Exhibit 10.4

 

RIGHT OF FIRST OFFER AGREEMENT

 

THIS RIGHT OF FIRST OFFER AGREEMENT (this “Agreement”), is made as of the 22nd
day of August, 2014, by and between Vaccinogen, Inc., a Maryland corporation
(the “Company”), and Intracel Holdings Corporation, a Delaware corporation (the
“Investor”).

 

RECITALS

 

WHEREAS, the Investor is the holder of shares of common stock of the Company,
par value $.0001 per share (“Common Stock”); and

 

WHEREAS, the Company is party to an agreement, dated April 24, 2014 (as amended,
restated and otherwise modified from time to time, the “TIS Agreement”) with The
Investment Syndicate, a group of investors (“TIS”), pursuant to which TIS has
agreed to invest up to $110,000,000 (the “TIS Investment”) in the Company in
exchange for the issuance by the Company to TIS of certain equity securities
(the “TIS Securities”), including shares of Common Stock and warrants to
purchase shares of Common Stock; and

 

WHEREAS, the Investor has requested that the Company enter into this Agreement
to provide a right of first offer to the Investor, and the Company has agreed to
provide the right of first offer to the Investor on the terms and conditions set
forth in this Agreement.

 

NOW, THEREFORE, the Company and the Investor hereby agree as follows:

 

1.           Definitions. For purposes of this Agreement:

 

1.1           “Abell Loan” the loan made to the Company by The Abell Foundation,
Inc., a Maryland corporation, pursuant to that certain Note and Warrant Purchase
Agreement made and entered into on October 26, 2011, as amended through the date
hereof.

 

1.2           “Change of Control Event” means any one or more of the following
events:

 

(a)          a merger or consolidation in which (i) the Company is a constituent
party or (ii) a subsidiary of the Company is a constituent party and the Company
issues shares of its capital stock pursuant to such merger or consolidation,
except any such merger or consolidation involving the Company or a subsidiary in
which the shares of capital stock of the Company outstanding immediately prior
to such merger or consolidation continue to represent, or are converted into or
exchanged for shares of capital stock that represent, immediately following such
merger or consolidation, at least a majority, by voting power, of the capital
stock of (y) the surviving or resulting corporation; or (z) if the surviving or
resulting corporation is a wholly owned subsidiary of another corporation
immediately following such merger or consolidation, the parent corporation of
such surviving or resulting corporation; or

 

 

 

 

(b)          the sale, lease, transfer, exclusive license or other disposition,
in a single transaction or series of related transactions, by the Company or any
subsidiary of the Company of all or substantially all the assets of the Company
and its subsidiaries taken as a whole (including the patents necessary to
manufacture the OncoVAX vaccine), or the sale or disposition (whether by merger,
consolidation or otherwise) of one or more subsidiaries of the Company if
substantially all of the assets of the Company and its subsidiaries taken as a
whole are held by such subsidiary or subsidiaries, except where such sale,
lease, transfer, exclusive license or other disposition is to a wholly owned
subsidiary of the Company or to an entity where at least fifty percent (50%) of
the combined voting power of the voting securities of such entity are owned by
stockholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.

 

1.3           “Derivative Securities” means any securities or rights convertible
into, or exercisable or exchangeable for (in each case, directly or indirectly),
Common Stock, including options and warrants.

 

1.4           “Exchange Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

 

1.5           “Exempted Securities” means any New Securities issued:

 

(a)          as a dividend;

 

(b)          in a stock split;

 

(c)          to employees, officers or directors pursuant to a compensation
plan;

 

(d)          upon conversion or exercise of Derivative Securities outstanding as
of the date hereof (including without limitation warrants and any securities
issuable pursuant to the Abell Loan);

 

(e)          in connection with equipment leasing financing;

 

(f)          to suppliers or third party service providers in connection with
the provision of goods or services; or

 

(g)          pursuant to the acquisition of another Person by the Company.

 

1.6           “IPO” means the Company’s first underwritten public offering of
its Common Stock under the Securities Act with aggregate gross proceeds to the
Company and all selling stockholders (if any) in an amount equal to or greater
than $50.0 million.

 

1.7           “New Securities” means, collectively, equity securities of the
Company, whether or not currently authorized, as well as rights, options, or
warrants to purchase such equity securities, or securities of any type
whatsoever that are, or may become, convertible or exchangeable into or
exercisable for such equity securities.

 

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1.8           “Person” means any individual, corporation, partnership, trust,
limited liability company, association or other entity.

 

1.9           “Securities Act” means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

 

2.           Rights to Future Stock Issuances.

 

2.1           Right of First Offer. Subject to the terms and conditions of this
Section 2.1 and applicable securities laws, if the Company proposes to offer,
issue or sell any New Securities or to convert, recharacterize, classify,
reclassify or amend the terms of any securities of the Company into New
Securities, the Company shall first offer such New Securities to the Investor.

 

(a)          The Company shall deliver written notice (the “Offer Notice”) to
the Investor, stating (i) its bona fide intention to offer the New Securities,
(ii) the number of New Securities to be offered, and (iii) the price and terms,
if any, upon which it proposes to offer such New Securities.

 

(b)          By notification to the Company within fifteen (15) days after the
Offer Notice is given, the Investor may elect to purchase or otherwise acquire,
at the price and on the terms specified in the Offer Notice, up to that portion
of the New Securities that equals the proportion that the Common Stock then held
by the Investor (including all shares of Common Stock then issuable (directly or
indirectly) upon conversion or exercise of any Derivative Securities then held
by the Investor) bears to the total Common Stock of the Company then outstanding
(assuming full conversion or exercise of all outstanding Derivative Securities).
The closing of any sale pursuant to this Section 2.1(b) shall occur within the
later of one hundred and twenty (120) days after the date of the Offer Notice
and the date of initial sale of New Securities pursuant to Section 2.1(c).

 

(c)          If all New Securities referred to in the Offer Notice are not
elected to be purchased or acquired as provided in Section 2.1(b), the Company
may offer and sell the remaining New Securities (including the portion offered
to the Investor that the Investor did not elect to purchase) to any Person or
Persons at a price not less than, and upon terms no more favorable to the
offeree than, those specified in the Offer Notice. If the Company does not enter
into an agreement for the sale of the New Securities within one hundred
fifty (150) days after the date of the Offer Notice, the right provided
hereunder shall be deemed to be revived and such New Securities shall not be
offered unless first reoffered to the Investor in accordance with this
Section 2.1.

 

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(d)          The right of first offer in this Section 2.1 shall not apply to
(i) Exempted Securities; and (ii) TIS Securities. To the extent that, on or
after the date hereof, the terms of the TIS Investment are modified in a manner
that (x) decreases the price paid by TIS for any of the securities issued
thereunder (as compared to price existing as of the date hereof) or (y) is
materially adverse to the interests of the Investor, in each case without the
Investor’s prior written consent, any equity securities subsequently issued
pursuant to the TIS Agreement shall not be TIS Securities.

 

(e)          Notwithstanding any provision hereof to the contrary, in lieu of
complying with the provisions of this Section 2.1, the Company may elect to give
notice to the Investor within thirty (30) days after the issuance of New
Securities, which notice shall describe the type, price, and terms of the New
Securities. The Investor shall have fifteen (15) days after the date notice is
given to elect to purchase up to the number of New Securities that would, if
purchased by the Investor, maintain the Investor’s percentage-ownership
position, calculated as set forth in Section 2.1(b) before giving effect to the
issuance of the New Securities. The closing of such sale shall occur within
nintey (90) days after the date notice is given to the Investor.

 

2.2           Termination. The covenants set forth in Section 2.1 shall
terminate and be of no further force or effect upon the first to occur of:
(i) immediately before the consummation of an IPO; (ii) a Change of Control
Event of the Company; (iii) the liquidation, dissolution or other winding-up of
the business and affairs of the Investor; or (iv) listing of any capital stock
of the Company on the New York Stock Exchange, the NYSE MKT or one of the NASDAQ
Stock Markets (i.e. The NASDAQ Global Select Market, The NASDAQ Global Market or
The NASDAQ Capital Market).

 

3.           Miscellaneous.

 

3.1           Successors and Assigns. Neither this Agreement nor any of the
rights conferred hereby may be sold, transferred or assigned by any party hereto
without the prior written consent of all other parties hereto. The terms and
conditions of this Agreement inure to the benefit of and are binding upon the
parties hereto and their respective successors and permitted assigns. Nothing in
this Agreement, express or implied, is intended to confer upon any Person other
than the parties hereto or their respective successors and permitted assignees
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.

 

3.2           Governing Law. This Agreement and all claims, disputes and
proceedings in connection herewith shall be governed by and construed and
enforced in accordane with the internal laws of the State of Maryland.

 

3.3           Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Counterparts may be
delivered via facsimile, electronic mail (including pdf or any electronic
signature complying with the U.S. federal ESIGN Act of 2000, e.g.,
www.docusign.com) or other transmission method and any counterpart so delivered
shall be deemed to have been duly and validly delivered and be valid and
effective for all purposes.

 

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3.4           Titles and Subtitles. The titles and subtitles used in this
Agreement are for convenience only and are not to be considered in construing or
interpreting this Agreement.

 

3.5           Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed effectively
given upon the earlier of actual receipt or (a) personal delivery to the party
to be notified; (b) when sent, if sent by electronic mail or facsimile during
the recipient’s normal business hours, and if not sent during normal business
hours, then on the recipient’s next business day; (c) three (3) business days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (d) one (1) business day after the business day
of deposit with a nationally recognized overnight courier, freight prepaid,
specifying next-day delivery, with written verification of receipt. All
communications shall be sent to the respective parties at their addresses as set
forth on the signature page(s) hereto, or to such email address, facsimile
number, or address as subsequently modified by written notice given in
accordance with this Section 3.5.

 

3.6           Amendments and Waivers. Any term of this Agreement may be amended
only with the written consent of the party against which such amendment or
waiver is claimed, and no waiver by a party will be enforceable against the
party unless in writing signed by the party. No waivers of or exceptions to any
term, condition, or provision of this Agreement, in any one or more instances,
shall be deemed to be or construed as a further or continuing waiver of any such
term, condition, or provision.

 

3.7           Severability. In case any one or more of the provisions contained
in this Agreement is for any reason held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provision of this Agreement, and such invalid, illegal, or
unenforceable provision shall be reformed and construed so that it will be
valid, legal, and enforceable to the maximum extent permitted by law.

 

3.8           Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with respect to the subject
matter hereof, and any other written or oral agreement relating to the subject
matter hereof existing between the parties is expressly canceled.

 

3.9           Dispute Resolution. The parties (a) hereby irrevocably and
unconditionally submit to the jurisdiction of the state courts of the State of
Maryland and to the jurisdiction of the United States District Court for the
District of Maryland (Northern Division) for the purpose of any suit, action or
other proceeding arising out of or based upon this Agreement, (b) agree not to
commence any suit, action or other proceeding arising out of or based upon this
Agreement except in the state courts of the State of Maryland or the United
States District Court for the District of Maryland (Northern Division),
(c) consent to personal jurisdiction for any equitable action sought in the
state cpirts pf the State or the United States District Court for the District
of Maryland (Northern Division), and (d) hereby waive, and agree not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that its property is exempt or immune from attachment or
execution, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that this
Agreement or the subject matter hereof may not be enforced in or by such court.

 

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Waiver of Jury Trial: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE
SUBJECT MATTER HEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND
ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED
BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY
EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER REPRESENTS AND WARRANTS THAT SUCH
PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.

 

The prevailing party shall be entitled to recover reasonable attorney’s fees,
costs, and necessary disbursements in addition to any other relief to which such
party may be entitled.

 

3.10         Delays or Omissions. No delay or omission to exercise any right,
power, or remedy accruing to any party under this Agreement, upon any breach or
default of any other party under this Agreement, shall impair any such right,
power, or remedy of such nonbreaching or nondefaulting party, nor shall it be
construed to be a waiver of or acquiescence to any such breach or default, or to
any similar breach or default thereafter occurring, nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. All remedies, whether under this Agreement
or by law or otherwise afforded to any party, shall be cumulative and not
alternative.

 

[Remainder of Page Intentionally Blank]

 

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IN WITNESS WHEREOF, the parties have executed this Right of First Offer
Agreement as of the date first written above.

 

  COMPANY:       VACCINOGEN, INC., a Maryland corporation       By: /s/ Michael
G. Hanna, Jr., Ph.D.         Name: Michael G. Hanna, Jr., Ph.D       Title:
Chairman and Chief Executive Officer

 

  Address: Vaccinogen, Inc.     Attention: Chief Exectuive Office     5300
Westview Drive, Suite 506     Frederick, Maryland 21703     Email:
atussing@vaccinogeninc.com

 

  INVESTOR:       INTRACEL HOLDINGS CORPORATION, a   Delaware corporation      
By: /s/ Richard Fuscone         Name: Richard Fuscone       Title: Director

 

  Address: Intracel Holdings Corporation     Attention: Chairman     550
Highland Street, Suite 417     Frederick, Maryland 21701