Document:

Exhibit 10.1

 

[*] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

 

Option for Exclusive Product and Platform Technology License

 

	
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Parties
    	
 
    	
Aridis Pharmaceuticals, Inc.,   a Delaware corporation with offices located at 5941 Optical Court, San Jose,   CA 95138 USA (“Aridis”); and Serum International BV, a Netherland based   company with offices located at Strawinskylaan 937, 1077   XX Amsterdam, The Netherlands (“SIBV”).

 

For purposes of this Agreement, “SIBV”, as used herein, shall be deemed to include the   following affiliated companies of Serum International BV, provided such   affiliated companies (i) are owned by or are under common ownership with   Serum International BV, and (ii) have agreed in writing that they are   bound by the terms of this Agreement to the same extent as Serum International   BV. Serum International BV shall remain separately responsible for the   performance of any obligations undertaken by any such affiliated company.

 

Affiliated companies include:

 

Serum Institute Of India Private Limited, [‘SERUM’]   an Indian Company having its Registered Office at 212/2 Off Soli Poonawalla   Road, Hadapsar, Pune 411028, INDIA
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.
    	
 
    	
Consideration
    	
 
    	
After execution of this Option Agreement by both   Parties, SIBV shall complete a “Closing” by July 30th, 2019. “Closing” shall   comprise:

 

·  Consummation   of the sale, within 5 days of the execution of this Option Agreement, by   Aridis to SIBV of 801,924 restricted shares of Aridis common stock at a price   of $12.47 per share or an aggregate of approximately $10,000,000,   representing, as of the date of execution of this Option Agreement,   approximately nine percent (9%) of the issued and outstanding common stock of   Aridis as calculated immediately upon the date of the execution of this   Option Agreement (the Parties shall cooperate in good faith to exchange such   documentation and execute such security purchase agreements as are required   to consummate the sale); and

 

·  Payment   by SIBV to Aridis of US $5 million coincident with the execution of this   Option Agreement (this fee shall be reimbursed to SIBV if for any reason the   License Agreement contemplated below is not executed by 31st August 2019. Such refund to be made by   10th September 2019).

 

After the Closing, SIBV   shall pay to Aridis US $10 million within 5 days of execution of License   Agreement (SIBV shall have sole responsibility for any governmental charges   of Netherlands imposed on payments hereunder by any entity for any reason,   including

 
    

 

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withholding, export or   excise taxes.)
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
3.
    	
 
    	
Option and Exercise of Option
    	
 
    	
Upon execution of this Option Agreement, SIBV and/or   its subsidiary company shall have an option for an Exclusive Product and   Platform Technology License Agreement (“License Agreement”) on the terms   described herein, with such other terms as are reasonable and customary in   the industry.

 

SIBV may complete this option at any time after the   Closing by executing a complete License Agreement with Aridis. After the   Closing, the Parties shall use their best commercially reasonable efforts to   complete the License Agreement prior to July 31, 2019 but certainly by   31st August 2019.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
4.
    	
 
    	
License Agreement Defined Terms
    	
 
    	
The following defined terms shall apply to the   License Agreement:

 

·  “Aridis   Products” (or “Limited License Products”) shall mean Aridis products AR-301,   AR-105, and AR-101 (each as further described at   www.aridispharma.com/ar-301/; www.aridispharma.com/ar-105; and   www.aridispharma/ar-101;

 

·  “AR-201   Product” shall mean Aridis product AR-201 as further described at   www.aridispharma.com/ar-201/;

 

·  “Aridis   Technology” shall mean all rights controlled by Aridis in the MabIgX platform   technology thereto (as further described at www.aridispharma.com/mabigx-overview);

 

·  “Development   Product” shall mean products designed solely from Candidates and solely for   use in the Field;

 

·  “Candidate”   shall mean a research cell bank expressing an antibody to a Target in the   Field, developed by Aridis using the Aridis Technology at request of SIBV /   its affiliate pursuant to section 6;

 

·  “Field”   shall mean a list, to be agreed by Aridis and SIIL as of the Effective Date   (and modified thereafter as appropriate by mutual agreement), comprising up   to five (5) targets to infectious diseases predominantly of economic   impact in the Developing World (Field excludes targets listed on the Aridis   pipeline as of the Effective Date);

 

·  “Worldwide   Territory” shall mean all countries of the world except China (“China”   includes PRC, Hong Kong, Macau and Taiwan).

 

·  “EU   Territory” shall mean the countries of the European Union.

 

·  “Limited   Territory” shall mean (a) the country of India, and (b) all other   countries of the world except USA, Canada, EU Territory, UK, China,   Australia, New Zealand, and Japan. Each of the “Worldwide Territory”, EU   Territory,” and “Limited Territory” in all cases shall 
    

 

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exclude any countries   which are embargoed by the US as of the Effective Date;

 

·  “Effective   Date” shall mean the date of execution of the full License Agreement as   contemplated in point no. 3 above;

 

·  “Term”   shall mean 20 years from the Effective Date.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
5.
    	
 
    	
Grant of License Rights
    	
 
    	
As of the Effective Date, Aridis shall grant to   SIBV:

 

·  An exclusive license to make, have made,   import, use and have used, and sell and have sold, Aridis   Products in the Limited Territory   for the Term;

 

·  An exclusive license to develop, make, have   made, import, use and have used, and sell and have sold, up to five   (5) approved Development Products   incorporating Aridis Technology in the Worldwide Territory for the Term,   for use in the Field;

 

·  An exclusive license to develop, make, have   made, import, use and have used, and sell and have sold AR-201 Product in the   Worldwide Territory for the Term; and

 

·  The right for SIBV to have Aridis perform Candidate development according to the terms of section 8.

 

All rights hereunder shall include rights to   sublicense subject to the terms of this Agreement and the final License   Agreement. The licensee continues to be responsible for all fees and   royalties payable hereunder for all sublicensed rights.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
6.
    	
 
    	
Right of Good Faith Negotiation to Extend License   Rights Into The EU Territory
    	
 
    	
In certain circumstances, SIBV (including   affiliates) and Aridis agree to commit to negotiate in good faith to extend   the rights to be granted in the License Agreement pursuant to section 5   above, to include an exclusive license to make, have made, import, use and   have used, and sell and have sold, certain Aridis   Products in the EU Territory   for the Term (herein, an “EU   Territory Grant”). Such commitment to negotiate in good faith   shall be subject to the following requirements:

 

1. Any such EU   Territory Grant shall be consummated by amendment to the License Agreement   executed in the reasonable discretion of both Parties;

 

2. Any such EU   Territory Grant shall be applicable solely to those Aridis Products   specifically noted in the amendment, and for which the conditions below are   met. Aridis shall reasonably cooperate with SIBV in its attempts to meet the   conditions set out below (although until such conditions are met Aridis is   not restricted from licensing Aridis Products to third parties);

 

3. As   consideration, an EU Territory Grant for Aridis Product/s shall include a   requirement that SIBV will be responsible for all
    

 

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costs related to all   further clinical trials as shall be necessary for licensure of those Aridis   Product in EU Territory ; shall include reasonable timelines for the   completion of clinical trials, regulatory submission, and commencement of   commercial sales; and shall include as a prerequisite requirement that SIBV   shall have obtained (or the parties shall have jointly determined that SIBV   may reasonably obtain) a loan / funding/ financial support from [*] for such   clinical trials costs, according to the [*] program entitled (the “[*]”).   SIBV shall be allowed to conduct clinical trials globally as [* ] may allow   such trials;

 

4. Any EU   Territory Grant shall provide that the conduct of all SIBV-supported clinical   trials shall remain under the oversight and consultation of Aridis, with   ultimate control with SIBV. SIBV shall have full rights of ownership of all   resulting clinical data and results. Aridis shall have full access and right   to use all clinical data generated out of these clinical trials so that   Aridis can use the data in the territory;

 

5. As   prerequisite to the execution of any EU Territory Grant, SIBV must   demonstrate that the [*] will allow for distribution of Aridis Products in   the EU Territory at commercial prices which are not required to be set at   lower than market rates, and shall not materially prohibit or hinder   distribution of Aridis Product in any other territory (that is, the Parties   must reasonably agree that an appropriate and financially reasonable market   for Aridis Products in the EU Territory will exist);

 

6. EU Territory   Grants shall be negotiated and executed by Q4 2020 (including completion of   prerequisites noted in the subsections above);

 

7. Royalties   payable to Aridis shall be as otherwise provided hereunder;

 

8. EU Territory   Grants shall include an option for Aridis to buy-back part or whole of the   territory granted under the EU Territory Grant from SIBV, if global sales   rights are requested by a partner or licensee of Aridis, by   (i) reimbursement to SIBV of all costs incurred by SIBV,   (ii) payment of [*]% (if the buy-back occurs after all clinical and   regulatory development is complete; for buy-back which occurs prior to   product commercialization, the License Agreement may include terms agreeable   to the Parties providing for pro-ration of   this amount) of the net amount received and receivable by Aridis from such   partner or licensee and (iii) repayment by Aridis or its licensee of any   required amounts under any [*]. (In the instance of any such buy-back, 
    

 

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SIBV shall retain its   Limited Territory rights to such Aridis Products.)

 

The EU Territory option as described in this   Section 6 shall be included as an Exhibit to the License Agreement   and is subject to such additional terms as are reasonably required by the   Parties and as specified in that final License Agreement.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
7.
    	
 
    	
Reversal of Licensed Territory
    	
 
    	
If Aridis seeks back any part of SIBV Territory so   as to give it to any third party who wishes to have a license for Aridis   Products to such party, then both parties shall execute an amendment so   allowing, provided that SIBV receives from Aridis (i) reimbursement of   all costs incurred by SIBV for that territory (ii) payment of [*]% of   the amount received and receivable by Aridis from such partner or licensee.

 

But in such a case, SIBV shall retain status of   exclusive manufacturer and supplier of such Aridis products as are given to   such third party (subject to buy back and other terms of section 9).
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
8.
    	
 
    	
Candidate Development
    	
 
    	
Upon request by SIBV as appropriate during the Term,   Aridis shall provide services to SIBV for the development of up to five   (5) Candidates for Development Products. Such services shall be negotiated   in good faith by the Parties when requested by SIBV, and SIBV shall reimburse   Aridis for its internal and out-of-pocket costs for such services.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
9.
    	
 
    	
Manufacturing Rights and Obligations
    	
 
    	
The following manufacturing rights and obligations shall   apply to Aridis Products and Development Products to be licensed under the   License Agreement:

 

1. Upon request   of SIBV, Aridis shall provide clinical trial material for Aridis Products for   use by SIBV or by its associate companies for any required clinical trials in   the Limited Territory as described in section 9. SIBV shall reimburse Aridis   for all internal and out-of-pocket costs for such material on cost basis   without any mark-up (other than allocable overhead costs).;

 

2. SIBV or its   associate companies shall have the rights to manufacture any Aridis Product   and any Development product in the Worldwide Territory for use in the   Worldwide Territory (this right shall be exclusive to SIBV [and affiliates]   and Aridis shall not manufacture through another party except where SIBV   elects to develop manufacturing capacity for only a portion of its territory,   or waives this option, or pursuant to the buy-back all as set out in parts 3   and 4 below);

 

3. SIBV manufacturing option for Aridis Products: SIBV shall   have the right to supply Aridis Products (all Products or a portion thereof   according to SIBV capacity) for use by Aridis and its 
    

 

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sublicensees outside of   the Limited Territory.

 

To exercise this   manufacturing option, SIBV shall demonstrate: SIBV’s ability for   manufacturing consistency of Aridis Products in conformance to all regulatory   FDA and EMA requirements, at commercially reasonable rates, and at sufficient   capacity as specified in the manufacturing agreement; and SIBV shall   negotiate and execute in good faith a manufacturing agreement with Aridis.   The term of the manufacturing agreement shall be twenty (20) years from the   effective date thereof, provided that SIBV shall maintain during the   agreement manufacturing consistency, capacity and commercially competitive   pricing as set out above. Aridis shall pay such reasonable manufacturing fees   to SIBV as are negotiated.

 

In order to allow   Aridis to plan its supply chain and ensure the availability of an adequate   supply of Aridis Products, SIBV agrees to exercise or waive this option by   December 31, 2020.

 

4. Aridis manufacturing right buy-back option: If a third   party sublicensee of Aridis Products wishes to have Aridis Product   manufactured by itself for the territory for which it has a license from   Aridis, then Aridis shall have the right to buy back the option noted in this   section 9 by paying to SIBV five million US dollars ($5,000,000).

 

5. Th   manufacturing option described in this Section 9 shall be included as an   Exhibit to the License Agreement and is subject to such additional terms   as are reasonably required by the Parties and as specified in that final   License Agreement.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
10.
    	
 
    	
Regulatory Rights and Obligations
    	
 
    	
The following regulatory rights and obligations   shall apply to Aridis Products and Development Products licensed hereunder:

 

·  Aridis and SIBV shall establish a joint   committee under which each Party shall share all relevant clinical data and   regulatory documentation created by it anywhere in the world. Pursuant to   this, Aridis shall provide to SIBV all US FDA and EMA data and documentation   created by Aridis for all licensed Aridis Products;

 

·  SIBV shall be responsible for and shall   take such actions as are required for the registration and licensing of   Aridis Products, AR-201 Product, and Development Products with any required   governmental organization in the Limited Territory, including the completion   of all required clinical trials for Development Products and any additional   required clinical trials for Aridis Products, all solely in the Limited   Territory.

 

·  SIBV shall be responsible for and shall   take all actions as are required for the registration and licensing of each   Development Product and
    

 

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AR-201 Product in the   Worldwide Territory, including completion of all required clinical trials.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
11.
    	
 
    	
Diligence, Milestones, and Milestone Fees
    	
 
    	
Commencing upon the Effective Date, SIBV shall make   commercially reasonable efforts to complete all activities described in sections   9 and 10, and to register, to obtain all regulatory approvals, to have   approved for commercialization and sale, and to commercialize and sell   (i) Aridis Products in the Limited Territory, and (ii) Development   Products and AR-201 Product in the Worldwide Territory. Such obligations   shall include commercially reasonable efforts to achieve the following   milestones:

 

·  Milestone 1: Completion of all clinical   trials necessary for regulatory approval in India for each Development   Product, and completion of any supplemental clinical trials if necessary for   regulatory approval in India for each Aridis Product;

 

·  Milestone 2: New Drug Application approval   in India for each Aridis Product, AR-201 Product and Development Product;

 

·  Milestone 3: Completion of all clinical   trials necessary for regulatory approval in the US and Europe for each   Development Product, (with respect to Aridis Products for which the option   for EU Territory under Section 6 above has been exercised, such   obligation is solely provided that SIBV gets appropriate funding from [*]);   and

 

·  Milestone 4: New Drug Application approval   in the US and Europe for each Development Product and AR-201 Product.

 

SIBV shall pay to Aridis the following Milestone   Fees for Aridis Product:

 

·  Within thirty (30) days of the successful   completion by Aridis of Phase III clinical trials in USA for the first Aridis   Product: [*] US dollars ($[*]);

 

·  Within thirty (30) days of the successful   completion by Aridis of Phase III clinical trials in USA for the second   Aridis Product: [*] US dollars ($[*]);

 

·  Within thirty (30) days of the receipt by   Aridis of New Drug Application approval from the US FDA or EU EMA for the   first Aridis Product: [*] US dollars ($[*]);

 

SIBV shall pay to Aridis the following Milestone   Fees for Development Product and AR-201 Product:

 

·  Within thirty (30) days of the filing of   IND for each of AR-201 Product and the 5 chosen development product; [*] US   dollars ($[*])

 

·  Within thirty (30) days of the successful   completion by SIBV of Phase III clinical trials required for FDA or European   approval for 
    

 

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each Development   Product and AR-201 Product: [*] US dollars (US $[*]); and

 

·  Within thirty (30) days of the completion   of FDA or European New Drug Application approval for each Development Product   and AR-201 Product: [*] million US dollars (US $[*]);
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
12.
    	
 
    	
Royalties
    	
 
    	
SIBV shall pay earned royalties to Aridis according   to the following terms:

 

·  SIBV shall pay the Royalty Rate for:   (i) Net Sales of Aridis Products in the Limited Territory (and the EU   Territory, if applicable pursuant to section 6); and (ii) Net Sales of   Development Products and AR-201 Product in the Worldwide Territory.

 

·  All earned royalties shall be paid   quarterly, within thirty (30) days of the end of such quarter, and shall be   accompanied by appropriate royalty reports as shall be defined in the License   Agreement. SIBV shall be responsible for any excise or other tax required to   be paid on such royalty payments.

 

“Royalty Rate” shall be defined separately for each   Aridis Product, AR-201 Product and Development Product, and shall mean:

 

·  For Net Sales (by the paying Party and   solely for that product) up to (and including) US $[*] million in each   calendar year: [*] percent ([*]%) of Net Sales;

 

·  For Net Sales above US $[*] million and up   to US $[*] million in each calendar year: [*]percent ([*]%) of Net Sales; and

 

·  For Net Sales above US $[*] million in each   calendar year: [*] percent ([*]%) of Net Sales.

 

·  Net Sales of Aridis Product in the EU   Territory (if applicable, pursuant to section 6), shall not be included in   the above calculations of Net Sales totals or royalty rates. For Net Sales of   Aridis Product in the EU Territory, the Royalty Rate shall be 20% of Net   Sales.

 

“Net Sales” shall mean, in the case of each Aridis   Product, AR-201 Product or Development Product licensed hereunder, the   aggregate gross amount invoiced by or on behalf of SIBV or its sublicensee   for sales of the Product to independent, unrelated third parties in bona fide arms’ length transactions, less deductions for:

 

·  any sales, excise or value added taxes imposed   on or charged to the selling party;

 

·  actual out-of-pocket costs for packing,   transportation, importation, postage, shipping and handling charges, and   other customary charges, such as insurance and customs duties, relating   thereto;

 

·  trade, quantity, prompt settlement or   similar discounts (including 
    

 

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chargebacks and   allowances) actually granted, allowed or incurred in connection with the sale   of such product.
    

 

This Option Agreement will be governed by the laws of the State of Delaware, without regard to conflict of law provisions, and the application of United Nations Convention on Contracts for the International Sale of Goods is expressly excluded.  This Agreement may be executed in any number of counterparts and by PDF, all of which shall constitute a single agreement.

 

IN WITNESS WHEREOF, the Parties acknowledge their agreement and acceptance of the foregoing terms of this Option Agreement by executing in the space provided below.

 

	
Aridis   Pharmaceuticals, Inc.
    	
 
    	
Serum   International BV
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
BY:
    	
/s/ Vu Truong
    	
 
    	
BY:
    	
/s/ A.C. Pounawalla
    
	
 
    	
Name: Vu Truong
    	
 
    	
 
    	
Name: A. C. Pounawalla
    
	
 
    	
Title: CEO
    	
 
    	
 
    	
Title: CEO
    
	
 
    	
Date: July 13, 2019
    	
 
    	
 
    	
Date: July 16, 2019
    

 

9Exhibit 10.2

 

STOCK SUBSCRIPTION AGREEMENT

 

ARIDIS PHARMACEUTICALS, INC.

 

This Stock Subscription Agreement (the “Agreement”) is entered into as of July 19, 2019 (the “Effective Date”), by and between Aridis Pharmaceuticals, Inc., a Delaware corporation (hereinafter the “Company”) and Serum International B.V., a corporation formed under the laws of the Netherlands (the “Subscriber”).

 

WHEREAS:

 

A.            The Company desires to issue to Subscriber (i) 801,820 shares of its common stock, par value $0.0001 per share (the “Securities”), for an aggregate issue price of Ten Million US Dollars ($10,000,000) (the “Purchase Price”), representing a purchase price of approximately $12.47 per share.

 

B.            Subscriber desires to acquire the Securities upon the terms and conditions herein.

 

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter set-forth, the parties hereto do hereby agree as follows:

 

SUBSCRIPTION

 

1.1                   Subject to the terms and conditions hereinafter set forth, the Subscriber hereby agrees to be issued the Securities, and the Company agrees to issue the Securities to Subscriber at the Purchase Price.

 

1.2                   Promptly following the execution of this Agreement the Company will deliver to the Subscriber fully executed stock certificates representing the Securities, and record the same on the Company’s books.

 

REPRESENTATIONS AND WARRANTIES BY SUBSCRIBER

 

2.1                   Subscriber hereby acknowledges, represents and warrants to the Company the following:

 

(A)                                           Subscriber acknowledges that the purchase of the Securities involves a high degree of risk in that the Company may require substantial additional funds;

 

(B)                                           Subscriber recognizes that acquiring the Securities of the Company is highly speculative and only investors who can afford the loss of their entire investment should consider investing in the Company and the Securities;

 

(C)                                           Subscriber has such knowledge and experience in finance, securities, investments, including investment in unregistered securities, and other business matters so as to be able to protect its interests in connection with this transaction;

 

(D)                                           The Subscriber is an “Accredited Investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”);

 

(E)                                            Subscriber acknowledges that the market for the Securities may be illiquid and, accordingly, Subscriber may not be able to liquidate the Securities;

 

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(F)                                             Subscriber acknowledges that the Securities are subject to significant restrictions on transfer as imposed by state and federal securities laws, including but not limited to a minimum holding period of at least six (6) months;

 

(G)                                           Subscriber hereby acknowledges (i) that this offering of Securities has not been reviewed by the United States Securities and Exchange Commission or by the securities regulator of any state; (ii) that the Securities are being issued by the Company pursuant to an exemption from registration provided by Section 4(a)(2) of the Act; and (iii) that any certificate evidencing the Securities received by Subscriber will bear a legend in substantially the following form:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES LAWS.  WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER UNLESS IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER AND THAT SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER.

 

(H)                                          Subscriber is acquiring the Securities as principal for Subscriber’s own benefit and not with a view to distribution, on behalf of the Company or otherwise, of the Securities;

 

(I)                                               Subscriber is not aware of any advertisement of the Securities or any general solicitation in connection with any offering of the Securities;

 

(J)                                               Subscriber acknowledges that it has had the opportunity and the Company’s encouragement to seek the advice and consultation of independent investment, legal and tax counsel;

 

(K)                                           Subscriber acknowledges and agrees that the Company has previously made available to Subscriber the opportunity to ask questions of and to receive answers from representatives of the Company concerning the Company and the Securities, as well as to conduct whatever due diligence the Subscriber, in its discretion, deems advisable.  Subscriber is not relying on any information communicated by any representatives of the Company and is relying solely upon information obtained during Subscriber’s due diligence investigation in making a decision to invest in the Securities and the Company.

 

REPRESENTATIONS BY THE COMPANY

 

3.1                   The Company represents and warrants to the Subscriber that:

 

(A)                                           The Company is a corporation duly organized, existing and in good standing under the laws of the State of Delaware and has the corporate power to conduct the business which it conducts and proposes to conduct.

 

(B)                                           Upon issuance, the Securities will be duly and validly issued and fully paid and non-assessable, and the Securities will be issued in compliance with all applicable state and federal laws concerning the issuance of securities.

 

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(C)                                           The Company has reserved the shares of common stock for issuance pursuant to this Agreement,.

 

(D)                                           Material Contracts. Except as disclosed in any report, schedule, form, statement or other document filed by the Company under the Securities Act of 1933, as amended and the Exchange Act of 1934, as amended (the “SEC Reports”), and except for the agreements explicitly contemplated hereby, there are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company is a party or by which it is bound which may involve (i) obligations of, or payments to, the Company in excess of $250,000 (other than obligations of, or payments to, the Company arising from purchase or sale agreements entered into in the ordinary course of business), or (ii) the license of any patent, copyright, trade secret or other proprietary right to or from the Company or (iii) the grant of rights to manufacture, produce, assemble, license, market or sell the Company’s products or affect the Company’s exclusive right to develop, manufacture, assemble, distribute, market or sell its products (each, a “Material Contract”, collectively the “Material Contracts”). All of the Material Contracts are valid, binding and in full force and effect in all material respects, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies and to general principles of equity. Neither the Company is nor is any other party to the Material Contracts in material default under any of such Material Contracts.

 

(E)                                            Intellectual Property.

 

(a) Ownership. Except as disclosed in the SEC Reports, to the knowledge of the Company (without having conducted any special investigation or patent search), the Company owns or possesses or can obtain on commercially reasonable terms sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, processes and similar proprietary rights (“Intellectual Property”) necessary to the business of the Company as presently conducted, the lack of which could reasonably be expected to have (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”). The Company has not received any written communication alleging that the Company has violated or, by conducting its business as currently conducted, would violate any of the Intellectual Property of any other person or entity , nor is the Company aware of any basis therefor.

 

(b) No Breach by Employees. Except as disclosed in the SEC Reports, the Company is not aware that any of its employees is obligated under any contract or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would materially interfere with the use of his or her efforts to promote the interests of the Company or that would conflict with the Company’s business as presently conducted. Neither the execution nor delivery of this Agreement, nor the carrying on of the Company’s business by the employees of the Company, nor the conduct of the Company’s business as presently conducted, will, to the Company’s knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any of such employees is now obligated. The Company does not believe it is or will be necessary to use any inventions of any of its employees made prior to their employment by the Company.

 

(F)                                             Title to Properties and Assets; Liens. Except as disclosed in the SEC Reports, to the knowledge of the Company, the Company has good and marketable title to its properties and assets, and has good title to all its leasehold interests, in each case subject to no material mortgage, pledge, lien, lease, encumbrance or charge, other than (i) liens for current taxes not yet due and payable, (ii) liens imposed by law and incurred in the ordinary course of business for obligations not past due, (iii) liens in respect of

 

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pledges or deposits under workers’ compensation laws or similar legislation, and (iv) liens, encumbrances and defects in title which do not in any case materially detract from the value of the property subject thereto or have a Material Adverse Effect, and which have not arisen otherwise than in the ordinary course of business. With respect to the property and assets it leases, the Company is in compliance with such leases in all material respects and, to its knowledge, holds a valid leasehold interest free of any liens, claims or encumbrances, subject to clauses (i)-(iv) above.

 

(G)                                           Compliance with Other Instruments. The Company is not in violation of any material term of its Certificate of Incorporation or bylaws, each as amended to date, or, to the Company’s knowledge, in any material respect of any term or provision of any material mortgage, indebtedness, indenture, contract, agreement, instrument, judgment, order or decree to which it is party or by which it is bound which would have a Material Adverse Effect. To the Company’s knowledge, the Company is not in violation of any federal or state statute, rule or regulation applicable to the Company the violation of which would have a Material Adverse Effect. The execution and delivery of the Agreement by the Company, the performance by the Company of its obligations pursuant to the Agreement, and the issuance of the Securities and such shares of Common Stock into which the Securities may be convertible or for which the Securities may be exercisable, will not result in any material violation of, or materially conflict with, or constitute a material default under, the Company’s Certificate of Incorporation or bylaws, each as amended to date, or any of its agreements, nor, to the Company’s knowledge, result in the creation of any material mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company.

 

(H)                                          Litigation. Except as disclosed in the SEC Reports, there are no actions, suits, proceedings or investigations pending against the Company or its properties (nor has the Company received notice of any threat thereof) before any court or governmental agency. The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit or proceeding initiated by the Company currently pending.

 

(I)                                               Permits. The Company has all franchises, permits, licenses, and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which would have a Material Adverse Effect, and believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as presently planned to be conducted. The Company is not in default in any material respect under any of such franchises, permits, licenses or other similar authority.

 

(J)                                               Offering. Subject to the accuracy of the Subscriber’s representations and warranties, the offer, sale and issuance of the Securities to be issued in conformity with the terms of this Agreement constitutes a transaction exempt from the registration requirements of the Act and, except for such notice requirements as may arise under applicable state law, from the registration or qualification requirements of applicable state securities laws, and neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemption.

 

(K)                                           Tax Returns and Payments. The Company has timely filed all tax returns required to be filed by it with appropriate federal, state and local governmental agencies, except where the failure to do so would not have a Material Adverse Effect. These returns and reports are true and correct in all material respects. All taxes shown to be due and payable on such returns, any assessments imposed, and, to the Company’s knowledge, all other taxes due and payable by the Company have been paid or will be paid prior to the time they become delinquent. The Company has not been advised in writing (i) that any of its returns have been or are being audited as of the date hereof, or (ii) of any deficiency in assessment or proposed judgment with respect to its federal, state or local taxes.

 

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TERMS OF SUBSCRIPTION

 

4.1                               Upon payment of the Purchase Price, Subscriber hereby authorizes and directs the Company to deliver the Securities to be issued to such Subscriber pursuant to this Agreement to Subscriber’s address indicated herein.

 

4.2                               Notwithstanding the place where this Agreement may be executed by any of the parties hereto, the parties expressly agree that all the terms and provisions hereof shall be construed in accordance with and governed by the laws of the State of California. Exclusive venue for any dispute arising out of this Agreement or the Securities shall be the state or federal courts sited in San Jose, California.

 

4.3                               The parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

 

CONDITIONS TO SUBSCRIBER’S OBLIGATION TO CLOSE

 

5.1                               The Subscriber’s obligation to acquire the Securities upon the execution of this Agreement is subject to the fulfillment, on or before the date hereof, of each of the following conditions, unless waived by the Subscriber:

 

(A)                               Representations and Warranties.  The representations and warranties made by the Company in this Agreement shall be true and correct in all material respects as of the date  hereof.

 

(B)                               Covenants.  The Company shall have performed or complied with all covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Company on or prior to the date hereof.

 

(C)                               Blue Sky.  The Company shall have obtained all necessary Blue Sky law permits and qualifications, or have the availability of exemptions therefrom, required by any state for the offer and sale of the Securities, as applicable.

 

(D)                               Consents and Waivers.  The Company and the Subscriber shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreements.

 

(E)                                Proceedings and Documents.  All corporate and other proceedings required to carry out the transactions contemplated by this Agreement, and all instruments and other documents relating to such transactions, shall be reasonably satisfactory in form and substance to the Company, and the Company shall have been furnished with such instruments and documents as it shall have reasonably requested.

 

CONDITIONS TO COMPANY’S OBLIGATION TO CLOSE

 

6.1                               The Company’s obligation to sell and issue the Securities is subject to the fulfillment on or before the date hereof of the following conditions, unless waived by the Company:

 

(A)                               Representations and Warranties.  The representations and warranties made by the Subscriber in this Agreement shall be true and correct in all material respects when made and shall be true and correct as of the date of hereof.

 

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(B)                               Covenants.  The Subscriber shall have performed or complied with all covenants, agreements and conditions contained in the Agreements to be performed or complied with by the Subscriber on or prior to the date hereof in all material respects.

 

(C)                               Compliance with Securities Laws.  The Company shall be satisfied that the offer and sale of the Securities and the Common Stock into which the Securities may be convertible or for which the Securities may be exercisable shall be qualified or exempt from registration or qualification under all applicable federal and state securities laws (including receipt by the Company of all necessary blue sky law permits and qualifications required by any state, if any).

 

(D)                               Consents and Waivers.  The Company and the Subscriber shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreement.

 

(E)                                Proceedings and Documents.  All corporate and other proceedings required to carry out the transactions contemplated by this Agreement, and all instruments and other documents relating to such transactions, shall be reasonably satisfactory in form and substance to the Company, and the Company shall have been furnished with such instruments and documents as it shall have reasonably requested.

 

(F)                                 Accredited Investor Status. Subscriber shall have satisfactorily completed Annex A— Accredited Investor Status.

 

MISCELLANEOUS

 

7.1                   Amendment.  Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing this Agreement and signed by the Company and the Subscriber.

 

7.2                   Notices.  All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid or otherwise delivered by hand, messenger or courier service addressed:

 

(A)                                           if to Subscriber, to the Subscriber’s address as shown in the Company’s records, as may be updated in accordance with the provisions hereof; or

 

(B)                                           if to the Company, to the attention of the Chief Executive Officer or Secretary of the Company at 5941 Optical Ct., San Jose, California 95138, or at such other current address as the Company shall have furnished to the Subscriber.

 

Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid.

 

7.4                               Expenses.  The Company and the Subscriber shall each pay their own expenses in connection with the transactions contemplated by this Agreement.

 

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7.5                               Survival.  The representations, warranties, covenants and agreements made in this Agreement shall survive any investigation made by any party hereto and the closing of the transaction contemplated hereby for 1 year from the date hereof.

 

7.6                               Entire Agreement.  This Agreement, including the exhibits attached hereto, constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. No party shall be liable or bound to any other party in any manner with regard to the subjects hereof or thereof by any warranties, representations or covenants except as specifically set forth herein or therein.

 

7.7                               Delays or Omissions.  Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any party to this Agreement upon any breach or default of any other party under this Agreement shall impair any such right, power or remedy of such non-defaulting party, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in 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. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party to this Agreement, shall be cumulative and not alternative.

 

7.8                               Successors and Assigns.  The provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

 

7.9                               California Corporate Securities Law.  THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

 

7.10                        Severability.  If any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Agreement, and such court will replace such illegal, void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the same economic, business and other purposes of the illegal, void or unenforceable provision. The balance of this Agreement shall be enforceable in accordance with its terms.

 

7.11                        Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.

 

7.12                        Telecopy Execution and Delivery.  A facsimile, telecopy or other reproduction of this Agreement may be executed by one or more parties hereto and delivered by such party by facsimile or any similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen. Such execution and delivery shall be considered valid, binding and effective for all purposes. At the request of any party hereto, all parties hereto agree to execute and deliver an original of this Agreement as well as any facsimile, telecopy or other reproduction hereof.

 

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7.14                        Further Assurances.  Each party hereto agrees to execute and deliver, by the proper exercise of its corporate, limited liability company, partnership or other powers, all such other and additional instruments and documents and do all such other acts and things as may be necessary to more fully effectuate this Agreement.

 

7.15                        Attorney’s Fees.  In the event that any suit or action is instituted to enforce any provisions in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party  all fees, costs and expenses of appeals.

 

7.16                        Jury Trial.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING (WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATED TO THIS AGREEMENT. Any claim or cause of action arising out of or relating to this Agreement shall be settled by judicial reference pursuant to California Code of Civil Procedure Section 638 et seq. before a referee sitting without a jury, such referee to be mutually acceptable to the parties or, if no agreement is reached, by a referee appointed by the Presiding Judge of the California Superior Court for Santa Clara County. This paragraph shall not restrict a party from exercising remedies under the Uniform Commercial Code or from exercising pre-judgment remedies under applicable law.

 

7.17                        Obligation of Company.  The Company agrees to use its reasonable efforts to enforce the terms of this Agreement, to inform the Subscriber of any breach hereof (to the extent the Company has knowledge thereof) and to assist the Subscriber in the exercise of its rights and the performance of its obligations hereunder.

 

[remainder of this page intentionally blank, accredited investor

status page and signature page to follow]

 

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ANNEX A

 

ACCREDITED INVESTOR STATUS

 

o  By checking this box, Subscriber represents and warrants to the Company that the Subscriber is an “Accredited Investor” as such term is defined in Rule 501 of Regulation D promulgated under the United States Securities Act of 1933, as amended (the “Act”).  The Subscriber acknowledges having reviewed and considered the definition of “Accredited Investor” as follows:

 

Accredited Investor Definition

 

The Subscriber will be an “Accredited Investor” as such term is defined in Rule 501 of Regulation D promulgated under the United States Securities Act of 1933, as amended (the “Act”) if the Subscriber is any of the following:

 

a)                         Any bank as defined in section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(a)(13) of the Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

 

b)                         Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;

 

c)                          Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;

 

d)                         Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;

 

e)                          Any natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his purchase exceeds $1,000,000, exclusive of the value of such person’s primary residence;

 

f)                           Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

 

g)                          Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii); and

 

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h)                         Any entity in which all of the equity owners are accredited investors.

 

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IN WITNESS WHEREOF, this Stock Subscription Agreement is executed as of the Effective Date.

 

	
 
	
Number of Common Stock Shares Subscribed   For:
    	
 
    
	
 
	
 
    	
 
    
	
 
	
Total Purchase Price:
    	
 
    
	
 
	
 
    	
 
    
	
 
	
Signature of Authorized Signatory:
    	
 
    
	
 
	
 
    	
 
    
	
 
	
Name of Authorized Signatory:
    	
 
    
	
 
	
 
    	
 
    
	
 
	
Title of Authorized Signatory:
    	
 
    
	
 
	
 
    	
 
    
	
 
	
Name of Subscriber:
    	
 
    
	
 
	
 
    	
 
    
	
 
	
Address of Subscriber:
    	
 
    
	
 
	
 
    	
 
    
	
 
	
Subscriber’s tax ID or EIN #:
    	
 
    
	
 
	
 
    	
 
    
	
Subscriber’s Email Address:
    	
 
    	
 
    	
 

	
 
    	
 
    	
 
    	
 

	
ACCEPTED BY:
    	
 
    	
 
    	
 

	
 
    	
 
    	
 
    	
 

	
Aridis Pharmacueticals, Inc., a Delaware corporation
    	
 

	
 
    	
 
    	
 
    	
 

	
Signature of Authorized Signatory:
    	
 
    	
 
    	
 

	
 
    	
 
    	
 
    	
 

	
Name of Authorized Signatory:
    	
 
    	
 
    	
 

	
 
    	
 
    	
 
    	
 

	
Title of Authorized Signatory:
    	
 
    	
 
    	
 

					

 

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