Document:

ex10-3.htm

Exhibit 10.3

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (the “Agreement”) is made and entered into as of this 10th day of March, 2014 by and among Mobivity Holdings Corp., a Nevada corporation (the “Company”), and the investors identified on the signature pages hereto (each, including its successors and assigns, an “Investor,” and collectively, the “Investors”).

 

R E C I T A L S

 

WHEREAS, the Company will sell up to $6,000,000 of the Company’s Common Stock and warrants to certain of the Investors pursuant to that certain Securities Purchase Agreement (the “Purchase Agreement”) dated as of even date herewith by and among the Company and the Investors.

 

A G R E E M E N T

 

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

 

The parties hereby agree as follows:

 

1.           Certain Definitions.  As used in this Agreement, the following terms shall have the following meanings:

 

“Business Day” means any day other than a Saturday, Sunday or a day which is a Federal legal holiday in the U.S.

 

“Common Stock” means the Company’s common stock, par value $0.001 per share, and any securities into which such shares may hereinafter be reclassified.

 

“Prospectus” means (i) the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus, and (ii) any “free writing prospectus” as defined in Rule 405 under the 1933 Act.

 

“Register,” “registered” and “registration” refer to a registration made by preparing and filing a Registration Statement or similar document in compliance with the 1933 Act (as defined below), and the declaration or ordering of effectiveness of such Registration Statement or document.

 

“Registrable Securities” means (i) the Shares, (ii) the Warrant Shares, and (iii) any other securities issued or issuable with respect to or in exchange for Registrable Securities, whether by merger, charter amendment or otherwise; provided, that, a security shall cease to be a Registrable Security upon sale pursuant to a Registration Statement or Rule 144 under the 1933 Act.

 

  

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“Registration Statement” means any registration statement of the Company filed under the 1933 Act (including a post-effective amendment to a previously filed registration statement) that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.

 

“Required Investors” means the Investors holding a majority of the Registrable Securities.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Shares” means the shares of Common Stock issued pursuant to the Purchase Agreement.

 

“Warrant Shares” means the shares of Common Stock issuable upon the exercise of warrants issued pursuant to the Purchase Agreement.

 

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

 

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

 

2.           Registration.

 

(a)           Registration Statements.

 

(i)           Promptly following the final closing date of the transactions contemplated by the Purchase Agreement (the “Closing Date”) but no later than May 15, 2014 (the “Filing Deadline”), the Company shall prepare and file with the SEC one Registration Statement on Form S-1 (or, if Form S-1 is not then available to the Company, on such form of registration statement as is then available to effect a registration for resale of the Registrable Securities), or a post-effective amendment to a previously filed registration statement on Form S-1, covering the resale of the Registrable Securities.  Subject to any SEC comments, such Registration Statement shall include the plan of distribution attached hereto as Exhibit A; provided, however, that no Investor shall be named as an “underwriter” in the Registration Statement without the Investor’s prior written consent.  Such Registration Statement also shall cover, to the extent allowable under the 1933 Act and the rules promulgated thereunder (including Rule 416), such indeterminate number of additional shares of Common Stock resulting from stock splits, stock dividends or similar transactions with respect to the Registrable Securities.  The Registration Statement (and each amendment or supplement thereto, and each request for acceleration of effectiveness thereof) shall be provided in accordance with Section 3(c) to the Investors and their counsel prior to its filing or other submission.  If a Registration Statement covering the Registrable Securities is not filed with the SEC on or prior to the Filing Deadline, the Company will make pro rata payments to each Investor, as liquidated damages and not as a penalty, in an amount equal to 1.5% of the aggregate amount invested by such Investor for each 30-day period or pro rata for any portion thereof following the Filing Deadline for which no Registration Statement is filed with respect to the Registrable Securities.  Such payments shall constitute the Investors’ exclusive monetary remedy for such events, but shall not affect the right of the Investors to seek injunctive relief.  Such payments shall be made to each Investor in cash no later than three (3) Business Days after the end of each 30-day period.

 

  

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(ii)           S-3 Qualification.  As soon as reasonably practicable following the date upon which the Company becomes eligible to use a registration statement on Form S-3 to register the Registrable Securities for resale (the “Qualification Date”), the Company shall file a registration statement on Form S-3 covering the Registrable Securities (or a post-effective amendment on Form S-3 to the registration statement on Form S-1) (a “Shelf Registration Statement”) and shall use commercially reasonable efforts to cause such Shelf Registration Statement to be declared effective as promptly as practicable thereafter.

 

(b)           Expenses.  The Company will pay all expenses associated with each registration, including filing and printing fees, the Company’s counsel and accounting fees and expenses, costs associated with clearing the Registrable Securities for sale under applicable state securities laws, listing fees, reasonable fees and expenses of one counsel to the Investors and the Investors’ reasonable expenses in connection with the registration, but excluding discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar securities industry professionals with respect to the Registrable Securities being sold.

 

(c)           Effectiveness.

 

(i)           The Company shall use commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable.  The Company shall notify the Investors by facsimile or e-mail as promptly as practicable, and in any event, within twenty-four (24) hours, after any Registration Statement is declared effective and shall simultaneously provide the Investors with copies of any related Prospectus to be used in connection with the sale or other disposition of the securities covered thereby.  If (A) a Registration Statement covering the Registrable Securities is not declared effective by the SEC prior to the earlier of (i) five (5) Business Days after the SEC shall have informed the Company that no review of the Registration Statement will be made or that the SEC has no further comments on the Registration Statement or (ii) August 15, 2014, or  then the Company will make pro rata payments to each Investor, as liquidated damages and not as a penalty, in an amount equal to 1.5% of the aggregate amount invested by such Investor for each 30-day period or pro rata for any portion thereof following the date by which such Registration Statement should have been effective (the “Blackout Period”).  Such payments shall constitute the Investors’ exclusive monetary remedy for such events, but shall not affect the right of the Investors to seek injunctive relief.  The amounts payable as liquidated damages pursuant to this paragraph shall be paid monthly within three (3) Business Days of the last day of each 30-day period following the commencement of the Blackout Period until the termination of the Blackout Period.  Such payments shall be made to each Investor in cash.

 

  

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(ii)           Notwithstanding anything herein to the contrary, the Company may suspend the use of any Prospectus included in any Registration Statement contemplated by this Section in the event that the Company determines in good faith that such suspension is necessary to (A) delay the disclosure of material non-public information concerning the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company or (B) amend or supplement the affected Registration Statement or the related Prospectus so that such Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not misleading (an “Allowed Delay”); provided, that the Company shall promptly (a) notify each Investor in writing of the commencement of and the reasons for an Allowed Delay, but shall not (without the prior written consent of an Investor) disclose to such Investor any material non-public information giving rise to an Allowed Delay, (b) advise the Investors in writing to cease all sales under the Registration Statement until the end of the Allowed Delay and (c) use commercially reasonable efforts to terminate an Allowed Delay as promptly as practicable.

 

(d)           Rule 415; Cutback  If at any time the SEC takes the position that the offering of some or all of the Registrable Securities in a Registration Statement (alone or together with previously or subsequently registered shares of Common Stock) is not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 under the 1933 Act or requires any Investor to be named as an “underwriter”, the Company shall use its best efforts to persuade the SEC that the offering contemplated by the Registration Statement is a valid secondary offering and not an offering “by or on behalf of the issuer” as defined in Rule 415 and that none of the Investors is an “underwriter”.  The Investors shall have the right to participate or have their counsel participate in any meetings or discussions with the SEC regarding the SEC’s position (unless in the reasonable opinion of the Company or its counsel, such participation will be to the detriment to the Company in that it may cause undue delays in the registration process or for other reasons) and to comment or have their counsel comment on any written submission made to the SEC with respect thereto.  No such written submission shall be made to the SEC to which the Investors’ counsel reasonably objects.  In the event that, despite the Company’s best efforts and compliance with the terms of this Section 2(d), the SEC refuses to alter its position, the Company shall (i) remove from the Registration Statement such portion of the Registrable Securities (the “Cut Back Shares”) and/or (ii) agree to such restrictions and limitations on the registration and resale of the Registrable Securities as the SEC may require to assure the Company’s compliance with the requirements of Rule 415 (collectively, the “SEC Restrictions”); provided, however, that the Company shall not agree to name any Investor as an “underwriter” in such Registration Statement without the prior written consent of such Investor.  Any cut-back imposed on the Investors pursuant to this Section 2(d) shall be allocated among the Investors (and the holders of any previously or subsequently registered shares of Common Stock whose shares are subject to the Rule 415 position taken by the SEC) on a pro rata basis, unless the SEC Restrictions otherwise require or provide or the Investors otherwise agree.  No liquidated damages shall accrue as to any Cut Back Shares until such date as the Company is able to effect the registration of such Cut Back Shares in accordance with any SEC Restrictions (such date, the “Restriction Termination Date” of such Cut Back Shares).  From and after the Restriction Termination Date applicable to any Cut Back Shares, all of the provisions of this Section 2 (including the liquidated damages provisions) shall again be applicable to such Cut Back Shares; provided, however, that (i) the Filing Deadline and/or the Qualification Deadline, as applicable, for the Registration Statement including such Cut Back Shares shall be ten (10) Business Days after such Restriction Termination Date, and (ii) the date by which the Company is required to obtain effectiveness with respect to such Cut Back Shares under Section 2(c) shall be the 90th day immediately after the Restriction Termination Date.

 

  

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3.           Company Obligations.  The Company will use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the terms hereof, and pursuant thereto the Company will, as expeditiously as possible:

 

(a)           use commercially reasonable efforts to cause such Registration Statement to become effective and to remain continuously effective for a period that will terminate upon the earlier of (i) the date on which all Registrable Securities covered by such Registration Statement as amended from time to time, have been sold, and (ii) the date on which all Registrable Securities covered by such Registration Statement may be sold without restriction pursuant to Rule 144 (the “Effectiveness Period”) and advise the Investors in writing when the Effectiveness Period has expired;

 

(b)           prepare and file with the SEC such amendments and post-effective amendments to the Registration Statement and the Prospectus as may be necessary to keep the Registration Statement effective for the Effectiveness Period and to comply with the provisions of the 1933 Act and the 1934 Act with respect to the distribution of all of the Registrable Securities covered thereby;

 

(c)           provide copies to and permit counsel designated by the Investors to review each Registration Statement and all amendments and supplements thereto no fewer than seven (7) days prior to their filing with the SEC and not file any document to which such counsel reasonably objects;

 

(d)           furnish to the Investors and their legal counsel (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company (but not later than two (2) Business Days after the filing date, receipt date or sending date, as the case may be) one (1) copy of any Registration Statement and any amendment thereto, each preliminary prospectus and Prospectus and each amendment or supplement thereto, and each letter written by or on behalf of the Company to the SEC or the staff of the SEC, and each item of correspondence from the SEC or the staff of the SEC, in each case relating to such Registration Statement (other than any portion of any thereof which contains information for which the Company has sought confidential treatment), and (ii) such number of copies of a Prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents as each Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investor that are covered by the related Registration Statement;

 

  

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(e)           use commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and, (ii) if such order is issued, obtain the withdrawal of any such order at the earliest possible moment;

 

(f)           prior to any public offering of Registrable Securities, use commercially reasonable efforts to register or qualify or cooperate with the Investors and their counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions requested by the Investors and do any and all other commercially reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(f), (ii) subject itself to general taxation in any jurisdiction where it would not otherwise be so subject but for this Section 3(f), or (iii) file a general consent to service of process in any such jurisdiction;

 

(g)           use commercially reasonable efforts to cause all Registrable Securities covered by a Registration Statement to be listed on each securities exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed;

 

(h)           immediately notify the Investors, at any time prior to the end of the Effectiveness Period, upon discovery that, or upon the happening of any event as a result of which, the Prospectus includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly prepare, file with the SEC and furnish to such holder a supplement to or an amendment of such Prospectus as may be necessary so that such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; and

 

(i)           otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the 1933 Act and the 1934 Act, including, without limitation, Rule 172 under the 1933 Act, file any final Prospectus, including any supplement or amendment thereof, with the SEC pursuant to Rule 424 under the 1933 Act, promptly inform the Investors in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Investors are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder; and make available to its security holders, as soon as reasonably practicable, but not later than the Availability Date (as defined below), an earnings statement covering a period of at least twelve (12) months, beginning after the effective date of each Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the 1933 Act, including Rule 158 promulgated thereunder (for the purpose of this subsection 3(i), “Availability Date” means the 45th day following the end of the fourth fiscal quarter that includes the effective date of such Registration Statement, except that, if such fourth fiscal quarter is the last quarter of the Company’s fiscal year, “Availability Date” means the 90th day after the end of such fourth fiscal quarter).

 

  

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(j)           With a view to making available to the Investors the benefits of Rule 144 (or its successor rule) and any other rule or regulation of the SEC that may at any time permit the Investors to sell shares of Common Stock to the public without registration, the Company covenants and agrees to:  (i) make and keep public information available, as those terms are understood and defined in Rule 144, until the earlier of (A) six months after such date as all of the Registrable Securities may be sold without restriction by the holders thereof pursuant to Rule 144 or any other rule of similar effect or (B) such date as all of the Registrable Securities shall have been resold; (ii) file with the SEC in a timely manner all reports and other documents required of the Company under the 1934 Act; (iii) furnish to each Investor upon request, as long as such Investor owns any Registrable Securities, (A) a written statement by the Company that it has complied with the reporting requirements of the 1934 Act, (B) a copy of the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other information as may be reasonably requested in order to avail such Investor of any rule or regulation of the SEC that permits the selling of any such Registrable Securities without registration; and (iv) use commercially reasonable efforts to assist each Investor with the removal of any legends required under Rule 144 under the 1933 Act, including with respect to any opinions required thereby, provided that the Company’s obligations hereunder are subject to the reasonable determination of the Company and the Company’s counsel that any such legend removal complies with the 1933 Act.

 

4.           Due Diligence Review; Information.  Upon written request, the Company shall make available, during normal business hours, for inspection and review by the Investors, advisors to and representatives of the Investors (who may or may not be affiliated with the Investors and who are reasonably acceptable to the Company), all financial and other records, all SEC Filings and other filings with the SEC, and all other corporate documents and properties of the Company as may be reasonably necessary for the purpose of such review, and cause the Company’s officers, directors and employees, within a reasonable time period, to supply all such information reasonably requested by the Investors or any such representative, advisor or underwriter in connection with such Registration Statement (including, without limitation, in response to all questions and other inquiries reasonably made or submitted by any of them), prior to and from time to time after the filing and effectiveness of the Registration Statement for the sole purpose of enabling the Investors and such representatives, advisors and underwriters and their respective accountants and attorneys to conduct initial and ongoing due diligence with respect to the Company and the accuracy of such Registration Statement.  As a condition to such inspection and review, the Company may require the Investors to enter into confidentiality agreements.

 

The Company shall not disclose material nonpublic information to the Investors, or to advisors to or representatives of the Investors, unless prior to disclosure of such information the Company identifies such information as being material nonpublic information and provides the Investors, such advisors and representatives with the opportunity to accept or refuse to accept such material nonpublic information for review and any Investor wishing to obtain such information enters into an appropriate confidentiality agreement with the Company with respect thereto.

 

  

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5.           Obligations of the Investors.

 

(a)           Each Investor shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.  At least five (5) Business Days prior to the first anticipated filing date of any Registration Statement, the Company shall notify each Investor of the information the Company requires from such Investor if such Investor elects to have any of the Registrable Securities included in the Registration Statement.  An Investor shall provide such information to the Company at least two (2) Business Days prior to the first anticipated filing date of such Registration Statement if such Investor elects to have any of the Registrable Securities included in the Registration Statement.

 

(b)           Each Investor, by its acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of a Registration Statement hereunder, unless such Investor has notified the Company in writing of its election to exclude all of its Registrable Securities from such Registration Statement.

 

(c)           Each Investor agrees that, upon receipt of any notice from the Company of either (i) the commencement of an Allowed Delay pursuant to Section 2(c)(ii) or (ii) the happening of an event pursuant to Section 3(h) hereof, such Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until the Investor is advised by the Company that such dispositions may again be made.

 

6.           Indemnification.

 

(a)           Indemnification by the Company.  The Company will indemnify and hold harmless each Investor and its officers, directors, members, managers, employees and agents, successors and assigns, and each other person, if any, who controls such Investor within the meaning of the 1933 Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement or omission or alleged omission of any material fact contained in any Registration Statement, any preliminary Prospectus or final Prospectus, or any amendment or supplement thereof; (ii) any blue sky application or other document executed by the Company specifically for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction in order to qualify any or all of the Registrable Securities under the securities laws thereof (any such application, document or information herein called a “Blue Sky Application”); (iii) the omission or alleged omission to state in a Blue Sky Application a material fact required to be stated therein or necessary to make the statements therein not misleading; (iv) any violation by the Company or its agents of any rule or regulation promulgated under the 1933 Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection with such registration; or (v) any failure to register or qualify the Registrable Securities included in any such Registration Statement in any state where the Company or its agents has affirmatively undertaken or agreed in writing that the Company will undertake such registration or qualification on an Investor’s behalf and will reimburse such Investor, and each such officer, director or member and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Investor or any such controlling person in writing specifically for use in such Registration Statement or Prospectus.

 

  

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(b)           Indemnification by the Investors.  Each Investor agrees, severally but not jointly, to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers, employees, stockholders and each person who controls the Company (within the meaning of the 1933 Act) against any losses, claims, damages, liabilities and expense (including reasonable attorney fees) resulting from any untrue statement of a material fact or any omission of a material fact required to be stated in the Registration Statement or Prospectus or preliminary Prospectus or amendment or supplement thereto or necessary to make the statements therein not misleading, to the extent, but only to the extent that such untrue statement or omission is contained in any information furnished in writing by such Investor to the Company specifically for inclusion in such Registration Statement or Prospectus or amendment or supplement thereto.  In no event shall the liability of an Investor be greater in amount than the dollar amount of the proceeds (net of all expense paid by such Investor in connection with any claim relating to this Section 6 and the amount of any damages such Investor has otherwise been required to pay by reason of such untrue statement or omission) received by such Investor upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.

 

(c)           Conduct of Indemnification Proceedings.  Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (c) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and provided, further, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation.  It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties.  No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation.

 

  

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(d)           Contribution.  If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) is unavailable to an indemnified party or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations.  No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation.  In no event shall the contribution obligation of a holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such holder in connection with any claim relating to this Section 6 and the amount of any damages such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.

 

7.           Miscellaneous.

 

(a)           Amendments and Waivers.  This Agreement may be amended only by a writing signed by the Company and the Required Investors.  The Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written consent to such amendment, action or omission to act, of the Required Investors.

 

(b)           Notices.  All notices and other communications provided for or permitted hereunder shall be made as set forth in the Purchase Agreement.

 

(c)           Assignments and Transfers by Investors.  The provisions of this Agreement shall be binding upon and inure to the benefit of the Investors and their respective successors and assigns.  An Investor may transfer or assign, in whole or from time to time in part, to one or more persons its rights hereunder in connection with the transfer of Registrable Securities by such Investor to such person, provided that such Investor complies with all laws applicable thereto and provides written notice of assignment to the Company promptly after such assignment is effected and agrees in writing to be bound by the terms hereof.

 

(d)           Assignments and Transfers by the Company.  This Agreement may not be assigned by the Company (whether by operation of law or otherwise) without the prior written consent of the Required Investors, provided, however, that in the event that the Company is a party to a merger, consolidation, share exchange or similar business combination transaction in which the Common Stock is converted into the equity securities of another Person, from and after the effective time of such transaction, such Person shall, by virtue of such transaction, be deemed to have assumed the obligations of the Company hereunder, the term “Company” shall be deemed to refer to such Person and the term “Registrable Securities” shall be deemed to include the securities received by the Investors in connection with such transaction unless such securities are otherwise freely tradable by the Investors after giving effect to such transaction.

 

  

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(e)           Benefits of the Agreement.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

(f)           Counterparts; Faxes.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  This Agreement may also be executed via facsimile, which shall be deemed an original.

 

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

 

(h)           Severability.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable in any respect.

 

(i)           Further Assurances.  The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

 

(j)           Entire Agreement.  This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein.  This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

 

  

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(k)           Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.  This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the choice of law principles thereof.  Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York  located in New York County and the United States District Court for the Southern District for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby.  Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement.  Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court.  Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written.

 

MOBIVITY HOLDINGS CORP.

 

By:  /s/Dennis Becker                                           

Name: Dennis Becker

Title:  Chief Executive Officer

 

  

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

 

INVESTOR

 

__________________________________________

Name of Investor

 

__________________________________________

Signature of Investor or by Authorized Person 

executing for Investor

 

Printed Name:______________________________

 

Title:_____________________________________

 

Its:_______________________________________

	
  

	
(Printed Name of Authorized Person and Title

	
  

	
 for Person executing for Investor)

 

 

[EXECUTED SIGNATURE PAGES OF THE INVESTORS OMITTED]

 

  

13

  

 

Exhibit A

 

Plan of Distribution

 

The selling stockholders, which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions.  These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.

 

The selling stockholders may use any one or more of the following methods when disposing of shares or interests therein:

 

- ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

- block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;

 

- purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

- an exchange distribution in accordance with the rules of the applicable exchange;

 

- privately negotiated transactions;

 

- short sales effected after the date the registration statement of which this Prospectus is a part is declared effective by the SEC;

 

- through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

 

- broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; and

 

- a combination of any such methods of sale.

 

The selling stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.  The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

 

  

A-1

  

 

In connection with the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume.  The selling stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities.  The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

The aggregate proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any.  Each of the selling stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents.  We will not receive any of the proceeds from this offering.

 

The selling stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of 1933, provided that they meet the criteria and conform to the requirements of that rule.

 

The selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be “underwriters” within the meaning of Section 2(11) of the Securities Act.  Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act.  Selling stockholders who are “underwriters” within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act.

 

To the extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.

 

In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers.  In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.

 

We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling stockholders and their affiliates.  In addition, to the extent applicable we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act.  The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.

 

  

A-2

  

 

We have agreed to indemnify the selling stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus.

 

We have agreed with the selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until the earlier of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration statement or (2) the date on which the shares may be sold without restriction pursuant to Rule 144 of the Securities Act.

 

A-3ex10-20.htm

Exhibit 10.20

COCRYSTAL DISCOVERY, INC.

 

SHARE PURCHASE AGREEMENT

 

This Share Purchase Agreement (the "Agreement") is entered into as of September 13, 2011 by and between Cocrystal Discovery, Inc., a Delaware corporation (the "Company"), and Teva Pharmaceutical Industries Limited, a limited share company organized under the laws of Israel ("Teva").  Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to such term in Exhibit C attached hereto.

 

RECITALS

 

Teva wishes to purchase, and the Company wishes to sell and issue, shares of the Company's Common Stock, $0.0001 par value per share (the "Shares"), for cash consideration in one or more Closings (as defined below), on the terms and conditions set forth in this Agreement.  Contemporaneous with the execution and delivery of this Agreement, the Company and Teva are entering into that certain Research and Collaboration Agreement dated as of September 13, 2011 (the "Research Agreement") and that certain Exclusive License Option Agreement dated as of September 13, 2011 (the "License Agreement").

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual representations, warranties and covenants set forth below and in the Research Agreement and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties hereto agree as follows:

 

1. Purchase and Sale of Shares.

 

(a) Purchase and Sale of Shares.  On or prior to each Closing (as defined below), the Company shall have authorized the sale and issuance to Teva of such number of Shares as determined pursuant to this Agreement for such Closing.  Subject to the terms and conditions of this Agreement and the Research Agreement, Teva shall purchase at the applicable Closing, and the Company shall sell and issue to Teva at such Closing, the number of Shares for such Closing as determined pursuant to the applicable subsection of Section 2(a) below at a purchase price per Share for such Closing as determined pursuant to the applicable subsection of Section 2(a) below.

 

(b) Use of Proceeds.  The proceeds from each Closing as set forth in Section 2(b)(ii) below shall be used in accordance with the terms of the Research Agreement.

 

2. Closing; Delivery.

 

(a) Closing.  Each event in which Teva shall purchase, and the Company shall sell and issue, Shares under this Agreement shall be deemed a "Closing," unless otherwise specified.

 

(i) Initial Closing.  Fourteen (14) days from and after the date first above written, the initial purchase and sale of a portion of the Shares under this Agreement shall take place at the offices of Perkins Coie LLP, 1201 Third Avenue, Suite 4800, Seattle, Washington, or such other place and time as the Company and Teva mutually determine in writing (the "Initial Closing").  The aggregate purchase price of the Shares purchased at the Initial Closing, the number of Shares purchased at the Initial Closing and the purchase price per share of such Shares is set forth on Exhibit A under the heading "Initial Closing."

 

  

  

  

(ii) First Target - Second Closing.  Subject to Section 2(a)(vii) below, if (A) Teva provides written notice to the Company of Teva's intent to exercise its option for the Second Investment in the First Target pursuant to the terms and subject to the conditions of the Research Agreement, (B) the Company has delivered a preliminary, updated Disclosure Schedule (as hereinafter defined) to Teva within ten (10) days after the Company has received Teva’s notice as set forth in Subsection (A) above, and (C) Teva, in its sole discretion, decides within thirty (30) days after receipt of such Disclosure Schedule to exercise its option and to purchase the Shares to be issued with respect to the Second Investment in the First Target, as determined pursuant to the terms of this Agreement, and provides written notice of such purchase decision to the Company within such period, then such purchase and sale shall take place at the offices of Perkins Coie LLP, 1201 Third Avenue, Suite 4800, Seattle, Washington at 11:00 a.m. Pacific time on the date that is ten (10) days following the date upon which Teva's notice to the Company of such purchase decision is deemed effectively given, or such other place, date and time as the Company and Teva mutually determine in writing.  The aggregate purchase price for the Shares purchased at such Closing shall be $7,500,000.  The purchase price per share of the Shares purchased at such Closing and the number of Shares purchased at such Closing shall be determined by the Company and Teva in accordance with the provisions of the attached Exhibit B.

 

(iii) Second Target – First Closing.  Subject to Section 2(a)(vii) below, if (A) Teva provides written notice to the Company of Teva's intent to exercise its option for the Initial Investment in the Second Target pursuant to the terms and subject to the conditions of the Research Agreement, (B) the Company has delivered a preliminary, updated Disclosure Schedule to Teva within ten (10) days after the Company has received Teva’s notice as set forth in Subsection (A) above, and, and (C) Teva, in its sole discretion, decides within thirty (30) days after receipt of such Disclosure Schedule to exercise its option and to purchase the Shares to be issued with respect to the Initial Investment in the Second Target, as determined pursuant to the terms of this Agreement, and provides written notice of such decision to the Company within such period, then such purchase and sale shall take place at the offices of Perkins Coie LLP, 1201 Third Avenue, Suite 4800, Seattle, Washington at 11:00 a.m. Pacific time on the date that is ten (10) days following the date upon which Teva's notice to the Company of such purchase decision is deemed effectively given, or such other place, date and time as the Company and Teva mutually determine in writing.  The aggregate purchase price for the Shares purchased at such Closing shall be $7,500,000.  The purchase price per share of the Shares purchased at such Closing and the number of Shares purchased at such Closing shall be determined by the Company and Teva in accordance with the provisions of the attached Exhibit B.

 

(iv) Second Target – Second Closing.  Subject to Section 2(a)(vii) below, if (A) Teva provides written notice to the Company of Teva's intent to exercise its option for the Second Investment in the Second Target pursuant to the terms and subject to the conditions of the Research Agreement, (B) the Company has delivered a preliminary, updated Disclosure Schedule to Teva within ten (10) days after the Company has received Teva’s notice as set forth in Subsection (A) above, and, and (C) Teva, in its sole discretion, decides within thirty (30) days after receipt of such Disclosure Schedule to exercise its option and to purchase the Shares to be issued with respect to the Second Investment in the Second Target, as determined pursuant to the terms of this Agreement, and provides written notice of such decision to the Company within such period, then such purchase and sale shall take place at the offices of Perkins Coie LLP, 1201 Third Avenue, Suite 4800, Seattle, Washington at 11:00 a.m. Pacific time on the date that is ten (10) days following the date upon which Teva's notice to the Company of such purchase decision is deemed effectively given, or such other place, date and time as the Company and Teva mutually determine in writing.  The aggregate purchase price for the Shares purchased at such Closing shall be $7,500,000.  The purchase price per share of the Shares purchased at such Closing and the number of Shares purchased at such Closing shall be determined by the Company and Teva in accordance with the provisions of the attached Exhibit B.

  

  

  

(v) Third Target – First Closing.  Subject to Section 2(a)(vii) below, if (A) Teva provides written notice to the Company of Teva's intent to exercise its option for the Initial Investment in the Third Target pursuant to the terms and subject to the conditions of the Research Agreement, (B) the Company has delivered a preliminary, updated Disclosure Schedule to Teva within ten (10) days after the Company has received Teva’s notice as set forth in Subsection (A) above, and, and (C) Teva, in its sole discretion, decides within thirty (30) days after receipt of such Disclosure Schedule to exercise its option and to purchase the Shares to be issued with respect to the Initial Investment in the Third Target, as determined pursuant to the terms of this Agreement, and provides written notice of such decision to the Company within such period, then such purchase and sale shall take place at the offices Perkins Coie LLP, 1201 Third Avenue, Suite 4800, Seattle, Washington at 11:00 a.m. Pacific time on the date that is ten (10) business days following the date upon which Teva's notice to the Company of such purchase decision is deemed effectively given, or such other place, date and time as the Company and Teva mutually determine in writing.  The aggregate purchase price of the Shares purchased at such Closing shall be $7,500,000.  The purchase price per share of the Shares purchased at such Closing, and the number of Shares purchased at such Closing shall be determined by the Company and Teva in accordance with the provisions of the attached Exhibit B.

 

(vi) Third Target – Second Closing.  Subject to Section 2(a)(vii) below, if (A) Teva provides written notice to the Company of Teva's intent to exercise its option for the Second Investment in the Third Target pursuant to the terms and subject to the conditions of the Research Agreement, (B) the Company has delivered a preliminary, updated Disclosure Schedule to Teva within ten (10) days after the Company has received Teva’s notice as set forth in Subsection (A) above, and, and (C) Teva, in its sole discretion, decides within thirty (30) days after receipt of such Disclosure Schedule to exercise its option and to purchase the Shares to be issued with respect to the Second Investment in the Third Target, as determined pursuant to the terms of this Agreement, and provides written notice of such decision to the Company within such period, then such purchase and sale shall take place at the offices of Perkins Coie LLP, 1201 Third Avenue, Suite 4800, Seattle, Washington at 11:00 a.m. Pacific time on the date that is ten (10) days following the date upon which Teva's notice to the Company of such purchase decision is deemed effectively given, or such other place, date and time as the Company and Teva mutually determine in writing.  The aggregate purchase price of the Shares purchased at such Closing shall be $7,500,000.  The purchase price per share of the Shares purchased at such Closing and the number of Shares purchased at such Closing shall be determined by the Company and Teva in accordance with the provisions of the attached Exhibit B.

 

(vii) Notice and Funding Requirements.  Notwithstanding anything in this Agreement to the contrary, the time periods within which the Initial Investments and the Second Investments are to be made as set forth in the Research Agreement shall not be delayed, and Teva shall initiate its notice process under the applicable subsection of Section 2(a) early enough in order to complete its purchase of Shares pursuant to this Agreement, if at all, within the time frames for equity investments set forth in the applicable provision of Sections 4.1.1 and 4.1.2 of the Research Agreement.

 

(b) Closing Deliverables.

 

(i) Company.  At each Closing, the Company shall deliver to Teva:

 

(A) a certificate representing the Shares being purchased by Teva at such Closing, registered in the name of Teva;

 

(B) a certificate, in form and substance reasonably satisfactory to Teva, executed by an officer of the Company certifying on behalf of the Company:

 

(1) that the representations and warranties of the Company contained in Section 3 of the Agreement and Section 8.2 of the Research Agreement, except as set forth on the Disclosure Schedule delivered to Teva in connection with such Closing, are true and correct as of the date of such Closing; and

  

  

  

(2) that the Company has performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Agreement and the Research Agreement to be performed, satisfied or complied with by the Company at or prior to such Closing;

 

(C) a Disclosure Schedule dated as of the date of such Closing; and

 

(D) any other documents reasonably requested by Teva or its counsel in connection with such Closing, including, without limitation, a customary secretary's certificate.

 

(ii) Teva.  At each Closing, Teva shall deliver to the Company payment of $7,500,000 in immediately available funds by wire transfer to a bank account designated by the Company at least three (3) days prior to such Closing.

 

(c) Schedule of Investments.  The Company shall update Exhibit A to this Agreement after each Closing to reflect the number of Shares purchased at such Closing and the purchase price per share of such Shares (in each case as determined pursuant to the applicable subsection of Section 2(a)), which update shall not be considered an amendment to this Agreement or otherwise require the consent of Teva.

 

3. Representations and Warranties of the Company.  The Company shall deliver a disclosure schedule (a "Disclosure Schedule") to Teva in connection with each Closing pursuant to the provisions of Section 2(b)(i)(C).  The Company hereby represents and warrants to Teva that, except as set forth on the Disclosure Schedule delivered to Teva in connection with the applicable Closing, the statements in the following paragraphs are all true and correct as of immediately prior to the applicable Closing:

 

(a) Organization, Valid Existence and Corporate Power.  The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, and has all requisite corporate power and authority to own its properties and carry on its business as currently conducted.  The Company is duly qualified to transact business and is in valid existence in the State of Washington, and is duly qualified to transact business and is in good standing in each other jurisdiction in which the failure to so qualify would have a material adverse effect on its business, financial condition or operating results.

 

(b) Authorization.  All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Company hereunder and the authorization, issuance and delivery of the Shares has been taken or will be taken prior to such Closing.  This Agreement constitutes a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other laws of general application affecting enforcement of creditors' rights generally, or (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

 

(c) Valid Issuance of Shares.  The Shares, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this Agreement, will be validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under applicable state and federal securities laws and liens or encumbrances created by or imposed by Teva.  Based in part upon the representations of Teva in Section 4 of this Agreement, the Shares will be issued in compliance with all applicable federal and state securities laws.

  

  

  

(d) Capitalization.  The equity capitalization of the Company as of immediately prior to the Closing is as set forth on Section 3(d) of the Disclosure Schedule.  Except for (i) the conversion privileges of the Series A Preferred Stock, (ii) the right of first offer set forth in the Investors Rights Agreement, (iii) stock options issued under the Company's 2007 Equity Incentive Plan, as amended (the "Plan"), and (iv) as provided in this Agreement or in the applicable Disclosure Schedule, there are no options, warrants, conversion privileges or other rights (or agreements for any such rights) outstanding to purchase or otherwise obtain from the Company any of the Company's securities.

 

(e) Subsidiaries.  The Company does not currently own or control, directly or indirectly, any interest in any other corporation, partnership, trust, joint venture, limited liability company, association, or other business entity, except as set forth in Section 3(e) of the Disclosure Schedule.  The Company is not a participant in any joint venture, partnership, or similar arrangement.

 

(f) Governmental Consents and Filings.  No consent, approval, order, or authorization of, or registration, qualification, designation, declaration, or filing with, any federal, state, or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, except for filings pursuant to applicable state securities laws and Regulation D of the Securities Act of 1933, as amended (the "Securities Act").

 

(g) Financial Statements.

 

(i) Attached as Section 3(g) of the Disclosure Schedule are copies of (a) the consolidated audited balance sheets of the Company as of the last day of the most recently completed fiscal year and the related audited statements of income and cash flows for the year then ended (the “Annual Financial Statements”) and (b) the consolidated unaudited balance sheet of the Company as of the last day of the most recently completed fiscal quarter of the Company ended not less than forty five (45) days before the applicable Closing (the “Balance Sheet”) and the related consolidated unaudited statements of income and cash flows for the period then ended (together with the Annual Financial Statements, the “Financial Statements”); provided, however that if the Company does not have Audited Financial Statements, the Company shall provide the unaudited balance sheet of the Company as of the last day of the most recently completed fiscal quarter of the Company ended not less than forty five (45) days before the applicable Closing and the related unaudited statements of income and cash flows for such quarter, and such unaudited statements shall constitute the “Financial Statements” for the purposes of this Agreement.  The Financial Statements, including any related notes thereto, (i) have been prepared in accordance with GAAP, consistently applied throughout the periods covered thereby, except as otherwise noted therein, (ii) fairly present, in all material respects, the financial condition and results of operations of the Company as of the respective dates thereof and for the respective periods covered thereby and (iii) have been prepared from, and are in accordance with, the books and records of the Company.

 

(ii) Except as reflected in the Financial Statements, the Company has no material liability or obligation, absolute or contingent (individually or in the aggregate), except (A) obligations and liabilities incurred after the date of the Balance Sheet in the ordinary course of business that are not material, individually or in the aggregate, and (B) obligations under contracts made in the ordinary course of business that would not be required to be reflected in financial statements prepared in accordance with generally accepted accounting principles.

  

  

  

(h) Litigation.  There is no claim, action, suit, proceeding, arbitration, complaint, charge, or investigation pending or, to the Company's knowledge, currently threatened in writing against the Company that questions the validity of this Agreement or the right of the Company to enter into this Agreement, or to consummate the transactions contemplated hereby, or that might result, either individually or in the aggregate, in a Material Adverse Effect, or any change in the current equity ownership of the Company, nor is the Company aware that there is any reasonable basis for the foregoing.  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, and to the Company's knowledge no officer of the Company is a party or subject to any of the foregoing with respect to such officer's role with the Company.  There is no action, suit, proceeding, or investigation by the Company currently pending or which the Company intends to initiate.

 

(i) Intellectual Property.  A complete list of all of the Company's applications for or registrations of any patents, trademarks, service marks, trade names, copyrights and Internet domain names owned by the Company is set forth on Section 3(i) of the Disclosure Schedule.   To the knowledge of the Company, the Company owns, or is validly licensed or otherwise possesses or reasonably believes that it can obtain on commercially reasonable terms legally enforceable rights to use, all right, title and interest in and to the Intellectual Property necessary to enable the Company to carry out the R&D Program as presently proposed to be conducted and to conduct the business of the Company as presently conducted.  The Company has not received any written notices of infringement or misappropriation from any Person with respect to the Intellectual Property owned, licensed or otherwise used by the Company.  To the Company's knowledge, the use of the Intellectual Property used by the Company to conduct its business as presently conducted and for the performance of the R&D Program as presently proposed to be conducted does not infringe any Intellectual Property rights of any Person.  To the Company's knowledge, there is no unauthorized use, infringement or misappropriation of the Intellectual Property owned by the Company by any third party.

 

(j) Compliance with Other Instruments.  The Company is not in violation of any provision of its Restated Certificate or Bylaws.  The Company is not in material violation or material default (i) of any judgment, order, writ, or decree applicable to it or to which it is a party, (ii) under any instrument, note, indenture or mortgage to which it is a party, (iii) under any lease, agreement, contract or purchase order to which it is a party that is required to be listed on the Disclosure Schedule or (iv) of any provision of any federal or state statute, rule or regulation applicable to the Company.  The execution, delivery, and performance of this Agreement and the Research Agreement, and the consummation of the transactions contemplated by this Agreement and the Research Agreement, will not result in any material violation of the Company's Restated Certificate or Bylaws or any material violation or material default of the terms or provisions of the items referred to in clauses (i)-(iv) of this Section 3(j), or constitute, with or without the passage of time and giving of notice, either (x) a violation of or default under any of the foregoing or (y) an event which results in the creation of any lien, charge, or encumbrance upon any assets of the Company or the suspension, revocation, forfeiture or nonrenewal of any permit or license applicable to the Company.  Neither the Company nor any of its subsidiaries is engaged, nor, to the Company's knowledge, has any officer, director, employee, or agent of the Company or any of its subsidiaries engaged, in any act or practice which would constitute a violation of the Foreign Corrupt Practices Act of 1977, or any rules or regulations promulgated thereunder.  There is not now, and there never has been, any employment by the Company or any of its subsidiaries, or beneficial ownership in the Company or any of its subsidiaries by, any governmental or political official in any country in the world.  To the Company's knowledge, the Company and each of its respective officers, directors, employees and agents are in compliance with and have not violated the U.S. money laundering laws or regulations, the U.S. Bank Secrecy Act, as amended by the USA Patriot Act of 2001 (including any recordkeeping or reporting requirements thereunder), or the anti-money laundering laws or regulations of any jurisdiction.

  

  

  

(k) Agreements; Actions.

 

(i) Except for the terms of this Agreement and the Research Agreement and as listed on Section 3(k) of the Disclosure Schedule, there are no agreements, understandings, instruments, contracts, or proposed transactions, or judgments, orders, writs, or decrees, to which the Company is a party or by which it is bound that involve (A) obligations of, or payments to, the Company in excess of $25,000 in any fiscal year, (B) the license of any patent, copyright, trademark, trade secret or other Intellectual Property right to or from the Company (other than standard end-user licenses for off the shelf software products used by the Company in its business, or licenses of the Company's Intellectual Property granted by the Company in the ordinary course of its business) or (C) the grant of rights to develop, license, distribute or sell its products or services to any other person outside of the ordinary course of business.

 

(ii) Since the date of the Balance Sheet, the Company has not (A) declared or paid any dividends or authorized or made any distribution upon or with respect to any class or series of its capital stock, (B) incurred any indebtedness for borrowed money or incurred any other liabilities individually in excess of $25,000 or in excess of $100,000 in the aggregate, (C) made any loans or advances to any person or entity, other than ordinary advances for travel expenses, or (D) sold, exchanged or otherwise disposed of any of its material assets or material rights, other than the sale of its inventory in the ordinary course of business.  For the purposes of subsections (i) and (ii) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts, and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated with that person or entity) shall be aggregated for the purposes of meeting the individual minimum dollar amounts of each such subsection.

 

(l) Related Party Transactions.

 

(i) Other than agreements or understandings pertaining to (A) standard employee benefits generally made available to all employees, (B) standard director and officer indemnification agreements approved by the Board of Directors, (C) the purchase of shares of the Company's capital stock, (D) options to purchase shares of the Company's common stock under the Plan and (E) standard employee offer letters and the Company's standard Invention, Proprietary Information and Noncompetition Agreement, there are no agreements, understandings or proposed transactions between the Company and any of its employees, officers, or directors or their affiliates.

 

(ii) The Company is not indebted, directly, or indirectly, to any of its employees, officers or directors, or to their respective affiliates, spouses or children, other than in connection with customary and reasonable expenses or advances of such expenses of employees incurred in the ordinary course of business.  None of the Company's employees, officers or directors, or any members of their immediate families, or any affiliate thereof, are, directly or indirectly, indebted to the Company or, to the Company's knowledge, have any direct or indirect ownership interest in (A) any firm or corporation with which the Company is affiliated or with which the Company has a business relationship or (B) any firm or corporation which competes with the Company, other than ownership positions in publicly traded companies not exceeding two percent of the outstanding capital stock thereof.  None of the Company's employees, officers or directors or, to the Company's knowledge, any members of their immediate families are, directly or indirectly, interested in any material contract with the Company.  The Company is not a guarantor or indemnitor of any indebtedness of any other person, firm, or corporation.

 

(m) Rights of Registration and Voting Rights.  Except as provided in the Investors Rights Agreement, the Company is not under any obligation to register under the Securities Act any of its currently outstanding securities or any securities issuable upon exercise or conversion of its currently outstanding securities.  Except as contemplated in the Voting Agreement, no stockholder of the Company has entered into any agreements with respect to the voting of shares of capital stock of the Company.

 

  

  

  

(n) Title to Assets.  The property and assets that the Company owns are free and clear of all mortgages, deeds of trust, liens, loans and encumbrances, except for statutory liens for the payment of current taxes that are not yet delinquent and encumbrances and liens that arise in the ordinary course of business and do not materially impair the Company's ownership or use of such property or assets.  With respect to the property and assets it leases, the Company is in material compliance with such leases and, to its knowledge, holds a valid leasehold interest free of any liens, claims, or encumbrances other than those of the lessors of such property or assets.

 

(o) Changes.  Since the date of the Balance Sheet, there has not been:

 

(i) any change in the financial condition, business, assets or results of operations of the Company from that reflected in the Financial Statements, except changes in the ordinary course of business that have not been, individually, or in the aggregate, materially adverse;

 

(ii) any damage, destruction, or loss, whether or not covered by insurance, materially and adversely affecting the business, properties or financial condition of the Company;

 

(iii) any waiver or compromise by the Company of a valuable right or of a material debt owed to it;

 

(iv) any satisfaction or discharge of any lien, claim, or encumbrance or payment of any obligation by the Company, except in the ordinary course of business and that is not materially adverse to the Company;

 

(v) any change to a material contract or agreement to which the Company is a party or subject;

 

(vi) any material change in any compensation arrangement or agreement with any officer or director;

 

(vii) any resignation or termination of employment of any officer or key employee of the Company;

 

(viii) any mortgage, pledge, transfer of a security interest in or lien created by the Company with respect to any of its properties or assets, except liens for taxes not yet due or payable;

 

(ix) any loans or guarantees made by the Company to or for the benefit of its employees, officers, or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of business;

 

(x) any declaration, setting aside or payment or other distribution in respect to any of the Company's capital stock, or any direct or indirect redemption, purchase, or other acquisition of any of such stock by the Company;

 

(xi) any sale, assignment, or transfer of any patents, trademarks, copyrights, trade secrets, or other Intellectual Property rights, other than in the ordinary course of the Company's business; or

 

(xii) any arrangement or commitment by the Company to do any of the things described in this Section 3(o).

  

  

  

(p) Tax Matters.  There are no federal, state, county, local or foreign taxes dues and payable by the Company that have not been timely paid.  There are no accrued and unpaid federal, state, country, local or foreign taxes of the Company which are due, whether or not assessed or disputed.  There have been no examinations or audits of any tax returns or reports by any applicable federal, state, local or foreign governmental agency.  The Company has duly and timely filed all federal, state, county, local and foreign tax returns required to have been filed by it and there are in effect no waivers of applicable statutes of limitations with respect to taxes for any year.

 

(q) Insurance.  The Company has in full force and effect fire, general liability, and casualty insurance policies with extended coverage, in such amounts (subject to reasonable deductions) as customarily carried by similar companies at equivalent stages of development.

 

(r) Employee Matters.

 

(i) The Company is not bound by or subject to (and none of its assets or properties is bound by or subject to) any written or oral, express or implied, contract, commitment, or arrangement with any labor union, and no labor union has requested or, to the knowledge of the Company, has sought to represent any of the employees, representatives, or agents of the Company.  There is no strike or other labor dispute involving the Company pending, or to the knowledge of the Company threatened, which could have a material adverse effect on the Company's business, financial condition or operating results, nor is the Company aware of any labor organization activity involving its employees.

 

(ii) Each officer and key employee of the Company is currently devoting substantially all of his or her business time to the conduct of the business of the Company.  The Company is not aware that any officer or key employee is planning to work less than full time at the Company.  The Company is not aware that any officer or key employee, or that any group of key employees, intends to terminate his, her, or their employment with the Company, nor does the Company have a present intention to terminate the employment of any of the foregoing individuals.  No officer or key employee is currently working or, to the Company's knowledge, plans to work for a competitive enterprise, whether or not such officer or key employee is or will be compensated by such enterprise.

 

(iii) The employment of each officer and employee of the Company is terminable at the will of the Company, and upon termination of the employment of each such officer and employee, no severance or other payments will become due.

 

(iv) The Company is not delinquent in payments to any of its employees, consultants, or independent contractors for any wages, salaries, commissions, bonuses, or other direct compensation for any service performed for it to the date hereof or amounts required to be reimbursed to such employees, consultants, or independent contractors.  The Company has complied in all material respects with all applicable state and federal equal employment opportunity laws and with other laws related to employment, including those related to wages, hours, worker classification, and collective bargaining.  The Company has withheld and paid to the appropriate governmental entity or is holding for payment not yet due to such governmental entity all amounts required to be withheld from employees of the Company and is not liable for any arrears of wages, taxes, penalties, or other sums for failure to comply with any of the foregoing.

 

(s) Permits.  The Company has all franchises, permits, licenses, and any similar authority necessary for the conduct of its business, the lack of which could reasonably be expected to cause a Material Adverse Effect.  The Company is not in default under any of such franchises, permits, licenses or other similar authority.

  

  

  

(t) Benefit Plans.  Section 3(t) of the Disclosure Schedule sets forth each employee benefit plan maintained, established, or sponsored by the Company, or which the Company participates in or contributes to, which is subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  The Company has made all required contributions and has no liability to any such employee benefit plan, other than liability for health plan continuation coverage described in Part 6 of Title 1(B) of ERISA, and has complied in all material respects with all applicable laws for any such employee benefit plan.

 

(u) Environmental and Safety Laws.  Except as disclosed on Section 3(u) of the Disclosure Schedule, to the Company's knowledge the Company is not in violation of any applicable statute, law, or regulation relating to the environment or occupational health and safety, and to the Company's knowledge no material expenditures are or will be required in order to comply with any such existing statute, law, or regulation.

 

(v) No Deemed Liquidation.  The issuance of Shares to Teva pursuant to the terms of this Agreement do not constitute a “Deemed Liquidation,” as such term is defined in the Restated Certificate.

 

(w) No Additional Shares of Common Stock.  The Shares issued to Teva pursuant to the terms of this Agreement do not constitute “Additional Shares of Common Stock,” as such term is defined in the Restated Certificate.

 

(x) Disclosure.  The representations and warranties of the Company contained in this Agreement, as qualified by the Disclosure Schedule, and in the exhibits attached hereto do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which they were made.

 

4. Representations and Warranties of Teva.  Teva hereby represents and warrants to the Company that the statements in the following paragraphs are all true and correct as of immediately prior to the applicable Closing:

 

(a) Organization, Valid Existence and Corporate Power.  Teva is a corporation duly organized, validly existing, and in good standing under the laws of Israel, and has all requisite corporate power and authority to own its properties and carry on its business as currently conducted.

 

(b) Authorization.  All corporate action on the part of Teva, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and Teva's performance of all of its obligations under this Agreement has been taken.  This Agreement constitutes a valid and legally binding obligation of Teva, enforceable against Teva in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other laws of general application affecting enforcement of creditors' rights generally, or (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

 

(c) Purchase Entirely for Own Account.  The Shares to be acquired by Teva will be acquired for investment for Teva's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and Teva has no present intention of selling, granting any participation in, or otherwise distributing the same.  By executing this Agreement, Teva further represents that it does not presently have any contract, undertaking, agreement, or arrangement with any person or entity to sell, transfer or grant participations to such person or entity or to any third person or entity, with respect to any of the Shares.  Teva has not been formed for the specific purpose of acquiring the Shares.

 

(d) Disclosure of Information.  Teva has had an opportunity to discuss the Company's business, management, financial affairs and the terms and conditions of the offering of the Shares with the Company's management.  The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 3 of this Agreement or the right of Teva to rely thereon.

  

  

  

(e) Restricted Securities.  Teva understands that the Shares have not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of Teva's representations as expressed herein.  Teva understands that the Shares are "restricted securities" under applicable U.S. federal and state securities laws and that, pursuant to these laws, Teva must hold the Shares indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available.  Teva acknowledges that the Company has no obligation to register or qualify the Shares for resale.

 

(f) No Public Market.  Teva understands that no public market now exists for the Shares, and that the Company has made no assurances that a public market will ever exist for the Shares.

 

(g) Accredited Investor.  Teva is an "accredited investor" as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

 

(h) Investment Representations, Warranties and Covenants by Non-U.S. Persons.

 

(i) This Agreement is made by the Company with Teva, who is a Non-U.S. person (as defined below), in reliance upon Teva's representations, warranties and covenants made in this Section 4(h).  As used herein, the terms "United States" and "U.S. person" have the meanings ascribed to such terms in Rule 902 of Regulation S.  As used herein, the term "Non-U.S. person" means any person who is not a U.S. person or is deemed not to be a U.S. person under Rule 902(k)(2) of Regulation S.

 

(ii) Teva has been advised and acknowledges that:

 

(A) the Shares have not been, and when issued, will not be, registered under the Securities Act, the securities laws of any state of the United States or the securities laws of any other country;

 

(B) in issuing and selling the Shares to Teva pursuant hereto, the Company is relying upon the "safe harbor" provided by Regulation S and/or on Section 4(2) under the Securities Act;

 

(C) it is a condition to the availability of the Regulation S "safe harbor" that the Shares not be offered or sold in the United States or to a U.S. person until the expiration of a one-year "distribution compliance period" (or a six-month "distribution compliance period," if the issuer is a "reporting issuer," as defined in Regulation S) following the date of the applicable Closing; and

 

(D) notwithstanding the foregoing, prior to the expiration of the one-year "distribution compliance period" (or six-month "distribution compliance period," if the issuer is a "reporting issuer," as defined in Regulation S) after the Closing (the "Restricted Period"), the Shares may be offered and sold by the holder thereof only if such offer and sale is made in compliance with the terms of this Agreement and either: (1) if the offer or sale is within the United States or to or for the account of a U.S. person, the securities are offered and sold pursuant to an effective registration statement or pursuant to Rule 144 under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act; or (2) the offer and sale is outside the United States and to other than a U.S. person.

 

(iii) Teva agrees that with respect to the Shares, until the expiration of the Restricted Period:

 

(A) Teva, its agents and its representatives have not and will not solicit offers to buy, offer for sale or sell any of the Shares, or any beneficial interest therein in the United States or to or for the account of a U.S. person;

 

  

  

  

(B) notwithstanding the foregoing, the Shares may be offered and sold by the holder thereof only if such offer and sale is made in compliance with the terms of this Agreement and either: (1) if the offer or sale is within the United States or to or for the account of a U.S. person, the securities are offered and sold pursuant to an effective registration statement or pursuant to Rule 144 under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act; or (2) the offer and sale is outside the United States and to other than a U.S. person; and

 

(C) Teva shall not engage in hedging transactions with regard to the Shares unless in compliance with the Securities Act.

 

The foregoing restrictions are binding upon subsequent transferees of the Shares, except for transferees pursuant to an effective registration statement. Teva agrees that after the Restricted Period, the Shares may be offered or sold within the United States or to or for the account of a U.S. person only pursuant to applicable securities laws.

 

(iv) Teva has not engaged, nor is it aware that any party has engaged, and Teva will not engage or cause any third party to engage, in any directed selling efforts (as such term is defined in Regulation S) in the United States with respect to the Shares.

 

(v) Teva: (A) is domiciled and has its principal place of business outside the United States; (B) certifies it is not a U.S. person and is not acquiring the Shares for the account or benefit of any U.S. person; and (C) at the time of the date of the applicable Closing, Teva or persons acting on Teva's behalf in connection therewith will be located outside the United States.

 

(vi) At the time of offering to Teva and communication of Teva's order to purchase the Shares at each Closing, and at the time of Teva's execution of this Agreement, Teva or persons acting on Teva's behalf in connection therewith were located outside the United States.

 

(vii) Teva is not a "distributor" (as defined in Regulation S) or a "dealer" (as defined in the Securities Act).

 

(viii) Teva acknowledges that the Company shall make a notation in its stock books regarding the restrictions on transfer set forth in this Section 4(h) and shall transfer such shares on the books of the Company only to the extent consistent therewith.  In particular, Teva acknowledges that the Company shall refuse to register any transfer of the Shares not made in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act or pursuant to an available exemption from registration.

 

(ix) Teva hereby represents that it has satisfied the requirements of the laws of its jurisdiction of formation and its principal place of business in connection with any invitation to subscribe for or purchase the Shares or any use of this Agreement, including (A) the legal requirements within such jurisdictions for the purchase of the Shares, (B) any foreign exchange restrictions applicable to such purchase, (C) any governmental or other consents that may need to be obtained, and (D) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Shares.  Teva's subscription and payment for and continued beneficial ownership of the Shares will not violate any applicable securities or other laws of its relevant jurisdictions.

 

  

  

  

(i) Legends.  The Shares and any securities issued in respect of or exchange for the Shares shall bear the following legends (in addition to any other legend required by this Agreement or under applicable securities laws):

 

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.  THIS CERTIFICATE MUST BE SURRENDERED TO THE CORPORATION OR ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE SALE, PLEDGE, HYPOTHECATION OR ANY OTHER TRANSFER OF ANY INTEREST IN ANY OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A CERTAIN SHARE PURCHASE AGREEMENT BETWEEN THE CORPORATION AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE CORPORATION.

 

THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A CERTAIN VOTING AGREEMENT (A COPY OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST FROM THE CORPORATION), AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAID VOTING AGREEMENT.

 

THE SALE, PLEDGE, HYPOTHECATION, ASSIGNMENT OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT BY AND BETWEEN THE STOCKHOLDER, THE CORPORATION AND CERTAIN HOLDERS OF STOCK OF THE CORPORATION, AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAID AGREEMENT. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION."

 

Each holder of Shares consents to the Company making a notation in its records and giving instructions to any transfer agent of the Shares in order to implement the restrictions on transfer set forth in this Agreement.

 

5. Transfer Restrictions.

 

(a) The Shares shall not be sold, pledged or otherwise transferred, and the Company shall not recognize and shall issue stop-transfer instructions to its transfer agent with respect to any such sale, pledge or transfer, except upon the conditions specified in this Agreement (which conditions are intended to ensure compliance with the provisions of the Securities Act).

  

  

  

(b) The holder of each certificate representing Shares, by acceptance thereof, agrees to comply in all respects with the provisions of this Agreement.  Before any proposed sale, pledge or transfer of any Shares, unless there is in effect a registration statement under the Securities Act covering the proposed transaction, the holder thereof shall give notice to the Company of such holder's intention to effect such sale, pledge or transfer.  Each such notice shall describe the manner and circumstances of the proposed sale, pledge or transfer in sufficient detail and, if reasonably requested by the Company, shall be accompanied at such holder's expense by, at Teva’s option, either (i) a written opinion of legal counsel who shall, and whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transaction may be effected without registration under the Securities Act, (ii) a "no action" letter from the SEC to the effect that the proposed sale, pledge or transfer of such Shares without registration will not result in a recommendation by the staff of the SEC that action be taken with respect thereto, or (iii) any other evidence satisfactory to counsel to the Company to the effect that the proposed sale, pledge or transfer of the Shares may be effected without registration under the Securities Act, whereupon the holder of such Shares shall be entitled to sell, pledge or transfer such Shares in accordance with the terms of the notice given by the holder to the Company provided that the other provisions of this Agreement are complied with and each transferee agrees in writing to be subject to the terms of this Agreement.  It is agreed that the Company will not require such a legal opinion or "no action" letter in any transaction in which such holder distributes Shares to a Permitted Transferee of such holder for no consideration; provided that each transferee agrees in writing to be subject to the terms of this Agreement.

 

(c) In connection with the initial public offering of the Company's securities and upon request of the Company or the underwriters managing such offering of the Company's securities, Teva agrees not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company, however or whenever acquired (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed 180 days but subject to such extension or extensions as may be required by the underwriters in order to publish research reports while complying with the Rule 2711 of the National Association of Securities Dealers, Inc.) from the effective date of such registration statement as may be requested by the Company or such managing underwriters.  Teva further agrees to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the Company's initial public offering.  The underwriters in connection with such registration are intended third‐party beneficiaries of this Section 5 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

 

6. Joinder.

 

(a) By executing this Agreement, Teva hereby acknowledges and confirms that it: (i) has received copies of (A) that certain First Amendment to Series A Preferred Stock Financing Agreements made as of June 9, 2009 by and among the Company and the stockholders of the Company who are signatories thereto (the "Amendment"), (B) that certain Voting Agreement entered into as of September 19, 2008 by and among the Company, the parties listed on Schedule A thereto and the parties listed on Schedule B thereto (as amended by the Amendment, the "Voting Agreement") and (C) that certain Right of First Refusal and Co-Sale Agreement entered into as of September 19, 2008 by and among the Company, the stockholders listed on Schedule A thereto and the investors listed on Schedule B thereto, as amended (as amended by the Amendment, the "ROFR Agreement"); (ii) has read and fully understood the provisions of each of the Voting Agreement and the ROFR Agreement; and (iii) has had the opportunity of obtaining independent legal advice with respect thereto.

 

(b) With respect to the Voting Agreement, Teva hereby agrees to be bound by and subject to all of the terms, provisions and conditions contained in the Voting Agreement as a "Common Holder" thereunder and agrees to execute and deliver all documentation reasonably requested by the Company in order for Teva to become a party to the Voting Agreement in such capacity promptly upon request by the Company, except that if another holder of Common Stock of the Company holding more than 3% of the outstanding stock of the Company (on a fully diluted basis) is released from such holder's obligations under the Voting Agreement, Teva shall no longer be bound by and subject to the Voting Agreement as a "Common Holder" thereunder.

 

  

  

  

(c) With respect to the ROFR Agreement, Teva hereby agrees to be bound by and subject to all of the terms, provisions and conditions contained in the ROFR Agreement as a "Founder" thereunder and hereby agrees that all Shares purchased pursuant to this Agreement shall be considered "Founder Stock" (notwithstanding anything to the contrary in the ROFR Agreement), and Teva further agrees to execute and deliver all documentation reasonably requested by the Company in order for Teva to become a party to the ROFR Agreement in such capacity and for the Shares to be considered "Founder Stock" promptly upon request by the Company, except that if another holder of Common Stock of the Company holding more than 3% of the outstanding stock of the Company (on a fully diluted basis) is released from such holder's obligations under the ROFR Agreement (other than with respect to stock that has been offered in accordance with the terms of the ROFR Agreement), Teva shall no longer be bound by and subject to the ROFR Agreement as a "Founder" thereunder and the Shares purchased pursuant to this Agreement shall no longer be considered "Founder Stock" under the ROFR Agreement.

 

7. Miscellaneous.

 

(a) Survival of Warranties.  Unless otherwise set forth in this Agreement, the representations and warranties of the Company contained in or made pursuant to this Agreement with respect to Shares issued at a Closing shall survive the execution and delivery of this Agreement and shall not terminate until the earlier of (i) three (3) years from the date of issuance of such Shares, (ii) the closing of a Deemed Liquidation (as defined in the Restated Certificate) or (iii) the closing of a Qualified IPO (as defined in the Restated Certificate).

 

(b) Successors and Assigns.  The rights and obligations of Teva under this Agreement may not be transferred or assigned for any reason (whether by operation of law or otherwise) without the Company's prior written consent.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

(c) Governing Law.  This Agreement and the rights and obligations of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to principles of conflicts of law.

 

(d) Counterparts.  This Agreement may be executed in two 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 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.

 

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

  

  

  

(f) Notices.  All notices and other communications given or made pursuant to this Agreement shall be in writing in the English language and shall be deemed effectively given: (i) when delivered by hand, if personally delivered; (ii) when delivered by courier, if delivered by commercial courier service; and (iii) upon confirmation of receipt, if sent by facsimile.  All communications shall be sent to the respective parties at their address or facsimile number as set forth in this Section 7(f), or to such facsimile number or address as subsequently modified by written notice given in accordance with this Section 7(f).  Notice shall be given as follows:

 

If to the Company:

 

Cocrystal Discovery, Inc.

Attention: Chief Executive Officer

19805 North Creek Parkway

Bothell, WA 98011

Facsimile: (425) 398-7178

 

with a copy (which shall not constitute notice) to:

 

Perkins Coie LLP

Attention: James R. Lisbakken and Mark A. Metcalf

1201 Third Avenue, Suite 4800

Seattle, WA 98101

Facsimile: (206) 359-9000

 

If to Teva:

 

Teva Pharmaceutical Industries Limited

Attention:  General Counsel, Legal Department

5 Basel Street

P.O. Box 3190

Petach Tikva 49131, Israel

Facsimile: 972-3-926-7429

with a copy (which shall not constitute notice) to:

 

Vinson & Elkins L.L.P.

Attention:  Ira Schreger

666 Fifth Avenue, 26th Floor

New York, NY 10103

Facsimile: (917) 849-5303

 

(g) No Finder's Fees.  Each party represents that it neither is nor will be obligated for any finder's fee or commission in connection with this transaction.  Teva agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finder's or broker's fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which Teva or any of its officers, employees, or representatives is responsible.  The Company agrees to indemnify and hold harmless Teva from any liability for any commission or compensation in the nature of a finder's or broker's fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees, or representatives is responsible.

 

(h) Fees and Expenses.  The Company and Teva shall each bear its own expenses with respect to the transactions contemplated by this Agreement.

  

  

  

(i) Amendments and Waivers.  Any term of this Agreement may be amended or waived only with the written consent of the Company and Teva.  Any amendment or waiver effected in accordance with this Section 7(i) shall be binding upon Teva and each transferee of the Shares, each future holder of such Shares, and the Company.

 

(j) Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.  In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded, and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

 

(k) 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 non-breaching or 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, shall be cumulative and not alternative.

 

(l) Entire Agreement.  This Agreement (including the Exhibits hereto), together with the Research Agreement and the License Agreement, constitute 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 are expressly canceled.

 

(m) Termination.  Notwithstanding any provision hereof to the contrary:

 

(i) The obligations of the Company to issue and sell Shares to Teva and the right of Teva to purchase Shares from the Company pursuant to this Agreement and the Research Agreement shall terminate and be of no further force and effect upon the earlier to occur of (A) the date on which Teva or the Company terminates the Research Agreement pursuant to its terms and (B) the closing of a Deemed Liquidation (as defined in the Restated Certificate).  Upon such termination, Teva shall have no right to purchase, and the Company shall have no obligation to sell and issue, Shares pursuant to the terms of this Agreement or the Research Agreement.  Following such termination, the parties will continue to be bound by and subject to Sections 4(h), 4(i), 6 and 7 of this Agreement.

 

  

  

  

(ii) If such termination occurs due to the closing of a Deemed Liquidation as a result of which the stockholders of the Company receive cash, stock or other property in exchange for their shares of Common Stock (in the aggregate, "Transaction Consideration"), then, so long as the Research Agreement has not been terminated and Teva is entitled to make an equity investment pursuant to Section 4.1.1 or 4.1.2 of the Research Agreement, the Company shall make provision so that Teva shall be entitled to receive, upon exercise of a funding option pursuant to Section 4.1.1 or 4.1.2 of the Research Agreement, a portion of the Transaction Consideration that equals the amount it would have received in such Deemed Liquidation if such funding option had been exercised and shares of Common Stock issued to Teva, immediately prior to the closing of such Deemed Liquidation, assuming all such remaining funding options had been exercised.  If the portion of the Transaction Consideration payable to a holder of Common Stock for such shares of Common Stock in connection with the Deemed Liquidation is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Company's Board of Directors and, at its discretion, paid in cash.  In each case the number of Shares that Teva could have acquired upon exercise of such a funding option shall be determined in accordance with the provisions of Exhibit B as if such exercise occurred immediately prior to the closing of the Deemed Liquidation.  As a condition to receiving the Deemed Liquidation consideration described in this Section 7(m)(ii), Teva shall execute all agreements and other documentation required to be executed by other holders of Common Stock in connection with such Deemed Liquidation and shall be subject, on a comparable basis, to the same escrow, indemnification and other post-closing claims procedures as are applicable to other holders of Common Stock.  The Closing procedures of Section 2 for the exercise of funding options shall be adapted, as appropriate, for the Closing of the exchange of the funding and portion of the Transaction Consideration; however, the representations and warranties of the Company, the Disclosure Schedule and the certification in Section 2(b) shall be limited solely to the representations and warranties contained in Section 8.2 of the Research Agreement.

 

(iii) The Company will notify Teva in writing at least thirty (30) days prior to the closing of a Deemed Liquidation.

 

*   *   *   *   *

  

  

  

IN WITNESS WHEREOF, the parties have executed this Share Purchase Agreement as of the date first written above.

 

COMPANY:

COCRYSTAL DISCOVERY, INC.

By:           

Name:           Gary Wilcox

Title:           Chief Executive Officer

TEVA:

TEVA PHARMACEUTICAL INDUSTRIES LIMITED

By:           _____________________

Name:

Title:

By:          ______________________ 

Name:

Title:

Share Purchase Agreement

Signature Page

 

 

  

  

  

EXHIBIT A

 

Schedule of Investments

 

	

 

Closing

	

 

Date of Closing

	 	

Number of Shares*

	 	 	

Share Price*

	 	 	

Cash Paid at Closing

	 
	
Initial Closing

	
_________, 2011

	 	 	605,815	 	 	$	12.38	 	 	$	7,500,000.00	 
	
First Target – Second Closing

	  	 	 	 	 	 	 	 	 	 	$	7,500,000.00	 
	
Second Target – First Closing

	  	 	 	 	 	 	 	 	 	 	$	7,500,000.00	 
	
Second Target – Second Closing

	  	 	 	 	 	 	 	 	 	 	$	7,500,000.00	 
	
Third Target – First Closing

	  	 	 	 	 	 	 	 	 	 	$	7,500,000.00	 
	
Third Target – Second Closing

	  	 	 	 	 	 	 	 	 	 	$	7,500,000.00	 
	
TOTAL:

	  	 	 	 	 	 	 	 	 	 	$	45,000,000.00	 

                      

* Determined pursuant to Exhibit B (except with respect to Initial Closing).

 

  

  

  

EXHIBIT B

 

 

	
I.  

	
Purchase Price per Share; Number of Shares

 

	
A.  

	
Purchase Price per Share.  The purchase price per Share for the Shares purchased at a Closing shall be equal to the quotient of (1) the Valuation with respect to such Closing, divided by (2) the Outstanding Equity as of immediately prior to such Closing, rounded to the nearest cent.

 

	
B.  

	
Number of Shares.  The number of Shares purchased in a Closing shall be equal to the quotient of (1) the Aggregate Purchase Price for such Closing, divided by (2) the purchase price per share for such Closing determined pursuant to paragraph I.A above, rounded down to the nearest whole share.

 

	
C.  

	
Fractional Shares.  No fractional Shares shall be issued in any Closing, and any amount of the Aggregate Purchase Price for such Closing left over after the rounding down described in paragraph I.B above shall be retained by the Company.

 

 

	
II.  

	
Determination of Purchase Price per Share, Number of Shares

 

	
A.  

	
The Company shall determine the purchase price per Share and the number of shares for the Shares to be purchased at a Closing pursuant to Section I above, which determination must be provided to Teva not later than the Company's provision of the preliminary, updated Disclosure Schedule for such Closing to Teva pursuant to Section 2(a)(ii)(B), 2(a)(iii)(B), 2(a)(iv)(B), 2(a)(v)(B) or 2(a)(vi)(B), as applicable.

 

	
B.  

	
The Company's determination of the purchase price per Share and the number of Shares shall be subject to Teva's approval of such determination, which shall not be unreasonably withheld or delayed.

 

In the event of a Deemed Liquidation for which Section 7(m)(ii) of this Agreement is applicable, references in the above Sections I and II to "Closing" shall mean immediately prior to the closing of the Deemed Liquidation.

 

 

  

  

  

SCHEDULE 3(d)

	
  

	
EXHIBIT C

 

	
  

	
"Agreement" shall have the meaning set forth in the preamble.

 

	
  

	
"Aggregate Purchase Price" with respect to a Closing means the dollar amount set forth opposite such Closing on Exhibit A under the column "Cash Paid at Closing".

 

	
  

	
"Annual Financial Statements" shall have the meaning set forth in Section 3(g)(i).

 

	
  

	
"Balance Sheet" shall have the meaning set forth in Section 3(g)(i).

 

"Board of Directors" shall mean the Board of Directors of the Company.

 

	
  

	
"Bylaws" shall mean the Bylaws of the Company, as amended from time to time.

 

	
  

	
"Closing" shall have the meaning set forth in Section 2(a).

 

	
  

	
"Company" shall have the meaning set forth in the preamble.

 

	
  

	
"Common Stock" means the Company's Common Stock, $0.0001 par value per share.

 

	
  

	
“Confidential Information” shall have the meaning set forth in Section 7(l).

 

	
  

	
"Control" means the possession, directly or indirectly, of the power to direct, or to cause the direction of, the management or policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 

	
  

	
"Disclosure Schedule" shall have the meaning set forth in Section 3.

 

	
  

	
“ERISA” shall have the meaning set forth in Section 3(t).

 

"Financial Statements" shall have the meaning set forth in Section 3(g)(i).

 

	
  

	
"First Target" shall have the meaning set forth in the Research Agreement.

 

	
  

	
"GAAP" means generally accepted accounting principles in the United States.

 

	
  

	
"Initial Closing" shall have the meaning set forth in Section 2(a)(i).

 

	
  

	
"Initial Investment" shall have the meaning set forth in the Research Agreement.

 

	
  

	
"Intellectual Property" means all intellectual property rights, including but not limited to: (a) all inventions, materials, compounds, compositions, substances, methods, processes, techniques, know-how, technology, data, information, discoveries and other results of whatsoever nature, whether or not patentable, and any Patents, copyrights, proprietary intellectual or industrial rights directly or indirectly deriving therefrom; (b) all works of authorship, regardless of copyrightability, all compilations and all copyrights; and (c) all trade secrets, confidential information and proprietary processes.

 

	
  

	
"Investors Rights Agreement" means the Company's Investors Rights Agreement entered into as of September 19, 2008 by and among the Company and the other parties identified therein, as amended from time to time.

 

 

  

  

  

	
  

	
"Material Adverse Effect" shall mean a material adverse effect on the financial condition, business, assets or results of operations of the Company, excluding any effect resulting from (A) changes in GAAP or changes in the regulatory accounting requirements applicable to any industry in which the Company operates, (B) changes in the financial or securities markets generally or changes in the general economic or political conditions in the United States or abroad, (C) changes (including changes of applicable law) or conditions generally affecting the industry in which the Company operates, except in the event that such change has a disproportionate effect on the Company, and (D) acts of war, sabotage, terrorism or natural disasters.

 

	
  

	
"Outstanding Equity" means all shares of Common Stock outstanding, assuming conversion of all outstanding shares of Preferred Stock into Common Stock in accordance with the Restated Certificate.

 

	
  

	
"Permitted Transferees" shall mean any Person directly or indirectly through one or more intermediaries, Controlling, Controlled by, or under common Control with such Person.

 

	
  

	
"Person" means any individual, partnership, corporation, limited liability company, trust or other entity.

 

	
  

	
"Plan" shall have the meaning set forth in Section 3(d).

 

	
  

	
"Preferred Stock" means the Company's Preferred Stock, $0.0001 par value per share.

 

	
  

	
"R&D Program" shall have the meaning set forth in the Research Agreement.

 

	
  

	
"Research Agreement" shall have the meaning set forth in the recitals.

 

	
  

	
"Restated Certificate" shall mean the Amended and Restated Certificate of Incorporation of the Company, as amended from time to time.

 

	
  

	
"ROFR Agreement" shall have the meaning set forth in Section 6(a).

 

	
  

	
"Second Investment" shall have the meaning set forth in the Research Agreement.

 

	
  

	
"Second Target" shall have the meaning set forth in the Research Agreement.

 

	
  

	
"Securities Act" shall have the meaning set forth in Section 3(f).

 

	
  

	
"Series A Preferred Stock" means the Company's Series A Preferred Stock, $0.0001 par value per share.

 

	
  

	
"Shares" shall have the meaning set forth in the recitals.

 

	
  

	
"Teva" shall have the meaning set forth in the preamble.

 

	
  

	
"Third Target" shall have the meaning set forth in the Research Agreement.

 

	
  

	
"Valuation" means the dollar amount set forth opposite such Closing in the table below under the column "Valuation":

 

 

  

  

  

 

	
Closing

	
Valuation

	
Initial Closing

	
$125,000,000

	
First Target – Second Closing

	
$175,000,000

	
Second Target – First Closing

	
$175,000,000

	
Second Target – Second Closing

	
$225,000,000

	
Third Target – First Closing

	
$225,000,000

	
Third Target – Second Closing

	
$275,000,000

	
  

	
"Voting Agreement" shall have the meaning set forth in Section 6(a).

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