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Exhibit 10.18
EXECUTION COPY
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AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
BY AND AMONG
EPICEPT CORPORATION,
AS BORROWER AND ISSUER
AND
THE PURCHASERS IDENTIFIED HEREIN
August 26, 2005
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THIS AMENDED AND
RESTATED NOTE PURCHASE AGREEMENT (this "AGREEMENT"), dated
as of August 26, 2005, is by and among
EpiCept Corporation, a Delaware
corporation ("COMPANY"), the purchasers
that are now and hereafter at any time
parties hereto and are listed in Annex A
(or any amendment or supplement
thereto) attached hereto (each a "U.S.
PURCHASER" and collectively, the "U.S.
PURCHASERS"), the purchasers that are now
and hereafter at any time parties
hereto and are listed in Annex B (or any
amendment or supplement thereto)
attached hereto (each a "QIB PURCHASER" and
collectively, the "QIB PURCHASERS"),
and the purchasers that are now and
hereafter at any time parties hereto and are
listed in Annex C (or any amendment or
supplement thereto) attached hereto (each
a "REGULATION S PURCHASER" and,
collectively, the "REGULATION S PURCHASERS" and
together with the U.S. Purchasers and the
QIB Purchasers, the "PURCHASERS").
Capitalized terms used and not defined
elsewhere in this Agreement are defined
in Article 1 hereof.
RECITALS
A. On March 3, 2005, the Company and the
Purchasers entered into the original
Note Purchase Agreement (the "ORIGINAL
AGREEMENT") pursuant to which the Company
sold the Notes to the Purchasers in the
aggregate principal amount of
$4,000,000.
B. The Company intends to enter into an
agreement and plan of merger (the
"MERGER AGREEMENT") with Magazine
Acquisition Corp. ("ACQUISITION CORP."), a
wholly owned subsidiary of the Company, and
Maxim Pharmaceuticals Inc. ("MAXIM")
pursuant to which Acquisition Corp. will
merge with and into Maxim (the
"MERGER"), with Maxim being the surviving
corporation in the Merger.
C. The Company desires to amend and restate
the Original Agreement to provide
for the conversion of the Notes held by TVM
IV GMBH & CO. KG, ("TVM"), PRIVATE
EQUITY DIRECT FINANCE ("PRIVATE EQUITY"),
THE MERLIN BIOSCIENCES FUND L.P. and
THE MERLIN BIOSCIENCES FUND GBR
(collectively, the "MERLIN INVESTORS," and
together with TVM and Private Equity, the
"CONVERTING HOLDERS") into shares of
Common Stock, $0.0001 par value of the
Company (the "COMMON STOCK") effective
upon consummation of the Merger, subject to
the terms and conditions set forth
in this Agreement.
D. In addition, in order to induce the
Purchasers to purchase the Notes issued
pursuant to the Original Agreement, the
Company issued and sold to the
Purchasers, in connection with the purchase
of the Notes, warrants exercisable
for shares of Common Stock or Next Round
Preferred Stock (as defined below), as
the case may be, subject to the terms and
conditions set forth in this
Agreement. In connection with the execution
of this Agreement, the warrants held
by Sanders Opportunity Fund, L.P. and
Sanders Opportunity Fund (Institutional),
L.P. are also being amended and restated to
provide for their automatic exercise
effective upon consummation of the Merger
upon the terms and conditions set
forth therein.
NOW, THEREFORE,
the parties hereto, in consideration of the premises and
their mutual covenants and agreements
herein set forth and intending to be
legally bound hereby, covenant and agree as
follows:
ARTICLE 1
DEFINITIONS
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1.1 CERTAIN
DEFINITIONS. In addition to other words and terms defined
elsewhere in this Agreement, the following
words and terms shall have the
meanings set forth below:
"ACQUISITION
CORP." shall have the meaning assigned to such term in the
preamble hereto.
"AFFILIATE"
shall mean, with respect to any Person, any other Person that
is directly or indirectly controlling,
controlled by or under common control
with such Person or entity or any of its
Subsidiaries, and the term "control"
(including the terms "CONTROLLED BY" and
"UNDER COMMON CONTROL WITH") means
having, directly or indirectly, the power
to direct or cause the direction of
the management and policies of a Person,
whether through ownership of voting
securities, by contract or otherwise.
"AGREEMENT"
shall mean this Note Purchase Agreement, as the same may be
amended, restated, supplemented or
otherwise modified from time to time.
"BUSINESS DAY"
shall mean any day other than a Saturday, Sunday or other
day on which banking institutions in New
York City are authorized or required by
law to close.
"BY-LAWS" shall
mean, with respect to any Person, the by-laws, partnership
agreement, operating agreement, limited
liability company agreement or analogous
instrument governing the operations of the
Company, as applicable, including all
amendments and supplements thereto.
"CURRENT CHARTER" shall mean the
Amended and Restated Certificate of
Incorporation of the Company as of the date
hereof and as amended from time to
time.
"CLOSING" shall
have the meaning assigned in Section 2.4 hereof.
"CLOSING DATE"
shall have the meaning assigned to such term in Section 2.4
hereof.
"COMMON STOCK"
shall have the meaning assigned to such term in the preamble
hereto.
"DEFAULT" shall
mean any event or condition that, but for the giving of
notice or the lapse of time, or both, would
constitute an Event of Default.
"EVENT OF
DEFAULT" shall mean any of the events of default described in
Section 9.1 hereof.
"FINANCIAL
STATEMENTS" shall have the meaning assigned to such term in
Section 5.1(d) hereof.
"GAAP" shall
have the meaning assigned to such term in Section 1.2 hereof.
"GUARANTEE"
shall mean any guaranty of the payment or performance of any
Indebtedness or other obligation and any
other arrangement whereby credit is
extended to one obligor on the basis of any
promise of another Person, whether
that promise is expressed in terms of an
obligation to pay the Indebtedness of
such obligor, or to purchase an obligation
owed by such obligor, or to purchase
goods and services from such obligor
pursuant to a take-or-pay contract, or to
maintain the capital, working capital,
solvency or general financial condition
of such obligor, whether or not any such
arrangement is reflected on the balance
sheet of such other Person, firm or
corporation, or referred to in a footnote
thereto, but shall not include
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endorsements of items for collection in the
ordinary course of business. For the
purpose of all computations made under this
Agreement, the amount of a Guarantee
in respect of any obligation shall be
deemed to be equal to the maximum
aggregate amount of such obligation or, if
the Guarantee is limited to less than
the full amount of such obligation, the
maximum aggregate potential liability
under the terms of the Guarantee.
"INDEBTEDNESS"
shall mean, for any Person at the time of any determination,
without duplication, all obligations,
contingent or otherwise, of such Person
that, in accordance with GAAP, should be
classified upon the balance sheet of
such Person as indebtedness, but in any
event including: (i) all obligations for
borrowed money, (ii) all obligations
arising from installment purchases of
property or representing the deferred
purchase price of property or services in
respect of which such Person is liable,
contingently or otherwise, as obligor or
otherwise (other than trade payables and
other current liabilities incurred in
the ordinary course of business on terms
customary in the trade), (iii) all
obligations evidenced by notes, bonds,
debentures, acceptances or instruments,
or arising out of letters of credit or
bankers' acceptances issued for such
Person's account, (iv) all obligations,
whether or not assumed, secured by any
Lien or payable out of the proceeds or
production from any property or assets
now or hereafter owned or acquired by such
Person, (v) all obligations for which
such Person is obligated pursuant to a
Guarantee, (vi) the capitalized portion
of lease obligations under capital leases,
(vii) all obligations for which such
Person is obligated pursuant to any
Interest Rate Protection Agreements or
derivative agreements or arrangements,
(viii) all factoring arrangements and
(ix) all obligations of such Person upon
which interest charges are customarily
paid or accrued.
"INTEREST RATE
PROTECTION AGREEMENT" shall mean any interest rate swap,
interest rate cap, interest rate collar or
other interest rate hedging agreement
or arrangement.
"MAXIM" shall
have the meaning assigned to such term in the preamble
hereto.
"MERGER" shall
have the meaning assigned to such term in the preamble
hereto.
"MERGER
AGREEMENT" shall have the meaning assigned to such term in the
preamble hereto.
"NEXT ROUND
PREFERRED STOCK" shall have the meaning assigned to such term
in the Warrants.
"NOTE" shall
have the meaning assigned to such term in Section 2.1(a)
hereof.
"PERSON" shall
mean any individual, partnership, limited partnership,
corporation, limited liability company,
association, joint stock company, trust,
joint venture, unincorporated organization
or governmental entity or department,
agency or political subdivision
thereof.
"PURCHASER"
shall have the meaning assigned to such term in the preamble
hereto and, if applicable, in Section 7.2
hereof.
"REGULATION S
PURCHASER" shall have the meaning assigned to such term in
the preamble hereto.
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"REQUIRED
PURCHASERS" shall mean, at any time, Purchasers holding a pro
rata percentage of the outstanding
principal amount of the Notes aggregating at
least 66-2/3% at such time.
"SEC" shall mean
the Securities and Exchange Commission and any
governmental body or agency succeeding to
the functions thereof.
"SECURITIES"
shall mean the Notes, the Warrants, the Warrant Shares and any
securities of the Company's capital stock
issuable upon conversion of the Notes
and any securities which may be issuable
upon exercise, conversion or exchange
of any of the foregoing.
"SECURITIES ACT"
shall mean the Securities Act of 1933, as amended.
"SUBSIDIARY" of
any corporation shall mean any other corporation or limited
liability company or other entity of which
the outstanding capital stock or
equity interest possessing a majority of
voting power in the election of
directors (otherwise than as the result of
a default) is owned or controlled by
such corporation directly or indirectly
through Subsidiaries.
"TRANSACTION
DOCUMENTS" shall mean this Agreement and the Securities and
all other agreements, instruments and
documents delivered in connection
therewith as any or all of the foregoing
may be supplemented or amended from
time to time.
"TRANSACTIONS"
shall mean the incurrence of debt and the issuance of
securities in connection therewith, as
contemplated by this Agreement, the Notes
and all other agreements contemplated
hereby and thereby.
"U.S. PURCHASER"
shall have the meaning assigned to such term in the
preamble hereto.
"WARRANTS" shall
have the meaning assigned to such term in Section 2.2
hereof.
"WARRANT SHARES"
shall mean the shares of Common Stock or Next Round
Preferred Stock issued or issuable upon
exercise of the Warrants.
1.2 ACCOUNTING
PRINCIPLES. The character or amount of any asset, liability,
capital account or reserve and of any item
of income or expense to be
determined, and any consolidation or other
accounting computation to be made,
and the construction of any definition
containing a financial term, pursuant to
this Agreement shall be determined or made
in accordance with generally accepted
accounting principles in the United States
of America consistently applied
("GAAP"), unless such principles are
inconsistent with the express requirements
of this Agreement.
1.3 OTHER
DEFINITIONAL PROVISIONS; CONSTRUCTION. Whenever the context so
requires, neuter gender includes the
masculine and feminine, the singular number
includes the plural and vice versa. The
word "including" when used herein shall
mean "including without limitation" unless
the context states otherwise. The
words "hereof," "herein" and "hereunder"
and words of similar import when used
in this Agreement shall refer to this
Agreement as a whole and not to any
particular provision of this Agreement, and
references to any section, article,
annex, schedule, exhibit or like references
are references to this Agreement
unless otherwise specified. A Default or
Event of Default shall "continue" or be
"continuing" until such Default or Event of
Default has been cured or waived by
any Purchaser as provided in
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Section 9.2(b). References in this
Agreement to any Persons shall include such
Persons, successors and permitted assigns.
Other terms contained in this
Agreement (which are not otherwise
specifically defined herein) shall have the
meanings provided to such terms in Article
9 of the New York Uniform Commercial
Code on the date hereof to the extent the
same are used or defined therein.
ARTICLE 2
ISSUE AND SALE OF SECURITIES
2.1 NOTES. The
Company has duly authorized the issuance to the Purchasers
of $4,000,000 of aggregate principal amount
of the 8% Senior Notes due 2006, to
be substantially in the form of the
promissory notes made by the Company in
favor of the Purchasers thereof in the form
attached hereto as Exhibit A
(together with any promissory notes issued
in substitution therefor pursuant to
Sections 7.3 and 7.4, the "NOTES").
2.2
AUTHORIZATION AND ISSUANCE OF THE WARRANTS. The Company has
duly
authorized the issuance and sale to the
Purchasers certain stock purchase
warrants substantially in the form of the
warrant attached hereto as Exhibit B
evidencing the Purchasers' right to acquire
shares of Common Stock or Next Round
Preferred Stock, as the case may be (the
"WARRANTS").
2.3 SALE AND
PURCHASE. Subject to the terms and conditions and in reliance
upon the representations, warranties and
agreements set forth herein, (a) the
Company shall sell to the Purchasers, and
the Purchasers shall purchase from the
Company, in the principal amounts
designated in Annex A and Annex B, the Notes
for a purchase price equal to the principal
amount and (b) the Company shall
sell to each Purchaser, and each Purchaser
shall purchase from the Company, for
a total purchase price of $10.00, a
Warrant.
2.4 THE CLOSING.
Delivery of and payment for the Securities to be issued at
closing (the "CLOSING") shall be made at
the offices of Weil, Gotshal & Manges
LLP, 767 Fifth Avenue, New York, NY 10153,
commencing at 10:00 a.m., local time,
on March 3, 2005 or at such place or on
such other date as may be mutually
agreeable to the Company and the
Purchasers. The date and time of the Closing as
finally determined pursuant to this Section
2.4 are referred to herein as the
"CLOSING DATE." Delivery of the Securities
shall be made to the Purchasers
against payment of the purchase price
therefor by wire transfer of immediately
available funds in the manner agreed to by
the Company and the Purchasers. The
Notes and Warrants to be issued at Closing
shall be issued in such name or names
and in such permitted denomination or
denominations, numbers and amounts as set
forth in Annex A or Annex B or as the
Purchasers may request in writing not less
than two (2) Business Days before the
Closing Date.
2.5 DELIVERY OF
THE CERTIFICATES REPRESENTING THE NOTES TO REGULATION S
PURCHASERS. At the Closing, the Company
will issue a temporary global
certificate representing the aggregate
principal amount of the Notes being
purchased by the Regulation S Purchasers,
registered in the name of EpiCept
Corporation, on behalf of the Regulation S
Purchasers, which shall be held in
trust by the Company for the benefit of
each of the Regulation S Purchasers
until the Delivery Date (as hereinafter
defined). The Company will cause to be
delivered to each Regulation S Purchaser or
its nominee who is acting as its
custodian, without additional payment,
within five (5) Business Days following
the Delivery Date, one (1) or more
definitive certificates representing the
aggregate principal amount of the Notes
purchased by such
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Regulation S Purchaser registered in the
name of such Regulation S Purchaser or
its nominee who is acting as its custodian.
The Delivery Date is the first
business day following a period of forty
(40) days after the Closing Date.
ARTICLE 3
REPAYMENT OF NOTES
3.1 INTEREST
RATES.
(a) The Notes shall bear interest on the outstanding principal
thereof
at a rate per annum equal to eight percent
(8%).
(b) Interest on the Notes will be computed on the basis of a
year
within three hundred sixty (360) days, and
the actual number of days elapsed.
3.2 REPAYMENT OF
NOTES. The Company covenants and agrees to pay all
outstanding principal and accrued and
unpaid interest.
3.3 OPTIONAL
PREPAYMENT OF NOTES. The Company shall have the right at its
option at any time to prepay the
outstanding principal and accrued and unpaid
interest on the Notes, in whole or in part,
without premium or penalty; provided
that the Company notifies the affected
Purchasers of the date that it intends to
make payment on the Note not less than five
(5) Business Days prior to such
date. Any prepayment of the Notes shall be
accompanied by the interest accrued
and unpaid on the prepaid principal amount.
Notice of prepayment having been so
given, the aggregate principal amount of
the Notes specified in such notice,
together with accrued interest thereon and
the premium, if any, shall become due
and payable on the prepayment date set
forth in such notice.
3.4 MANDATORY
PREPAYMENT. The Notes shall be prepaid in full, together with
all accrued and unpaid interest, (1) within
five (5) Business Days of the
consummation of any public offering of debt
or equity securities of the Company
or (2) immediately upon the consummation of
Sale of the Company (each a
"MANDATORY PREPAYMENT EVENT"). For purposes
hereof, a "SALE OF THE COMPANY"
means (a) a merger, consolidation, share
exchange or other form of corporate
reorganization involving the Company in
which the stockholders of the Company
immediately before such merger,
consolidation, share exchange or other corporate
reorganization dispose of in excess of
fifty percent (50%) of the issued and
outstanding capital stock of the Company;
(b) any transaction or series of
related transactions in which (i) all or
substantially all of the assets of the
Company are sold, or (ii) in excess of
fifty percent (50%) of the shares of
Common Stock (assuming conversion of all
convertible securities) is issued
transferred to any person; or (c) any event
that would trigger payments to the
holders of any series of the Company's
Preferred Stock under Section 1(c) of
Article FOURTH of the Current Charter in
the absence of the prescribed vote of
the holders of such series to the contrary.
The Company will mail or cause to be
mailed to the holder of the Notes a notice
specifying the date on which such
Mandatory Prepayment Event is scheduled to
be consummated. Such notice will be
mailed at least twenty (20) days prior to
the date of such consummation.
3.5 CONVERSION
UPON MERGER.
(a) Immediately prior to the Effective Time of the Merger, the
outstanding principal of and accrued and
unpaid interest on the Notes held by
the Converting Holders shall
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automatically convert, without further act
on the part of such Purchasers, into
shares of Common Stock at a conversion
price of $0.71.
(b) Immediately following such conversion, all Warrants issued to
the
Converting Holders shall be void and of no
further force and effect without any
further action on the part of such
Purchaser or the Company.
(c) In the event that conversion of a Note would, but for the
provisions of this Section 3.5(b), result
in the issuance of any fractional
share of Common Stock, such fractional
shares shall be rounded up to the next
nearest whole number of shares of Common
Stock.
ARTICLE 4
CONDITIONS
4.1 CONDITIONS
TO THE PURCHASE OF SECURITIES. The obligation of Purchasers
to purchase and pay for the Securities to
be purchased at the Closing is subject
to the satisfaction, prior to or at the
Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and
warranties of the Company contained in
Article 5 hereof shall be true and
correct at and as of the Closing Date as
though then made.
(b) AGREEMENTS AND CONDITIONS. The Company shall have performed
and
complied with all agreements, obligations
and conditions contained in this
Agreement that are required to be performed
or complied with by it on or before
the Closing Date.
(c) CLOSING DOCUMENTS. Except as set forth in Section 2.5, the
Company
will have delivered the following documents
in form and substance reasonably
satisfactory to the Purchasers:
(i) Notes in aggregate original principal amounts as set forth
herein, duly completed and executed by the Company;
(ii) one or more Warrants evidencing the right to acquire
shares
of Common Stock or Next Round Preferred Stock of the Company;
(iii) certificates of good standing dated not more than ten
(10)
days prior to the Closing Date for the Company issued by the
Secretary
of State of the State of Delaware and each jurisdiction where it
is
qualified to operate as a foreign corporation, or its
equivalent;
(iv) a copy of the Current Charter of the Company, certified by
the Secretary of State of the State of Delaware as of a date not
more
than
ten (10) days prior to the Closing Date;
(v) a copy of the By-laws of the Company, certified as of the
Closing Date by the secretary or assistant secretary of the
Company;
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(vi) a certificate of the secretary or assistant secretary of
the
Company, certifying as to the names and true signatures of the
officers of the Company authorized to sign this Agreement and
the
other documents to be delivered by the Company hereunder;
(vii) copies of the resolutions duly adopted by the Company's
board of directors authorizing the execution, delivery and
performance
by the Company of this Agreement and each of the other
agreements,
instruments and documents contemplated hereby to which it is a
party,
and the consummation of all of the other Transactions, certified as
of
the Closing Date by the secretary or assistant secretary of the
Company;
(viii) a certificate dated as of the Closing Date from an
officer
of the Company stating that the conditions specified in this
Section
4.1 have been fully satisfied or waived by the Purchasers; and
(ix) such other documents contemplated by this Agreement as the
Purchasers or their counsel may reasonably request.
(d) WAIVER OF RIGHT OF FIRST REFUSAL. The Waiver by Investors
of
Certain Rights of First Refusal (currently
in the form attached hereto as
Exhibit C) shall have been duly and validly
executed by the Company and all
signatories thereto.
(e) PROCEEDINGS. All proceedings taken or required to be taken
in
connection with the transactions
contemplated hereby to be consummated at or
prior to the Closing and all documents
incident thereto will be reasonably
satisfactory in form and substance to the
Purchasers and their counsel.
(f) SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT.
The
Company, the Purchasers and certain other
securityholders of the Company, shall
have entered into the Second Amended and
Restated Registration Rights Agreement,
dated as of March 3, 2005 in form and
substance as set forth in Exhibit D
attached hereto (the "REGISTRATION RIGHTS
AGREEMENT").
4.2 WAIVER. Any
condition specified in this Article 4 may be waived by the
Purchasers.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES
5.1
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents
and warrants to the Purchasers as
follows:
(a) The Company is a corporation duly organized, validly existing
and
in good standing under the laws of the
State of Delaware, and has the corporate
power and authority to own, lease and
operate its properties and to conduct the
business that it presently conducts. The
Company is duly qualified as a foreign
corporation to transact business, and is in
good standing in each jurisdiction
in which such qualification is required,
except for such jurisdictions where the
failure to be so qualified or in good
standing would not have a material
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adverse effect on the condition, financial
or otherwise, or on the results of
operations, business affairs or business
prospects of the Company.
(b) The execution, delivery and performance of this Agreement by
the
Company (a) has been duly authorized and
approved by the Board of Directors of
the Company and all other necessary
corporate action on the part of the Company
in connection therewith has been taken, and
(b) will not conflict with or
constitute a breach of or default under, or
result in the creation or imposition
of any lien, charge or encumbrance upon any
property or assets of the Company
pursuant to (i) the charter documents or
by-laws of the Company, (ii) any
material contract, indenture, mortgage,
loan agreement, note, lease or other
agreement or instrument to which the
Company is a party or by which it may be
bound or to which any of its properties may
be subject, or (iii) any law,
administrative regulation or court decree
applicable to or binding upon the
Company. This Agreement, the Notes, the
Warrants and the Registration Rights
Agreement have been duly and validly
executed and delivered by the Company and
constitute the legal, valid and binding
agreement of the Company, enforceable
against the Company in accordance with its
terms, except that (i) any
enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium
or similar laws from time to time in effect
and affecting the rights of
creditors generally, (ii) the remedy of
specific performance and injunctive and
other forms of equitable relief may be
subject to equitable defenses and to the
discretion of the court before which any
proceedings therefor may be brought and
(iii) the enforcement of rights to
indemnity and contribution under the
Registration Rights Agreement may be
limited by applicable securities laws or
principles of public policy.
(c) No authorization, approval or consent of any court,
governmental
authority or agency is necessary with
respect to the issuance by the Company of
the Note or Warrant.
(d) The audited consolidated balance sheet of the Company as of
December 31, 2004, and the related audited
consolidated statement of income,
stockholders' equity and cash flows for the
Company for the year ended December
31, 2004, have been made available to the
Purchasers (such financial statements
are referred to herein as the "FINANCIAL
STATEMENTS"; the balance sheet of the
Company as of December 31, 2004 is
hereinafter referred to as the "BALANCE
SHEET," and December 31, 2004 is hereafter
referred to as the "BALANCE SHEET
DATE"). The Financial Statements (a) are
true and correct in all material
respects, (b) are in accordance with the
books and records of the Company, and
(c) present fairly the financial position
and results of operations of the
Company
