PURCHASE AGREEMENT dated November 1, 2023 between AQUESTIVE THERAPEUTICS, INC. and THE PURCHASER NAMED HEREIN $45,000,000 13.5% SENIOR SECURED NOTES DUE 2028

Exhibit 10.1

 

 

dated November 1, 2023

 

between

 

 

and

 

THE PURCHASER NAMED HEREIN

 

$45,000,000 13.5% SENIOR SECURED NOTES DUE 2028

 

Table of Contents

 

 

November 1, 2023

 

To the Purchaser named in Schedule 1

 

Ladies and Gentlemen:

 

Aquestive Therapeutics, Inc., a Delaware corporation (the “Issuer”), hereby covenants and agrees with you as follows:

 

ARTICLE I

 

Section 1.1         Introductory. The Issuer proposes, subject to the terms and conditions stated herein, to issue and sell to the purchaser named in Schedule 1 (the “Purchaser”) and to the Other Purchasers $45,000,000 in aggregate principal amount of the Issuer’s 13.5% Senior Secured Notes due 2028 and Royalty Rights. The principal amount of Notes to be purchased by the Purchaser pursuant to this Purchase Agreement is set forth opposite the Purchaser’s name in Schedule 1. The Notes to be sold to the Purchaser and the Other Purchasers are to be issued on the Closing Date pursuant to, and subject to the terms and conditions of, the Indenture.

 

The Notes and the Royalty Rights will be offered and sold to the Purchaser and the Other Purchasers (collectively, the “Purchasers”), or Affiliates of the Purchasers, in transactions exempt from or not subject to the registration requirements of the Securities Act.

 

ARTICLE II

 

Section 2.1      Rules of Construction and Defined Terms. The rules of construction set forth in Annex A shall apply to this Purchase Agreement and are hereby incorporated by reference into this Purchase Agreement as if set forth fully in this Purchase Agreement. Capitalized terms used but not otherwise defined in this Purchase Agreement shall have the respective meanings given to such terms in Annex A, which is hereby incorporated by reference into this Purchase Agreement as if set forth fully in this Purchase Agreement.

 

ARTICLE III

 

Section 3.1          Sale and Purchase of Notes and Royalty Rights; Closing.

 

 

 

 

 

Section 3.2         Allocation of Purchase Price. The Issuer and the Purchaser hereby acknowledge and agree that the Notes to be issued and sold by the Issuer to the Purchaser and the Royalty Rights to be sold by the Issuer to the Purchaser (or its Affiliate) on the Closing Date will constitute an “investment unit” for purposes of Section 1273(c)(2) of the Code. In accordance with Section 1273(b)(2) of the Code and Section 1273(c)(2)(A) of the Code, the issue price of the investment unit will be 97.5% of the principal amount of such Notes. Allocating that issue price among such Notes and such Royalty Rights based on their relative fair market values, as required by Section 1273(c)(2)(B) of the Code and U.S. Treasury Regulations Section 1.1273-2(h)(1), results in (a) such Notes having an issue price of 68% of the principal amount of such Notes and (b) such Royalty Rights having a purchase price of 32% of the principal amount of such Notes; provided, that such percentages are subject to final adjustment based on the good faith determination of the Issuer, with prompt written notice to the Purchaser, within 30 days of the Closing Date, provided, further, that any such adjustment shall be made solely on the basis of the relative fair market values of the Notes and the Royalty Rights as of the Closing Date. The Issuer and the Purchaser agree to prepare their respective U.S. federal income tax returns, including statements and reports related thereto, as the case may be, in a manner consistent with the foregoing agreement, to the extent such returns, statements and reports are required to be filed.

 

ARTICLE IV

 

The Purchaser agrees and acknowledges that (a) the Issuer and counsel to the Issuer may rely upon the accuracy of and performance of obligations under the representations, warranties and agreements of the Purchaser contained in this Article IV and (b) the Placement Agent may rely upon the accuracy of and performance of obligations under the representations, warranties and agreements of the Purchaser contained in Sections 4.1, 4.2 and 4.4.

 

Section 4.1          Purchase for Investment and Restrictions on Resales. The Purchaser (on behalf of itself and any Affiliate thereof purchasing the Royalty Rights):

 

 

 

 

 

 

Section 4.2         Purchaser Status. The Purchaser (on behalf of itself and any Affiliate thereof purchasing the Royalty Rights) represents and warrants that, as of the date hereof, it (and any such Affiliate) (a) if it is purchasing a Rule 144A Security or would purchase a Rule 144A Security except that it cannot or opts not to hold a beneficial interest in a Global Security, is a QIB and is purchasing the Notes and the Royalty Rights for its own account or for the account of a QIB, (b) if it is purchasing a Regulation S Security or would purchase a Regulation S Security except that it cannot or opts not to hold a beneficial interest in a Global Security, is a Person outside the United States purchasing the Notes and the Royalty Rights in an offshore transaction in compliance with Regulation S or (c) if neither clause (a) nor clause (b) is applicable, is an Accredited Investor.

 

Section 4.3          Source of Funds; ERISA Matters.

 

 

 

 

 

 

 

 

As used in this Section 4.3(a), the terms “employee benefit plan”, “governmental plan” and “separate account” shall have the respective meanings assigned to such terms in Section 3 of ERISA.

 

 

Section 4.4         Due Diligence. The Purchaser (on behalf of itself and any Affiliate thereof purchasing the Royalty Rights) acknowledges that, prior to the date of this Purchase Agreement, (a) it has made, either alone or together with its advisors, such separate and independent investigation of the Issuer and its business, financial condition, prospects and management as the Purchaser (and such Affiliate) deems to be, or such advisors have advised to be, necessary or advisable in connection with the purchase of the Notes and the Royalty Rights pursuant to the transactions contemplated by this Purchase Agreement, (b) it and its advisors have received all information and data that it and such advisors believe to be necessary in order to reach an informed decision as to the advisability of the purchase of the Notes and the Royalty Rights pursuant to the transactions contemplated by this Purchase Agreement, (c) it understands the nature of the potential risks and potential rewards of the purchase of the Notes and the Royalty Rights, (d) it is a sophisticated investor with investment experience and has the ability to bear complete loss of its investment, whether as a result of an Event of Default or any insolvency, liquidation or winding up of the Issuer or otherwise, and (e) it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of purchasing the Notes and the Royalty Rights and can bear the economic risks of investing in the Notes and the Royalty Rights for an indefinite period of time, including the complete loss of its investment. The Purchaser (on behalf of itself and any Affiliate thereof purchasing the Royalty Rights) acknowledges that it has obtained its own attorneys, business advisors and tax advisors as to legal, business and tax advice (or has decided not to obtain such advice) and has not relied in any respect on the Issuer or the Placement Agent for such advice. The Purchaser (and any such Affiliate) has had a reasonable time prior to the date of this Purchase Agreement to ask questions and receive answers concerning the Issuer and its business and the terms and conditions of the offering of the Notes and the Royalty Rights and the transactions contemplated hereby and to obtain any additional information that the Issuer possesses or could acquire without unreasonable effort or expense, and has generally such knowledge and experience in business and financial matters and with respect to investments in securities as to enable the Purchaser (and any such Affiliate) to understand and evaluate the risks of such investment and form an investment decision with respect thereto. Except for (i) the representations, warranties and covenants made by the Issuer in the Transaction Documents and (ii) the legal opinions provided to the Purchaser in connection with the transactions contemplated by the Transaction Documents, the Purchaser (and any such Affiliate) is relying on its own investigation and analysis in entering into the transactions contemplated hereby.

 

Section 4.5          Enforceability of this Purchase Agreement. This Purchase Agreement has been duly authorized, executed and delivered by the Purchaser and constitutes the valid, legally binding and enforceable obligation of the Purchaser, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally and by general principles of equity.

 

Section 4.6          Tax Matters.

 

 

 

 

Section 4.7          Reliance for Opinions. The Purchaser acknowledges and agrees that the Issuer and, for purposes of the opinions to be delivered to the Purchaser pursuant to Sections 6.1 and 6.2, counsel for the Issuer and counsel for the Purchasers, respectively, may rely, without any independent verification thereof, upon the accuracy of the representations and warranties of the Purchaser, and compliance by the Purchaser with its agreements, contained in Sections 4.1, 4.2 and 4.3, and the Purchaser hereby consents to such reliance.

 

 

ARTICLE V

 

The Issuer represents and warrants to the Purchaser as of the date hereof as follows:

 

Section 5.1          Securities Laws.

 

 

 

 

Section 5.2         Investment Company Act Matters. After giving effect to the offering and sale of the Notes and the Royalty Rights, the Issuer will not be required to register as an “investment company” or “controlled” by an “investment company” within the meaning of the U.S. Investment Company Act of 1940, as amended.

 

Section 5.3       Use of Proceeds; Margin Regulations. No part of the proceeds from the sale of the Notes or the Royalty Rights under the Transaction Documents will be used, directly or indirectly, for the purpose of purchasing or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of purchasing or carrying or trading in any securities under such circumstances as to involve the Issuer in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). The Issuer is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221). As used in this Section 5.3, the terms “margin stock” and “purpose of purchasing or carrying” shall have the meanings ascribed to them in said Regulation U.

 

Section 5.4       Exchange Act Documents. The documents filed by the Issuer with the Commission pursuant to the Exchange Act since December 31, 2022 (excluding any documents or portions thereof furnished to, rather than filed with, the Commission) (such documents, the “Exchange Act Documents”), when they were filed with the Commission, conformed as to form in all material respects with the requirements of the Exchange Act, and none of such documents contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

Section 5.5        Financial Statements. The financial statements included in the Exchange Act Documents, together with the related notes and schedules, present fairly in all material respects the consolidated financial position of the Issuer as of the respective dates indicated and the consolidated results of operations, cash flows and changes in shareholders’ equity of the Issuer for the respective periods specified and have been prepared in all material respects in compliance with the requirements of the Exchange Act and in conformity with GAAP applied on a consistent basis during the periods covered thereby, except as may be expressly stated in the related notes thereto and, in the case of unaudited financial statements, subject to normal and recurring year-end adjustments that, if presented, would not differ materially from that included in the audited financial statements. The other financial and accounting data of the Issuer contained in the Exchange Act Documents are accurately and fairly presented and prepared on a basis consistent with the financial statements or the books and records of the Issuer in all material respects.

 

Section 5.6       Organization; Power; Authorization; Enforceability. The Issuer has been duly organized, is legally existing and is in good standing under the Laws of the State of Delaware. The Issuer does not have any Subsidiaries. The Issuer is duly qualified as a foreign corporation (or other equivalent entity) in all jurisdictions in which the nature of its business or location of its properties require such qualifications, except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect. The Issuer has the requisite corporate power and authority to own, lease or operate the properties and assets it purports to own, lease or operate, to carry on its business as presently conducted and to execute, deliver and perform its obligations under each Transaction Document except where the failure to have such power and authority to own, lease or operate such properties and assets and carry on such business would not reasonably be expected to have a Material Adverse Effect. Each Transaction Document entered into as of the date hereof has been duly authorized, executed and delivered by the Issuer and constitutes the valid, legally binding and, assuming due authorization, execution and delivery by all other parties thereto, enforceable obligation of the Issuer (subject, in each case, to general equitable principles, insolvency, liquidation, reorganization and other Laws of general application relating to creditors’ rights). Each Transaction Document to be entered into after the date hereof will be duly authorized, executed and delivered by the Issuer and will constitute the valid, legally binding and, assuming due authorization, execution and delivery by all other parties thereto, enforceable obligation of the Issuer (subject, in each case, to general equitable principles, insolvency, liquidation, reorganization and other Laws of general application relating to creditors’ rights).

 

Section 5.7         Organizational Information and Equity Interests. The Issuer’s principal place of business is Warren, New Jersey. The Issuer’s U.S. taxpayer identification number is ▇▇-▇▇▇▇▇▇▇. All of the outstanding Equity Interests in the Issuer have been duly authorized and validly issued and, to the extent applicable, are fully paid and non-assessable, free and clear of all Liens except Permitted Liens and the Liens created by the Security Documents.

 

Section 5.8       Dilutive Securities. Except as set forth in filings made by the Issuer with the Securities Exchange Commission that are available to the public via ▇▇▇▇▇, (i) there are no outstanding rights (including pre-emptive rights), warrants or options to acquire, or instruments convertible into or exchangeable for, any shares of Capital Stock in the Issuer or any of its Subsidiaries and (ii) there is no contract, commitment, agreement, understanding or arrangement of any kind relating to the issuance of (A) any Capital Stock of the Issuer or any such Subsidiary, (B) any such convertible or exchangeable securities or (C) any such rights, warrants or options.

 

Section 5.9       Governmental and Third Party Authorizations. No consent, approval, authorization, license, registration, qualification or order of, or filing or declaration with, any Governmental Authority, any self-regulatory organization or any other non-governmental regulatory authority (including the Nasdaq Stock Market LLC) or approval of the shareholders of the Issuer or any other Person is required in connection with (a) the execution or delivery by the Issuer of any Transaction Document or the performance of obligations by the Issuer under any Transaction Document (including the issuance and sale of the Notes and the sale of the Royalty Rights), (b) the transactions contemplated by the Transaction Documents, (c) the grant by the Issuer of the Liens granted or purported to be granted by it pursuant to the Security Documents or (d) the perfection of the Liens created under the Security Documents, other than (i) such consents, approvals, authorizations, licenses, registrations, qualifications, orders, filings, declarations and other actions as shall have been taken, given, made or obtained and are in full force and effect as of the Closing Date, in each case, as set forth in Schedule 5.9, (ii) any necessary filings under the securities or blue sky Laws of the various jurisdictions in which the Notes and the Royalty Rights are being offered, (iii) the filing of financing statements under the UCC and recordings with the PTO and the filing of any other recordings (including in any applicable non-U.S. jurisdiction) required to perfect a security interest in the Notes Collateral and (iv) such consents, approvals, authorizations, licenses, registrations, qualifications, orders, filings, declarations and other actions, the failure of which to take, give, make or obtain would not reasonably be expected to have a Material Adverse Effect.

 

Section 5.10       No Conflicts. The execution, delivery and performance of each Transaction Document by the Issuer, the issuance and sale of the Notes and the sale of the Royalty Rights and the consummation of the transactions contemplated by the Transaction Documents will not conflict with, result in any breach or violation of or constitute a default under (nor constitute any event that, with notice, lapse of time or both, would result in any breach or violation of, constitute a default under or give the holder of any indebtedness (or a Person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a part of such indebtedness under) (or result in the creation or imposition of a Lien on any property or assets of the Issuer pursuant to) (a) the certificate of incorporation or bylaws of the Issuer, (b) any indenture, mortgage, deed of trust, bank loan, credit agreement, other evidence of indebtedness, license, lease, contract or other agreement or instrument to which the Issuer is a party or by which it or its properties may be bound or affected, (c) any Law or (d) any rule or regulation of any self-regulatory organization or other non-governmental regulatory authority (including the rules and regulations of the Nasdaq Stock Market LLC), except, in the case of clause (b), (c) or (d), where such conflict, breach, violation, default, event, right or Lien would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

 

Section 5.11       No Violation or Default. The Issuer is not in breach or violation of or in default under (nor has any event occurred that, with notice, lapse of time or both, would result in any breach or violation of, constitute a default under or give the holder of any indebtedness (or a Person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a part of such indebtedness under) (a) its certificate of incorporation or bylaws, (b) any indenture, mortgage, deed of trust, bank loan, credit agreement, other evidence of indebtedness, license, lease, contract or other agreement or instrument to which it is a party or by which it or any of its properties may be bound or affected, (c) any Law or (d) any rule or regulation of any self-regulatory organization or other non-governmental regulatory authority (including the rules and regulations of the Nasdaq Stock Market LLC), except, in the case of clause (b), (c) or (d), where such breach, violation, default, event or right would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. On the Closing Date, no Event of Default exists.

 

Section 5.12       No Material Adverse Change. Except as disclosed in the Exchange Act Documents, subsequent to the respective dates as of which information is given in the Exchange Act Documents, (a) there has not been any material change in the Capital Stock or long-term debt of the Issuer or any material adverse change, or any development that would be expected to result in a material adverse change, in or affecting the business, condition (financial or otherwise), results of operations, earnings, properties or prospects of the Issuer and its Subsidiaries taken as a whole, (b) the Issuer has not incurred any material liabilities or obligations, direct or contingent, nor has it entered into any material transactions not in the ordinary course of business, other than pursuant to the Transaction Documents and the transactions referred to herein and therein, (c) the Issuer has not and will not have paid or declared any dividends or other distributions of any kind on any class of its Capital Stock, (d) the Issuer has not sustained any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or any action, order or decree of any Governmental Authority and (e) the Issuer has not altered its method of accounting.

 

Section 5.13       Compliance with ERISA. The Issuer has not maintained or contributed to a defined benefit plan as defined in Section 3(35) of ERISA. No plan maintained or contributed to by the Issuer that is subject to ERISA (an “ERISA Plan”) (or any trust created thereunder) has engaged in a “prohibited transaction” within the meaning of Section 406 of ERISA or Section 4975 of the Code that could subject the Issuer to any material tax penalty on prohibited transactions and that has not adequately been corrected. Each ERISA Plan is in compliance in all material respects with all reporting, disclosure and other requirements of the Code and ERISA as they relate to such ERISA Plan, except for any noncompliance that would not result in the imposition of a material tax or monetary penalty. With respect to each ERISA Plan that is intended to be “qualified” within the meaning of Section 401(a) of the Code, either (a) a determination letter has been issued by the IRS stating that such ERISA Plan and the attendant trust are qualified thereunder or (b) the remedial amendment period under Section 401(b) of the Code with respect to the establishment of such ERISA Plan has not ended and a determination letter application will be filed with respect to such ERISA Plan prior to the end of such remedial amendment period. The Issuer has never completely or partially withdrawn from a “multiemployer plan”, as defined in Section 3(37) of ERISA.

 

Section 5.14        Tax Matters. The Issuer has filed all income and franchise tax returns and all other material tax returns required to be filed by it and has paid all taxes required to be paid by it and, if due and payable, any related or similar assessment, fine or penalty levied against it (except for any such taxes, assessments, fines or penalties currently being contested in good faith and for which adequate reserves in accordance with GAAP are being maintained or in any case in which the failure to file or pay, individually or collectively, would not reasonably be expected to have a Material Adverse Effect). The Issuer has made adequate charges, accruals and reserves in the applicable financial statements referred to in Section 5.5 in respect of all material federal, state and foreign income and franchise taxes for all periods as to which the tax liability of the Issuer has not been finally determined. The Issuer is not aware of any material claims against it by any taxing authority in relation to the filing of tax returns or the payment of required taxes, assessments, fines or penalties.

 

Section 5.15       Legal Proceedings. Except as disclosed in the Exchange Act Documents, there are no actions, suits or proceedings pending or, to the Issuer’s knowledge, threatened against or affecting, the Issuer or any of its officers in their capacity as such before or by any Governmental Authority or the Financial Industry Regulatory Authority, Inc. or the Nasdaq Stock Market LLC, wherein an unfavorable ruling, decision or finding could reasonably be expected to result in a Material Adverse Effect. Except as set forth in the Exchange Act Documents, the Issuer has not received any written notice of proceedings relating to the revocation or modification of any authorization, approval, order, license, certificate, franchise or permit, where such revocation or modification would reasonably be expected to result in a Material Adverse Effect. There are no pending investigations known to the Issuer involving the Issuer by any Governmental Authority having jurisdiction over the Issuer or its business or operations that would reasonably be expected to result in a Material Adverse Effect.

 

Section 5.16       Solvency. No step has been taken or is currently intended by the Issuer or, to the knowledge of the Issuer, any other Person for the winding-up, liquidation, dissolution or administration or for the appointment of a receiver or administrator of the Issuer for all or any of its properties or assets. Immediately after the issuance and sale of the Notes and the sale of the Royalty Rights and the consummation of the other transactions contemplated by the Transaction Documents on the Closing Date, the Issuer will not be rendered insolvent within the meaning of 11 U.S.C. 101(32) or any other applicable insolvency Laws or, taken as a whole, be unable to pay its debts as they mature.

 

Section 5.17       Existing Indebtedness. The Exchange Act Documents disclose all of the following types of material third-party outstanding indebtedness of the Issuer as of the Closing Date: (a) indebtedness in respect of borrowed money; (b) any other obligation of the Issuer to be liable for, or to pay, as obligor, guarantor or otherwise, on the indebtedness for borrowed money of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business); and (c) to the extent not otherwise included, indebtedness for borrowed money of another Person secured by a Lien on any asset owned by such Person (whether or not such indebtedness for borrowed money is assumed by such Person). As of the date hereof (prior to giving effect to the transactions contemplated hereby), the aggregate principal amount of Existing Notes outstanding is $34,389,750.

 

Section 5.18     Material Contracts. There is no document or agreement of a character required to be described in the Exchange Act Documents or to be filed as an exhibit to the Exchange Act Documents that is not described or filed as required. All Material Contracts are in full force and effect and constitute the valid, legally binding and (subject to general equitable principles and insolvency, liquidation, reorganization and other Laws of general application relating to creditors’ rights) enforceable obligation of the Issuer and, to the knowledge of the Issuer, all other parties thereto, except in each case as would not reasonably be expected to have a Material Adverse Effect. To the knowledge of the Issuer, there are no oral waivers or modifications (or pending requests therefor) in respect of any Material Contract except as would not reasonably be expected to have a Material Adverse Effect. The Issuer is not in breach or default under or with respect to any Material Contract binding on it except where such breaches or defaults would not reasonably be expected to have a Material Adverse Effect. To the knowledge of the Issuer, no other Person party to any Material Contract is in default thereunder except where such default would not reasonably be expected to have a Material Adverse Effect. To the knowledge of the Issuer, no party to any Material Contract has given any notice of termination or breach of any Material Contract.

 

Section 5.19        Properties. The Issuer has good and marketable title to all properties and assets described in the Exchange Act Documents as being owned by it, free and clear of all Liens or restrictions other than Permitted Liens and the Liens created by the Security Documents, except as set forth in the Exchange Act Documents or those where the failure to have such title would not, individually or in the aggregate, have a Material Adverse Effect. To the knowledge of the Issuer, the Issuer has valid, subsisting and (subject to general equitable principles and insolvency, liquidation, reorganization and other Laws of general application relating to creditors’ rights) enforceable leases for the properties described in the Exchange Act Documents as leased by it, with such exceptions as are not material and do not materially interfere with the use made and proposed to be made of such properties by the Issuer.

 

Section 5.20        Intellectual Property.

 

 

 

 

 

Section 5.21       Environmental Matters. Except in each case as would not individually or in the aggregate reasonably be expected to result in a Material Adverse Effect, (a) the Issuer is and has been in compliance with, and is not subject to any pending or, to the knowledge of the Issuer, threatened costs or liability under, any and all applicable Laws (including common law), and applicable and binding judicial or administrative decisions or orders, relating to pollution, the generation, use, handling, transportation, treatment, storage, discharge, disposal or release of Hazardous Substances, the protection or restoration of the environment, human health and safety, noise or the protection of natural resources, including wildlife, migratory birds, eagles or endangered or threatened species or habitats (collectively, “Environmental Laws”) and, to the knowledge of the Issuer, no facts or circumstances currently exist that would reasonably be expected to result in such non-compliance, cost or liability, (b) to the knowledge of the Issuer, the Issuer does not own, occupy, operate, lease or use any real property contaminated with Hazardous Substances in violation of Environmental Laws and that would reasonably be expected to result in the Issuer incurring any liability, (c) the Issuer is not conducting or funding any investigation, remediation, remedial action or monitoring of actual or suspected Hazardous Substances in the environment, (d) to the knowledge of the Issuer, the Issuer is not subject to any pending or threatened liability for any release or threatened release of Hazardous Substances, including at any off-site treatment, storage or disposal site, (e) the Issuer is not subject to any written claim, action, suit, order, demand or notice by any Governmental Authority or Person alleging liability or violation relating to Environmental Laws or Hazardous Substances, (f) the Issuer has received and is in compliance with all, and has received no written claim of liability under any, permits, licenses, authorizations, identification numbers or other approvals required under applicable Environmental Laws to conduct its business, as currently conducted, and (g) to the knowledge of the Issuer, there are no new requirements applicable to the conduct of the Issuer’s business, as currently conducted, proposed for adoption or implementation under any Environmental Law. Except as set forth in the Exchange Act Documents, there are no judicial or administrative proceedings that are pending, or known to be contemplated, against the Issuer pursuant to any Environmental Laws by a Governmental Authority, other than such proceedings for which it is reasonably believed no monetary sanctions of $100,000 or more will be imposed. Except as set forth in the Exchange Act Documents, the Issuer has not incurred, and does not currently anticipate incurring, any costs or expenditures (including capital expenditures) required under or pursuant to Environmental Laws that would reasonably be expected to have a material effect on the capital expenditures, earnings or competitive position of the Issuer.

 

Section 5.22      Labor Matters. The Issuer is not involved in any labor dispute except where the dispute would not, individually or in the aggregate, have a Material Adverse Effect, nor, to the knowledge of the Issuer, is any such dispute threatened. The Issuer is currently in compliance with all applicable Laws relating to employment and labor, including those related to wages, hours, collective bargaining and the payment and withholding of Taxes.

 

Section 5.23       Insurance. The Issuer carries, or is covered by, insurance in such amounts and covering such risks as the Issuer believes are adequate for the conduct of its business and the value of its properties and is customary for companies engaged in similar industries, and all such insurance is in full force and effect. The Issuer has no reason to believe that it will not be able to (a) renew its existing insurance coverage as and when such policies expire or (b) obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as currently conducted or proposed to be conducted and at a cost that would not, individually or in the aggregate, result in a Material Adverse Effect. The Issuer has not been denied any insurance coverage that it has sought or for which it has applied.

 

Section 5.24       No Unlawful Payments. None of the Issuer, any of its directors or officers or, to the Issuer’s knowledge, any agent, employee or representative of the Issuer or its Affiliates or other Person associated with or acting on behalf of the Issuer has (a) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity, (b) made or taken an act in furtherance of an offer, promise or authorization of any direct or indirect unlawful payment of corporate funds or benefit to any government or regulatory official or employee, including of any government-owned or controlled entity or of a public international organization, or any Person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office, (c) taken any action, directly or indirectly, that would result in a violation of any provision of the FCPA, the U.K. Bribery Act 2010, or any applicable Law implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, or committed an offense under any other applicable anti-bribery or anti-corruption Laws, or (d) made, offered, agreed to, requested or taken an act in furtherance of any unlawful bribe or other unlawful benefit, including any rebate, payoff, influence payment, kickback or other unlawful or improper payment or benefit. The Issuer and, to the knowledge of the Issuer, its Affiliates have conducted their businesses in compliance with the FCPA and have instituted, maintained and enforced, and will continue to maintain and enforce, policies and procedures designed to promote and ensure compliance with all applicable anti-bribery and anti-corruption Laws.

 

Section 5.25      Compliance with Anti-Money Laundering Laws. The operations of the Issuer are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements, including those of the Currency and Foreign Transactions Reporting Act of 1970, as amended, those of the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the applicable anti-money laundering Laws of all jurisdictions in which the Issuer conducts business (collectively, the “Anti-Money Laundering Laws”), and no action, suit or proceeding by or before any Governmental Authority involving the Issuer with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Issuer, threatened.

 

Section 5.26       Sanctions. None of the Issuer or any director or officer of the Issuer or, to the knowledge of the Issuer, any agent, employee or representative of the Issuer or any Affiliate or other Person associated with or acting on behalf of the Issuer is currently the subject or target of any sanctions administered or enforced by the U.S. government (including the Office of Foreign Assets Control of the U.S. Treasury Department or the U.S. Department of State and including the designation as a “specially designated national” or “blocked person”), the United Nations Security Council, the European Union, His Majesty’s Treasury or other relevant sanctions authority (collectively, “Sanctions”), nor is the Issuer located, organized or resident in a country or territory that is the subject or the target of Sanctions, including the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic or any other Covered Region of Ukraine identified pursuant to Executive Order 14065, the Crimea Region and the non-government controlled areas of the Zaporizhzhia and Kherson Regions of Ukraine, Cuba, Iran, North Korea, Sudan and Syria (each, a “Sanctioned Country”). The Issuer will not directly or indirectly use the proceeds of the offering of the Notes and the Royalty Rights, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person, (a) to fund or facilitate any activities of or business with any Person that, at the time of such funding or facilitation, is the subject or the target of Sanctions, (b) to fund or facilitate any activities of or business in any Sanctioned Country or (c) in any other manner that will result in a violation by any Person (including any Person participating in the transaction contemplated hereby, whether as underwriter, advisor, investor or otherwise) of Sanctions. For the past five years, the Issuer has not knowingly engaged in, is not now knowingly engaged in, and will not engage in, any dealings or transactions with any Person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned Country.

 

Section 5.27       Disclosure Controls. The Issuer has established and maintains disclosure controls and procedures (as such term is defined in Rules 13a-15 and 15d-15 under the Exchange Act) that (a) are designed to ensure that material information relating to the Issuer is made known to the Issuer’s principal executive officer and principal financial officer by others within the Issuer, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared, (b) provide for the periodic evaluation of the effectiveness of such disclosure controls and procedures as of the end of the period covered by the Issuer’s most recent annual or quarterly report filed with the Commission and (c) are effective in all material respects to perform the functions for which they were established.

 

Section 5.28        Accounting Controls.

 

 

 

Section 5.29     Licenses and Permits. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (a) the Issuer holds, and is operating in compliance with, such permits, licenses, franchises, registrations, exemptions, approvals, authorizations and clearances of any Governmental Authorities (including the FDA) required for the conduct of its business as currently conducted (collectively, the “Permits”), and all such Permits are in full force and effect, and (b) the Issuer has fulfilled and performed all of its obligations with respect to the Permits, and, to the Issuer’s knowledge, no event has occurred that allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other impairment of the rights of the holder of any Permit, other than, in each case, the Permits set forth in Schedule 5.29. All applications, notifications, submissions, information, claims, reports and statistics, and other data and conclusions derived therefrom, utilized as the basis for any and all requests for a Permit from the FDA or other Governmental Authority relating to the Issuer, its business and its products, when submitted to the FDA or other Governmental Authority by or on behalf of the Issuer, were true, complete and correct in all material respects. Any necessary or required updates, changes, corrections or modifications to such applications, notifications, submissions, information, claims, reports and statistics and other data have been submitted to the FDA or other Governmental Authority, other than, in each case, the Permits set forth in Schedule 5.29. The Issuer has not received any written notification, correspondence or other written communication, including notification of any pending or, to the Issuer’s knowledge, threatened claim, suit, proceeding, hearing, enforcement, investigation, arbitration or other action, from any Governmental Authority, including the FDA or the DEA, of potential or actual non-compliance by, or liability of, the Issuer under any Permits except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. To the Issuer’s knowledge, no facts or circumstances currently exist that would reasonably be expected to give rise to any liability of the Issuer under any Permits except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 5.30      Clinical Trials. The pre-clinical studies and clinical trials conducted by or, to the knowledge of the Issuer, on behalf of or sponsored by the Issuer, or in which the Issuer has participated, that are described in, or the results of which are referred to in, the Exchange Act Documents were and, if still pending, are being conducted in accordance with protocols filed with the appropriate regulatory authorities for each such study or trial, as the case may be, and with standard medical and scientific research standards and procedures, all applicable Laws (including those of the FDA and comparable regulatory agencies outside of the United States) to which they are subject and Good Clinical Practices and Good Laboratory Practices, except to the extent where failure to conduct such pre-clinical studies and clinical trials in such manner would not have a Material Adverse Effect. Each description of the results of such studies and trials contained in the Exchange Act Documents is accurate and complete in all material respects and fairly presents the data derived from such studies and trials, and the Issuer has no knowledge of any other studies or trials the results of which are inconsistent with, or otherwise call into question, the results described or referred to in the Exchange Act Documents. The Issuer has not received any written notices, correspondence or other written communications from the FDA or any committee thereof or from any other U.S. or non-U.S. government or drug or medical device regulatory agency (collectively, the “Regulatory Agencies”) requiring or, to the Issuer’s knowledge, threatening the termination, suspension or modification of any clinical trials that are described or referred to in the Exchange Act Documents. The Issuer has operated at all times and currently is in compliance with all applicable Laws of the Regulatory Agencies except where such failure to operate or non-compliance would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

 

Section 5.31      Regulatory Filings. The Issuer has not failed to file with the Regulatory Agencies any required material filing, declaration, listing, registration, report or submission with respect to any products or product candidates that are described or referred to in the Exchange Act Documents or any other material filing required by any other applicable Regulatory Agency or other Governmental Authority. All such filings, declarations, listings, registrations, reports or submissions were in material compliance with applicable Laws when filed. All such filings, declarations, listings, registrations, reports or submissions were timely, complete, accurate and not misleading on the date filed in all material respects (or were corrected or supplemented by subsequent submission). No material deficiencies regarding compliance with applicable Law have been asserted in writing by any applicable regulatory authority with respect to any such filings, declarations, listings, registrations, reports or submissions.

 

Section 5.32     Compliance with Certain Regulatory Matters. The Issuer, its directors and officers and, to the Issuer’s knowledge, its employees and agents have operated and currently are in compliance in all material respects with applicable Laws administered or enforced by the FDA, the DEA or any other Governmental Authority, including the Food, Drug and Cosmetic Act (21 U.S.C. § 301 et seq.), the Anti-kickback Statute (42 U.S.C. § 1320a-7b(b)), the civil False Claims Act (31 U.S.C. §3729 et seq.), the False Statements Law (42 U.S.C. § 1320a-7b(a)), the Civil Monetary Penalties Law (42 U.S.C. §1320a-7a), all criminal Laws relating to health care fraud and abuse, including 18 U.S.C. §§ 286 and 287, the exclusions law (42 U.S.C. § 1320a-7), the Laws of Medicare (Title XVIII of the Social Security Act), Medicaid (Title XIX of the Social Security Act) and all other government funded or sponsored healthcare programs, and the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq.), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (42 U.S.C. §17921 et seq.). The Issuer is not a party to, and does not have any ongoing reporting obligations pursuant to, any corporate integrity agreement, deferred prosecution agreement, monitoring agreement, consent decree, settlement order, plan of correction or similar agreement imposed by any Governmental Authority. Neither the Issuer nor, to the knowledge of the Issuer, any of its directors, officers, employees or agents has been debarred, excluded or suspended from participation in or receiving payment from any U.S. federal, state or local government health care program or is subject to an audit, investigation, proceeding or other similar action by any Governmental Authority that could reasonably be expected to result in debarment, suspension or exclusion.

 

Section 5.33       Absence of Certain Regulatory Actions. Except as described in the Exchange Act Documents or as would not, individually or in the aggregate, have a Material Adverse Effect, the Issuer has not (a) had any product or manufacturing site (whether Issuer-owned or that of a contract manufacturer for Issuer products or product candidates) subject to a Governmental Authority (including the FDA) shutdown or import or export prohibition or (b) received any FDA Form 483 or other Governmental Authority notice of inspectional observations, “warning letters”, “untitled letters”, requests to make changes to the Issuer products, processes or operations, or similar written correspondence or notice from the FDA or other Governmental Authority alleging or asserting material noncompliance with any applicable Laws. To the Issuer’s knowledge, neither the FDA nor any other Governmental Authority has threatened such action. The Issuer has not received written notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any Regulatory Agency or other Governmental Authority alleging that any product operation or activity is in violation of any health care Laws, and, to the Issuer’s knowledge, no such claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action is threatened, except where such claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

 

 

ARTICLE VI

 

The obligations of the Purchaser hereunder on the Closing Date are subject to the accuracy in all material respects (except for such representations qualified by materiality or Material Adverse Effect, which shall be accurate in all respects) of the representations and warranties of the Issuer contained herein as of the Closing Date, to the accuracy of the statements of the Issuer and its officers made in any certificates delivered pursuant hereto on the Closing Date, to the performance by the Issuer of its obligations hereunder as of the Closing Date and to the satisfaction or waiver by the Purchaser of each of the following additional terms and conditions applicable on the Closing Date:

 

Section 6.1        Issuer’s Counsel Opinion. Dechert LLP, counsel to the Issuer, shall have furnished to the Purchasers (and any Affiliate thereof purchasing the Royalty Rights) their opinion, addressed to the Purchasers (and any Affiliate thereof purchasing the Royalty Rights) and dated the Closing Date, in form and substance reasonably satisfactory to the Purchasers.

 

Section 6.2        Purchasers’ Counsel Opinion. Pillsbury ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ LLP, special counsel to the Purchasers (and any Affiliate thereof purchasing the Royalty Rights), shall have furnished to the Purchasers their opinion, addressed to the Purchasers (and any Affiliate thereof purchasing the Royalty Rights) and dated the Closing Date, in form and substance reasonably satisfactory to the Purchasers.

 

Section 6.3        Certification as to Purchase Agreement. The Issuer shall have furnished to the Purchasers a certificate, dated the Closing Date, of a Responsible Officer, stating that, as of the Closing Date, the representations and warranties of the Issuer in this Purchase Agreement are true and correct in all material respects (except for such representations qualified by materiality or Material Adverse Effect, which are true and correct in all respects) and the Issuer has complied in all material respects with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date.

 

Section 6.4         Authorizations. The Issuer shall have furnished to the Purchasers (a) a copy of the resolutions, consents or other documents, certified by a Responsible Officer of the Issuer, as of the Closing Date, duly authorizing the execution and delivery of, and performance of obligations under, the Transaction Documents and any other documents to be executed on or prior to the Closing Date by or on behalf of the Issuer in connection with the transactions contemplated hereby and thereby and the issuance and sale of the Notes and the sale of the Royalty Rights, and a certification that such resolutions, consents or other documents have not been modified, rescinded or amended and are in full force and effect, (b) certified copies of its organizational documents, (c) a certification by a Responsible Officer, as of the Closing Date, as to the incumbency and specimen signatures of each officer executing any Transaction Document or any other document delivered in connection herewith or therewith on behalf of the Issuer (together with a certification of another Responsible Officer as to incumbency and specimen signature of the first-mentioned Responsible Officer) and (d) a certificate of good standing of the Issuer as of a recent date from the Secretary of State of the State of Delaware.

 

Section 6.5         Offering of Notes and Royalty Rights. The Placement Agent shall have delivered to the Issuer a certificate, dated on or about the Closing Date, as to the manner of the offering of the Notes and the Royalty Rights and the number and character of the offerees contacted, which certificate shall state that the Placement Agent (a) did not solicit offers for, or offer, the Notes or the Royalty Rights by means of any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act, including publication or release of articles, notices or other communications published in any newspaper, magazine or similar medium or broadcast over television, radio or internet, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising, and did not engage in any directed selling efforts within the meaning of Rule 902(c) of Regulation S and (b) solicited offers for the Notes and the Royalty Rights only from, and offered the Notes and the Royalty Rights only to, (i) Persons that it reasonably believed were QIBs or, if any such Person was buying for one or more institutional accounts for which such Person was acting as fiduciary or agent, only when such Person reasonably believed that each such account was a QIB, (ii) to Persons that are not U.S. persons (as defined in Regulation S) in accordance with Rule 903 of Regulation S if such offers were outside the United States and (iii) Accredited Investors, and shall further state that counsel to the Issuer and to the Purchasers may rely thereon in rendering their respective opinions to be delivered hereunder.

 

Section 6.6      CUSIP Numbers. S&P Global Market Intelligence’s CUSIP Global Services, as agent for the National Association of Insurance Commissioners, shall have issued CUSIP numbers and ISIN numbers for the Notes.

 

Section 6.7       Further Information. On or prior to the Closing Date, the Issuer shall have furnished to the Purchaser such further information, certificates and documents as the Purchaser may reasonably request in connection with this Purchase Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby (including written evidence of the repayment in full of all indebtedness (including the Existing Notes) and any other obligations under the Existing Indenture, the termination of any guarantees with respect thereto and the release of all Liens securing such indebtedness and other obligations).

 

Section 6.8         Consummation of Transactions. All of the transactions contemplated by the Transaction Documents to be completed on or before the Closing Date shall have been consummated or shall be consummated concurrently with the transactions contemplated hereby, and the Purchaser shall have received executed copies of the Transaction Documents (which shall be in full force and effect).

 

Section 6.9         No Actions. No action shall have been taken and no Law shall have been enacted, adopted or issued by any Governmental Authority that would, as of the Closing Date, prevent the issuance or sale of the Notes or the sale of the Royalty Rights, and no injunction, restraining order or order of any other nature by any Governmental Authority of competent jurisdiction shall have been issued as of the Closing Date that would prevent the issuance or sale of the Notes or the sale of the Royalty Rights.

 

Section 6.10     Consents. The Purchasers shall have received copies of all consents, approvals, authorizations, orders, registrations and qualifications set forth in Schedule 5.9.

 

Section 6.11        Notes Collateral Requirements. The Collateral Agent shall have received:

 

 

 

 

 

 

Section 6.12      Insurance. The Collateral Agent shall have received evidence that all insurance required to be maintained pursuant to the Transaction Documents by the Issuer has been obtained and is in effect together with the certificates of insurance, naming the Collateral Agent, on behalf of the Noteholders, as an additional insured, loss payee and/or mortgagee, as the case may be, under all insurance policies maintained with respect to the properties and assets that constitute Notes Collateral.

 

Section 6.13       Royalty Rights. On the Closing Date, the Royalty Rights shall have been received by the Purchaser (or any Affiliate thereof) pursuant to the Royalty Right Agreement.

 

Section 6.14      Use of Proceeds. The Issuer will apply the net proceeds of the sale of the Notes and the Royalty Rights (i) to repay all indebtedness (including the Existing Notes) and all other obligations under the Existing Indenture in full (the “Repayment”), (ii) to pay fees, costs and expenses arising in connection with the issuance and sale of the Notes, the sale of the Royalty Rights, the Repayment, the execution and delivery of the Indenture and the Security Documents, and the transactions contemplated hereby and thereby and (iii) otherwise for general corporate purposes.

 

ARTICLE VII

 

Section 7.1         DTC. The Issuer will use reasonable best efforts to comply with the agreements set forth in the representation letter of the Issuer to DTC relating to the approval of the Notes by DTC for “book-entry” transfer.

 

Section 7.2         Expenses. The Issuer agrees to pay or cause to be paid from the proceeds of the issuance of the Notes and the sale of the Royalty Rights all reasonable and documented (including detailed time sheets) fees and expenses of Pillsbury ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ LLP, acting as special counsel to the Purchasers, it being understood that the Issuer will not reimburse any other expenses of any Purchasers (including expenses of any other counsel).

 

Section 7.3          Confidentiality; Public Announcement.

 

 

 

 

Section 7.4          Right of First Offer. Prior to the Issuer’s issuance or sale, if any, of royalty rights (“New Royalty Rights”) to any Person with respect to the Issuer’s epinephrine prodrug sublingual film product candidate, identified as AQST-109, for the emergency treatment of severe Type I allergic reactions, including anaphylaxis, to be marketed by or on behalf of the Issuer initially under the name ANAPHYLM™ (whether marketed under such name or any other name) (“ANAPHYLM™”), the Issuer will first offer to the Purchaser the option to purchase a portion of such New Royalty Rights in an amount equal to the same proportion that the principal amount of Notes the Purchaser has purchased as set forth opposite its name in Schedule 1 bears to the aggregate principal amount of Notes issued on the Closing Date to the Purchaser and the Other Purchasers and at a purchase price specified by the Issuer (which purchase price shall not be more than the purchase price being offered to any other Person), with such option to purchase being exercised by the Purchaser by written notice to the Issuer no later than 15 days after being notified of such proposed issuance or sale by the Issuer. To the extent that the Other Purchasers decline to exercise their option to purchase any New Royalty Rights (in whole or in part) pursuant to the Other Agreements, the Issuer will promptly notify the Purchaser (only if the Purchaser previously exercised its option to purchase previously available New Royalty Rights in full pursuant to the preceding sentence), in which case the Purchaser will have the option to purchase such remaining New Royalty Rights (subject to proportional reduction to the extent of the relative amount of New Royalty Rights purchased by Other Purchasers exercising the same option pursuant to the Other Agreements) on the same terms as any New Royalty Rights it previously exercised the option to purchase pursuant to the preceding sentence, with such option to purchase being exercised by the Purchaser by written notice to the Issuer no later than two days after being notified of the opportunity to purchase such remaining New Royalty Rights by the Issuer. The Issuer acknowledges and agrees that any New Royalty Rights to be purchased by the Purchaser may, at the Purchaser’s election, be purchased by any Affiliate of the Purchaser. Notwithstanding the foregoing, the rights of the Purchaser in this Section 7.4 shall terminate after the date that is six months following the first sale of ANAPHYLM^™ anywhere in the world.

 

ARTICLE VIII

 

Section 8.1      Survival of Certain Provisions. The representations, warranties, covenants and agreements contained in this Purchase Agreement shall survive (a) the execution and delivery of this Purchase Agreement, the Notes and the Royalty Rights and (b) the sale or transfer by any Purchaser (or any Affiliate thereof) of any Note or any Royalty Right or portion thereof or interest therein. All such provisions are binding upon and may be relied upon by any subsequent holder or beneficial owner of a Note or a Royalty Right, regardless of any investigation made at any time by or on behalf of any Purchaser or any other holder or beneficial owner of a Note or a Royalty Right. All statements contained in any certificate or other instrument delivered by or on behalf of either party hereto pursuant to this Purchase Agreement shall be deemed to have been relied upon by the other party hereto and shall survive the consummation of the transactions contemplated hereby regardless of any investigation made by or on behalf of either such party. The Transaction Documents embody the entire agreement and understanding between the parties hereto and supersede all prior agreements and understandings relating to the subject matter hereof. Notwithstanding anything to the contrary elsewhere in this Purchase Agreement, neither party hereto shall, in any event, be liable to any other Person for any consequential, incidental, indirect, special or punitive damages of such other Person, including loss of revenue, income or profits, diminution of value or loss of business reputation or opportunity relating to the breach or alleged breach hereof (provided, that such limitation with respect to lost profits or otherwise shall not limit the Issuer’s right to recover contract damages in connection with the Purchaser’s failure to close in violation of this Purchase Agreement).

 

ARTICLE IX

 

Section 9.1        Notices. All statements, requests, notices and agreements hereunder shall be in writing and delivered by hand, mail, overnight courier, telefax or electronically as follows:

 

 

 

ARTICLE X

 

 

ARTICLE XI

 

Section 11.1      Severability. Any provision of this Purchase Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by Law) not invalidate or render unenforceable such provision in any other jurisdiction.

 

ARTICLE XII

 

Section 12.1    WAIVER OF JURY TRIAL. THE PURCHASER AND THE ISSUER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS PURCHASE AGREEMENT.

 

ARTICLE XIII

 

Section 13.1   Governing Law; Consent to Jurisdiction. THIS PURCHASE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF LAW OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. The parties hereto hereby submit to the non-exclusive jurisdiction of the U.S. federal and state courts of competent jurisdiction in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Purchase Agreement or the transactions contemplated hereby.

 

ARTICLE XIV

 

Section 14.1       Counterparts. This Purchase Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Purchase Agreement. Any counterpart may be executed by facsimile or other electronic transmission, and such facsimile or other electronic transmission shall be deemed an original. The words “execution”, “signed” and “signature” and words of like import in this Purchase Agreement or in any other certificate, agreement or document related to this Purchase Agreement shall include images of manually executed signatures transmitted by facsimile or other electronic format (including “pdf”, “tif” or “jpg”) and other electronic signatures (including DocuSign and AdobeSign). The use of electronic signatures and electronic records (including any contract or other record created, generated, sent, communicated, received or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable Law, including the Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable Law, including any state Law based on the Uniform Electronic Transactions Act or the UCC.

 

ARTICLE XV

 

Section 15.1      Table of Contents and Headings. The Table of Contents and headings of the Articles and Sections of this Purchase Agreement have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof.

 

ARTICLE XVI

 

Section 16.1       Tax Disclosure. Notwithstanding anything expressed or implied to the contrary herein, the Purchaser, on the one hand, and the Issuer, on the other hand, and its respective employees, representatives and agents may disclose to any and all Persons, without limitation of any kind, the tax treatment and the tax structure of the transactions contemplated by this Purchase Agreement and the agreements and instruments referred to herein and all materials of any kind (including opinions or other tax analyses) that are provided to such Person relating to such tax treatment and tax structure; provided, however, that neither such Person nor any employee, representative or other agent thereof shall disclose any other information that is not relevant to understanding the tax treatment and tax structure of such transactions (including the identity of any party and any information that could lead another to determine the identity of any party) or any other information to the extent that such disclosure could reasonably result in a violation of any Law relating to U.S. federal or state securities matters. For these purposes, the tax treatment of the transactions contemplated by this Purchase Agreement and the agreements and instruments referred to herein means the purported or claimed U.S. federal or state tax treatment of such transactions. Moreover, the tax structure of the transactions contemplated by this Purchase Agreement and the agreements and instruments referred to herein includes any fact that may be relevant to understanding the purported or claimed U.S. federal or state tax treatment of such transactions.

 

{SIGNATURE PAGE FOLLOWS}

 

If the foregoing is in accordance with your understanding of this Purchase Agreement, kindly sign and return to us one of the counterparts hereof, whereupon it will become a binding agreement between us and you in accordance with its terms.

 

Very truly yours,

 

ANNEX A

RULES OF CONSTRUCTION AND DEFINED TERMS

 

Unless the context otherwise requires, in this Annex A and each Transaction Document (or other document) to which this Annex A is attached:

 

 

 

 

 

 

 

 

 

 

 

 

 

“$” means lawful money of the United States.

 

“Accredited Investor” means an institutional “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act that is not (i) a QIB or (ii) a Person other than a U.S. Person that acquires Notes or Royalty Rights in reliance on Regulation S.

 

“Affiliate” means, with respect to any specified Person, another Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the specified Person. For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of the Capital Stock of such Person that is at the time entitled to vote in the election of the board of directors (or equivalent) of such Person, by contract or otherwise, and “controlled” has a meaning correlative thereto.

 

“ANAPHYLM™” has the meaning set forth in Section 7.4 of the Purchase Agreements.

 

“Anti-Money Laundering Laws” has the meaning set forth in Section 5.25 of the Purchase Agreements.

 

“Business Day” means any day other than a Saturday, a Sunday or any other day on which banking institutions are authorized or required by Law to close in New York City or the city in which the Trustee’s corporate trust office is located.

 

“Capital Stock” means (a) in the case of a corporation, corporate stock or shares, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (c) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and membership rights, and (d) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, in each case to the extent treated as equity in accordance with GAAP, but excluding from all of the foregoing any debt securities convertible into or exchangeable for Capital Stock whether or not such debt securities include any right of participation with Capital Stock.

 

“Closing Account” means the account maintained with the Trustee at U.S. Bank National Association, ABA No. ▇▇▇▇▇▇▇▇▇, Account No. 1731 0332 1092, Ref. Aquestive Senior Secured Notes, Attention: ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇.

 

“Closing Date” means the date hereof.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

“Collateral Agent” means U.S. Bank Trust Company, National Association, in its capacity as “Collateral Agent” under the Indenture and under the Security Documents and any successor thereto in such capacity.

 

“Collateral Agreement” means that certain collateral agreement dated as of the Closing Date among the Issuer, the other grantors from time to time party thereto, the Trustee and the Collateral Agent.

 

“Commission” means the U.S. Securities and Exchange Commission or any successor thereto.

 

“Confidential Information” means, as it relates to the Purchaser (or its Affiliates), all information (whether written or oral, or in electronic or other form) furnished before or after the date of this Purchase Agreement concerning the Purchaser or its Affiliates (including any of its equityholders), including any and all information regarding any aspect of the Purchaser’s business, including its owners, funds, strategy, market views, structure, investors or potential investors. Such Confidential Information includes any IRS Form W-9 or W-8BEN (or any similar type of form) provided by the Purchaser (or its Affiliates) to the Issuer or its Affiliates. Notwithstanding the foregoing definition, “Confidential Information” shall not include information that is (v) independently developed or discovered by the Issuer without use of or access to any information described in the second preceding sentence, as demonstrated by documentary evidence, (w) already in the public domain at the time the information is disclosed or has become part of the public domain after such disclosure through no breach of this Purchase Agreement, (x) lawfully obtainable from other sources, (y) required to be disclosed in any document to be filed with any Governmental Authority or otherwise required to be disclosed under applicable Law or judicial or administrative proceedings (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigation demand or similar process) or pursuant to requests from regulatory agencies having oversight over the Issuer or (z) required to be disclosed by court or administrative order or under securities Laws applicable to any party to this Purchase Agreement or pursuant to the rules and regulations of any stock exchange or stock market on which securities of the Issuer or its Affiliates or the Purchaser or its Affiliates may be listed for trading.

 

“DEA” means the U.S. Drug Enforcement Administration or any successor thereto.

 

“Definitive Security” has the meaning set forth in Appendix A to the Indenture as of the date of the Purchase Agreements.

 

“DTC” means The Depository Trust Company (including its nominees).

 

“Environmental Laws” has the meaning set forth in Section 5.21 of the Purchase Agreements.

 

“Equity Interests” means, with respect to any Person, all of the shares of Capital Stock of (or other ownership, distribution or profit interests or participations in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of Capital Stock of (or other ownership, distribution or profit interests or participations in) such Person and all of the other ownership, distribution or profit interests or participations in such Person (including partnership, membership or trust interests therein), whether voting or non-voting, and whether or not such shares, warrants, options, rights or other interests or participations are outstanding on any date of determination.

 

“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Plan” has the meaning set forth in Section 5.13 of the Purchase Agreements.

 

“Event of Default” has the meaning set forth in the Indenture as of the date of the Purchase Agreements.

 

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

 

“Exchange Act Documents” has the meaning set forth in Section 5.4 of the Purchase Agreements.

 

“Existing Indenture” means that certain Indenture dated as of July 15, 2019 among the Issuer, any guarantor party thereto from time to time, and U.S. Bank National Association, as trustee and as collateral agent, as amended and supplemented from time to time prior to the date hereof.

 

“Existing Notes” means the 12.5% senior secured notes issued pursuant to the Existing Indenture.

 

“FCPA” means the U.S. Foreign Corrupt Practices Act of 1977, as amended.

 

“FDA” means the U.S. Food and Drug Administration or any successor thereto.

 

“GAAP” means generally accepted accounting principles in effect in the United States from time to time.

 

“Global Security” has the meaning set forth in Appendix A to the Indenture as of the date of the Purchase Agreements.

 

“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, arbitrator, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

“Hazardous Substances” means (a) petroleum and petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and mold and (b) any other chemical, material or substance defined as toxic or hazardous or as a pollutant, contaminant or waste or words of similar import, or regulated or that can form the basis for liability, under Environmental Laws.

 

“Indenture” means that certain indenture for the Notes, dated as of the Closing Date, by and among the Issuer, the other subsidiary parties from time to time party thereto, the Trustee and the Collateral Agent.

 

“Intellectual Property” has the meaning set forth in Section 5.20(a) of the Purchase Agreements.

 

“IRS” means the U.S. Internal Revenue Service.

 

“Issuer” has the meaning set forth in the preamble to the Purchase Agreements.

 

“Laws” means, collectively, all applicable international, foreign, federal, state and local laws, statutes, treaties, rules, regulations, ordinances, judgments, orders, writs, injunctions, decrees, codes and administrative or judicial precedents or authorities, including the binding and enforceable interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, licenses, authorizations and permits of, and binding and enforceable agreements with, any Governmental Authority.

 

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable Law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the UCC (or equivalent Laws) of any jurisdiction); provided, that in no event shall an operating lease be deemed to constitute a Lien.

 

“Material Adverse Effect” means a material adverse effect (a) in or affecting the business, condition (financial or otherwise), results of operations, earnings, properties or prospects of the Issuer and its Subsidiaries taken as a whole or (b) on the ability of the Issuer to perform its obligations under the Transaction Documents.

 

“Material Contract” means a contract or other agreement that is required to be filed by the Issuer with the Commission pursuant to Item 601(b)(4), Item 601(b)(10) or Item 601(b)(99) of Regulation S-K as an exhibit to the Exchange Act Documents.

 

“New Royalty Rights” has the meaning set forth in Section 7.4 of the Purchase Agreements.

 

“Notes” means the 13.5% Senior Secured Notes due 2028 of the Issuer in the initial outstanding principal balance of $45,000,000 that are issued on the Closing Date pursuant to the Indenture and Section 3.1 of the Purchase Agreements.

 

“Notes Collateral” means all property subject, or purported to be subject from time to time, to a Lien under any Security Documents.

 

“Other Agreements” has the meaning set forth in Section 3.1(b) of the Purchase Agreements.

 

“Other Purchasers” has the meaning set forth in Section 3.1(b) of the Purchase Agreements.

 

“Patents” means (i) an issued patent or a patent application, (ii) all registrations and recordings thereof, (iii) all continuations and continuations-in-part to an issued patent or patent application, (iv) all divisions, patents of addition, reissues, renewals and extensions of any patent, patent application, continuation or continuation-in-part and (v) all counterparts of any of the above in any jurisdiction.

 

“Paying Agent” means an office or agency where Notes may be presented for payment, maintained by the Issuer in accordance with the Indenture.

 

“Perfection Certificate” means the perfection certificate substantially in the form of Exhibit A to the Collateral Agreement, together with the schedules and attachments contemplated by such certificate, executed and delivered by the Issuer on the Closing Date.

 

“Permits” has the meaning set forth in Section 5.29 of the Purchase Agreements.

 

“Permitted Lien” has the meaning set forth in the Indenture as of the date of the Purchase Agreements.

 

“Person” means an individual, corporation, partnership, association, limited liability company, unincorporated organization, trust, joint stock company or joint venture, a Governmental Authority or any other entity.

 

“Placement Agent” means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. LLC.

 

“Plan Assets” has the meaning given to such term by Section 3(42) of ERISA and regulations issued by the U.S. Department of Labor.

 

“Price” has the meaning set forth in Section 3.1(b) of the Purchase Agreements.

 

“PTE” means the United States Department of Labor Prohibited Transaction Exemption.

 

“PTO” means the U.S. Patent and Trademark Office or any successor thereto.

 

“Purchase Agreement” means this purchase agreement.

 

“Purchase Agreements” means, collectively, the Purchase Agreement and the Other Agreements.

 

“Purchase Price” has the meaning set forth in Section 3.1(b) of the Purchase Agreements.

 

“Purchaser” has the meaning set forth in Section 1.1 of the Purchase Agreements.

 

“Purchasers” has the meaning set forth in Section 1.1 of the Purchase Agreements.

 

“QIB” means a qualified institutional buyer within the meaning of Rule 144A.

 

“QPAM Exemption” means PTE 84-14 (issued December 21, 1982, as subsequently amended).

 

“Regulation S” means Regulation S under the Securities Act.

 

“Regulation S Securities” has the meaning set forth in Appendix A to the Indenture as of the date of the Purchase Agreements.

 

“Regulatory Agencies” has the meaning set forth in Section 5.30 of the Purchase Agreements.

 

“Repayment” has the meaning set forth in Section 6.14 of the Purchase Agreements.

 

“Responsible Officer” means, with respect to the Issuer, any director or officer of the Issuer.

 

 

“Royalty Rights” means the royalty rights sold by the Issuer to each Purchaser (or any Affiliate thereof) pursuant to and subject to the terms and conditions of the Royalty Right Agreements.

 

“Rule 144A” means Rule 144A under the Securities Act.

 

“Rule 144A Securities” has the meaning set forth in Appendix A to the Indenture as of the date of the Purchase Agreements.

 

“Sanctioned Country” has the meaning set forth in Section 5.26 of the Purchase Agreements.

 

“Sanctions” has the meaning set forth in Section 5.26 of the Purchase Agreements.

 

“Securities Act” means the U.S. Securities Act of 1933, as amended.

 

“Security Documents” means the Collateral Agreement and the other security agreements, pledge agreements, mortgages, collateral assignments and related agreements, as amended, supplemented, restated, renewed, refunded, replaced, restructured, repaid, refinanced or otherwise modified from time to time, creating, perfecting or otherwise evidencing the security interests in the Notes Collateral as contemplated by the Indenture and the Collateral Agreement.

 

“Similar Law” has the meaning set forth in Section 4.3(b) of the Purchase Agreements.

 

“Source” has the meaning set forth in Section 4.3(a) of the Purchase Agreements.

 

“Subsidiary” means, with respect to any Person, (a) any corporation, association or other business entity (other than a partnership, joint venture or limited liability company) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, and (b) any partnership, joint venture or limited liability company of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, or (y) such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity. For purposes of clarity, a Subsidiary of a Person shall not include any Person that is under common control with the first Person solely by virtue of having directors, managers or trustees in common and shall not include any Person that is solely under common control with the first Person (i.e., a sister company with a common parent).

 

“Taxes” means any present or future tax, fee, duty, levy, tariff, impost, assessment or other charge imposed by a Governmental Authority (including penalties, interest and additions to tax applicable thereto).

 

“Transaction Documents” means the Indenture, the Notes, the Royalty Right Agreements, the Security Documents, the Purchase Agreements, and each other agreement pursuant to which the Collateral Agent (or its agent) is granted a Lien to secure the obligations under the Indenture or the Notes.

 

“Trustee” means U.S. Bank Trust Company, National Association, as trustee under the Indenture.

 

“UCC” means the Uniform Commercial Code as in effect in the State of New York; provided, that, if perfection, the effect of perfection or non-perfection or the priority of any security interest in any Notes Collateral is governed by the Uniform Commercial Code (or equivalent Law) as in effect in a jurisdiction other than the State of New York, then “UCC” means the Uniform Commercial Code (or equivalent Law) as in effect from time to time in such other jurisdiction for purposes of the provisions relating to such perfection, effect of perfection or non-perfection or priority.

 

“U.S.” or “United States” means the United States of America, its 50 states, each territory thereof and the District of Columbia.

 

“U.S. Person” means a “U.S. person” as defined in Regulation S

 

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