EXHIBIT 99.2
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of June 25,
2004, by and among Nastech Pharmaceutical Company Inc., a Delaware corporation,
with headquarters located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(the "COMPANY"), and the investors listed on the Schedule of Buyers attached
hereto (individually, a "BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and each Buyer desire to enter into this transaction to
purchase the Purchased Shares (as defined below) and Warrants (as defined below)
set forth herein pursuant to a currently effective shelf registration statement
on Form S-3, which has at least $12,500,000 in unallocated securities registered
thereunder (Registration Number 333-111324) (the "REGISTRATION STATEMENT"),
which Registration Statement has been declared effective in accordance with the
Securities Act of 1933, as amended (the "1933 ACT"), by the United States
Securities and Exchange Commission (the "SEC").
B. Each Buyer wishes to purchase, and the Company wishes to sell, upon the
terms and conditions stated in this Agreement, (i) that aggregate number of
shares of common stock, par value $0.006 per share, of the Company (the "COMMON
STOCK"), set forth opposite such Buyer's name in column (3) on the Schedule of
Buyers (which aggregate amount for all Buyers together shall be 1,136,364 shares
of Common Stock and shall collectively be referred to herein as the "PURCHASED
SHARES"), and (ii) a warrant representing the right to acquire initially up to
that number of additional shares of Common Stock set forth opposite such Buyer's
name in column (4) on the Schedule of Buyers (which aggregate amount for all
Buyers together shall be initially 511,364 shares of Common Stock and shall
collectively be referred to herein as the (the "WARRANTS"), in substantially the
form attached hereto as Exhibit A (as exercised, collectively, the "WARRANT
SHARES").
C. The Purchased Shares, the Warrants and the Warrant Shares are
collectively referred to herein as the "SECURITIES".
NOW, THEREFORE, the Company and each Buyer hereby agree as follows:
1. PURCHASE AND SALE OF PURCHASED SHARES AND WARRANTS.
(a) Purchase of Purchased Shares and Warrants.
Subject to the satisfaction (or waiver) of the conditions set
forth in Sections 6 and 7 below, the Company shall issue and sell to each Buyer,
and each Buyer severally, but not jointly, agrees to purchase from the Company
on the Closing Date (as defined below) (i) the number of Purchased Shares as is
set forth opposite such Buyer's name in column (3) on the Schedule of Buyers and
(ii) Warrants to acquire initially up to that number of Warrant Shares as is set
forth opposite such Buyer's name in column (4) on the Schedule of Buyers (the
"CLOSING"). The Closing shall occur on the Closing Date at the offices of
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
(b) Purchase Price. The purchase price for each Purchased Share and
related Warrant to be purchased by each Buyer at the Closing shall be $11.00
(the "PURCHASE PRICE").
(c) Closing Date. The date and time of the Closing (the "CLOSING
DATE") shall be on the date hereof after execution and delivery of this
Agreement, after notification of satisfaction (or waiver) of the conditions to
the Closing set forth in Sections 6 and 7 below (or such later date as is
mutually agreed to by the Company and each Buyer). As used herein, "BUSINESS
DAY" means any day other than Saturday, Sunday or other day on which commercial
banks in The City of New York are authorized or required by law to remain
closed.
(d) Form of Payment. On the Closing Date, (i) each Buyer shall pay
its Purchase Price to the Company for the Purchased Shares and Warrants to be
issued and sold to such Buyer at the Closing, by wire transfer of immediately
available funds in accordance with the Company's written wire instructions, and
(ii) the Company shall (A) cause American Stock Transfer & Trust Company, the
Company's transfer agent (the "TRANSFER AGENT") through the Depository Trust
Company ("DTC") Fast Automated Securities Transfer Program, to credit such
aggregate number of Purchased Shares that such Buyer is purchasing as is set
forth opposite such Buyer's name in column (3) of the Schedule of Buyers to such
Buyer's or its designee's balance account with DTC through its Deposit
Withdrawal Agent Commission system and (B) deliver to each Buyer a Warrant
pursuant to which such Buyer shall have the right to acquire such number of
Warrant Shares as is set forth opposite such Buyer's name in column (4) of the
Schedule of Buyers, duly executed on behalf of the Company and registered in the
name of such Buyer.
2. REPRESENTATIONS AND WARRANTIES OF EACH BUYER.
Each Buyer represents and warrants with respect to only itself that:
(a) Organization; Authority. Such Buyer is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by the applicable Transaction Documents
(as defined below) and otherwise to carry out its obligations thereunder. The
execution, delivery and performance by such Buyer of the transactions
contemplated by this Agreement has been duly authorized by all necessary action
on the part of such Buyer. This Agreement has been duly executed by such Buyer,
and when delivered by such Buyer in accordance with the terms hereof, each will
constitute the valid and legally binding obligation of such Buyer, enforceable
against it in accordance with its terms, except (a) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (b) as enforceability of any indemnification and
contribution provisions may be limited under the federal and state securities
laws and public policy, and (c) that 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 proceeding therefor
may be brought.
2
(b) No Conflicts. The execution, delivery and performance by such
Buyer of this Agreement and the consummation by such Buyer of the transactions
contemplated hereby will not (i) result in a violation of the organizational
documents of such Buyer or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which such Buyer is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws) applicable to
such Buyer, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations which would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of such Buyer to perform its obligations hereunder.
(c) Such Buyer does not own any shares of Common Stock, except as
set forth on the Schedule of Buyers. Such Buyer is not an Affiliate (as defined
below) of any other Buyer.
The Company acknowledges and agrees that each Buyer does not make or
has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 2.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby makes the following representations and warranties to
each Buyer:
(a) Subsidiaries. There is no entity in which the Company, directly
or indirectly, owns capital stock or holds an equity or similar interest other
than those listed in Schedule 3.1(a) ("SUBSIDIARIES"). Except as disclosed in
Schedule 3.1(a), the Company owns, directly or indirectly, all of the capital
stock of each Subsidiary free and clear of any and all liens, charges,
encumbrances, security interests, rights of first refusal or other restrictions
of any kind ("LIENS"), and all the issued and outstanding shares of capital
stock of each Subsidiary are validly issued and are fully paid, non-assessable
and free of preemptive and similar rights.
(b) Organization and Qualification. Each of the Company and each
Subsidiary is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and each Subsidiary is
duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may
be, would not, individually or in the aggregate, reasonably be expected to have
(i) an adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material and adverse effect on the results of
operations, assets, prospects, business or financial condition of the
3
Company and the Subsidiaries, taken as a whole, or (iii) an adverse impairment
to the Company's ability to perform on a timely basis its obligations under any
Transaction Document (any of (i), (ii) or (iii), a "MATERIAL ADVERSE EFFECT").
(c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of this Agreement, the Warrants, the Irrevocable Transfer
Agent Instructions (as defined below) and any other documents or agreements
executed in connection with the transactions contemplated hereunder
(collectively, the "TRANSACTION DOCUMENTS") and otherwise to carry out its
obligations hereunder and thereunder and to issue the Securities in accordance
with the terms hereof and thereof. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including, without limitation, the
issuance of the Purchased Shares and the Warrants and the reservation for
issuance of the Warrant Shares issuable upon exercise of the Warrants, have been
duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, its Board of Directors or its
stockholders in connection herewith and therewith. Each Transaction Document has
been (or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except (a) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally, (b) as enforceability of any indemnification and contribution
provisions may be limited under the federal and state securities laws and public
policy, and (c) that 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 proceeding therefor may be brought.
(d) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Purchased Shares and the Warrants and reservation for issuance
of the Warrant Shares) do not and will not (i) conflict with or violate any
provision of the Company's or any Subsidiary's certificate or articles of
incorporation, any certificate of designations, preferences and rights of any
outstanding series of preferred stock, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit facility, debt
or other instrument (evidencing a Company or Subsidiary debt or otherwise) or
other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations of whichever of the New York Stock
Exchange, Inc., the American Stock Exchange or the Nasdaq National Market (the
"PRINCIPAL MARKET") that the Common Stock is listed or quoted for trading on the
date in question (any of the foregoing, a
4
"TRADING MARKET"), or by which any property or asset of the Company or a
Subsidiary is bound or affected; except in the case of each of clauses (ii) and
(iii), such as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(e) Filings, Consents and Approvals. Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration (collectively,
"CONSENTS") with, any Person in connection with the execution, delivery and
performance by the Company of the Transaction Documents, other than (i) the
filing with the SEC of the prospectus supplement required by the Registration
Statement pursuant to Rule 424(b) under the 1933 Act (the "PROSPECTUS
SUPPLEMENT") supplementing the base prospectus forming part of the Registration
Statement (the "PROSPECTUS"), (ii) the application(s) to the Principal Market
for the listing of the Purchased Shares and the Warrant Shares for trading
thereon in the time and manner required thereby, (iii) all filings required
pursuant to Section 4(g) hereof, and (iv) those Consents set forth in Schedule
3.1(e), which Consents have been obtained prior to the date hereof.
(f) Issuance of the Securities. The Purchased Shares and Warrants
are duly authorized and, upon issuance in accordance with the terms hereof, will
be duly and validly issued, fully paid and nonassessable, free from all taxes,
Liens and charges with respect to the issue thereof. The Warrant Shares have
been duly authorized and, when issued and paid for in accordance with the
Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all taxes, Liens and charges with respect to
the issue thereof. The Company has reserved from its duly authorized capital
stock the maximum number of shares of Common Stock issuable as of the date of
this Agreement pursuant to the Warrants in order to issue the full number of
Warrant Shares as are or may become issuable in accordance with the terms of the
Warrants. The issuance by the Company of the Securities has been registered
under the 1933 Act, the Securities are being issued pursuant to the Registration
Statement and all of the Securities are freely transferable and tradable by the
Buyers without restriction. The Registration Statement is effective and
available for the issuance of the Purchased Shares thereunder and the Company
has not received any notice that the SEC has issued or intends to issue a
stop-order with respect to the Registration Statement or that the SEC otherwise
has suspended or withdrawn the effectiveness of the Registration Statement,
either temporarily or permanently, or intends or has threatened in writing to do
so. The "Plan of Distribution" section under the Registration Statement permits
the issuance and sale of the Securities hereunder. Upon receipt of the Purchased
Shares and Warrant Shares, the Buyers will have good and marketable title to
such Purchased Shares and Warrant Shares.
(g) Capitalization. The number of shares and type of all authorized,
issued and outstanding capital stock of the Company is set forth in Schedule
3.1(g). Except as set forth in Schedule 3.1(g), no securities of the Company are
entitled to preemptive or similar rights, and no Person has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents.
Except as a result of the purchase and sale of the Securities and except as
disclosed in Schedule 3.1(g), there are no outstanding options, warrants, scrip
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
5
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. Except as set forth in Schedule
3.1(g), the issue and sale of the Securities will not, immediately or with the
passage of time, obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Buyers) and will not result in a right
of any holder of Company securities to adjust the exercise, conversion, exchange
or reset price under such securities.
(h) SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the 1933 Act and the 1934 Act,
including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law to file such reports) (the foregoing materials being collectively referred
to herein as the "SEC REPORTS" and, together with the Schedules to this
Agreement, the "DISCLOSURE MATERIALS") on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. The Company has delivered to the Buyers a copy
of all SEC Reports not available on the ▇▇▇▇▇ system. As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the 1933 Act and the 1934 Act and the rules and regulations of the SEC
promulgated thereunder, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
Registration Statement and any prospectus included therein, including the
Prospectus and the Prospectus Supplement, complied in all material respects with
the requirements of the 1933 Act and the 1934 Act and the rules and regulations
of the SEC promulgated thereunder, and none of such Registration Statement or
any such prospectus, including the Prospectus and the Prospectus Supplement,
contain or contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in the case of any prospectus in the light of the
circumstances under which they were made, not misleading. The Company is in
compliance with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, and the rules and regulations
promulgated thereunder by all government and regulatory authorities and
agencies. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the SEC with respect thereto as in effect at the time
of filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved ("GAAP"), except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in all material
respects the financial position of the Company and its consolidated Subsidiaries
as of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(i) Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports or on
6
Schedule 3(i), (i) there has been no event, occurrence or development that has
had or that would reasonably be expected to have a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company's financial statements pursuant to GAAP or required to
be disclosed in filings made with the SEC, (iii) the Company has not altered its
method of accounting or the identity of its auditors, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock, (v) the Company has not issued any equity
securities to any officer, director or any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with a Person, as such terms are used in and construed under Rule
144 promulgated under the 1933 Act, as amended (or a successor rule thereto)
("RULE 144") (an "AFFILIATE"), except pursuant to existing Company stock option
plans, (vi) the Company has not sold any assets, individually or in the
aggregate, in excess of $250,000 outside of the ordinary course of business or
(vii) the Company has not had capital expenditures, individually or in the
aggregate, in excess of $1,000,000. The Company does not have pending before the
SEC any request for confidential treatment of information.
(j) Litigation. Except as set forth in Schedule 3.1(j), there is no
Action which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
would, if there were an unfavorable decision, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any Subsidiary, nor any director or officer thereof, is or has been the
subject of any action or proceeding involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been, and to the knowledge of the Company, there
is not pending or contemplated, any investigation by the SEC involving the
Company or any current or former director or officer of the Company. The SEC has
not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the 1934 Act
or the 1933 Act, including the Registration Statement.
(k) Labor Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company.
(l) Compliance. Neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator, governmental body, or
regulatory or self-regulatory authority or (iii) is or has been in violation of
any statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety,
7
product quality and safety and employment and labor matters, except in each case
as would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(m) Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect ("MATERIAL PERMITS"), and neither
the Company nor any Subsidiary has received any notice of proceedings relating
to the revocation or modification of any Material Permit.
(n) Title to Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to their respective businesses and good and marketable title in all
personal property owned by them that is material to their respective businesses,
in each case free and clear of all Liens, except as set forth in Schedule 3.1(n)
and except for Liens as do not materially affect the value of such property and
do not materially interfere with the use made and proposed to be made of such
property by the Company and the Subsidiaries. Any real property and facilities
held under lease by the Company and the Subsidiaries are held by them under
valid, subsisting and enforceable leases of which the Company and the
Subsidiaries are in compliance in all material respects.
(o) Patents and Trademarks. The Company and the Subsidiaries have,
or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights that are necessary or material for use in connection with their
respective businesses as described in the SEC Reports and which the failure to
so have would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect (collectively, the "INTELLECTUAL PROPERTY
RIGHTS"). The Company does not have any knowledge of any infringement by the
Company or its Subsidiaries of Intellectual Property Rights of others. There is
no claim, action or proceeding being made or brought, or to the knowledge of the
Company, being threatened, against the Company or its Subsidiaries regarding its
Intellectual Property Rights.
(p) Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged. The Company has no reason to believe
that it or its Subsidiaries will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a
significant increase in cost, other than anticipated increases in the market
price of officers' and directors' liability insurance generally.
(q) Foreign Corrupt Practices. Neither the Company nor any direct
director, officer or employee acting on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf of, the Company
(i) used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expenses relating to political activity; (ii)
8
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
(r) Transactions With Affiliates and Employees. Except as set forth
in the SEC Reports, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company is presently a
party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
(s) Tax Status. The Company and each of its Subsidiaries (i) has
made or filed all federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject, (ii) has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii) has set aside
on its books provision reasonably adequate for the payment of all material taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
(t) Internal Accounting Controls. The Company and the Subsidiaries
maintain a system of internal accounting controls which the audit committee of
the board of directors reasonably believes is sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(u) Solvency. Based on the financial condition of the Company as of
the date hereof and as of the Closing Date, (i) the Company's fair saleable
value of its assets exceeds the amount that will be required to be paid on or in
respect of the Company's existing debts and other liabilities (including known
contingent liabilities) as they mature; (ii) assuming consummation of the
transactions contemplated by this Agreement, the Company's assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof; and (iii) the current cash flow of the Company,
9
together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).
(v) Placement Agent's Fees. The Company shall be responsible for the
payment of any placement agent's fees, financial advisory or consultancy fees,
brokers' commissions or finder's fee (other than for persons engaged by any
Buyer or its investment advisor) relating to or arising out of the transactions
contemplated hereby, which fees are set forth on Schedule 3.1(v). The Company
shall pay, and hold each Buyer harmless against, any liability, loss or expense
(including, without limitation, attorney's fees and out-of-pocket expenses)
arising in connection with any such claim.
(w) Integration. Neither the Company, nor any of its Affiliates, nor
any Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated, nor will the Company or
any of its Subsidiaries take any action or steps that would cause the offering
of the Securities to be integrated with other offerings.
(x) Listing and Maintenance Requirements. Except as set forth in the
SEC Reports or as set forth in Schedule 3.1(x), the Company has not, in the two
years preceding the date hereof, received notice (written or oral) from any
Trading Market on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. Except as set forth in Schedule 3.1(x), the
Company is currently in compliance with all such listing and maintenance
requirements. The issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the Principal Market and no approval of
the stockholders of the Company is required for the Company to issue and deliver
to the Buyers the maximum number of shares of Common Stock contemplated by this
Agreement, including by reason of the issuance of shares of Common Stock upon
the issuance of the Warrant Shares upon exercise in full of the Warrants.
(y) Investment Company. The Company is not, and is not an Affiliate
of, an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(z) Application of Takeover Protections. The Company has taken all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company's
Certificate of Incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Buyers solely
as a result of the Buyers and the Company fulfilling their obligations or
exercising
10
their rights under the Transaction Documents, including without limitation the
Company's issuance of the Securities and the Buyers' ownership of the
Securities.
(aa) FDA Compliance. The Company and its Subsidiaries, and the
manufacture, marketing and sales of the Company's products, complies with any
and all applicable requirements of the Federal Food, Drug and Cosmetic Act, 21
U.S.C. Section 301, et seq., any rules and regulations of the Food and Drug
Administration promugulated thereunder, and any similar laws outside of the
United States to which the company is subject, except where such noncompliance
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(bb) Disclosure. The Company confirms that neither it nor any Person
acting on its behalf has provided any of the Buyers or their agents or counsel
with any information that the Company believes constitutes material, non-public
information. The Company understands and confirms that the Buyers will rely on
the foregoing representations and covenants in effecting transactions in
securities of the Company.
(cc) Acknowledgment Regarding Buyer's Purchase of Securities. The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of arm's length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby, and that no Buyer is an officer or
director of the Company. The Company further acknowledges that no Buyer is
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby, and any advice given by a Buyer or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to such
Buyer's purchase of the Securities. The Company further represents to each Buyer
that the Company's decision to enter into the Transaction Documents has been
based solely on the independent evaluation by the Company and its
representatives.
4. COVENANTS.
(a) Reasonable Best Efforts. Each party shall use its reasonable
best efforts timely to satisfy each of the covenants and the conditions to be
satisfied by it as provided in Sections 5, 6 and 7 of this Agreement.
(b) Maintenance of Registration Statement. For so long as any of the
Warrants remain outstanding, the Company shall use its reasonable best efforts
to maintain the effectiveness of the Registration Statement for the issuance
thereunder of the Warrant Shares; provided that, if at any time while the
Warrants are outstanding the Company shall be ineligible to utilize Form S-3 (or
any successor form) for the purpose issuance of the Warrant Shares the Company
shall promptly amend the Registration Statement on such other form as may be
necessary to maintain the effectiveness of the Registration Statement for this
purpose.
11
(c) Prospectus Supplement and Blue Sky. On or before the execution
of this Agreement, the Company shall have delivered, and as soon as practicable
after the Closing the Company shall file, the Prospectus Supplement with respect
to the Purchased Shares as required under and in conformity with the 1933 Act,
including Rule 424(b) thereunder. If required, the Company, on or before the
Closing Date, shall take such action as the Company shall reasonably determine
is necessary in order to obtain an exemption for or to qualify the Securities
for sale to the Buyers at the Closing pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United States (or
to obtain an exemption from such qualification), and shall provide evidence of
any such action so taken to the Buyers on or prior to the Closing Date. The
Company shall make all filings and reports relating to the offer and sale of the
Securities required under applicable securities or "Blue Sky" laws of the states
of the United States following the Closing Date.
(d) Reporting Status. Other than in connection with a Fundamental
Transaction (as defined in the Warrant) conducted in compliance with the
applicable terms of the Warrant whereby the Company is not the Successor Entity
(as defined in the Warrants) of such Fundamental Transaction, until the date on
which the Buyers shall have sold all the Purchased Shares and Warrant Shares and
none of the Warrants is outstanding (the "REPORTING PERIOD"), the Company shall
timely file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
(e) Listing. The Company shall promptly secure the listing of all of
the Purchased Shares and Warrant Shares upon each national securities exchange
and automated quotation system, if any, upon which the Common Stock is then
listed (subject to official notice of issuance). Other than in connection with a
Fundamental Transaction conducted in compliance with the applicable terms of the
Warrant whereby the Company is not the Successor Entity of such Fundamental
Transaction, so long as any Warrants are outstanding, the Company (i) shall
maintain the Common Stock's authorization for listing on a Trading Market and
(ii) shall not take any action which would be reasonably expected to result in
the delisting or suspension of the Common Stock on the Principal Market. The
Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 4(e).
(f) Fees. At the Closing, the Company shall pay an expense allowance
of $20,000 to ____________ (a Buyer) or its designee(s), which amount shall be
withheld by such Buyer from its aggregate Purchase Price at the Closing. The
Company shall be responsible for the payment of any placement agent's fees,
financial advisory fees, or broker's commissions (other than for Persons engaged
by any Buyer) relating to or arising out of the transactions contemplated
hereby. The Company shall pay, and hold each Buyer harmless against, any
liability, loss or expense (including, without limitation, reasonable attorney's
fees and out-of-pocket expenses) arising in connection with any claim relating
to any such payment. Except as otherwise set forth in this Agreement or in the
Transaction Documents, each party to this Agreement shall bear its own expenses
in connection with the sale of the Securities to the Buyers.
12
(g) Disclosure of Transactions and Other Material Information. The
Company shall, on or before 8:30 a.m., New York City Time, on the first Business
Day following the execution and delivery of this Agreement, issue a press
release reasonably acceptable to the Buyers disclosing all material terms of the
transactions contemplated hereby (the "PRESS RELEASE"). On or before 8:30 a.m.,
New York Time, on the second Business Day following the execution and delivery
of this Agreement, the Company shall file a Current Report on Form 8-K
describing the terms of the transactions contemplated by the Transaction
Documents in the form required by the 1934 Act, and attaching the material
Transaction Documents (including, without limitation, this Agreement and the
form of the Warrants) as exhibits to such filing (including all attachments, the
"8-K FILING"). From and after the filing of the Press Release, no Buyer shall be
in possession of any material, nonpublic information received from the Company,
any of its Subsidiaries or any of its respective officers, directors, employees
or agents, that is not disclosed in such Press Release. The Company shall not,
and shall cause each of its Subsidiaries and its and each of their respective
officers, directors, employees and agents, not to, provide any Buyer with any
material nonpublic information regarding the Company or any of its Subsidiaries
from and after the filing of the press release referred to in the first sentence
of this Section without the express written consent of such Buyer. Subject to
the foregoing, neither the Company nor any Buyer shall issue any press releases
or any other public statements with respect to the transactions contemplated
hereby; provided, however, that the Company shall be entitled, without the prior
approval of any Buyer, to make any press release or other public disclosure with
respect to such transactions (i) in substantial conformity with the 8-K Filing
and contemporaneously therewith and (ii) as is required by applicable law and
regulations, including the applicable rules and regulations of the Principal
Market (provided that in the case of clause (i) each Buyer shall be consulted by
the Company in connection with any such press release or other public disclosure
prior to its release). Without the prior written consent of any applicable
Buyer, the Company shall not disclose the name of any Buyer in any filing,
announcement, release or otherwise, except as required by law or legal process.
(h) Reservation of Shares. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, from and after the Closing Date, the number of shares of Common Stock
issuable upon exercise of the Warrants being issued at the Closing.
(i) Use of Proceeds. The Company will use the proceeds from the sale
of the Securities for general corporate purposes.
(j) Additional Issuances of Securities.
(i) For purposes of this Section 4(j), the following
definitions shall apply.
(1) "CONVERTIBLE SECURITIES" means any stock or
securities (other than Options) convertible into or exercisable or
exchangeable for shares of Common Stock.
13
(2) "OPTIONS" means any rights, warrants or options to
subscribe for or purchase shares of Common Stock or Convertible
Securities.
(3) "COMMON STOCK EQUIVALENTS" means, collectively,
Options and Convertible Securities.
(ii) From the date hereof until the date that is 90 Business
Days following the date hereof (the "TRIGGER DATE"), the Company, without the
consent of the Buyers listed on the Schedule of Buyers as purchasing at least a
majority of the amount of the Purchased Shares, will not, directly or
indirectly, offer, sell, grant any option to purchase, or otherwise dispose of
(or announce any offer, sale, grant or any option to purchase or other
disposition of) any of its or its Subsidiaries' equity or equity equivalent
securities, including without limitation any debt, preferred stock or other
instrument or security that is, at any time during its life and under any
circumstances, convertible into or exchangeable or exercisable for shares of
Common Stock or Common Stock Equivalents (any such offer, sale, grant,
disposition or announcement being referred to as a "SUBSEQUENT PLACEMENT").
(iii) From the Trigger Date until the twelve month anniversary
of the Closing Date, the Company will not, directly or indirectly, effect any
Subsequent Placement unless the Company shall have first complied with this
Section 4(j)(iii).
(1) The Company shall deliver to each Buyer a written
notice by mailing, fax and email and make reasonable best efforts to
contact each Buyer by telephone (the "OFFER NOTICE") of any proposed or
intended issuance or sale or exchange (the "OFFER") of the securities
being offered (the "OFFERED SECURITIES") in a Subsequent Placement, which
Offer Notice shall (w) identify and describe the Offered Securities, (x)
describe the price and other terms upon which they are to be issued, sold
or exchanged, and the number or amount of the Offered Securities to be
issued, sold or exchanged, (y) identify the persons or entities (if known)
to which or with which the Offered Securities are to be offered, issued,
sold or exchanged and (z) offer to issue and sell to or exchange with the
Buyers all of the Offered Securities, allocated among the Buyers (a) based
on such Buyer's pro rata portion of the aggregate number of shares of
Common Stock purchased hereunder (the "BASIC AMOUNT"), and (b) with
respect to each Buyer that elects to purchase its Basic Amount, any
additional portion of the Offered Securities attributable to the Basic
Amounts of other Buyers as such Buyer shall indicate it will purchase or
acquire should the other Buyers subscribe for less than their Basic
Amounts (the "UNDERSUBSCRIPTION AMOUNT").
(2) To accept an Offer, in whole or in part, a Buyer
must deliver a written notice to the Company prior to the end of the third
(3rd) Business Day after such Buyer's receipt of the Offer Notice (the
"OFFER PERIOD"), setting forth the portion of the Buyer's Basic Amount
that such Buyer elects to purchase and, if such Buyer shall elect to
purchase all of its Basic Amount, the Undersubscription Amount, if any,
that such Buyer elects to purchase (in either case, the "NOTICE OF
ACCEPTANCE"). If the Basic Amounts subscribed for by all Buyers are less
than the total of all of the Basic
14
Amounts, then each Buyer who has set forth an Undersubscription Amount in
its Notice of Acceptance shall be entitled to purchase, in addition to the
Basic Amounts subscribed for, the Undersubscription Amount it has
subscribed for; provided, however, that if the Undersubscription Amounts
subscribed for exceed the difference between the total of all the Basic
Amounts and the Basic Amounts subscribed for (the "AVAILABLE
UNDERSUBSCRIPTION AMOUNT"), each Buyer who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion
of the Available Undersubscription Amount as the Basic Amount of such
Buyer bears to the total Basic Amounts of all Buyers that have subscribed
for Undersubscription Amounts, subject to rounding by the Company to the
extent its deems reasonably necessary.
(3) The Company shall have ten (10) Business Days from
the expiration of the Offer Period above to offer, issue, sell or exchange
all or any part of such Offered Securities as to which a Notice of
Acceptance has not been given by the Buyers (the "REFUSED SECURITIES"),
but only upon terms and conditions (including, without limitation, unit
prices and interest rates) that are not more favorable to the acquiring
person or persons or less favorable to the Company than those set forth in
the Offer Notice.
(4) In the event the Company shall propose to sell less
than all the Refused Securities (any such sale to be in the manner and on
the terms specified in Section 4(j)(iii)(3) above), then each Buyer may,
at its sole option and in its sole discretion, reduce the number or amount
of the Offered Securities specified in its Notice of Acceptance to an
amount that shall be not less than the number or amount of the Offered
Securities that the Buyer elected to purchase pursuant to Section
4(j)(iii)(2) above multiplied by a fraction, (i) the numerator of which
shall be the number or amount of Offered Securities the Company actually
proposes to issue, sell or exchange (including Offered Securities to be
issued or sold to Buyers pursuant to Section 4(j)(iii)(3) above prior to
such reduction) and (ii) the denominator of which shall be the original
amount of the Offered Securities. In the event that any Buyer so elects to
reduce the number or amount of Offered Securities specified in its Notice
of Acceptance, the Company may not issue, sell or exchange more than the
reduced number or amount of the Offered Securities unless and until such
securities have again been offered to the Buyers in accordance with
Section 4(j)(iii)(1) above.
(5) Upon the closing of the issuance, sale or exchange
of all or less than all of the Refused Securities, the Buyers shall
acquire from the Company, and the Company shall issue to the Buyers, the
number or amount of Offered Securities specified in the Notices of
Acceptance, as reduced pursuant to Section 4(j)(iii)(3) above if the
Buyers have so elected, upon the terms and conditions specified in the
Offer. The purchase by the Buyers of any Offered Securities is subject in
all cases to the preparation, execution and delivery by the Company and
the Buyers of a purchase agreement relating to such Offered Securities not
inconsistent with the terms of the Offer and otherwise reasonably
satisfactory in form and substance to the Buyers and their respective
counsel.
15
(6) Any Offered Securities not acquired by the Buyers or
other persons in accordance with Section 4(j)(iii)(3) above may not be
issued, sold or exchanged until they are again offered to the Buyers under
the procedures specified in this Agreement.
(iv) The restrictions contained in subsections (ii) and (iii)
of this Section 4(j) shall not apply (1) in connection with any employee benefit
plan which has been approved by the Board of Directors of the Company, pursuant
to which the Company's securities may be issued to any employee, officer or
director for services provided to the Company or any of its Subsidiaries, or
pursuant to the exercise of any securities of the Company issued thereunder; (2)
upon conversion of any options or convertible securities that are outstanding on
the day immediately preceding the Closing Date, provided, that the terms of such
options or convertible securities are not amended, modified or changed on or
after the Closing Date; (3) upon conversion of any options or convertible
securities that are issued in compliance with the provisions of this Section
4(j), provided, that the terms of such options or convertible securities are not
amended, modified or changed on or after the date of their issuance; (4) to
transactions involving a strategic alliance, acquisition of stock or assets,
merger, collaboration, joint venture, partnership or other similar arrangement
of the Company with another corporation, partnership or other business entity
(A) which is engaged in a business similar, complementary or related to the
business of the Company or (B) pursuant to which the Company issues securities
with the primary purpose to directly or indirectly acquire, license or otherwise
become entitled to use technology relevant to or useful in the Company's
business; (5) pursuant to a bona fide firm commitment underwritten public
offering with a nationally recognized underwriter which generates net proceeds
to the Company in excess of $25,000,000 (other than an "at-the-market offering"
as defined in Rule 415(a)(4) under the 1933 Act and "equity lines") (the
foregoing, "EXCLUDED SECURITIES"); or (6) as to any particular Buyer in the
event that the Company requested consent from such Buyer to deliver an Offer
Notice to such Buyer, and such Buyer elected not to receive the Offer Notice.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to the Transfer
Agent, and any subsequent transfer agent, to issue certificates or credit shares
to the applicable balance accounts at DTC, registered in the name of each Buyer
or its respective nominee(s), for the Warrant Shares in such amounts as
specified from time to time by each Buyer to the Company upon exercise of the
Warrants in the form of Exhibit B attached hereto (the "IRREVOCABLE TRANSFER
AGENT INSTRUCTIONS"). The Company represents and warrants that no instruction
other than the Irrevocable Transfer Agent Instructions referred to in this
Section 5 will be given by the Company to the Transfer Agent, and any subsequent
transfer agent with respect to the Securities, and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the other Transaction Documents.
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to a Buyer. Accordingly, the Company acknowledges that
the remedy at law for a breach of its obligations under this Section 5 will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5, that a Buyer
16
shall be entitled, in addition to all other available remedies, to an order
and/or injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond or
other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the
Purchased Shares and the related Warrants to each Buyer at the Closing is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole discretion by
providing each Buyer with prior written notice thereof:
(i) Such Buyer shall have executed this Agreement and
delivered the same to the Company.
(ii) Such Buyer shall have delivered to the Company the
Purchase Price for the Purchased Shares and the related Warrants being purchased
by such Buyer at the Closing by wire transfer of immediately available funds
pursuant to the wire instructions provided by the Company.
(iii) The representations and warranties of such Buyer shall
be true and correct in all material respects as of the date when made and as of
the Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and such Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Buyer at or prior to the Closing Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the Purchased
Shares and the related Warrants at the Closing is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions, provided
that these conditions are for each Buyer's sole benefit and may be waived by
such Buyer at any time in its sole discretion by providing the Company with
prior written notice thereof:
(i) The Company shall have (i) executed and delivered to such
Buyer each of the Transaction Documents, (ii) electronically delivered the
Purchased Shares being purchased by such Buyer at the Closing pursuant to this
Agreement and (iii) executed and delivered the related Warrants (in such amounts
as such Buyer shall request) being purchased by such Buyer at the Closing
pursuant to this Agreement.
(ii) Such Buyer shall have received the opinion of the
Company's counsel, dated as of the Closing Date, in a form reasonably acceptable
to the Buyers.
(iii) The Company shall have delivered to such Buyer a copy of
the Irrevocable Transfer Agent Instructions, in the form of Exhibit B attached
hereto, which
17
instructions shall have been delivered to and acknowledged in writing by the
Company's transfer agent.
(iv) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the Company and
each of its Subsidiaries in such corporation's jurisdiction of incorporation
issued by the Secretary of State of such state of incorporation as of a date
within 10 days of the Closing Date.
(v) The Common Stock (I) shall be listed on the Principal
Market and (II) shall not have been suspended, as of the Closing Date, by the
SEC or the Principal Market from trading on the Principal Market nor shall
suspension by the SEC or the Principal Market have been threatened, as of the
Closing Date, either (A) in writing by the SEC or the Principal Market or (B) by
falling below the minimum listing maintenance requirements of the Principal
Market.
(vi) The Company shall have delivered to such Buyer a
certified copy of the Certificate of Incorporation, as amended to date (the
"CERTIFICATE OF INCORPORATION") as certified by the Secretary of State of
Delaware within 10 days of the Closing Date.
(vii) The Company shall have delivered to such Buyer a
certificate, executed by the Secretary of the Company and dated as of the
Closing Date, as to (i) the resolutions consistent with this transaction as
adopted by the Company's Board of Directors in a form reasonably acceptable to
such Buyer, (ii) the Certificate of Incorporation and (iii) the Bylaws of the
Company, each as in effect at the Closing, in the form attached hereto as
Exhibit C.
(viii) The representations and warranties of the Company shall
be true and correct as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date) and the Company shall have performed, satisfied and
complied in all respects with the covenants, agreements and conditions required
by the Transaction Documents to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. Such Buyer shall have received a
certificate, executed by the Chief Executive Officer of the Company, dated as of
the Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by such Buyer in the form attached hereto as Exhibit D.
(ix) The Company shall have delivered to such Buyer a letter
from the Company's transfer agent certifying the number of shares of Common
Stock outstanding as of a date within five days of the Closing Date.
(x) The Company shall have obtained all governmental,
regulatory or third party consents and approvals, if any, necessary for the sale
of the Purchased Shares, the Warrants and the Warrant Shares.
18
(xi) The Registration Statement shall be effective and
available for the issuance and sale of the Purchased Shares hereunder and the
Company shall have delivered to such Buyer the Prospectus and the Prospectus
Supplement as required thereunder.
(xii) The Company shall have delivered to such Buyer such
other documents relating to the transactions contemplated by this Agreement as
such Buyer or its counsel may reasonably request.
8. TERMINATION. In the event that the Closing shall not have occurred with
respect to a Buyer on the Closing Date due to the Company's or such Buyer's
failure to satisfy the conditions set forth in Sections 6 and 7 above (and the
nonbreaching party's failure to waive such unsatisfied condition(s)), the
nonbreaching party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on such date without
liability of any party to any other party; provided, however, that if this
Agreement is terminated pursuant to this Section 8, the Company shall remain
obligated to reimburse the Buyers for the expenses described in Section 4(f)
above.
9. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in The City of New York, Borough of Manhattan
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(b) Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon
19
the signatory thereto with the same force and effect as if the signature were an
original, not a facsimile signature.
(c) Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
(e) Entire Agreement; Amendments. This Agreement supersedes all
other prior oral or written agreements between the Buyers, the Company, their
Affiliates and Persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the holders of Purchased Shares representing at least a majority of
the amount of the Purchased Shares, or, if prior to the Closing Date, the Buyers
listed on the Schedule of Buyers as being obligated to purchase at least a
majority of the amount of the Purchased Shares. No provision hereof may be
waived other than by an instrument in writing signed by the party against whom
enforcement is sought. No such amendment shall be effective to the extent that
it applies to less than all of the holders of the Purchased Shares then
outstanding. No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration also is offered to all of the parties to
the Transaction Documents, holders of Purchased Shares, holders of the Warrants
or holders of Warrant Shares, as the case may be. The Company has not, directly
or indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents.
(f) Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
an overnight courier service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
If to the Company:
20
Nastech Pharmaceutical Company Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn.: Chief Executive Officer
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers, with copies to such Buyer's representatives as set forth on the Schedule
of Buyers,
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
or to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively.
(g) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and any
Person to which the rights hereunder are specifically assigned in connection
with a transfer of any Purchased Securities not effected on the Principal
Market.
(h) No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
21
(i) Survival. Unless this Agreement is terminated under Section 8,
the representations and warranties of the Company and the Buyers contained in
Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and 9
shall survive the Closing and the delivery and exercise of Securities, as
applicable. Each Buyer shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.
(j) Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(k) Indemnification. (i) In consideration of each Buyer's execution
and delivery of the Transaction Documents and acquiring the Securities
thereunder and in addition to all of the Company's other obligations under the
Transaction Documents, the Company shall defend, protect, indemnify and hold
harmless each Buyer and their shareholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing
Persons' agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "INDEMNITEES") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
"INDEMNIFIED LIABILITIES"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company contained
in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby or (c) any cause of action, suit or claim brought
or made against such Indemnitee by a third party (including for these purposes a
derivative action brought on behalf of the Company) and arising out of or
resulting from the execution, delivery, performance or enforcement of the
Transaction Documents other than as a result of the gross negligence or willful
misconduct of the Buyer. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
(ii) Promptly after receipt by an Indemnitee under this
Section 9(k) of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving an Indemnified
Liability, such Indemnitee shall, if a claim for indemnification in respect
thereof is to be made against any indemnifying party under this Section 9(k),
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying
22
party and the Indemnitee; provided, however, that an Indemnitee shall have the
right to retain its own counsel with the fees and expenses of not more than one
counsel for such Indemnitee to be paid by the indemnifying party, if, in the
reasonable opinion of the Indemnitee, the representation by such counsel of the
Indemnitee and the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnitee and any other party
represented by such counsel in such proceeding. Legal counsel referred to in the
immediately preceding sentence shall be selected by the Buyers holding at least
a majority of the Purchased Shares. The Indemnitee shall cooperate fully with
the indemnifying party in connection with any negotiation or defense of any such
action or Indemnified Liabilities by the indemnifying party and shall furnish to
the indemnifying party all information reasonably available to the Indemnitee
that relates to such action or Indemnified Liabilities. The indemnifying party
shall keep the Indemnitee fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No indemnifying
party shall be liable for any settlement of any action, claim or proceeding
effected without its prior written consent, provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnitee, consent to entry of any judgment or enter into any settlement or
other compromise which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnitee of a release from all
liability in respect to such Indemnified Liabilities or litigation. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnitee with respect to all third parties,
firms or corporations relating to the matter for which indemnification has been
made. The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnitee under this Section 9(k),
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.
(iii) The indemnification required by this Section 9(k) shall
be made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified
Liabilities are incurred.
(iv) The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Indemnitee against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
(l) No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
(m) Remedies. Each Buyer and each holder of the Securities shall
have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any
other agreement or contract and all of the rights which such holders have under
any law. Any Person having any rights under any provision of this Agreement
shall be entitled to enforce such rights specifically (without posting
23
a bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law.
Furthermore, the Company recognizes that in the event that it fails to perform,
observe, or discharge any or all of its obligations under the Transaction
Documents, any remedy at law may prove to be inadequate relief to the Buyers.
The Company therefore agrees that the Buyers shall be entitled to seek temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages and without posting a bond or other security.
(n) Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Buyer exercises a right, election, demand or
option under a Transaction Document and the Company does not timely perform its
related obligations within the periods therein provided, then, until such time
as the Company shall have performed such obligations, such Buyer may rescind or
withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.
(o) Payment Set Aside. To the extent that the Company makes a
payment or payments to the Buyers hereunder or pursuant to any of the other
Transaction Documents or the Buyers enforce or exercise their rights hereunder
or thereunder, and such payment or payments or the proceeds of such enforcement
or exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
(p) Independent Nature of Buyers' Obligations and Rights. The
obligations of each Buyer under any Transaction Document are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under any
Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to constitute the Buyers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Buyers are
in any way acting in concert or as a group with respect to such obligations or
the transactions contemplated by the Transaction Documents. Each Buyer confirms
that it has independently participated in the negotiation of the transaction
contemplated hereby with the advice of its own counsel and advisors. Each Buyer
shall be entitled to independently protect and enforce its rights, including,
without limitation, the rights arising out of this Agreement or out of any other
Transaction Documents, and it shall not be necessary for any other Buyer to be
joined as an additional party in any proceeding for such purpose.
[SIGNATURE PAGE FOLLOWS]
24
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to the Securities Purchase Agreement to be duly
executed as of the date first written above.
COMPANY:
NASTECH PHARMACEUTICAL COMPANY INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D., Ph.D.
Title: Chairman, Chief Executive Officer and President
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to the Securities Purchase Agreement to be duly
executed as of the date first written above.
BUYERS:
By:
-----------------
Name:
Title: