Form of Securities Purchase Agreement
Exhibit 10.9
Form of Securities Purchase Agreement
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE OR ANY OTHER JURISDICTION. THERE ARE FURTHER RESTRICTIONS ON THE TRANSFERABILITY OF THE SECURITIES DESCRIBED HEREIN.
THE PURCHASE OF THE SECURITIES INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN BEAR THE RISK OF THE LOSS OF THEIR ENTIRE INVESTMENT.
Chromocell Therapeutics Corporation
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Ladies and Gentlemen:
The undersigned understands that Chromocell Therapeutics Corporation, a corporation organized under the laws of Delaware (the “Company”), is offering an aggregate of up to (i) shares of its Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Shares”), for a purchase price of $1,000 per Series B Share and (ii) shares (the “Standby Shares”) of its common stock, par value $0.0001 per share (the “Common Stock”), in an amount to be determined pursuant to 4(c) hereof as additional consideration (such offering, the “Offering”). The Series B Shares, the shares of Common Stock issuable upon conversion of the Series B Shares, and the Standby Shares are collectively referred to herein as the “Securities.”
The undersigned further understands that the Offering is being made without registration of the Securities under the Securities Act of 1933, as amended (the “Securities Act”), or any securities law of any state of the United States or of any other jurisdiction, and is being made only to “accredited investors” (as defined in Rule 501 of Regulation D under the Securities Act). Capitalized terms used but not defined in this Agreement (as defined below) have the meanings set forth in the Certificate of Designation (as defined below).
1. Subscription. Subject to the terms and conditions hereof, each of the undersigned, severally and not jointly, hereby irrevocably subscribes for the number of Series B Shares set forth on the respective signature page hereto for the subscription amount as stated thereon (the “Subscription Amount”), which is payable as described in Section 4 hereof. Each of the undersigned acknowledges that the Securities will be subject to restrictions on transfer as set forth in this securities purchase agreement (this “Agreement”).
2. Acceptance of Subscription and Issuance of Securities. It is understood and agreed that the Company shall have the sole right, at its complete discretion, to accept or reject this subscription, in whole or in part, for any reason and that the same shall be deemed to be accepted by the Company only when it is signed by a duly authorized officer of the Company and delivered to the undersigned. Subscriptions need not be accepted in the order received. Notwithstanding anything in this Agreement to the contrary, the Company shall have no obligation to issue any of the Securities to any person who is a resident of a jurisdiction in which the issuance of Securities to such person would constitute a violation of the securities, “blue sky” or other similar laws of such jurisdiction (collectively referred to as the “State Securities Laws”).
3. The Closing. The closing of the purchase and sale of the Series B Shares and the Standby Shares (the “Closing”) shall occur substantially concurrently with the closing of the Company’s initial public offering (the “IPO”) of its Common Stock, pursuant to the Registration Statement on Form S-1 (File No. 333-269188) initially filed with the U.S. Securities and Exchange Commission on January 11, 2023, as amended to date.
4. Waiver Option; Standby Shares.
(a) Waiver Option
(i) Prior to the Closing, the Company may waive the undersigned’s obligation to fund the Subscription Amount, in part or in full, as determined by the Company in its sole and absolute discretion (the “Waiver Option”). If the Waiver Option is exercised, the Subscription Amount set forth on each signature page hereto shall be reduced by the amount subject to the Waiver Option, applied on a pro rata basis based on each of the undersigned’s Subscription Amounts relative to the aggregate amount subscribed for by all investors in the Offering, and the Company’s obligation to issue Series B Shares shall be reduced accordingly.
(b) Payment for the Series B Shares. Payment for the Series B Shares shall be received by the Company from each of the undersigned by wire transfer of immediately available funds or other means approved by the Company at or prior to the Closing, in the amount as set forth on the respective signature page hereto. The Company shall deliver certificates representing the Series B Shares and Standby Shares to the undersigned at the Closing bearing an appropriate legend referring to the fact that the Securities were sold in reliance upon an exemption from registration under the Securities Act.
(c) Standby Shares. Following the Closing of the IPO and as additional consideration for entering into this Agreement, the Company shall deliver to each of the undersigned 50 Standby Shares for every $1,000 invested by such investor and set forth on the signature page hereto. The Standby Shares shall be issued upon close of the IPO regardless of whether the Company exercises the Waiver Option pursuant to Section 4(a) hereof, and any exercise of the Waiver Option shall not reduce the number of Standby Shares that the Company is obligated to issue.
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5. Representations and Warranties of the Company. As of the Closing, the Company represents and warrants that:
(a) The Company has been duly incorporated and is validly existing under the laws of Delaware, with full power and authority to conduct its business as it is currently being conducted and to own its assets; and has secured any authorizations, approvals, permits and orders required by law for the conduct by the Company of its business as it is currently being conducted.
(b) The Series B Shares have been duly authorized and, when issued, delivered and paid for in the manner set forth in this Agreement, will be validly issued, fully paid and nonassessable.
(c) The shares of Common Stock issuable upon conversion of the Series B Shares purchased hereunder (the “Conversion Shares”) will, upon issuance in accordance with the terms of the Certificate of Designation of Series B Convertible Preferred Stock of the Company (“Certificate of Designation”), be duly authorized, validly issued, fully paid and nonassessable.
(d) The Standby Shares have been duly authorized and, upon issuance, will be validly issued, fully paid and nonassessable.
6. Representations and Warranties of the Undersigned. Each of the undersigned, severally and not jointly, hereby represents and warrants to and covenants with the Company that:
(a) General.
(i) The undersigned has all requisite authority (and in the case of an individual, the capacity) to purchase the Series B Shares and Standby Shares, enter into this Agreement and to perform all the obligations required to be performed by the undersigned hereunder, and such purchase will not contravene any law, rule, or regulation binding on the undersigned or any investment guideline or restriction applicable to the undersigned.
(ii) The undersigned is a resident of the state set forth on the signature page hereto and is not acquiring the Securities as a nominee or agent or otherwise for any other person.
(iii) The undersigned will comply with all applicable laws and regulations in effect in any jurisdiction in which the undersigned purchases or sells Securities and obtain any consent, approval or permission required for such purchases or sales under the laws and regulations of any jurisdiction to which the undersigned is subject or in which the undersigned makes such purchases or sales, and the Company shall have no responsibility therefor.
(b) Information Concerning the Company.
(i) The undersigned understands and accepts that the purchase of the Securities involves various risks, including the risks outlined in this Agreement. The undersigned represents that it is able to bear any loss associated with an investment in the Securities.
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(ii) The undersigned confirms that it is not relying on any communication (written or oral) of the Company or any of its affiliates, as investment or tax advice or as a recommendation to purchase the Securities. It is understood that information and explanations related to the terms and conditions of the Securities or otherwise by the Company or any of its affiliates shall not be considered investment or tax advice or a recommendation to purchase the Securities, and that neither the Company nor any of its affiliates is acting or has acted as an advisor to the undersigned in deciding to invest in the Securities. The undersigned acknowledges that neither the Company nor any of its affiliates has made any representation regarding the proper characterization of the Securities for purposes of determining the undersigned’s authority to invest in the Securities.
(iii) The undersigned is familiar with the business and financial condition and operations of the Company. The undersigned has had access to such information concerning the Company and the Securities as it deems necessary to enable it to make an informed investment decision concerning the purchase of the Securities.
(iv) The undersigned understands that, unless the undersigned notifies the Company in writing to the contrary at or before the Closing, each of the undersigned’s representations and warranties contained in this Agreement will be deemed to have been reaffirmed and confirmed as of the Closing, taking into account all information received by the undersigned.
(v) The undersigned understands that no federal or state agency has passed upon the merits or risks of an investment in the Securities or made any finding or determination concerning the fairness or advisability of this investment.
(c) Non-Reliance.
(i) The undersigned represents that it is not relying on (and will not at any time rely on) any communication (written or oral) of the Company, as investment advice or as a recommendation to purchase the Securities, it being understood that information and explanations related to the terms and conditions of the Securities and the other transaction documents, if any, shall not be considered investment advice or a recommendation to purchase the Securities.
(ii) The undersigned confirms that the Company has not (A) given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Securities or (B) made any representation to the undersigned regarding the legality of an investment in the Securities under applicable legal investment or similar laws or regulations. In deciding to purchase the Securities, the undersigned is not relying on the advice or recommendations of the Company and the undersigned has made its own independent decision that the investment in the Securities is suitable and appropriate for the undersigned.
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(d) Status of Undersigned.
(i) The undersigned has such knowledge, skill and experience in business, financial and investment matters that the undersigned is capable of evaluating the merits and risks of an investment in the Securities. With the assistance of the undersigned’s own professional advisors, to the extent that the undersigned has deemed appropriate, the undersigned has made its own legal, tax, accounting, and financial evaluation of the merits and risks of an investment in the Securities and the consequences of this Agreement. The undersigned has considered the suitability of the Securities as an investment in light of its own circumstances and financial condition and the undersigned is able to bear the risks associated with an investment in the Securities, and it is authorized to invest in the Securities.
(ii) The undersigned is an “accredited investor” as defined in Rule 501(a) under the Securities Act. The undersigned agrees to furnish any additional information requested by the Company or any of its affiliates to assure compliance with applicable U.S. federal and state securities laws in connection with the purchase and sale of the Securities.
(e) Restrictions on Transfer or Sale of Securities.
(i) The undersigned is acquiring the Securities solely for the undersigned’s own beneficial account, for investment purposes, and not with a view to, or for resale in connection with, any distribution of the Securities. The undersigned understands that the Securities have not been registered under the Securities Act or any State Securities Laws by reason of specific exemptions under the provisions thereof which depend in part upon the investment intent of the undersigned and of the other representations made by the undersigned in this Agreement. The undersigned understands that the Company is relying upon the representations and agreements contained in this Agreement (and any supplemental information) for the purpose of determining whether this transaction meets the requirements for such exemptions.
(ii) The undersigned understands that the Securities are “restricted securities” under applicable federal securities laws and that the Securities Act and the rules of the U.S. Securities and Exchange Commission (the “Commission”) provide in substance that the undersigned may dispose of the Securities only pursuant to an effective registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act, and the undersigned understands that, subject to Section 10 of this Agreement, the Company has no obligation or intention to register any of the Securities or the offering or sale thereof, or to take action so as to permit offers or sales pursuant to the Securities Act or an exemption from registration thereunder (including pursuant to Rule 144 thereunder). Accordingly, the undersigned understands that under the Commission’s rules, the undersigned may dispose of the Securities only in “private placements” which are exempt from registration under the Securities Act, in which event the transferee will acquire “restricted securities,” subject to the same limitations that apply to the Securities in the hands of the undersigned. Consequently, the undersigned understands that the undersigned must bear the economic risks of the investment in the Securities for an indefinite period of time.
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(iii) The undersigned agrees: (A) that the undersigned will not sell, assign, pledge, give, transfer, or otherwise dispose of the Securities or any interest therein, or make any offer or attempt to do any of the foregoing, unless the transaction is registered under the Securities Act and complies with the requirements of all applicable State Securities Laws, or the transaction is exempt from the registration provisions of the Securities Act and all applicable requirements of State Securities Laws; (B) that the certificates representing the Securities will bear a legend making reference to the foregoing restrictions; and (C) that the Company and its affiliates shall not be required to give effect to any purported transfer of such Securities, except upon compliance with the foregoing restrictions.
(iv) The undersigned acknowledges that neither the Company nor any other person offered to sell the Securities to it by means of any form of general solicitation or advertising, including but not limited to: (A) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio or (B) any seminar or meeting whose attendees were invited by any general solicitation or general advertising.
7. Conditions to Obligations of the Undersigned and the Company. The obligations of each of the undersigned to purchase and pay for the Securities set forth on the respective signature page hereto, and of the Company to sell those Securities, are subject to the satisfaction at or prior to the Closing of the following conditions precedent: the representations and warranties of the Company contained in Section 5 hereof and of the undersigned contained in Section 6 hereof shall be true and correct as of the Closing in all respects with the same effect as though such representations and warranties had been made on and as of the Closing, and the Certificate of Designation has been filed with the Secretary of State of the state of Delaware, substantially in the form attached hereto as Exhibit A.
8. Obligations Irrevocable. The obligations of the undersigned shall be irrevocable.
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9. Legend. The certificates representing the Series B Shares and the Standby Shares sold pursuant to this Agreement will be imprinted with a legend in substantially the following form:
“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR SUCH OTHER APPLICABLE LAWS.”
10. Resale Registration. The Company shall be obligation to file a resale registration statement (the “Resale Registration Statement”) registering for resale the Registerable Securities (as defined below). Such Resale Registration Statement shall be filed with the SEC within 180 days following the closing date of the IPO; provided, however, that in the event the Company’s underwriters in the IPO permit an earlier release on such lockup restrictions, the Company shall file the Resale Registration Statement as promptly as practicable after notification of earlier release on the lockup restrictions. The Company shall use its reasonable best efforts to obtain the effectiveness of the Resale Registration Statement as promptly as practicable following the filing thereof. “Registrable Securities” means (a) any Standby Shares and any Conversion Shares issued or issuable upon conversion of the Series B Shares, and (b) any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event, or any price adjustment as a result of such stock splits, reverse stock splits or similar events with respect to any of the securities referenced in clause (a) above (it being understood that, for purposes of this Agreement, a person shall be deemed to be a holder of Registrable Securities whenever such Person has the right to then acquire or obtain from the Company any Registrable Securities, whether or not such acquisition has actually been effected, and without regard to Beneficial Ownership Limitations set forth in the Certificate of Designation). As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (i) the Commission has declared the Resale Registration Statement covering such securities effective and such securities have been disposed of pursuant to such effective Registration Statement, (ii) such securities are sold under circumstances in which all of the applicable conditions of Rule 144 under the Securities Act are met, and (iii) such securities become eligible for sale pursuant to Rule 144 without volume or manner-of-sale restrictions and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144(c)(1), as set forth in a written opinion letter to such effect, addressed, delivered and reasonably acceptable to the applicable transfer agent and the holders of such securities.
11. Waiver, Amendment. Neither this Agreement nor any provisions hereof shall be modified, changed, discharged or terminated except by an instrument in writing, signed by the party against whom any waiver, change, discharge or termination is sought.
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12. Assignability. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by either the Company or the undersigned without the prior written consent of the other party, and any attempted assignment without such prior written consent shall be void.
13. Waiver of Jury Trial. THE UNDERSIGNED IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
14. Submission to Jurisdiction. With respect to any suit, action, or proceeding relating to any offers, purchases, or sales of the Securities by the undersigned (“Proceedings”), the undersigned irrevocably submits to the jurisdiction of the federal and state courts located in the Borough of Manhattan in New York City, which submission shall be exclusive, unless none of such courts has lawful jurisdiction over such Proceedings.
15. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. All legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). The Company and the undersigned each irrevocably submit to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. The Company and the undersigned hereby irrevocably waive personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agree that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. The Company and the undersigned hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
16. Section and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.
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17. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.
18. Notices. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid to the following addresses (or such other address as either party shall have specified by notice in writing to the other):
| If to the Company: |
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| with a copy to: | ▇▇▇▇▇▇▇▇ & Worcester E-mail: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇; ▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇; ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ |
| If to Purchasers: | As set forth on the respective signature page of each such purchaser. |
19. Binding Effect. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors, and assigns.
20. Survival. All representations, warranties and covenants contained in this Agreement shall survive (i) the acceptance of the subscription by the Company and the Closing, (ii) changes in the transactions, documents and instruments which are not material or which are to the benefit of the undersigned, and (iii) the death or disability of the undersigned.
21. Notification of Changes. The undersigned hereby covenants and agrees to notify the Company upon the occurrence of any event prior to the closing of the purchase of the Securities pursuant to this Agreement which would cause any representation, warranty, or covenant of the undersigned contained in this Agreement to be false or incorrect.
22. Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
[signature page follows]
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IN WITNESS WHEREOF, the undersigned has executed this Agreement as of , 2023.
| PURCHASER (if any individual): | PURCHASER (if an entity): |
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_____________________
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Legal Name of Entity
By_____________________
Name: Title: |
State/Country of Domicile or Formation: ______________________________________
Contact Information for Notices: ______________________________________
Number of Series B Shares to be Purchased: __________
Subscription Amount for Series B Shares: $__________
Allocation of Standby Shares: __________
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The offer to purchase the number of Securities as set forth above is confirmed and accepted by the Company.
| CHROMOCELL THERAPEUTICS CORPORATION | |||
| By: | |||
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ | ||
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EXHIBIT A
Certificate of Designation
(attached)
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