision of any
material indenture, mortgage, agreement, contract or other material instrument
to which the Company or any subsidiary is a party or by which the Company or any
subsidiary or any of their respective properties or assets is bound as of the
date hereof. Upon the execution and delivery, and assuming the valid execution
thereof by the Purchaser, this Agreement will constitute a valid and binding
obligation of the Company, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification agreements
of the Company in Section 7.5 hereof may be legally unenforceable.
4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES. The authorized capital stock
of the Company consists of sixty million (60,000,000) shares of Common Stock and
fifteen million (15,000,000) shares of Preferred Stock, $0.02 par value per
share. As of September 25, 1997, there were issued and outstanding 34,636,067
shares of the Company's Common Stock, which shares are duly authorized, validly
issued, fully paid and nonassessable. When issued, delivered to Purchaser or
Purchaser's custodian bank and paid for by Purchaser in accordance with the
terms and conditions of this Agreement, the Shares to be sold hereunder by the
Company will be validly issued, fully paid and nonassessable and will be
delivered to Purchaser free and clear of all liens, pledges, claims,
encumbrances, security interests or other restrictions, except for
2.
23
restrictions on transfer imposed to ensure compliance with the Securities Act of
1993, as amended (the "Securities Act").
4.4 ADDITIONAL INFORMATION. The Company represents and warrants that the
information contained in the following documents, which the Company has
furnished to the Purchaser, is true and correct in all material respects as of
their respective final dates:
(a) the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 (without exhibits);
(b) the Company's Quarterly Reports on Form 10-Q for the periods ended
March 31 and June 30, 1997 (the "Form 10-Qs");
(c) the Company's Current Report on Form 8-K dated as of January 17,
1997;
(d) the Company's Proxy Statement dated September 2, 1997 for the
Company's 1997 Annual Meeting of Stockholders;
(e) the Company's Press Releases dated June 30, 1997 and July 28, 1997
(collectively, the "Press Releases"); and
(f) the Company's Private Placement Memorandum dated September 8, 1997
prepared in connection with the issuance of the Shares, as amended by that
certain First Supplement to Private Placement Memorandum dated September 30,
1997 (the "Memorandum").
4.5 NO MATERIAL CHANGE. As of the date hereof, except as may be reflected
in the Form 10-Qs, the Memorandum or the Press Releases, there has been no
material adverse change in the financial condition or results of operations of
the Company since June 30, 1997.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
The Purchaser represents, warrants and covenants with the Company as
follows:
5.1 The Purchaser represents and warrants to, and covenants with, the
Company that: (i) the Purchaser, taking into account the personnel and resources
it can practically bring to bear on the purchase of the Shares contemplated
hereby, is knowledgeable, sophisticated and experienced in making, and is
qualified to make, decisions with respect to investments in shares presenting an
investment decision like that involved in the purchase of the Shares, including
investments in securities issued by the Company, and has requested, received,
reviewed and considered all information it deems relevant in making an informed
decision to purchase the Shares; (ii) the Purchaser is acquiring the number of
Shares set forth in Section 2 above for its own account for investment only and
with no present intention of distributing any of such Shares or any arrangement
or understanding with any other persons regarding the distribution of such
Shares; (iii) the Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act and the rules and regulations
3.
24
promulgated thereunder; (iv) the Purchaser has completed or caused to be
completed the Stock Certificate and Funds Transfer Questionnaire, attached
hereto as Exhibit A and the answers thereto are true and correct to the best
knowledge of the Purchaser as of the date hereof; (v) the Purchaser has, in
connection with its decision to purchase the number of Shares set forth in
Section 2 above, relied solely upon the information delivered to the Purchaser
as described in Section 4.4 above and the representations and warranties of the
Company contained herein; and (vi) the Purchaser is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act and has completed or caused to be completed the relevant Investor
Qualification Questionnaire attached hereto as Exhibit B.
5.2 The Purchaser further represents and warrants to, and covenants with,
the Company that (i) the Purchaser has full right, power, authority and capacity
to enter into this Agreement and to consummate the transactions contemplated
hereby and has taken all necessary action to authorize the execution, delivery
and performance of this Agreement, and (ii) upon the execution and delivery of
this Agreement, this Agreement shall constitute a valid and binding obligation
of the Purchaser enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification agreements
of the Purchaser in Section 7.5 hereof may be legally unenforceable.
5.3 Purchaser acknowledges and agrees that the Shares acquired by Purchaser
must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. Purchaser
has been advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act, which permits limited resale of securities in a private
placement subject to the satisfaction of certain conditions, including, among
other things: the availability of certain current public information about the
Company, the resale occurring not less than one year after a party has purchased
and paid for the security to be sold, the sale being made through an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) and the number of shares being sold during any three-month
period not exceeding specified limitations.
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Notwithstanding any
investigation made by any party to this Agreement, all covenants, agreements,
representations and warranties made by the Company and the Purchaser herein and
in the certificates for the Shares delivered pursuant hereto shall survive the
execution of this Agreement, the delivery to the Purchaser of the Shares being
purchased and the payment therefor.
7. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.
7.1 RESALE REGISTRATION RIGHTS.
(A) The Company shall within thirty (30) days following receipt by the
Company of a written request by the Purchaser, prepare and file with the
Securities and
4.
25
Exchange Commission (the "Commission") a registration statement (the
"Registration Statement") in order to register the Shares with the Commission
for resale by Purchaser from time to time through underwriters, agents or
otherwise, in negotiated or market transactions or through the automated
quotation system of the Nasdaq or the facilities of any national securities
exchange on which the Company's Common Stock is then traded or in privately
negotiated transactions;
(B) use its best efforts, subject to the receipt of necessary
information from the Purchaser, to cause the Registration Statement to become
effective within sixty (60) days after the Registration Statement is filed by
the Company;
(C) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep the Registration Statement effective for a
period of sixty (60) days after it is declared effective by the Commission or,
if earlier, until Purchaser has sold all of the Shares covered by such
Registration Statement (provided that the Company shall not be deemed to have
used its best efforts to keep the Registration Statement effective if it
voluntarily takes any action that would result in Purchaser not being able to
sell any of its Shares pursuant to the Registration Statement unless (i) such
action is required under applicable law or taken by the Company in good faith
and for valid business reasons, including without limitation the acquisition or
divestiture of assets and (ii) the Company promptly complies with the
requirements of this Section 7.1, if applicable);
(D) furnish to Purchaser with respect to the Shares registered under
the Registration Statement such number of copies of prospectuses and preliminary
prospectuses in conformity with the requirements of the Securities Act, in order
to facilitate the public sale or other disposition of all or any of the Shares
by Purchaser; provided, however, that the obligation of the Company to deliver
copies of prospectuses or preliminary prospectuses to Purchaser shall be subject
to the receipt by the Company of reasonable assurances from Purchaser that
Purchaser will comply with the applicable provisions of the Securities Act and
of such other securities or blue sky laws as may be applicable in connection
with any use of such prospectuses or preliminary prospectuses; and
(E) file documents required of the Company for normal blue sky
clearance in states specified in writing by Purchaser; provided, however, that
the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented.
7.2 TRANSFER OF SHARES AFTER REGISTRATION. Purchaser agrees that it will
not effect any disposition of the Shares that would constitute a sale within the
meaning of the Securities Act except as contemplated in Section 7.1 and that it
will promptly notify the Company of any changes in the information set forth in
the Registration Statement regarding Purchaser or its plan of distribution.
7.3 EXPENSES OF REGISTRATION. All expenses incurred by the Company in
complying with Section 7.1, including without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company and blue
5.
26
sky fees and expenses (but excluding underwriting and/or selling commissions
incurred with respect to the resale of the Shares) shall be borne by the
Company.
7.4 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted
under this Section 7 shall terminate and be of no further force and effect one
(1) year after the date of the Closing.
7.5 INDEMNIFICATION.
(a) For the purposes of this Section 7.5, the following terms shall
have the following meanings:
(i) "Registration Statement" shall include any final prospectus,
exhibit supplement or amendment included in or relating to any registration
statement referred to in this Section 7; and
(ii) "untrue statement" shall include any untrue statement or
alleged untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(b) The Company agrees to indemnify and hold harmless each Holder from
and against any losses, claims, damages or liabilities to which such Purchaser
may become subject (under the Securities Act or otherwise), insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of, or are based upon, any untrue statement of a material
fact contained in the Registration Statement on the effective date of such
Registration Statement, or arise out of any failure by the Company to fulfill
any undertaking included in the Registration Statement, and the Company will
reimburse such Purchaser for any reasonable legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of, or is based upon, an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Purchaser specifically for use in
preparation of the Registration Statement, or the failure of such Purchaser to
comply with the covenants and agreements contained in Sections 5.1 and 7.2
hereof respecting the sale of the Shares or any statement or omission in any
prospectus that is corrected in any subsequent prospectus that was delivered to
Purchaser prior to the pertinent sale or sales by Purchaser.
(c) Purchaser agrees to indemnify and hold harmless the Company (and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act, each officer of the Company who signs the Registration
Statement and each director of the Company) from and against any losses, claims,
damages or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any failure to
comply with the covenants and agreements contained in Sections 5.1 and 7.2
hereof respecting the sale of the Shares, or any
6.
27
untrue statement of a material fact contained in the Registration Statement on
the effective date of such Registration Statement if such untrue statement was
made in reliance upon and in conformity with written information furnished by or
on behalf of Purchaser specifically for use in preparation of the Registration
Statement, and Purchaser will reimburse the Company (or such officer, director
or controlling person, as the case may be) for any legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim. In no event shall the liability of Purchaser
hereunder be greater in amount than the dollar amount of the proceeds received
by Purchaser upon the sale of Shares giving rise to such indemnification
obligation.
(d) Promptly after receipt by an indemnified party under this Section
7.5 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 7.5, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 7.5, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 7.5.
(e) If the indemnification provided for in this Section 7.5 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any losses, claims, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the violation(s) that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by a court of law by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, that in no event shall any contribution by a Purchaser hereunder
exceed the proceeds from the offering received by such Purchaser.
(f) The obligations of the Company and Purchasers under this Section
7.5 shall survive completion of any offering of Shares in a Registration
Statement and the
7.
28
termination of this Agreement. No indemnifying party, in the defense of any such
claim or litigation, shall, except with the consent of each indemnified party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect to such
claim or litigation.
7.6 RULE 144 REPORTING. With a view to making available to Purchasers the
benefits of certain rules and regulations of the SEC which may permit the sale
of the Shares to the public without registration, the Company agrees to use its
best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Commission Rule 144 or any similar or analogous rule
promulgated under the Securities Act; and
(b) File with the Commission, in a timely manner, all reports and
other documents required of the Company under the Exchange Act.
8. BROKER'S FEE.
(a) Each of the parties hereto hereby represents that, except as
provided in Section 8(b), on the basis of any actions and agreements by it,
there are no brokers or finders entitled to compensation in connection with the
sale of Shares to the Purchaser.
(b) The Company has agreed to pay to certain persons or entities who
have been retained by the Company to assist it with the sale of Shares being
offered hereby a fee in an amount equal to six percent (6%) of the total sales
price of any Shares sold by any such person or entity.
8.
29
9. NOTICES. All notices, requests, consents and other communications hereunder
shall be in writing, shall be sent by facsimile or mailed by first class
registered or certified airmail, or nationally recognized overnight express
courier postage prepaid, and shall be deemed given when so sent by facsimile or
mailed and shall be delivered as follows:
(a) if to the Company, to:
Cypress Bioscience, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Director of Finance
with a copy so mailed to:
▇▇▇▇▇▇ Godward LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and
(b) if to the Purchaser, at its address as set forth at the end of
this Agreement, or at such other address or addresses as may have been furnished
to the Company in writing.
10. CHANGES. This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and the Purchaser.
11. HEADINGS. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
12. SEVERABILITY. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware as applied to contracts
entered into and performed entirely in Delaware by Delaware residents.
14. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one instrument.
15. REMEDIES. In addition to being entitled to exercise all rights and remedies
provided herein or granted by law for any breach by the Company hereunder, the
Purchaser will be entitled to specific performance of its rights under this
Agreement. In that regard, the Company
9.
30
acknowledges and agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
10.
31
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.
CYPRESS BIOSCIENCE, INC. PURCHASER
-----------------------------------
Print Name
By: By
-------------------------------- ---------------------------------
Name: Name
------------------------------ -------------------------------
Title: Title
----------------------------- ------------------------------
Address:
---------------------------
---------------------------
---------------------------
---------------------------
Telephone:
-------------------------
Telecopier:
------------------------
11.
32
SUMMARY INSTRUCTION SHEET FOR PURCHASER
(TO BE READ IN CONJUNCTION WITH THE ENTIRE
STOCK PURCHASE AGREEMENT WHICH FOLLOWS)
A. Complete the following items on the Purchase Agreement:
1. Page 11 - Signature:
(I) Name of Purchaser (Individual or Institution)
(II) Name of Individual representing Purchaser (if an Institution)
(III) Title of Individual representing Purchaser (if an Institution)
(IV) Signature of Individual Purchaser or Individual representing
Purchaser
2. Exhibit A - Stock Certificate and Funds Transfer Questionnaire:
Provide the information requested by the Stock Certificate and
Funds Transfer Questionnaire.
3. Exhibit B - Investor Qualification Questionnaire:
Two forms of Investor Qualification Questionnaires have been
included as Exhibit B, one to be completed by individual
purchasers and one to be completed by entity purchasers (e.g.,
corporation, trust, partnership). Please complete, sign and
return the appropriate Investor Qualification Questionnaire.
4. Return the properly completed and signed Stock Purchase Agreement
including properly completed Exhibit A and Exhibit B and, if paying by
check, a check for the full purchase price, to:
Cypress Bioscience, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
T: (▇▇▇) ▇▇▇-▇▇▇▇
F: (▇▇▇) ▇▇▇-▇▇▇▇
PLEASE RETURN THE FOREGOING DOCUMENTS BY FEDEX.
33
EXHIBIT A
CYPRESS BIOSCIENCE, INC.
STOCK CERTIFICATE AND FUNDS TRANSFER QUESTIONNAIRE
Pursuant to Section 3 of the Stock Purchase Agreement, please provide us
with the following information:
1. The exact name that your Shares are
to be registered in (this is the ------------------------------
name that will appear on your stock
certificate(s)). You may use a
nominee name if appropriate:
2. The relationship between the
Purchaser of the Shares and the ------------------------------
Registered Holder listed in
response to item 1 above:
3. The mailing address of the
Registered Holder listed in ------------------------------
response to item 1 above:
4. The Social Security Number or Tax
Identification Number of the ------------------------------
Registered Holder listed in the
response to item 1 above:
5. Whether you will be making payment Check [ ]
for the Shares with a check or wire
transfer (check appropriate box). Wire Transfer [ ]
If you will be sending a wire
transfer, please provide the name
of your bank and the proposed
initiation date of the wire: Name of your bank
-------------
------------------------------
------------------------------
Date of initiation
------------
------------------------------
2.
34
EXHIBIT B
CYPRESS BIOSCIENCE, INC.
INVESTOR QUALIFICATION QUESTIONNAIRE
[INDIVIDUALS]
In connection with a proposed offer to the undersigned of securities of
Cypress Bioscience, Inc., a Delaware corporation (the "Company"), the
undersigned makes the following representations on which the Company shall be
entitled to rely:
1. The undersigned makes on the following representations regarding his or
her net worth and/or income, and has checked the applicable representation:
( ) a. The undersigned has a net worth, either individually or upon a
joint basis with the undersigned's spouse, of at least
$1,000,000.
( ) b. The undersigned has had an individual income in excess of
$200,000 for each of the two most recent years, or joint income
with the undersigned's spouse in excess of $300,000 in each of
those years, and has a reasonable expectation of reaching the
same income level in the current year.
( ) c. The undersigned is a director or executive officer of the
Company.
( ) d. The undersigned cannot make any of the representations set forth
above.
In addition, the undersigned represents as follows:
2. My full name and primary business address and phone number are
---------
-----------------------------------------------------------------------
3. I am a resident of the state of
----------------------------------------
4. I am acquiring the securities solely for my own account and not directly
or indirectly for the account of any other person whatsoever, for investment and
not with a view to, or for sale in connection with, any distribution of the
securities. I do not have any contract, undertaking or arrangement with any
person to sell, transfer or grant a participation to any person with respect to
the securities.
------------------------------
(Signature)
------------------------------
(Date)
35
EXHIBIT B
CYPRESS BIOSCIENCE, INC.
INVESTOR QUALIFICATION QUESTIONNAIRE
[PARTNERSHIP, TRUST OR OTHER ENTITY]
In connection with a proposed offer to the undersigned of securities of
Cypress Bioscience, Inc., a Delaware corporation (the "Company"), the
undersigned makes the following representations on which the Company shall be
entitled to rely:
1. The undersigned makes one of the following representations regarding its
net worth and certain related matters, and has checked the applicable
representation:
( ) a. The undersigned is a trust with total assets in excess of
$5,000,000, whose purchase is directed by a person with such
knowledge and experience in financial and business matters that
he is capable of evaluating the merits and risks of the
prospective investment.
( ) b. The undersigned represents that it is a bank, insurance company,
investment company registered under the Investment Company Act of
1940, a business development company, Small Business Investment
Company licensed by the U.S. Small Business Administration, or a
private business development company.
( ) c. If the undersigned is an employee benefit plan, the undersigned
represents either that all investment decisions are ------ made
by a bank, insurance company, or registered investment advisor,
or that the undersigned has total assets in excess -- of
$5,000,000.
( ) d. If the undersigned is a corporation, partnership or business
trust, the undersigned represents that it has total assets in
excess of $5,000,000.
( ) e. If the undersigned is not an entity described in paragraphs "a"
through "d", the undersigned represents that each of its equity
owners is either (i) an entity described in paragraphs "b"
through "d"; or (ii) an individual who (A) has an individual net
worth, or a joint net worth with such individual's spouse, in
excess of $1,000,000, or (B) has had an individual income in
excess of $200,000 in each of the two most recent years and
reasonably expects an income in excess of $200,000 in the current
year, or (C) is a director or executive officer of the Company.
( ) f. The undersigned cannot make any of the representations set forth
in paragraphs "a" through "e" above.
In addition, the undersigned represents as follows:
36
2. Its full name and primary business address and phone number are:
-------
-------------------------------------------------------------------------------
3. Its form, state and date of organization are (i.e., partnership,
corporation or trust, state where organized, date of organization):
------------
-------------------------------------------------------------------------------
4. The entity has sufficient profits and net assets that it does not
contemplate disposing of any investment in the Company to satisfy other
undertakings or indebtedness. It has made other investments in early stage
privately-held companies and the person(s) making the investment decision on its
behalf understand the risks attendant with such investments. The knowledge and
experience in financial and business matters of the person(s) making the
investment decision on its behalf are such that he/she/they are capable of
evaluating the merits and risks of an investment in the Company. It is able to
bear the economic risk of an investment in the Company as well as the
restriction on its ability to sell or transfer the investment for an indefinite
period of time. It has had access to such information concerning the Company and
the securities as it considered necessary to make an informed decision
concerning the proposed investment.
5. It was not formed for the specific purpose of making an investment in
the Company.
6. It is acquiring the securities solely for its own account and not
directly or indirectly for the account of any other person whatsoever, for
investment and not with a view to, or for sale in connection with, any
distribution of the securities. It does not have any contract, undertaking or
arrangement with any person to sell, transfer or grant a participation to any
person with respect to the securities.
Name of Entity:
By:
--------------------------------
(Signature)
-----------------------------------
(Name)
-----------------------------------
(Title)
-----------------------------------
(Date)
37
EXHIBIT C
Attention:
CERTIFICATE OF SUBSEQUENT SALE
The undersigned, an officer of, or other person duly authorized by
------------------------------------------------------------------
[fill in official name of individual or institution]
hereby certifies that he/she sold the shares evidenced by the attached
certificate on ________ in accordance with registration statement
number
[date]
____________________________________________and the requirement of
[fill in the number of or otherwise identify registration statement]
delivering a current prospectus has been complied with in connection
with such sale.
Print or Type:
Name (Individual or Institution):
-----------------------------
Name of Individual representing Institution
(if applicable)
-----------------------------
Title of Individual representing Institution
(if applicable):
-----------------------------
Signature by:
Individual Purchaser or Individual
representing Institution:
-----------------------------
38
CYPRESS BIOSCIENCE, INC.
STOCK PURCHASE AGREEMENT
39
TABLE OF CONTENTS
1. AUTHORIZATION OF SALE OF THE SHARES.....................................1
2. AGREEMENT TO SELL AND PURCHASE THE SHARES...............................1
3. DELIVERY OF THE SHARES AT THE CLOSING...................................1
4. REPRESENTATIONS, WARRANTIES AND COVENANTS...............................2
4.1 Organization and Qualification..............................2
4.2 Due Execution, Delivery and Performance of the Agreements...2
4.3 Issuance, Sale and Delivery of the Shares...................2
4.4 Additional Information......................................3
4.5 No Material Change..........................................3
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER..............3
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS..................4
7. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT..........4
7.1 Resale S-3 Registration Rights..............................4
7.2 Transfer of Shares After Registration.......................5
7.3 Expenses of Registration....................................5
7.4 Indemnification.............................................6
7.5 Rule 144 Reporting..........................................8
8. BROKER'S FEE............................................................8
9. NOTICES.................................................................8
10. CHANGES.................................................................9
11. HEADINGS................................................................9
12. SEVERABILITY............................................................9
13. GOVERNING LAW...........................................................9
14. COUNTERPARTS............................................................9
15. REMEDIES................................................................9