At the closing of the second tranche (the “Second Closing”, and the issuance of Shares in the Second Closing, the “Second Placement”), subject to satisfaction of certain closing conditions, including the Company’s shareholders voting in favor of the transaction at this Special Meeting, Innoviva will purchase approximately 7.7 million shares of Common Stock and Warrants to purchase approximately 7.7 million shares of Common Stock for an aggregate purchase price of approximately $22.2 million.
At the First Closing, Innoviva and the Company entered into an investor rights agreement (the “Investor Rights Agreement”), which provides that, for so long as Innoviva and its affiliates hold at least 12.5% of the outstanding shares of Common Stock on a fully-diluted basis, Innoviva shall have the right to designate two (2) directors to the Board of Directors of the Company (the “Board”), and, for so long as Innoviva and its affiliates hold at least 8% but less than 12.5% of the outstanding shares of Common Stock on a fully-diluted basis, Innoviva shall have the right to designate one (1) director to the Board, subject to certain qualifications and conditions in the Investor Rights Agreement. In connection with the First Closing, on February 12, 2020, two of Armata’s Board members, Richard Bear and Michael Perry, resigned from the Board, and Innoviva appointed Sarah Schlesinger, M.D. and Odysseas Kostas, M.D. to fill the newly created vacancies on the Board. The Investor Rights Agreement also provides for participation rights for Innoviva to participate in future offerings of equity securities by the Company.
The Second Closing is expected to occur by the end of the first quarter of 2020, subject to the satisfaction of certain closing conditions referenced above. Following the Second Closing, Innoviva will become our largest shareholder, owning approximately 47% of the Company, assuming no exercise of the Warrants, and if Innoviva exercises the Warrants, it will own approximately 64% of the Company?—?either of which will result in a change of control of the Company under the rules of the NYSE American.
In addition, the Purchase Agreement provides that prior to the consummation of the Second Closing, Armata will effect an amendment to its Amended and Restated Articles of Incorporation, as amended, to renounce any interest or expectancy of the Company in, or in being offered an opportunity to participate in, any business opportunity that is presented to its directors, officers or shareholders.
