Exhibit 10.63

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of December 4, 2018,
by and between VBI Vaccines Inc., a British Columbia corporation (the
“Company”), and Brii Biosciences Limited, an exempted company organized under
the laws of the Cayman Islands (“Investor”).

 

PREAMBLE

 

A. Contemporaneously with the execution and delivery of this Agreement, the
Company and the Investor are entering into that certain Collaboration and
License Agreement, dated as of the date hereof (the “License Agreement”),
relating to, among other things, the development and commercialization by the
Company of the Company’s therapeutic vaccine product; and

 

B. The Investor wishes to purchase, and the Company wishes to sell, upon the
terms and conditions stated in this Agreement, 2,295,082 Common Shares (the
“Shares”).

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Company and the
Investor agree as follows:

 

ARTICLE 1

DEFINITIONS

 

In addition to the terms defined elsewhere in this Agreement, the following
terms have the meanings indicated:

 

“Affiliate” means, with respect to a Person, any Person that controls, is
controlled by or is under common control with such first Person. For purposes of
this definition only, “control” means (a) to possess, directly or indirectly,
the power to direct the management or policies of a Person, whether through
ownership of voting securities, by contract relating to voting rights or
corporate governance or otherwise, or (b) to own, directly or indirectly, fifty
percent (50%) or more of the outstanding securities or other ownership interest
of such Person. For the purposes of this Agreement, neither Party shall be
considered an Affiliate of the other, and the Affiliates of each Party shall not
be considered Affiliates of the other Party or of any of such other Party’s
Affiliates.

 

“Agreement” has the meaning set forth in the Preamble.

 

“Business Day” means any day (other than a Saturday, Sunday or a legal holiday)
on which banks are open for general business in New York, New York.

 

“Closing” means the closing of the purchase and sale of the Shares pursuant to
Section 2.1.

 

“Closing Date” means the date and time of the Closing which shall take place as
set forth in Section 2.1, on the date hereof, simultaneously with the execution
of this Agreement.

 

“Common Shares” means the common shares of the Company, no par value per share.

 

“Company” has the meaning set forth in the Preamble.

 

“Company Intellectual Property” has the meaning set forth in Section 3.1(h).

 

   

 

 

“Company U.S. Counsel” means Haynes and Boone, LLP, U.S. counsel to the Company.

 

“Competitor” means any Person that, during the Term (as defined in the License
Agreement), commercializes or develops a product which competes directly or
indirectly with a Licensed Product (as such term is defined in the License
Agreement).

 

“Convertible Securities” means any share or securities (other than Options)
convertible into or exercisable or exchangeable for Common Shares.

 

“Disclosure Materials” has the meaning set forth in Section 3.1(g).

 

“Equity Securities” means any all Common Shares and any securities of the
Company convertible into, or exchangeable or exercisable for, such shares, and
options, warrants or other rights to acquire such shares.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“GAAP” has the meaning set forth in Section 3.1(g).

 

“Indemnified Party” has the meaning set forth in Section 5.2(a).

 

“Indemnifying Party” has the meaning set forth in Section 5.2(a).

 

“Intellectual Property” means patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade dress, trade secrets,
inventions and discoveries and invention disclosures whether or not patented,
copyrights in both published and unpublished works, including without limitation
all compilations, data bases and computer programs, materials and other
documentation, licenses, internet domain names and other intellectual property
rights and similar rights.

 

“Investor” has the meaning set forth in the Preamble.

 

“knowledge” of the Company means with respect to any statement made to the
knowledge of the Company, that the statement is based upon the actual knowledge,
after reasonable due inquiry, of any executive officer of the Company as of the
date of this Agreement.

 

“License Agreement” has the meaning set forth in the Preamble.

 

“Lien” means any lien, charge, claim, security interest, encumbrance, right of
first refusal or other restriction.

 

“Losses” means any and all losses, claims, damages, liabilities, settlement
costs and expenses, including, without limitation, reasonable attorneys’ fees.

 

“Material Adverse Effect” means (i) a material adverse effect on the results of
operations, assets, business or financial condition of the Company and the
Subsidiaries taken as a whole on a consolidated basis or (ii) a material and
adverse effect on the legality, validity or enforceability of this Agreement,
provided, that none of the following alone shall be deemed, in and of itself, to
constitute a Material Adverse Effect: (x) a change in the market price or
trading volume of the Common Shares, (y) changes in general economic conditions
or changes affecting the industry in which the Company operates generally (as
opposed to Company-specific changes) so long as such changes do not have a
disproportionate effect on the Company and the Subsidiaries taken as a whole or
(z) effects resulting from or relating to the announcement or disclosure of the
sale of the Shares or other transactions contemplated by, or being taken in
connection with, this Agreement.

 

 2 

 

 

“Options” means any outstanding rights, warrants or options to subscribe for or
purchase Common Shares or Convertible Securities.

 

“Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, a
government or any department or agency thereof and any other legal entity.

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, a partial proceeding, such as a deposition),
whether commenced or threatened in writing.

 

“Purchase Price” means Seven Million Dollars ($7,000,000).

 

“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act,
as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC having substantially the same effect as such Rule.

 

“SEC” means the United States Securities and Exchange Commission.

 

“SEC Reports” has the meaning set forth in Section 3.1(g).

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Shares” has the meaning set forth in the Preamble.

 

“Short Sales” means all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act and all types of direct and indirect stock
pledges, forward sale contracts, options, puts, calls, swaps, derivatives and
similar arrangements.

 

“Subsidiary” means any entity in which the Company, directly or indirectly, owns
capital stock or holds an equity or similar interest.

 

“Trading Day” means (i) a day on which the Common Shares are traded on a Trading
Market (other than the OTCQB or OTCQX), or (ii) if the Common Shares are not
listed or quoted on a Trading Market (other than the OTCQB or OTCQX), a day on
which the Common Shares are traded in the over-the-counter market, as reported
by the OTCQB or OTCQX, or (iii) if the Common Shares are not listed or quoted on
any Trading Market, a day on which the Common Shares are quoted in the
over-the-counter market as reported in the “Pink Sheets” published by OTC
Markets Group, Inc. (or a similar organization or agency succeeding to its
functions of reporting prices); provided, that in the event that the Common
Shares are not listed or quoted as set forth in (i), (ii) and (iii) hereof, then
a Trading Day shall mean a Business Day.

 

“Trading Market” means whichever of the New York Stock Exchange, the NYSE
American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq
Capital Market, the OTCQB or OTCQX on which the Common Shares are listed or
quoted for trading on the date in question.

 

“Transaction” has the meaning set forth in Section 3.2(h).

 

 3 

 

 

“Transaction Documents” means this Agreement and the License Agreement and the
schedules and exhibits referred to herein.

 

“Transfer Agent” means Computershare, or any successor transfer agent for the
Company.

 

ARTICLE 2

PURCHASE AND SALE

 

2.1 Closing. Subject to the terms and conditions set forth in this Agreement, at
the Closing, the Company shall issue and sell to the Investor, and the Investor
shall purchase from the Company, the Shares for the Purchase Price. The date and
time of the Closing shall be simultaneously with the execution of this Agreement
at the offices of Company U.S. Counsel or such other location as the parties
shall mutually agree.

 

2.2 Closing Deliveries.

 

(a) At the Closing, the Company shall deliver or cause to be delivered to the
Investor a copy of the Company’s irrevocable instructions to the Transfer Agent
instructing the Transfer Agent to register the Shares, free and clear of all
restrictive and other legends (except for a customary legend to the effect that
the Shares have not been registered under the Securities Act), in book-entry
form in the name of the Investor.

 

(b) At the Closing, the Investor shall deliver or cause to be delivered to the
Company the Purchase Price in United States dollars by wire transfer to an
account designated in writing to the Investor by the Company for such purpose.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of the Company. The Company hereby represents
and warrants to the Investor that, except as set forth in the SEC Reports or in
the schedules delivered concurrently herewith:

 

(a) Organization and Qualification. The Company is an entity duly organized,
validly existing and in good standing under the laws of British Columbia,
Canada, with the requisite legal authority to own and use its properties and
assets and to carry on its business as currently conducted. Each Subsidiary is
an entity duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or formation. Neither the Company nor
any Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, formation, bylaws or other
organizational or charter documents. The Company and each Subsidiary is duly
qualified to do business and is in good standing as a foreign corporation or
other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.

 

(b) Subsidiaries. The Company owns or controls, directly or indirectly, all of
the capital stock or comparable equity interests of each Subsidiary free and
clear of any Lien except as described in Section 3.1(b), and all issued and
outstanding shares of capital stock or comparable equity interest of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights; and the Company has no Subsidiaries other than
the corporations, partnerships, limited liability partnerships, limited
liability companies, associations or other entities set forth on Schedule I.

 

 4 

 

 

(c) Authorization; Enforcement. The Company has the requisite corporate
authority to enter into and to consummate the transactions contemplated by this
Agreement and each of the other Transaction Documents to which it is a party and
otherwise to carry out its obligations hereunder and thereunder including the
issuance and sale of the Shares. The execution and delivery by the Company of
this Agreement and each of the other Transaction Documents to which it is party
and the consummation by it of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of the
Company and no further consent or action is required by the Company, its Board
of Directors or its stockholders. Each of the Transaction Documents to which to
Company is party to has been duly executed by the Company and is the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally, and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.

 

(d) No Conflicts. The execution, delivery and performance by the Company of this
Agreement and the other Transaction Documents it is party to and the
consummation by the Company of the transactions contemplated hereby and thereby
do not, and will not, (i) conflict with or violate any provision of the
Company’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, (ii) in any material respect, conflict
with, or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company debt or otherwise) or other understanding to which the
Company is a party or by which any property or asset of the Company is bound, or
affected, or (iii) in any material respect, result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Company is subject (including,
assuming the accuracy of the representations and warranties of the Investor set
forth in Section 3.2 hereof, federal, state and provincial securities laws and
regulations and the rules and regulations of any self-regulatory organization to
which the Company or its securities are subject, including all applicable
Trading Markets), or by which any property or asset of the Company is bound or
affected.

 

(e) The Shares. The Shares are duly authorized and, when issued and paid for in
accordance with this Agreement, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens (other than restrictions on transfer
set forth in this Agreement or imposed by applicable securities laws) and will
not be subject to preemptive or similar rights of stockholders (other than those
imposed by the Investor).

 

(f) Capitalization. The aggregate number of shares and type of all authorized,
issued and outstanding classes of capital stock, Options and other securities of
the Company (whether or not presently convertible into or exercisable or
exchangeable for shares of capital stock of the Company) is set forth on
Schedule 3.1(f). All outstanding shares of capital stock are duly authorized,
validly issued, fully paid and nonassessable and have been issued in compliance
in all material respects with all applicable securities laws. Except as set
forth on Schedule 3.1(f), the Company does not have outstanding any Options,
script rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, nor has it entered into any agreement giving
any Person any right to subscribe for or acquire, any Common Shares, or
securities or rights convertible or exchangeable into Common Shares. Except for
customary adjustments as a result of stock dividends, stock splits, combinations
of shares, reorganizations, recapitalizations, reclassifications or other
similar events, there are no anti-dilution or price adjustment provisions
contained in any security issued by the Company (or in any agreement providing
rights to security holders) and the issuance and sale of the Shares will not
obligate the Company to issue Common Shares or other securities to any Person
(other than the Investor) and will not result in a right of any holder of
securities to adjust the exercise, conversion, exchange or reset price under
such securities.

 

 5 

 

 

(g) SEC Reports; Financial Statements. The Company has filed all reports
required to be filed by it under the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, for the two years preceding the date hereof on a timely
basis or has received a valid extension of such time of filing and has filed any
such SEC Reports prior to the expiration of any such extension. Such reports
required to be filed by the Company under the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof, together with the exhibits thereto and the
documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports” and, together with this Agreement and the schedules
to this Agreement, the “Disclosure Materials”. As of their respective dates (or,
if amended or superseded by a filing prior to the Closing Date, then on the date
of such filing), the SEC Reports filed by the Company complied in all material
respects with the requirements of the Securities Act and the Exchange Act and
the rules and regulations of the SEC promulgated thereunder, and none of the SEC
Reports, when filed (or, if amended or superseded by a filing prior to the date
hereof, then on the date of such filing) by the Company, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the SEC with respect thereto as in effect at the time of filing
(or, if amended or superseded by a filing prior to the Closing Date, then on the
date of such filing). Such financial statements have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements, the notes thereto and except
that unaudited financial statements may not contain all footnotes required by
GAAP or may be condensed or summary statements, and fairly present in all
material respects the consolidated financial position of the Company and the
Subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, year-end audit adjustments. All material agreements to
which the Company or any Subsidiary is a party or to which the property or
assets of the Company or any Subsidiary are subject are included as part of or
identified in the SEC Reports, to the extent such agreements are required to be
included or identified pursuant to the rules and regulations of the SEC.

 

(h) Intellectual Property. Except as described in Schedule 3.1(h), the Company
owns, or has the right pursuant to a valid, written license agreement to use and
exploit, all Intellectual Property used in or necessary for the conduct of the
business of the Company and that is material to the business of the Company as
conducted as of the Closing (the “Company Intellectual Property”). To the
knowledge of the Company, (i) all issued patents and registered trademarks that
are Company Intellectual Property and that are owned by the Company are valid
and enforceable and are currently in compliance with formal legal requirements
(including without limitation, as applicable, payment of filing, examination and
maintenance fees, proofs of working or use, timely post registration filing of
affidavits of use and incontestability and renewal applications), and (ii) there
is no existing infringement or misappropriation by another Person of any of the
Company Intellectual Property. Except as disclosed in the SEC Reports, no claims
have been asserted by a third party in writing (a) alleging that the conduct of
the business of the Company has infringed or misappropriated any Intellectual
Property rights of such third party, or (b) challenging or questioning the
validity or effectiveness of any Intellectual Property right of the Company,
and, to the knowledge of the Company, there is no valid basis for any such
claim. No loss or early expiration of any of the Company’s material Intellectual
Property is pending, or, to the knowledge of the Company, threatened. The
Company has taken reasonable steps in accordance with standard industry
practices to protect its rights in the Company Intellectual Property and at all
times has maintained the confidentiality of all information used in connection
with the business that constitutes or constituted a trade secret of the Company.

 

 6 

 

 

(i) Bad Actor Disqualification. With respect to the Shares to be offered and
sold hereunder in reliance on Regulation D under the Securities Act, none of the
Company, any of its predecessors, any affiliated issuer, any director, executive
officer, other officer of the Company participating in the offering hereunder,
any beneficial owner of 20% or more of the Company’s outstanding voting equity
securities, calculated on the basis of voting power, nor any promoter (as that
term is defined in Rule 405 under the Securities Act) connected with the Company
in any capacity at the time of sale (each, an “Issuer Covered Person” and,
together, “Issuer Covered Persons”) is subject to any of the “Bad Actor”
disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities
Act (a “Disqualification Event”), except for a Disqualification Event covered by
Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine
whether any Issuer Covered Person is subject to a Disqualification Event. The
Company has complied, to the extent applicable, with its disclosure obligations
under Rule 506(e), and has furnished to the Investor a copy of any disclosures
provided thereunder.

 

3.2 Representations and Warranties of the Investor. The Investor hereby
represents and warrants to the Company as follows:

 

(a) Organization; Authority. The Investor is a corporation duly organized,
validly existing and in good standing under the laws of the Cayman Islands with
the requisite corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and otherwise to carry out its
obligations hereunder. The purchase by the Investor of the Shares hereunder has
been duly authorized by all necessary corporate action on the part of the
Investor. This Agreement has been duly executed and delivered by the Investor
and constitutes the valid and binding obligation of the Investor, enforceable
against it in accordance with its terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.

 

(b) No Public Sale or Distribution. The Investor is acquiring the Shares for its
own account and not with a view towards, or for resale in connection with, the
public sale or distribution thereof, except pursuant to sales registered under
the Securities Act or under an exemption from such registration and in
compliance with applicable federal, state and provincial securities laws, and
the Investor does not have a present arrangement to effect any distribution of
the Shares to or through any person or entity; provided, however, that by making
the representations herein, such Investor does not agree to hold any of the
Shares for any minimum or other specific term and reserves the right to dispose
of the Shares at any time in accordance with or pursuant to a registration
statement or an exemption under the Securities Act.

 

(c) Investor Status. At the time the Investor was offered the Shares, it was,
and at the date hereof it is an “accredited investor” as defined in Rule 501(a)
under the Securities Act or a “qualified institutional buyer” as defined in Rule
144A(a) under the Securities Act. Such Investor is not a registered broker
dealer registered under Section 15(a) of the Exchange Act, or a member of the
Financial Industry Regulatory Authority, Inc. or an entity engaged in the
business of being a broker dealer.

 

 7 

 

 

(d) Experience of Such Investor. The Investor, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Shares, and has so evaluated the merits and
risks of such investment. The Investor understands that it must bear the
economic risk of this investment in the Shares indefinitely, and is able to bear
such risk and is able to afford a complete loss of such investment.

 

(e) Access to Information. The Investor acknowledges that it has reviewed the
Disclosure Materials and has been afforded: (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Shares and the merits and risks of investing in the Shares; (ii)
access to information about the Company and its financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment. Neither such inquiries nor any other
investigation conducted by or on behalf of the Investor or its representatives
or counsel shall modify, amend or affect the Investor’s right to rely on the
truth, accuracy and completeness of the Disclosure Materials and the Company’s
representations and warranties contained in the Transaction Documents.

 

(f) No Conflicts. The execution, delivery and performance by the Investor of
this Agreement and the consummation by the Investor of the transactions
contemplated hereby will not (i) result in a violation of the organizational
documents of the Investor or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Investor is
a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal, state and provincial securities laws)
applicable to the Investor, except in the case of clauses (ii) and (iii) above,
for such that are not material and do not otherwise affect the ability of the
Investor to consummate the transactions contemplated hereby.

 

(g) Restricted Securities. The Investor understands that the Shares are
characterized as “restricted securities” under the U.S. federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act only
in certain limited circumstances. The Investor further understands that Shares
in book-entry form shall be subject to the following legend:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.

 

 8 

 

 

(h) Prohibited Transactions. The Investor has not, directly or indirectly, and
no Person acting on behalf of or pursuant to any understanding with the Investor
has, engaged in any purchases or sales in the securities, including derivatives,
of the Company (including, without limitation, any Short Sales (a “Transaction”)
involving any of the Company’s securities) since the time that the Investor was
first contacted by the Company or any other Person regarding an investment in
the Company. The Investor covenants that neither it nor any Person acting on its
behalf or pursuant to any understanding with the Investor will engage, directly
or indirectly, in any Transactions in the securities of the Company (including
Short Sales) prior to the time the transactions contemplated by this Agreement
are publicly disclosed.

 

ARTICLE 4

OTHER AGREEMENTS OF THE PARTIES

 

4.1 Filing of Reports. Until the date that the Investor (or any transferee that
is an Affiliate of the Investor) ceases to own any Shares, the Company covenants
to use its commercially reasonable efforts to (a) timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Securities Act and the Exchange Act, (b) comply with the requirements of
Rule 144(c) under the Securities Act with respect to current public information
about the Company, and (c) furnish to the Investor promptly upon request
therefor (i) a written statement by the Company as to its compliance with the
requirements of Rule 144(c) under the Securities Act, and the reporting
requirements under the Securities Act and the Exchange Act, and (ii) such
reports and documents of the Company as the Investor may reasonably request to
avail itself (or its Affiliates) of any similar rule or regulation of the SEC
allowing it (or its Affiliates) to sell any such securities without
registration.

 

4.2 Listing of Shares. Promptly following the date hereof, the Company shall
take all necessary action to cause the Shares to be qualified for trading on the
Nasdaq Capital Market. If the Company applies to have its Common Shares traded
on any other principal stock exchange or market, it shall include in such
application the Shares and will take such other action as is necessary to cause
such Shares to be so listed.

 

4.3 Use of Proceeds. The Company will use the net proceeds from the sale of the
Shares to meet its obligations under the License Agreement and for other working
capital and general corporate purposes.

 

4.4 Lock-Up. During the six (6) month period following the Closing, the Investor
shall not, without the consent of the Company, issue, sell, offer or agree to
sell, grant any option for the sale of, pledge, enter into any swap, derivative
transaction or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of any of the Shares (whether any
such transaction is to be settled by delivery of Shares, other securities, cash
or other consideration) or otherwise dispose (or publicly announce the
undersigned’s intention to do any of the foregoing) of, directly or indirectly,
any Shares. Notwithstanding anything in this Agreement to the contrary, subject
to the requirements of Section 6.6 (including the obligation to be bound by this
Section 4.4), the Investor shall not be restricted from transferring any of the
Shares to any Affiliate of the Investor.

 

 9 

 

 

4.5 Public Statements. Except as required by applicable law or regulation,
neither party hereto shall issue any press release or other public announcement
concerning the existence of or terms of this Agreement or the Transaction
Documents without the prior written consent of the other Party, which consent
shall not be unreasonably withheld. Each Party agrees to provide to the other
Party a copy of any proposed press release or other public announcement as soon
as reasonably practicable under the circumstances prior to the proposed date of
dissemination thereof. The party proposing such press release or other public
announcement shall consider in good faith any changes to such proposed press
release or public announcement that are requested by the other party.

 

4.6 Legend Removal. The Company shall, or shall cause, the legend set forth in
Section 3.2(g) to be removed and shall issue, or cause to be issued, a
certificate (or shares in book-entry form) without such legend or any other
legend upon the Investor’s request, if such Shares are (a) sold or transferred
pursuant to Rule 144 or (b) such Shares are eligible for sale under Rule 144,
without the requirement for the Company to be in compliance with the current
public information required under Rule 144 as to such securities and without
volume or manner-of-sale restrictions.

 

ARTICLE 5

INDEMNIFICATION

 

5.1 Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless the Investor, its
officers, directors, partners, members, agents and employees, each Person who
controls the Investor (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, partners, members,
agents and employees of each such controlling Person, to the fullest extent
permitted by applicable law, from and against any and all Losses, as incurred,
arising out of or relating to (i) any misrepresentation or breach of any
representation or warranty made by the Company in this Agreement or any other
agreement, certificate, instrument or document delivered in connection with the
consummation of the transactions hereby (which, for the avoidance of doubt,
shall not include the License Agreement or any agreements, certificates,
instruments or documents ancillary thereto), (ii) any breach of any covenant,
agreement or obligation of the Company contained in this Agreement or any other
agreement, certificate, instrument or document delivered in connection with the
consummation of the transactions contemplated hereby (which, for the avoidance
of doubt, shall not include the License Agreement or any agreements,
certificates, instruments or documents ancillary thereto), or (iii) any cause of
action, suit or claim brought or made against such Indemnified Party (as defined
in Section 5.2(a) below) by a third party (including for these purposes a
derivative action brought on behalf of the Company), arising out of or resulting
from (x) the execution, delivery, performance or enforcement of this Agreement
or any other agreement, certificate, instrument or document delivered in
connection with the consummation of the transactions contemplated hereby (which,
for the avoidance of doubt, shall not include the License Agreement or any
agreements, certificates, instruments or documents ancillary thereto), or (y)
the status of Indemnified Party as a holder of Common Shares (unless, and only
to the extent that, such action, suit or claim is based, including in part, upon
a breach of the Investor’s representations, warranties or covenants in this
Agreement or any other agreement, certificate, instrument or document delivered
in connection with the consummation of the transactions contemplated hereby
(which, for the avoidance of doubt, shall not include the License Agreement or
any agreements, certificates, instruments or documents ancillary thereto), or
any conduct by the Investor that constitutes fraud, gross negligence or willful
misconduct).

 

 10 

 

 

5.2 Conduct of Indemnification Proceedings.

 

(a) If any Proceeding shall be brought or asserted against any Person entitled
to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall
promptly notify the Person from whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, that the failure of any Indemnified Party to give
such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such failure
shall have proximately and materially adversely prejudiced the Indemnifying
Party.

 

(b) An Indemnified Party shall have the right to employ separate counsel in any
such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of
separate counsel shall be at the expense of the Indemnifying Party). It shall be
understood, however, that the Indemnifying Party shall not, in connection with
any one such Proceeding (including separate Proceedings that have been or will
be consolidated before a single judge) be liable for the fees and expenses of
more than one separate firm of attorneys at any time for all Indemnified
Parties, which firm shall be appointed by a majority of the Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.

 

(c) All reasonable fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within 20 Trading Days of written notice thereof to the Indemnifying
Party (regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification hereunder).

 

The indemnity and agreements contained in this Article 6 are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.

 

 11 

 

 

ARTICLE 6

GENERAL PROVISIONS

 

6.1 Fees and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all Transfer
Agent fees, stamp taxes and other taxes and duties levied in connection with the
sale and issuance of the Shares.

 

6.2 Entire Agreement. This Agreement, together with the exhibits and schedules
hereto, contains the entire understanding of the parties with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral or written, with respect to such matters, which the parties acknowledge
have been merged into such documents, exhibits and schedules. At or after the
Closing, and without further consideration, the Company will execute and deliver
to the Investor such further documents as may be reasonably requested in order
to give practical effect to the intention of the parties under this Agreement.

 

6.3 Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of (a) the date of transmission, if such
notice or communication is delivered via facsimile or email at the facsimile
number or email address specified in this Section prior to 5:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile or
email at the facsimile number or email address specified in this Section on a
day that is not a Trading Day or later than 5:30 p.m. (New York City time) on
any Trading Day, (c) the Trading Day following the date of deposit with a
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given. The addresses, facsimile
numbers and email addresses for such notices and communications are those set
forth on the signature pages hereof, or such other address or facsimile number
as may be designated in writing hereafter, in the same manner, by any such
Person.

 

6.4 Amendments; Waivers. No provision of this Agreement may be waived or amended
except in a written instrument signed, in the case of an amendment, by the
Company and the Investor or, in the case of a waiver, by the party against whom
enforcement of any such waiver is sought. No waiver of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right.

 

6.5 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

 

6.6 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Investor, which consent may be withheld
by the Investor in its sole discretion. The Investor may assign its rights under
this Agreement to any Person to whom the Investor assigns or transfers any
Shares, provided (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company after such assignment, (ii) the Company is furnished with written notice
of (x) the name and address of such transferee or assignee and (y) the number of
Shares which are being transferred or assigned, (iii) following such transfer or
assignment, the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act and applicable state securities
laws, (iv) such transferee agrees in writing to be bound, with respect to the
transferred Shares, by the provisions hereof that apply to the “Investor” and
such transferee is not a Competitor of, or Affiliated with a Competitor of, the
Company and (v) such transfer shall have been made in accordance with the
applicable requirements of this Agreement and with all laws applicable thereto.

 

 12 

 

 

6.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except that each Indemnified Party is an intended third party
beneficiary of Section 5.1, as applicable, and (in each case) may enforce the
provisions of such Section directly against the parties with obligations
thereunder.

 

6.8 Governing Law; Venue; Waiver of Jury Trial. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK. THE COMPANY AND THE INVESTOR HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK,
BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY
OR THE INVESTOR HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION
CONTEMPLATED HEREBY OR DISCUSSED HEREIN, AND HEREBY IRREVOCABLY WAIVE, AND AGREE
NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR THE
INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY
SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY
HEREBY IRREVOCABLY WAIVES 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 AGREES 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 MANNER PERMITTED BY LAW.
THE COMPANY AND THE INVESTOR HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

 

6.9 Survival. The representations and warranties, agreements and covenants
contained herein shall survive the Closing.

 

6.10 Execution. This Agreement may be executed in two or more counterparts, all
of which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or email attachment, such signature shall create a valid
and binding obligation of the party executing (or on whose behalf such signature
is executed) with the same force and effect as if such facsimile or
email-attached signature page were an original thereof.

 

6.11 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

 

6.12 Replacement of Certificates. If any certificate or instrument evidencing
any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and the execution by the holder
thereof of a customary lost certificate affidavit of that fact, an agreement to
indemnify and hold harmless the Company for any Losses in connection therewith
and the posting by the Investor of any bonds as may be required by the Transfer
Agent.

 

6.13 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Investor
and the Company will be entitled to seek specific performance under this
Agreement. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agree to waive in any action for
specific performance of any such obligation (other than in connection with any
action for a temporary restraining order) the defense that a remedy at law would
be adequate.

 

[SIGNATURE PAGES TO FOLLOW]

 

 13 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

 

  VBI Vaccines Inc.         By: /s/ Jeff Baxter     Name: Jeff R. Baxter    
Title: Chief Executive Officer

 

  Address for Notice:       VBI Vaccines Inc.  

222 3rd Street, Suite 2241

Cambridge, MA 02142

  Attn: Chief Executive Officer       With a copy (which shall not constitute
notice) to:       Haynes and Boone, LLP  

30 Rockefeller Plaza, 26th Floor

New York, NY 10112

Attention: Rick A. Werner

 

  Brii Biosciences limited         By: /s/ Zhi Hong   Name: Zhi Hong   Title:
Chief Executive Officer

 

  Address for Notice:      

Brii Biosciences Limited

Vistra (Cayman) Limited

PO Box 3119

Grand Pavilion Hibiscus Way

802 West Bay Road Grand Cayman KYI-1205

 

Attn: Zhi Hong

Email: zhi.hong@briibio.com

 

   

 

 

Schedule 3.1(b)

 

The shares of SciVac Ltd. are pledged in favor of Perceptive Credit Holdings LP
as part of a credit agreement between Variation Biotechnologies (US), Inc. and
Perceptive Credit Holdings LP.

 

   

 

 

Schedule 3.1(f)

 

Share Type  Common Shares  Warrants & Options  Total  Fully Diluted %         
     Issued and outstanding Common Shares   64,383,391    -    64,383,391  
 88.6% Equity Plans (outstanding and available)        5,674,307    5,674,307  
 7.8% Warrants        2,618,824    2,618,824    3.6% Dilutive equity   -  
 8,293,131    8,293,131    11.4% Total issued and outstanding   64,383,391  
 8,293,131    72,676,522    100.0%

 

   

 

 

Schedule 3.1(h)

 

The patent family covering the VBI-1501 vaccine candidate for cytomegalovirus is
co-owned by Universite Sorbonne.

 

   

 

 

Schedule I

 

Subsidiaries

 

Name of Subsidiary  Country of Incorporation  Ownership Interest
(direct or indirect)  VBI Vaccines (Delaware) Inc.  Delaware (U.S.A)   100%
SciVac Ltd.  Rehovot (Israel)   100% Variation Biotechnologies (US), Inc. 
Delaware (U.S.A)   100% Variation Biotechnologies Inc.  Ottawa, Ontario
(Canada)   100%