EXHIBIT 4.1
STOCK PURCHASE AGREEMENT
This Agreement is made as of _________________, by and between Hollis-Eden
Pharmaceuticals, Inc., a Delaware corporation with its principal office at 9333
Genesee Avenue, Suite 110, San Diego, California 92121 (the "Company"), and
___________________, a __________ corporation with its principal office at
__________________________________________ (the "Purchaser").
In Consideration of the mutual covenants and agreements contained herein,
the Company and the Purchaser agree as follows:
1. Purchase of Common Stock. Subject to the terms and conditions of this
Agreement, and in reliance on the representations and warranties contained
herein, at the Closing (as hereinafter defined) the Company agrees to sell to
Purchaser and Purchaser agrees to purchase from the Company,
___________________________ (_________) shares of the Company's Common Stock
(the "Shares"). The purchase price per share shall be $_____.
2. Closing Date; Delivery.
2.1 Closing; Closing Date. Subject to the terms of Section 5, the
closing of the sale and purchase of the Shares under Section 1 of this Agreement
(the "Closing") shall be held at 2:00 p.m. (PDT) on January 22, 1999 (the
"Closing Date") at the offices of the Company, or at such other time and place
as the Company and Purchaser may agree.
2.2 Delivery. At the Closing, subject to the terms and conditions
hereof, the Company will deliver to Purchaser a stock certificate, in the names
designated by Purchaser, representing the shares of Common Stock deliverable at
such Closing, dated as of Closing, against payment of the purchase price
therefor by wire transfer, unless other means of payment shall have been agreed
upon by Purchaser and the Company.
3. Representations And Warranties Of The Company. Subject to and except
as disclosed by the Company in the Schedule of Exceptions attached hereto as
Exhibit A, the Company hereby represents and warrants and covenants to Purchaser
as follows:
3.1 Authorization. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement has been taken. The Company has the
requisite corporate power to enter into this Agreement and carry out and perform
its obligations under the terms of this Agreement. At the Closing, the Company
will have the requisite corporate power to sell the shares of Common Stock to be
sold at such Closing. This Agreement has been duly authorized, executed and
delivered by the Company and, upon due execution and delivery by Purchaser, this
Agreement will be a valid and binding obligation of the Company, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally or by equitable
principles.
3.2 No Conflict with Other Instruments. The execution, delivery and
performance of this Agreement will not result in any violation of, be in
conflict with, or constitute a default under, with or without the passage of
time or the giving of notice: (a) any provision of the Company's Certificate of
Incorporation or Bylaws as either shall be in effect; (b) any provision of any
judgment, decree or order to which the Company is a party or by which it is
bound; (c) any material contract, obligation or commitment to which the Company
is a party or by which it is
1.
bound; or (d) any statute, rule or governmental regulation applicable to the
Company.
3.3 Certificate of Incorporation; By-laws. Attached hereto as
Exhibits B and C, respectively, are true, correct and complete copies of the
Certificate of Incorporation and Bylaws of the Company, as in effect on the date
hereof.
3.4 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify would have a material adverse
effect on its business or properties.
3.5 Disclosure Documents. The Company's Form 10-K filed with the
Securities and Exchange Commission for the year ended December 31, 1997, and
Forms 10-Q for the fiscal quarters ended March 31, June 30, and September 30,
1998, did not, when filed with the Securities and Exchange Commission, contain
any untrue statements of material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
in which they were made, not misleading.
3.6 Capitalization.
(a) The authorized capital stock of the Company consists of
30,000,000 shares of Common Stock, of which 8,989,406 shares were issued and
outstanding as of January 19, 1999, and 10,000,000 shares of Preferred Stock,
none of which are outstanding. All such issued and outstanding shares have been
duly authorized and validly issued, and are fully paid and nonassessable and
have been issued in compliance with all applicable federal and state securities
laws.
(b) Except as described on Exhibit A, after giving effect to
the sale of stock hereunder, there are no preemptive or other outstanding
rights, options, warrants, conversion rights or agreements for the purchase or
acquisition from the Company of any shares of its capital stock or other
securities of the Company.
3.7 Subsidiaries. The Company does not presently own or control,
directly or indirectly, and has no stock or other interest as owner or principal
in, any other corporation or partnership, joint venture, association or other
business venture or entity.
3.8 Valid Issuance of Shares. The shares of Common Stock which will
be purchased by Purchaser hereunder, when issued, sold and delivered in
accordance with the terms hereof for the consideration expressed herein, will be
duly and validly authorized and issued, fully paid and nonassessable and, based
in part upon the representations of Purchaser in Section 4.3 of this Agreement,
will be issued in compliance with all applicable federal and state securities
laws.
3.9 Litigation, etc. There is no action, suit or proceeding pending
nor, to the best of its knowledge, any action, suit, proceeding or investigation
currently threatened against the Company, nor, to the best of its knowledge, is
there any basis therefor, which might result, either individually or in the
aggregate, in any material adverse change in the assets, condition,
2.
affairs or prospects of the Company, financial or otherwise. The foregoing
includes, without limitation, any action, suit, proceeding or investigation,
pending or threatened, that questions the validity of this Agreement or the
right of the Company to enter into the Agreement.
3.10 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, local or provincial governmental authority on
the part of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement, except for notices required or
permitted to be filed with certain state and federal securities commissions,
which notices will be filed on a timely basis.
3.11 Brokers Fee. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based on arrangements made by the
Company.
3.12 No Material Change. Since September 30, 1998, (i) the Company
has not incurred any material liabilities or obligations, indirect, or
contingent, or entered into any material verbal or written agreement or other
transaction which is not in the ordinary course of business or which could
result in a material adverse effect on the Company; (ii) the Company has not
sustained any material loss or interference with its business or properties from
fire, flood, windstorm, accident or other calamity, whether or not covered by
insurance; (iii) the Company has not paid or declared any dividends or other
distributions with respect to its capital stock and the Company is not in
material default in the payment of principal or interest on any outstanding debt
obligations; (iv) there has not been any change in the capital stock other than
the sale of the Shares hereunder, shares issued pursuant to employee equity
incentive plans or purchase plans approved by the Company's Board of Directors
or indebtedness material to the Company (other than in the ordinary course of
business); and (v) there has not been any material adverse change in the
condition (financial or otherwise), business, properties or results of
operations of the Company.
3.13 Intellectual Property. The Company has sufficient trademarks,
trade names, patent rights, copyrights, licenses, and governmental
authorizations to conduct its businesses as now conducted; and the Company has
no knowledge of any material infringement by it of trademark, trade name rights,
patent rights, copyrights, licenses, trade secrets or other similar rights of
others, and no claim has been made against the Company regarding trademark,
trade name, patent, copyright, license, trade secrecy or other infringement
which could have a material adverse effect on the condition (financial or
otherwise), business or results of operations of the Company.
3.14 Compliance. The Company has not been advised, and has no reason
to believe, that it is not conducting its business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local, state
and federal environmental laws and regulations; except where failure to be so in
compliance would not materially adversely affect the condition (financial or
otherwise), business or results of operations of the Company.
3.15 Investment Company. The Company is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
3.16 SEC Documents; Financial Statements . The Company has filed in
a timely manner all documents that it was required to file with the SEC under
Sections 13, 14(a) and 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), during the
3.
twelve (12) months preceding the date of this Agreement. As of their respective
filing dates (or, if amended prior to the date of this Agreement, when amended),
all documents filed by the Company with the SEC (the "SEC Documents") complied
in all material respects with the requirements of the Exchange Act. None of the
SEC Documents as of their respective dates contained any untrue statement of
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the SEC Documents (the "Financial Statements") comply as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto. The
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied and fairly present the financial
position of the Company at the dates thereof and the results of its operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal, recurring adjustments). The Company is eligible to use
the Registration Statement on Form S-3 for resale of the Shares.
4. Representations And Warranties Of Purchaser.
Purchaser hereby represents and warrants to the Company as follows:
4.1 Legal Power. Purchaser has the requisite legal power to enter
into this Agreement, to carry out and perform its obligations under the terms of
this Agreement and, at the Closing, will have the requisite legal power to
purchase the Shares.
4.2 Due Execution. This Agreement has been duly authorized,
executed and delivered by Purchaser, and, upon due execution and delivery by the
Company, this Agreement will be a valid and binding obligation of Purchaser,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
or by equitable principles.
4.3 Investment Representations. In connection with the purchase of
the Shares, the Purchaser makes the following representations:
(a) 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
representing 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;
(b) the Purchaser is acquiring the Shares in the ordinary
course of its business and for its own account for investment only (as defined
for purposes of the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the
regulations thereunder) and with no present intention of distributing any such
Shares or any arrangements or understanding with any other persons regarding the
distribution of such Shares;
(c) 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 of 1933, as
4.
amended, (the "Act") and the rules and regulations of the Securities and
Exchange Commission (the "SEC");
(d) the Purchaser has completed or caused to be completed the
Registration Statement Questionnaire and the Stock Certificate Questionnaire,
both attached hereto as Appendix I, for use in preparation of the Registration
Statement and the answers thereto are true and correct to the best knowledge of
the Purchaser as of the date hereof and will be true and correct as of the
effective date of the Registration Statement;
(e) the Purchaser has, in connection with its decision to
purchase the Shares, relied solely upon the representations and warranties of
the Company contained herein;
(f) the Purchaser is an "accredited investor" within the
meaning of Rule 501 of Regulation D promulgated under the Act;
(g) the Purchaser understands that (i) the shares of Common
Stock to be purchased under this Agreement have not been registered under the
Act by reason of a specific exemption therefrom, that such securities must be
held by Purchaser, and that Purchaser must, therefore, bear the economic risk of
such investment, until a subsequent disposition thereof is registered under the
Act or is exempt from such registration; (ii) each certificate representing such
shares will be endorsed with the following legends:
(1) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES
MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH
THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
(2) THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO THE TERMS AND CONDITIONS, INCLUDING RESTRICTIONS ON
TRANSFERABILITY, OF THAT CERTAIN STOCK PURCHASE AGREEMENT, DATED JANUARY 22,
1999. A COPY OF SUCH STOCK PURCHASE AGREEMENT WILL BE FURNISHED TO THE RECORD
HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO HOLLIS-EDEN
PHARMACEUTICALS, INC. AT ITS PRINCIPAL PLACE OF BUSINESS."
(3) Any legend required to be placed thereon by the
Company's Bylaws (and shown on Exhibit C hereto or as may hereafter be added to
such Bylaws with respect to all Common Stock of the Company) or under applicable
state securities laws; and (iii) the Company will instruct any transfer agent
not to register the transfer of the shares of Common Stock purchased pursuant to
this Agreement (or any portion thereof) unless the conditions specified in the
foregoing legends are satisfied, until such time as a transfer is made, pursuant
to the terms of this Agreement, and in compliance with Rule 144 or pursuant to a
registration statement or, if the opinion of counsel referred to above is to the
further effect that such legend is not required in order to establish compliance
with any provisions of the Act or this Agreement; and
5.
(h) the Purchaser has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the shares of Common Stock purchased hereunder.
4.4 No Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based on arrangements made by
Purchaser.
5. Conditions To Closing.
5.1 Conditions to Obligations of Purchaser at Closing. Purchaser's
obligation to purchase the Shares at the Closing is subject to the fulfillment
to Purchaser's satisfaction, on or prior to the Closing, of all of the following
conditions, any of which may be waived by Purchaser:
(a) Representations and Warranties True; Performance of
Obligations. The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects on the Closing Date
with the same force and effect as if they had been made on and as of said date
and the Company shall have performed and complied with all obligations and
conditions herein required to be performed or complied with by it on or prior to
the Closing and a certificate duly executed by an officer of the Company, to the
effect of the foregoing, shall be delivered to the Purchaser.
(b) Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to counsel to the Purchaser, and counsel to
the Purchaser shall have received all such counterpart originals or certified or
other copies of such documents as they may reasonably request.
(c) Qualifications, Legal Investment. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with the
lawful sale and issuance of the Shares shall have been duly obtained and shall
be effective on and as of the Closing. No stop order or other order enjoining
the sale of the Shares such Closing shall have been issued and no proceedings
for such purpose shall be pending or, to the knowledge of the Company,
threatened by the Securities and Exchange Commission, or any commissioner of
corporations or similar officer of any state having jurisdiction over this
transaction. At the time of the Closing, the sale and issuance of the Shares
shall be legally permitted by all laws and regulations to which the Purchaser
and the Company are subject.
5.2 Conditions to Obligations of the Company at Closing. The
Company's obligation to issue and sell the Shares to be sold at the Closing is
subject to the fulfillment to the Company's satisfaction, on or prior to the
Closing of the following conditions, any of which may be waived by the Company:
(a) Representations and Warranties True. The representations
and warranties made by the Purchaser in Section 4 hereof shall be true and
correct in all material respects at the date of the Closing with the same force
and effect as if they had been made on and as of the date hereof.
6.
(b) Performance of Obligations. Purchaser shall have
performed and complied with all agreements and conditions herein required to be
performed or complied with by it on or before the Closing and a Certificate duly
executed by an officer of the Purchaser, to the effect of the foregoing, shall
be delivered to the Company.
(c) Qualifications, Legal Investment. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with the
lawful sale and issuance of the Shares shall have been duly obtained and shall
be effective on and as of the Closing. No stop order or other order enjoining
the sale of such shares shall have been issued and no proceedings for such
purpose shall be pending or, to the knowledge of the Company, threatened by the
SEC, or any commissioner of corporations or similar officer of any state having
jurisdiction over this transaction. At the time of the Closing the sale and
issuance of the Shares shall be legally permitted by all laws and regulations to
which the Purchaser and the Company are subject.
6. Registration of the Shares.
6.1 Within 30 days following the Closing, the Company will prepare
and file with the SEC a registration statement on Form S-3 (or such other form
that the Company may be eligible to use) relating to the sale of the Shares by
Purchaser from time to time (the "Registration Statement"), and use its best
efforts, subject to receipt of necessary information from Purchaser, to cause
such Registration Statement to be declared effective by the SEC as soon as
practicable after the SEC has completed its review process. The Company agrees
to use its best efforts to keep such Registration Statement effective until the
date on which the Shares may be resold by Purchaser without registration by
reason of Rule 144(k) under the Act of 1933 or any other rule of similar effect.
Notwithstanding the foregoing, following the effectiveness of the Registration
Statement, the Company may, at any time, suspend the effectiveness of the
Registration Statement for up to no longer than 30 days, as appropriate (a
"Suspension Period"), by giving notice to the Purchaser, if the Company shall
have determined that the Company may be required to disclose any material
corporate development. The Company will use its best efforts to minimize the
length of any Suspension Period. Notwithstanding the foregoing, no more than two
Suspension Periods may occur in any twelve (12) month period. Purchaser agrees
that, upon receipt of any notice from the Company of a Suspension Period,
Purchaser will not sell any Shares pursuant to the Registration Statement until
(i) Purchaser is advised in writing by the Company that the use of the
applicable prospectus may be resumed, (ii) Purchaser has received copies of any
additional or supplemental or amended prospectus, if applicable, and (iii)
Purchaser has received copies of any additional or supplemental filings which
are incorporated or deemed to be incorporated by reference in such prospectus.
Purchaser further covenants to notify the Company promptly of the sale of all of
its Shares.
6.2 Indemnification. For the purpose of this Section 6.2:
(i) the term "Purchaser/Affiliate" shall include
Purchaser and any affiliate of Purchaser;
(ii) the term "Registration Statement" shall include any
final prospectus, exhibit, supplement or amendment included in or relating to
the Registration Statement referred to in Section 6.1.
(a) The Company agrees to indemnify and hold harmless
Purchaser and each person, if any, who controls Purchaser within the meaning of
the Securities Act, against any losses, claims, damages, liabilities or expenses
to which Purchaser or such controlling person
7.
may become subject, under the Securities Act, the Exchange Act, or any other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Company), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, including the
prospectus, financial statements and schedules, and all other documents filed as
a part thereof or incorporated by reference therein, as amended at the time of
effectiveness of the Registration Statement, including any information deemed to
be a part thereof as of the time of effectiveness pursuant to paragraph (b) of
Rule 430A, or pursuant to Rule 434, of the Rules and Regulations, or the
prospectus, in the form first filed with the Commission pursuant to Rule 424(b)
of the Regulations, or filed as part of the Registration Statement at the time
of effectiveness if no Rule 424(b) filing is required (the "Prospectus"), or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state in any of them a material fact required to be
stated therein or necessary to make the statements in any of them not
misleading, and will reimburse Purchaser and each such controlling person for
any legal and other expenses as such expenses are reasonably incurred by
Purchaser or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; PROVIDED, HOWEVER, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company (i) by or on behalf of Purchaser expressly for use therein or (ii) the
failure of Purchaser to comply with the covenants and agreements contained in
this Agreement respecting the sale of the Shares, the inaccuracy of any
representations made by Purchaser herein 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. In addition to its
other obligations under this paragraph (a), the Company agrees that, as an
interim measure during the pendency of any claim, action, investigation, inquiry
or other proceeding arising out of or based upon any statement or omission, or
any alleged statement or omission, or any inaccuracy in the representations and
warranties of the Company in this Agreement or failure to perform its
obligations in this Agreement, all as described in this paragraph (a), it will
reimburse Purchaser on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
Company's obligation, to reimburse Purchaser for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, Purchaser shall promptly
return it to the Company together with interest, compounded daily, determined on
the basis of the prime rate (or other commercial lending rate for borrowers of
the highest credit standing) announced from time to time by Bank of America
National Trust and Savings Association, San Francisco, California (the "Prime
Rate"). Any such interim reimbursement payments which are not made to a
Purchaser within 30 days of a request for reimbursement shall bear interest at
the Prime Rate from the date of such request. This indemnity agreement will be
in addition to any liability which the Company may otherwise have.
(b) Purchaser will indemnify and hold harmless the Company,
each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of the Securities Act, against any losses, claims, damages, liabilities or
expenses to which the Company, each of its directors, each of its officers who
signed the Registration Statement or controlling person may become subject,
under the Securities Act, the Exchange Act, or any other federal or state
statutory law or regulation, or at
8.
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of Purchaser) insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof
as contemplated below) arise out of or are based upon any untrue or alleged
untrue statement of any material fact contained in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, the Prospectus, or any amendment or supplement
thereto, in reliance upon and in conformity with written information furnished
to the Company by or on behalf of any Purchaser expressly for use therein, and
will reimburse the Company, each of its directors, each of its officers who
signed the Registration Statement or controlling person for any legal and other
expense reasonably incurred by the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action. In addition to its other
obligations under this paragraph (b), Purchaser agrees that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding arising out of or based upon any failure to comply, statement
or omission, or any alleged failure to comply, statement or omission, described
in this paragraph (b) which relates to written information furnished to the
Company by or on behalf of any purchaser, it will reimburse the Company (and, to
the extent applicable, each officer, director or controlling person) on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of Purchaser's
obligations to reimburse the Company (and, to the extent applicable, each
officer, director or controlling person) for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim reimbursement
payment is so held to have been improper, the Company (and, to the extent
applicable, each officer, director or controlling person) shall promptly return
it to Purchaser together with interest, compounded daily, determined on the
basis of the Prime Rate. Any such interim reimbursement payments which are not
made to the Company within 30 days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request. This indemnity
agreement will be in addition to any liability which Purchaser may otherwise
have.
(c) Promptly after receipt by an indemnified party under this
Section 6.2 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 6.2 notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party for
contribution or otherwise than under the indemnity agreement contained in this
Section 6.2 or to the extent it is not prejudiced as a proximate result of such
failure. In case any such action is brought against any indemnified party and
such indemnified party seeks or intends to seek indemnity from an indemnifying
party, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be a conflict
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action
9.
on behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 6.2 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel, approved by such
indemnifying party in the case of paragraph (a), representing the indemnified
parties who are parties to such action) or (ii) the indemnified party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of action, in each of which cases the fees and expenses of counsel
shall be at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 6.2
is required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a), (b) or (c) of this Section 6.2 in respect to any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any losses, claims, damages, liabilities or expenses referred to
herein (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and Purchaser from the placement of Common Stock or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but the relative fault of the Company
and Purchaser in connection with the statements or omissions or inaccuracies in
the representations and warranties in this Agreement which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company on the one hand and Purchaser on the other shall be deemed to be in the
same proportion as the amount paid by Purchaser to the Company pursuant to this
Agreement for the Shares purchased by Purchaser that were sold pursuant to the
Registration Statement bears to the difference (the "Difference") between the
amount Purchaser paid for the Shares that were sold pursuant to the Registration
Statement and the amount received by Purchaser from such sale. The relative
fault of the Company and Purchaser shall be determined by reference to, among
other things, whether the untrue or alleged statement of a material fact or the
omission or alleged omission to state a material fact or the inaccurate or the
alleged inaccurate representation and/or warranty relates to information
supplied by the Company or by Purchaser and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in paragraph (c) of this
Section 6.2 any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in paragraph (c) of this Section 6.2 with respect to notice
of commencement of any action shall apply if a claim for contribution is to be
made under this paragraph (d); PROVIDED, HOWEVER, that no additional notice
shall be required with respect to any action for which notice has been give
under paragraph (c) for purposes of indemnification. The Company and Purchaser
agree that it would not be just and equitable if contribution pursuant to this
Section 6.2 were determined solely by pro rata allocation (even if Purchaser
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this paragraph. Notwithstanding the provisions of this Section 6.2, the
Purchaser shall not be required to contribute any amount in excess of the amount
by which the Difference exceeds the amount of any damages that Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of
10.
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(e) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in paragraphs (a)
and (b) of this Section 6.2, including the amounts of any requested
reimbursement payments and the method of determining such amounts, shall be
settled by arbitration conducted under the provisions of the Judicial
Arbitration and Mediation Service (JAMS) and shall be held in San Diego,
California. Any such arbitration must be commenced by service of a written
demand for arbitration or a written notice of intention to arbitrate, therein
electing the arbitration tribunal. In the event the party demanding arbitration
does not make such designation of any arbitration tribunal in such demand or
notice, then the party responding to said demand or notice is authorized to do
so. Such an arbitration would be limited to the operation of the interim
reimbursement provisions contained in paragraphs (a) and (b) of this Section 6.2
and would not resolve the ultimate propriety or enforceability of the obligation
to reimburse expenses which is created by the provisions of such paragraphs (a)
and (b).
7. Miscellaneous.
7.1 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
each Purchaser herein and in the certificates for the securities delivered
pursuant hereto shall survive the execution of this Agreement, the delivery to
the Purchasers of the Shares being purchased and the payment therefor and shall
expire on the second anniversary of the date hereof.
7.2 Governing Law. This Agreement shall be governed by and
interpreted in accordance with the substantive laws of the State of California
and the United States of America, without regard to choice of law rules.
7.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, and permitted assigns of the parties hereto.
7.4 Entire Agreement. This Agreement and the Exhibits hereto, and
the other documents delivered pursuant hereto, constitutes the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and no party shall be liable or bound to any other party in any manner by any
representations, warranties, covenants, or agreements except as specifically set
forth herein or therein. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto and their
respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
7.5 Severability. Whenever possible, each provision of the
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without
11.
invalidating the remainder of the Agreement. In the event of such invalidity,
the parties shall seek to agree on an alternative enforceable provision that
preserves the original purpose of this Agreement.
7.6 Amendment and Waiver. Except as otherwise provided herein, any
term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance, either
retroactively or prospectively, and either for a specified period of time or
indefinitely), with the written consent of the Company and Purchaser.
7.7 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
and received (a) upon personal delivery, (b) on the fifth day following mailing
by registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company and Purchaser at their respective addresses first above
written, (c) upon transmission of telegram or facsimile (with telephonic
notice), or (d) upon confirmed delivery by overnight commercial courier service.
7.8 Fees and Expenses. The Company and the Purchaser shall bear
their own expenses and legal fees incurred on their behalf with respect to this
Agreement and the transactions contemplated hereby.
7.9 Titles and Subtitles. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
7.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
7.11 NASDAQ. The Company will promptly file a Notification of
Listing of Additional Shares with Nasdaq covering the Shares. The Company agrees
to take all action reasonable and necessary to maintain the listing of its
Common Stock on Nasdaq.
12.
IN WITNESS WHEREOF, the foregoing Stock Purchase Agreement is hereby
executed as of the date first above written.
Hollis-Eden Pharmaceuticals, Inc.
By:_______________________________
Name:_____________________________
Title:____________________________
___________________________
By:_______________________________
Name:_____________________________
Title:____________________________
13.
Appendix I
HOLLIS-EDEN PHARMACEUTICALS, INC.
STOCK CERTIFICATE QUESTIONNAIRE
In connection with the 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 response to to item 1 above:
Appendix I
HOLLIS-EDEN PHARMACEUTICALS, INC.
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please
provide us with the following information:
1. Pursuant to the "Selling Shareholder" section of the Registration
Statement, please state your or your organization's name exactly as it
should appear in the Registration Statement:
2. Please provide the number of shares that you or your organization will own
immediately after Closing, including those Shares purchased by you or your
organization pursuant to this Purchase Agreement and those shares purchased
by you or your organization through other transactions:
3. Have you or your organization had any position, office or other material
relationship within the past three years with the Company or its affiliates
other than as disclosed in the Prospectus included in the Registration
Statement?
_______ Yes ________ No
If yes, please indicate the nature of any such relationships below:
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
EXHIBIT A
SCHEDULE OF EXCEPTIONS
This Schedule of Exceptions is made and given pursuant to Section 3 of the
Hollis-Eden Pharmaceuticals, Inc. Common Stock Agreement dated as of January 25,
1999 (the "Agreement"). The section numbers in this Schedule of Exceptions
correspond to the section numbers in the Agreement; however, any information
disclosed herein under any section number shall be deemed to be disclosed and
incorporated into any other section number under the Agreement where such
disclosure would be appropriate. Any terms defined in the Agreement shall have
the same meaning when used in this Schedule of Exceptions as when used in the
Agreement unless the context otherwise requires.
3.6(b). The following warrants and options are outstanding as of January 19,
1999:
Number of Exercise Price
Issue Date Shares Expiration Date
- ------------------------------------------------------------------------------------------------------------------------
A warrant 3/6/1996 613,688 $ 11.02 1/7/2002
- ------------------------------------------------------------------------------------------------------------------------
393,250 $ 11.02 2/8/2001
- ------------------------------------------------------------------------------------------------------------------------
B warrant 2/10/1995 37,736 $ 15.90 2/10/2000
- ------------------------------------------------------------------------------------------------------------------------
Fair market 5 years after
Royalty option 8/25/1994 169,811 value of stock milestone
on milestone date
- ------------------------------------------------------------------------------------------------------------------------
Placement Agent I 5/2/1996 1,000 $ 2.475 5/1/2003
- ------------------------------------------------------------------------------------------------------------------------
Placement Agent II 5/2/1997 452,830 $ 2.475 5/1/2004
- ------------------------------------------------------------------------------------------------------------------------
IAC Represent. 5/1995 44,790 units* $ 11.00 5/15/2000
- ------------------------------------------------------------------------------------------------------------------------
44,790 units* $ 9.00
- ------------------------------------------------------------------------------------------------------------------------
IAC Represent. 5/1995 14,741 $ 6.025 5/15/2000
- ------------------------------------------------------------------------------------------------------------------------
14,741 $ 9.00
- ------------------------------------------------------------------------------------------------------------------------
IAC Mgmt. 4/1994 152,000 $ 10.00 5/15/2000
- ------------------------------------------------------------------------------------------------------------------------
152,000 $ 9.00
- ------------------------------------------------------------------------------------------------------------------------
IIRG 2/1998 150,000 $ 14.75 2/4/99
- ------------------------------------------------------------------------------------------------------------------------
1998 Private 5/6/1998 1,437,475 $ 17.00 5/6/2001
Placement
- ------------------------------------------------------------------------------------------------------------------------
Non Plan Options 1995-1996 499,717 $ 2.25-7.95 2000 to 2003
- ------------------------------------------------------------------------------------------------------------------------
Non Plan Options 2/6/1997 2,400,000 $ 5.00 2008 to 2013
- ------------------------------------------------------------------------------------------------------------------------
________________________________________________________________________________________________________________________
1997 Plan Options 1997-1998 758,800 $6.75-16.75 2007 to 2008
- ------------------------------------------------------------------------------------------------------------------------
* Units consist of 1 share of Common Stock and 1 Common Stock purchase warrant
with an exercise price of $9.00 per share
3.12(iii). In connection with the voluntary conversion by the holders thereof
of an aggregate of 4,000 shares of Series A Preferred Stock into an aggregate of
337,230 shares of Common Stock in January 1999, the Company paid to such holders
an additional 8,897 shares of Common Stock, representing the pro rata portion of
the 5% dividend accumulated with respect to the Series A Preferred Stock as of
the dates of the respective conversions.
17.
Schedule of Purchasers
- -------------------------------------------------------------------------------------------------
Name Purchase Number of
Price Shares
- -------------------------------------------------------------------------------------------------
Garo H. Armen $18.00 11,111
- -------------------------------------------------------------------------------------------------
Armen Partners L.P. $18.00 44,444
- -------------------------------------------------------------------------------------------------
Robert E. Petersen and Margaret M. Petersen as Trustees $18.50 648,649
of the R.E. & M. Petersen Living Trust Dated 1/17/83
- -------------------------------------------------------------------------------------------------
Banca Del Gottardo $18.50 108,108
- -------------------------------------------------------------------------------------------------
Clipperbay & Co. $18.00 555,556
- -------------------------------------------------------------------------------------------------