Exhibit 10.2
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated as of
the 9th day of April, 2007 (the "Effective Date") by and between Advancis
Pharmaceutical Corporation, a Delaware corporation, with its principal office at
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and
the several purchasers identified in the attached Exhibit A (individually, a
"Purchaser" and collectively, the "Purchasers").
WHEREAS, the Company desires to issue and sell to the Purchasers an
aggregate of approximately 10,155,000 shares (the "Shares") of the authorized
but unissued shares of common stock, $0.01 par value per share, of the Company
(the "Common Stock"); and (ii) warrants in the form attached as Exhibit B to
purchase an aggregate of approximately 7,616,250 shares of Common Stock (each, a
"Warrant," and collectively, the "Warrants"); and
WHEREAS, the Purchasers, severally, wish to purchase the Shares and the
Warrants on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements,
representations, warranties and covenants herein contained, the parties hereto
agree as follows:
1. Definitions. As used in this Agreement, the following terms
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shall have the following respective meanings:
(a) "Affiliate" of a party means any corporation
or other business entity controlled by, controlling or under common
control with such party. For this purpose "control" shall mean direct
or indirect beneficial ownership of fifty percent (50%) or more of the
voting or income interest in such corporation or other business entity.
(b) "Agreement" means this Securities Purchase
Agreement.
(c) "Business Day" means any day except
Saturday, Sunday and any day which shall be a federal legal holiday or
a day on which banking institutions in the State of New York are
authorized or required by law or other governmental action to close.
(d) "Closing Dates" means the dates of the First
Closing and the Additional Closing.
(e) "Exchange Act" means the Securities Exchange
Act of 1934, as amended, and all of the rules and regulations
promulgated thereunder.
(f) "Registration Rights Agreement" shall mean
that certain Registration Rights Agreement, dated as of the date
hereof, among the Company and the Purchasers.
(g) "Operative Agreements" shall mean the
Registration Rights Agreement and the Warrant together with this
Agreement.
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(h) "Majority Purchasers" shall mean Purchasers
which, at any given time, hold greater than fifty percent (50%) of the
voting power of the outstanding Shares, that have not been resold
pursuant to an effective registration statement under the Securities
Act or Rule 144 under the Securities Act.
(i) "Rules and Regulations" shall mean the rules
and regulations of the SEC.
(j) "SEC" shall mean the Securities and Exchange
Commission.
(k) "SEC Documents" shall have the meaning set
forth in Section 3.26 below.
(l) "Securities" shall mean the Shares, the
Warrants and the Underlying Shares.
(m) "Securities Act" shall mean the Securities
Act of 1933, as amended, and all of the rules and regulations
promulgated thereunder.
(n) "Subsidiary" of any entity means another
entity, an amount of the voting securities, other voting ownership or
voting partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if
there are no such voting interests, 50% or more of the equity interests
of which) is owned directly or indirectly by such first entity.
(o) "Trading Day" means(a) if the Common Stock
is listed or quoted on the NASDAQ Global Market, then any day during
which securities are generally eligible for trading on the NASDAQ
Global Market, or (b) if the Common Stock is not then listed or quoted
and traded on the NASDAQ Global Market, then any Business Day.
(p) "Underlying Shares" shall mean the shares of
Common Stock issuable upon exercise of the Warrants.
2. Purchase and Sale of Securities.
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2.1 Purchase and Sale. Subject to and upon the
terms and conditions set forth in this Agreement, the Company agrees to
issue and sell to each Purchaser, and each Purchaser, severally, hereby
agrees to purchase from the Company, on the Closing Dates, (i) the
number of shares of Common Stock set forth opposite the name of such
Purchaser under the heading "Number of Shares to be Purchased" on
Exhibit A hereto, at a purchase price of $2.27 per share and (ii) a
Warrant to purchase the number of Underlying Shares set forth opposite
the name of such Purchaser under the heading "Number of Shares
Underlying the Warrant" on Exhibit A (which number of Underlying shares
shall equal 0.75 share of Common Stock for every one Share purchased by
the Purchaser), having an exercise price of $2.27 per Underlying Share,
at a purchase price of $0.125 per Underlying Share. The total purchase
price payable by each Purchaser for the Securities that such Purchaser
is hereby agreeing to purchase is set forth opposite the name of such
Purchaser under the heading "Aggregate Purchase Price" on Exhibit A
hereto. The aggregate purchase price payable by the Purchasers to the
Company for all of the Securities shall be approximately $24,003,881.
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2.2 Closings. The first closing of the
transactions contemplated under this Agreement (the "First Closing")
shall take place at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, 1301 Avenue of
the ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, counsel to the Company, on the
second business day after the Company shall have given written notice
(the "Closing Notice") to the Purchasers that all of the conditions
precedent set forth in Section 5.1 have been satisfied in full or at
such other location, date and time as may be agreed upon between the
Majority Purchasers and the Company. At the First Closing, the Company
shall deliver to each Purchaser listed on Exhibit A hereto as
participating in the First Closing a single stock certificate and a
single Warrant representing the number of Securities purchased by such
Purchaser, each to be registered in the name of such Purchaser, or in
such nominee's or nominees' name(s) as designated by such Purchaser in
writing in the form of the Investor Questionnaire attached hereto as
Appendix I, against payment of the purchase price therefor by wire
transfer of immediately available funds to such account or accounts as
the Company shall designate in writing. Upon the completion of the
First Closing, an additional closing, which shall take place on April
18, 2007 (the "Additional Closing"), will become unconditional. At the
Additional Closing which shall take place at the offices of ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ LLP, 1301 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
counsel to the Company, the Company shall deliver to the Purchasers,
listed on Exhibit A hereto as participating in the Additional Closing,
a single stock certificate and a single Warrant representing the number
of Securities purchased by such Purchaser, to be registered in the name
of such Purchaser, or in such nominee's or nominees' name(s) as
designated by such Purchaser in writing in the form of the Investor
Questionnaire attached hereto as Appendix I, against payment of the
purchase price therefor by wire transfer of immediately available funds
to such account or accounts as the Company shall designate in writing.
3. Representations and Warranties of the Company. The Company
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hereby represents and warrants to each of the Purchasers as follows:
3.1 Incorporation. The Company has been duly
incorporated and is a validly existing corporation in good standing
under the laws of Delaware with full power and authority (corporate and
other) to own, lease and operate, as the case may be, its properties
and conduct its business as now conducted; and the Company is duly
qualified to transact business and is in good standing in each
jurisdiction in which the nature of the business conducted by it, or
its ownership or leasing of property, or its employment of employees or
consultants therein, makes such qualification necessary, except where
the failure to be so qualified or be in good standing would not
reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the financial condition, business,
properties, or results of operations of the Company ("Material Adverse
Effect"). The Company has not received a written notification that any
proceeding has been instituted in
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any such jurisdiction, revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or qualification,
and to the Company's knowledge, no proceeding has been instituted in
any such jurisdiction, revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or qualification.
The Company is in possession of and operating in material compliance
with all authorizations, licenses, certificates, consents, orders and
permits from state, federal and other regulatory authorities that are
material to the conduct of its business, all of which are valid and in
full force and effect. The Company is not in violation of its charter
or bylaws. Except as disclosed in the SEC Documents the Company does
not own or control, directly or indirectly, any corporation,
association or other entity. Complete and correct copies of the
certificate of incorporation (the "Certificate of Incorporation") and
bylaws (the "Bylaws") of the Company as in effect on the Effective Date
have been filed by the Company with the SEC. The business described in
the SEC Documents is carried on primarily by the Company and the
Company does not have any Subsidiary that constitutes a "Significant
Subsidiary" as such term is defined in Item 1-02(w) of Regulation S-X.
3.2 Authority. The Company has all requisite
corporate power and authority to enter into this Agreement and the
other Operative Agreements and to perform the transactions contemplated
hereby and thereby. The Operative Agreements have been duly authorized,
executed and delivered by the Company and are valid and binding
agreements on the part of the Company, enforceable in accordance with
their terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally or by general equitable
principles. The performance of this Agreement and the other Operative
Agreements and the consummation of the transactions herein and therein
contemplated will not result in (A) any violation of the Certificate of
Incorporation or Bylaws of the Company or (B) a breach or violation of
any of the terms and provisions of, or constitute a default under any
contract, agreement, license, understanding, indenture, mortgage, deed
of trust, loan agreement, joint venture, lease (including without
limitation any sale and leaseback arrangement) or bond, debenture, note
or other evidence of indebtedness, to which the Company is a party or
by or to which it or its properties (including without limitation all
Company Intellectual Property (as defined in Section 3.9(b)) are or may
be bound or subject (each, a "Contract") or any law, order, ruling,
rule, regulation, writ, assessment, injunction, judgment or decree of
any government or governmental court, agency or body, domestic or
foreign, having jurisdiction over the Company or over any of its
respective properties (including without limitation all Company
Intellectual Property) or Contracts ("Government Entity") or by or to
which they or such of its properties or Contracts are or may be bound
or subject (each, a "Law"), except in the case of this clause (B), such
defaults or violations which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. No
consent, approval, authorization or order of or qualification with any
Government Entity is required for the execution and delivery of this
Agreement or the other Operative Agreements and the consummation by the
Company of the transactions herein and therein contemplated, except
such consents (i) that will be obtained prior to the Closing Dates and
(ii) as may be required under the Securities Act, the Exchange Act (if
applicable), the Rules and Regulations, or under state or other
securities or blue sky laws or the National Association of Securities
Dealers, Inc. (the "NASD"), all of which requirements will be satisfied
in all material respects at or prior to the Closing Dates.
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3.3 Litigation; Contracts. Except as disclosed
in the SEC Documents, there are no actions, suits, claims,
investigations or proceedings pending or, to the Company's knowledge,
threatened to which the Company or, to the Company's knowledge, to
which any of its respective directors or officers is a party, or of
which any of its respective properties (including without limitation
all Company Intellectual Property) or any Contract is the subject, at
law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or agency
which, if adversely decided, would be reasonably likely to result in a
decision, ruling, finding, judgment, decree, order or settlement having
a Material Adverse Effect or to prevent consummation of the
transactions contemplated hereby. There are no Contracts of a character
required to be described or referred to in the SEC Documents, and/or
filed as an exhibit to, by the Securities Act, the Exchange Act or the
Rules and Regulations which have not been accurately described in all
material respects in the SEC Documents, and/or filed as an exhibit to
such SEC Documents. Except to the extent disclosed in the SEC
Documents, the Contracts described in the SEC Documents are in full
force and effect and are valid agreements, enforceable by the Company,
except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles, and except where the enforceability and validity
thereof would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. No event has occurred, and no
circumstances or condition exists, that (with or without notice or
lapse of time) (A) has resulted or is reasonably likely to result in a
breach, default, violation or waiver of any Contract or any provision
thereof; (B) gives or is reasonably likely to give any party to any
Contract the right to declare a breach, default or violation of or
exercise any remedy under such Contract; (C) gives or is reasonably
likely to give any party to any Contract the right to cancel,
terminate, modify or be excused from performance of any obligations
under such Contract; or (D) has resulted or is reasonably likely to
result in a violation of any Law or in imposition of any fines,
penalties, damages, injunctions, prohibitions or other sanctions,
except in the cases of clauses (A), (B) and (C) where such breaches,
defaults, violations, waivers, remedies, cancellations, terminations,
modifications excuses or impositions would not reasonably by expected
to have, individually or in the aggregate, a Material Adverse Effect.
3.4 Capitalization. All outstanding shares of
capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, and have not
been issued in violation of any preemptive rights or other rights to
subscribe for or purchase securities. The authorized capital stock of
the Company consists of (i) 225,000,000 shares of Common Stock, of
which approximately 36,401,854 shares are outstanding on the date
hereof and (ii) 25,000,000 shares of preferred stock, of which no
shares are outstanding on the date hereof. Except for options to
purchase Common Stock, other equity awards issued to employees and
consultants of the Company pursuant to employee benefits plans and the
warrants disclosed in the SEC Documents, there are no existing options,
warrants, calls, preemptive (or similar) rights, subscriptions or other
rights, agreements, arrangements or commitments of any character
obligating the Company to issue, transfer or sell, or
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cause to be issued, transferred or sold, any shares of the capital
stock of the Company or other equity interests in the Company or any
securities convertible into or exchangeable for such shares of capital
stock or other equity interests, and there are no outstanding
contractual obligations of the Company to repurchase, redeem or
otherwise acquire any shares of its capital stock or other equity
interests. There are no voting agreements or other similar arrangements
with respect to the Common Stock to which the Company is a party. The
description of the Company's stock option plans, employee stock
purchase plans or similar arrangements, and the options or other rights
granted and exercised thereunder, set forth in the SEC Documents
accurately and fairly presents, in all material respects, the
information required to be shown with respect to such plans,
arrangements, options and rights. Except as described in the SEC
Documents or as have been waived, no person or entity has the right to
require the Company to register any securities of the Company under the
Securities Act, whether on a demand basis or in connection with the
registration of securities of the Company for its own account or for
the account of any other person or entity. The issuance and sale of the
Securities hereunder will not obligate the Company to issue shares of
Common Stock or other securities to any other person or entity (other
than the Purchasers) and will not result in the adjustment of the
exercise, conversion, exchange or reset price of any outstanding
security.
3.5 Authorization. The Securities have been duly
authorized for issuance and sale to the Purchasers pursuant to this
Agreement and, when issued and delivered by the Company against payment
therefor in accordance with the terms of this Agreement, will be duly
and validly issued and fully paid and nonassessable, and will be sold
free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest. The Underlying Shares have been duly and
validly authorized and reserved for issuance and, upon exercise of the
Warrants in accordance with their terms, including payment of the
exercise price therefore, the Underlying Shares will be validly issued,
fully paid and nonassessable and will be sold free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable
interest. No preemptive right, co-sale right, registration right, right
of first refusal or other similar right of stockholders exists with
respect to any of the Securities or the issuance and sale thereof,
other than those that have been expressly waived prior to the date
hereof, those that will have been expressly waived prior to the Closing
Dates, and those that will automatically expire upon or will not apply
to the consummation of the transactions contemplated on the Closing
Dates. No further approval or authorization of any stockholder, the
Board of Directors of the Company or others is required for the
issuance and sale or transfer of the Securities, except as may be
required (i) under state or other securities or blue sky laws or (ii)
pursuant to the Registration Rights Agreement. The Company does not
have a stockholder rights plan or other "poison pill" arrangement and
no provision of the Company's Certificate of Incorporation or Bylaws
that is or could reasonably be expected to become applicable to the
Purchasers as a result of the transactions contemplated hereby.
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3.6 Accountants. PricewaterhouseCoopers LLP,
whose report on the financial statements of the Company is filed with
the SEC in the Company's Annual Report on Form 10-K for the year ended
December 31, 2006, are independent registered public accountants as
required by the Securities Act and the Rules and Regulations. Except as
described in the SEC Documents and as preapproved in accordance with
the requirements set forth in Section 10A of the Exchange Act, to the
Company's knowledge, PricewaterhouseCoopers LLP has not engaged in any
"prohibited activities" (as defined in Section 10A of the Exchange Act)
on behalf of the Company.
3.7 Financial Statements. The financial
statements of the Company contained in the SEC Documents, together with
the related schedules and notes: (i) present fairly, in all material
respects, the financial position of the Company as of the dates
indicated and the results of operations and cash flows of the Company
for the periods specified; (ii) have been prepared in compliance with
requirements of the Securities Act and the Rules and Regulations and in
conformity with generally accepted accounting principles in the United
States applied on a consistent basis during the periods presented and
present fairly, in all material respects, the information required to
be stated therein (provided, however, that the statements that are
unaudited are subject to normal year-end adjustments and do not contain
certain footnotes required by generally accepted accounting
principles); (iii) comply with the antifraud provisions of the federal
securities laws; and (iv) describe accurately, in all material
respects, the controlling principles used to form the basis for their
presentation. There are no financial statements (historical or pro
forma) and/or related schedules and notes that are required to be
included in the SEC Documents that are not included as required by the
Securities Act, the Exchange Act and/or the Rules and Regulations.
3.8 No Changes. Subsequent to December 31, 2006,
except as otherwise described in the SEC Documents, there has not been
(i) any change, development or event that would reasonably be expected
to result, individually or in the aggregate, in a Material Adverse
Effect, (ii) any transaction that is material to the Company, (iii) any
obligation, direct or contingent, that is material to the Company,
incurred by the Company, (iv) any change in the capital stock or
outstanding indebtedness of the Company that is material to the
Company, (v) any dividend or distribution of any kind declared, paid or
made on the capital stock of the Company or (vi) any loss or damage
(whether or not insured) to the property of the Company that has been
sustained or will have been sustained that could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
3.9 Property.
(a) Except as set forth in the SEC
Documents: (i) the Company has good and marketable title to all
properties and assets described in the SEC Documents as owned by it
free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest, whether imposed by agreement, contract,
understanding, law, equity or otherwise, except for Permitted Liens (as
defined below) or where any failure to have good and marketable title
to such properties and assets, individually or in the aggregate, would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect; and (ii) the Company has valid and enforceable
leases, including without limitation any leases that are the subject of
any sale and leaseback arrangement, for all properties described in the
SEC Documents as
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leased by it, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles. Except as set forth in the SEC Documents,
the Company owns or leases all such properties as are necessary to its
operations as now conducted or as proposed to be conducted. A
"Permitted Lien" shall mean (i) liens for taxes not yet due, (ii)
mechanics liens and similar liens for labor, materials or supplies
incurred in the ordinary course of business for amounts that are not
delinquent and (iii) any liens that individually or in the aggregate
are not material.
(b) Except as described in the SEC
Documents, to the Company's knowledge the Company owns or has valid,
binding and enforceable licenses or other rights to use the patents and
patent applications, inventions, copyrights, trademarks, service marks,
trade names, service names, technology or know-how (including trade
secrets and other unpatented and/or unpatentable proprietary rights and
excluding generally commercially available "off the shelf" software
programs licensed pursuant to shrink wrap or "click and accept"
licenses) necessary to conduct its business in the manner described in
the SEC Documents (collectively, the "Company Intellectual Property"),
except for any Company Intellectual Property the absence of which,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect. The Company Intellectual Property is
free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest, whether imposed by agreement, contract,
understanding, law, equity or otherwise, except for Permitted Liens or
where any failure to have such adequate licenses or other rights of use
to such Intellectual Property, individually or in the aggregate, would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect or except as described in the SEC Documents.
The Company is not obligated to pay a royalty, grant a license or
provide other consideration to any third party in connection with the
Company Intellectual Property other than as disclosed in the SEC
Documents or except as could not reasonably be expected to have a
Material Adverse Effect. Except as disclosed in the SEC Documents or as
could not reasonably be expected to have a Material Adverse Effect, (i)
the Company has not received any notice of infringement or conflict
with asserted rights of others with respect to any Company Intellectual
Property, (ii) the conduct of the business of the Company in the manner
described in the SEC Documents does not and will not, to the knowledge
of the Company, infringe, interfere or conflict with any valid issued
patent claim or other intellectual property right of any third party
known to the Company and (iii) no third party, including any academic
or governmental organization, possesses rights to the Company
Intellectual Property which, if exercised, would enable such party to
develop products competitive to those of the Company. Except as
disclosed in the SEC Documents, the Company has not received any notice
or has any knowledge of (i) any potential infringement or
misappropriation by others of the Company Intellectual Property or (ii)
any intellectual property of others that potentially conflicts or
interferes with the Company Intellectual Property, that would
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. To the Company's knowledge, no claim of any
patent or patent application (assuming the claims of patent
applications issue as currently pending) included in the Company
Intellectual Property is unenforceable or invalid, except for such
unenforceability or invalidity that would not reasonably be expected to
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result, individually or in the aggregate, in a Material Adverse Effect
or except as described in the SEC Documents. Each former and current
employee and independent contractor of the Company has signed and
delivered one or more written contracts with the Company pursuant to
which such employee or independent contractor assigns to the Company
all of his, her or its rights in and to any inventions, discoveries,
improvements, works of authorship, know-how or information made,
conceived, reduced to practice, authored or discovered in the course of
employment by or performance of services for the Company and any and
all patent rights, copyrights, trademark and other intellectual
property rights therein or thereto.
3.10 Tax Returns. The Company has timely filed
all federal, state and foreign income and franchise tax returns
required to be filed by the Company on or prior to the date hereof, and
has paid all taxes shown thereon as due, and there is no tax deficiency
that has been or, to the Company's knowledge, might be asserted against
the Company that could reasonably be expected to have a Material
Adverse Effect. All tax liabilities are adequately provided for on the
books of the Company.
3.11 Internal Controls. The Company has
established and maintains a system of internal accounting controls
sufficient to provide reasonable assurances that: (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles in the United States and to maintain
accountability for assets; (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 existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
3.12 Audit Committee. The Company's Board of
Directors has validly appointed an Audit Committee whose composition
satisfies the requirements of Rule 4350(d)(2) of the Rules of the NASD
(the "NASD Rules") and the Board of Directors and/or the Audit
Committee has adopted a charter that satisfies the requirements of Rule
4350(d)(1) of the NASD Rules. The Audit Committee has reviewed the
adequacy of its charter within the past 12 months.
3.13 Disclosure Controls. The Company has
established and maintains disclosure controls and procedures (as such
term is defined in Rules 13a-15 and 15d-15 under the Exchange Act).
Since the date of the most recent evaluation of such disclosure
controls and procedures, there have been no significant changes in
internal controls or in other factors that could significantly affect
internal controls, including any corrective actions with regard to
significant deficiencies and material weaknesses. The Company is in
compliance in all material respects with all provisions currently in
effect and applicable to the Company of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002,
and all rules and regulations promulgated thereunder or implementing
the provisions thereof.
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3.14 Insurance. The Company maintains insurance
with insurers of recognized financial responsibility of the types and
in the amounts it reasonably believes to be adequate for its business
and consistent with insurance coverage maintained by similar companies
in similar businesses, including, but not limited to, insurance
covering the acts and omissions of directors and officers, real and
personal property owned or leased by the Company against theft, damage,
destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect; and the
Company has no reason to believe that it 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 at a cost that would not reasonably be expected
to have a Material Adverse Effect.
3.15 Losses. The Company has not sustained since
December 31, 2006 any losses or interferences with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, other than any losses or interferences which could not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
3.16 Labor Disputes. No labor dispute with
employees of the Company exists or, to the Company's knowledge, is
imminent which could reasonably be expected to have a Material Adverse
Effect. No collective bargaining agreement exists with any of the
Company's employees and, to the Company's knowledge, no such agreement
is imminent.
3.17 NASDAQ Global Market. The Common Stock is
registered pursuant to Section 12(g) of the Exchange Act and is listed
on the NASDAQ Global Market, and the Company has taken no action
designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting
the Common Stock from the NASDAQ Global Market. Except as disclosed in
the Company's Form 8-K filed on May 10, 2005, the Company has not
received any notification that the SEC or the NASDAQ Stock Market LLC
is contemplating terminating such registration or listing. The Company
has taken all actions necessary to list the Securities for quotation on
the NASDAQ Global Market. The Company is in compliance with all
corporate governance requirements of the NASDAQ Global Market except
for such non-compliance as would not, individually or in the aggregate,
have a Material Adverse Effect. The Company shall comply with all
requirements of the NASD with respect to the issuance of the Shares and
the listing of the Shares on the NASDAQ Global Market and such other
securities exchange or automated quotation system, as applicable. The
sale and issuance of the Securities does not require stockholder
approval, including, without limitation, pursuant to the NASD Rules.
3.18 Investment Company. The Company is not and,
after giving effect to the offering and sale of the Securities, will
not be an "investment company," as such term is defined in the
Investment Company Act of 1940, as amended.
-10-
3.19 Offering Materials. Other than the SEC
Documents and the Operative Agreements (collectively, the "Offering
Materials"), the Company has not distributed and, prior to the Closing
Dates, will not distribute, any offering materials in connection with
the offering and sale of the Securities. The Company has not in the
past nor will it hereafter take any action to sell, offer for sale or
solicit offers to buy any securities of the Company which would require
the offer, issuance or sale of the Shares, as contemplated by this
Agreement, to be registered under Section 5 of the Securities Act
(other than pursuant to the Registration Rights Agreement).
3.20 No Manipulation of Stock. Neither the
Company nor, to its knowledge, any of its affiliates has taken,
directly or indirectly, any action designed to or which has constituted
or which would reasonably be expected to cause or result, under the
Exchange Act or otherwise, in the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Securities.
3.21 ERISA. The Company is in compliance in all
material respects with all currently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, including
the regulations and published interpretations thereunder ("ERISA"),
except where a failure to so comply could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect; to
the Company's knowledge, no unwaivable "reportable event" (as defined
in ERISA) has occurred with respect to any "pension plan" (as defined
in ERISA) for which the Company would have any liability; the Company
has not incurred and does not expect to incur any material liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such
qualification.
3.22 Environmental. Except as set forth in the
SEC Documents: (i) the Company is in material compliance with all
rules, laws and regulations relating to the use, treatment, storage and
disposal of toxic substances and protection of health or the
environment ("Environmental Laws") which are applicable to its
business; (ii) the Company has not received any notice from any
governmental authority or third party of an asserted claim under
Environmental Laws, which claim is required to be disclosed in the SEC
Documents; (iii), to the Company's knowledge, the Company is not
currently required to make future material capital expenditures to
comply with Environmental Laws; and (iv) to the Company's knowledge, no
property that is owned, leased or occupied by the Company has been
designated a Superfund site pursuant to the Comprehensive Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Section
9601, et seq.), or otherwise designated as a contaminated site under
applicable state or local law.
3.23 Outstanding Loans to Officers or Directors.
There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of the members of the
families of any of them.
-11-
3.24 Regulatory Compliance.
(a) The Company possess all
certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct
its business as currently conducted, including without limitation all
such certificates, authorizations and permits required by the United
States Food and Drug Administration (the "FDA") or any other federal,
state or foreign agencies or bodies engaged in the regulation of
pharmaceuticals or biohazardous materials, except where the failure to
so possess such certificates, authorizations and permits, individually
or in the aggregate, would not result in a Material Adverse Effect or
except as disclosed in the SEC Documents. The Company has not received
any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit which, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect.
(b) Except to the extent disclosed in
the SEC Documents, the Company has not received any written notices or
statements from the FDA, the European Medicines Agency (the "EMEA") or
any other governmental agency, and otherwise has no knowledge or reason
to believe, that (i) any new drug application or marketing
authorization application for any product or potential product of the
Company is or has been rejected or determined to be non-approvable or
conditionally approvable; and (ii) any license, approval, permit or
authorization to conduct any clinical trial of or market any product or
potential product of the Company has been, will be or may be suspended
or revoked, except in the cases of clauses (i) and (ii) where such
rejections, determinations, delays, requests, suspensions, revocations,
modifications or limitations could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(c) To the Company's knowledge, the
preclinical and clinical testing, application for marketing approval
of, manufacture, distribution, promotion and sale of the products and
potential products of the Company is in compliance, in all material
respects, with all laws, rules and regulations applicable to such
activities, including without limitation applicable good laboratory
practices, good clinical practices and good manufacturing practices,
except for such non-compliance as would not, individually or in the
aggregate, have a Material Adverse Effect. The descriptions of the
results of such tests and trials contained in the SEC Documents are
accurate in all material respects. Except to the extent disclosed in
the SEC Documents, the Company has not received notice of adverse
finding, warning letter or clinical hold notice from the FDA or any
non-U.S. counterpart of any of the foregoing, or any untitled letter or
other correspondence or notice from the FDA or any other governmental
authority or agency or any institutional or ethical review board
alleging or asserting noncompliance with any law, rule or regulation
applicable in any jurisdiction, except notices, letters and
correspondence and non-U.S. counterparts thereof alleging or asserting
such noncompliance as would not, individually or in the aggregate, have
a Material Adverse Effect. The Company has not, either voluntarily or
involuntarily, initiated, conducted or issued, or caused to be
initiated, conducted or issued, any recall, field correction, market
withdrawal or replacement, safety alert, warning, "dear doctor" letter,
investigator
-12-
notice, or other notice or action relating to an alleged or potential
lack of safety or efficacy of any product or potential product of the
Company, or any violation of any material applicable law, rule,
regulation or any clinical trial or marketing license, approval, permit
or authorization for any product or potential product of the Company,
except such notices or actions as would not, individually or in the
aggregate, have a Material Adverse Effect.
3.25 Lock-Up Agreements. The Company has caused
each person listed on Schedule I hereto to furnish to the Placement
Agent (as defined herein), on or prior to the date of this Agreement, a
letter or letters, in form and substance reasonably satisfactory to the
Placement Agent (the "Lock-up Agreements"), pursuant to which such
person shall agree not to, directly or indirectly, for a period (the
"Lock-up Period") commencing on the date of this Agreement and ending
on the Effectiveness Date of the Initial Registration Statement (as
such terms are defined in the Registration Rights Agreement), offer,
sell, pledge, contract to sell, grant any option to purchase, grant a
security interest in, hypothecate or otherwise sell or dispose of
(collectively, a "Transfer") any shares of Common Stock (including
without limitation, shares of Common Stock that may be deemed to be
beneficially owned by such person in accordance with the Rules and
Regulations and shares of Common Stock that may be issued upon the
exercise of a stock option or warrant) or any securities convertible
into, derivative of or exchangeable or exercisable for Common Stock
(collectively, "Covered Securities"), owned directly by such person or
as to which such person has the power of disposition, in any such case
whether owned as of the date of such letter or acquired thereafter,
except for such Transfers that are expressly permitted by the Lock-up
Agreements. The foregoing restrictions have been expressly agreed to
preclude the holder of the Covered Securities from engaging in any
hedging or other transaction, as more fully described in the Lock-up
Agreements. Furthermore, such person has also agreed and consented to
the entry of stop transfer instructions with the Company's transfer
agent against the transfer of the Covered Securities held by such
person except in compliance with this restriction. The Company hereby
represents and warrants that it will not release, prior to the
expiration of the Lock-up Period, any of its officers from any Lock-up
Agreements currently existing or hereafter effected without the prior
written consent of Pacific Growth Equities, LLC.
3.26 SEC Documents. The Company has made
available to each Purchaser, a true and complete copy of the Company's
Annual Report on Form 10-K for the year ended December 31, 2006, each
current report on Form 8-K (except for the information deemed to be
furnished and not filed therewith), and definitive proxy statement,
filed by the Company with the SEC during the period commencing on
January 1, 2007 and ending on the date hereof. The Company will,
promptly upon the filing thereof, also make available to each Purchaser
all Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and
definitive proxy statements filed by the Company with the SEC during
the period commencing on the date hereof and ending on the Closing
Dates (all such materials required to be furnished to each Purchaser
pursuant to this sentence or pursuant to the next preceding sentence of
this Section 3.26 being called, collectively, the "SEC Documents"). The
Company has filed in a timely manner all documents that the Company was
required to file under the Exchange Act
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during the 12 months preceding the date of this Agreement. As of their
respective filing dates, the SEC Documents complied or, when filed will
comply in all material respects with the requirements of the Exchange
Act or the Securities Act, as applicable, and none of the SEC Documents
contained or, when filed, will contain any untrue statement of a
material fact or omitted or, when filed, will omit to state a material
fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they
were made, not misleading, as of their respective filing dates, except
to the extent corrected by a subsequently filed SEC Document.
3.27 Brokers or Finders. Except for Pacific
Growth Equities, LLC, the Company has not dealt with any broker or
finder in connection with the transactions contemplated by this
Agreement, and, except for certain fees and expenses payable by the
Company to Pacific Growth Equities, LLC, the Company has not incurred,
and shall not incur, directly or indirectly, any liability for any
brokerage or finders' fees or agents commissions or any similar charges
in connection with this Agreement or any transaction contemplated
hereby.
3.28 No Integrated Offering. 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 within the prior six months that would require
registration under the Securities Act of the issuance of the Securities
to the Purchasers.
3.29 No General Solicitation. Neither the Company
nor, to the knowledge of the Company, any person acting for the
Company, has conducted any "general solicitation" (as such term is
defined in Regulation D) with respect to any of the Securities being
offered hereby. The Company will not distribute any offering material
in connection with the sale of the Securities prior to the Closing
Dates, other than this Agreement, the Registration Rights Agreement and
the SEC Documents.
3.30 Private Placement. The offer and sale of the
Securities to the Purchasers as contemplated hereby is exempt from the
registration requirements of the Securities Act.
3.31 S-3 Eligibility. The Company is eligible to
use Form S-3 to register the Registrable Securities (as such term is
defined in the Registration Rights Agreement) for sale by the
Purchasers as contemplated by the Registration Rights Agreement.
3.32 Disclosures. Neither the Company nor any
person or entity acting on its behalf has provided the Purchasers or
their agents or counsel with any information that constitutes or might
constitute material, non-public information, other than the terms of
the transactions contemplated hereby, except as has been provided
pursuant to confidentiality agreements with certain of the Purchasers
or as has been acquired by certain Purchasers in the ordinary course of
the performance of their duties as employees or directors of the
Company.
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4. Representations and Warranties of the Purchasers. Each
------------------------------------------------
Purchaser severally for itself, and not jointly with the other Purchasers,
represents and warrants to the Company as follows:
4.1 Authorization. All action on the part of
such Purchaser and, if applicable, its officers, directors and
shareholders necessary for the authorization, execution, delivery and
performance of the Operative Agreements and the consummation of the
transactions contemplated herein and therein has been taken. When
executed and delivered, each of the Operative Agreements will
constitute the legal, valid and binding obligation of such Purchaser,
enforceable against such Purchaser in accordance with its terms, except
as such may be limited by bankruptcy, insolvency, reorganization or
other laws affecting creditors' rights generally and by general
equitable principles. Such Purchaser has all requisite corporate power
to enter into each of the Operative Agreements and to carry out and
perform its obligations under the terms of the Operative Agreements.
Such Purchaser has the knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of
an investment in the Securities and has the ability to bear the
economic risks of an investment in the Securities for an indefinite
period of time.
4.2 Purchase Entirely for Own Account. Such
Purchaser is acquiring the Securities being purchased by it hereunder
for investment, for its own account, and not for resale or with a view
to distribution thereof in violation of the Securities Act. Such
Purchaser has not entered into an agreement or understanding with any
other party to resell or distribute such Securities.
4.3 Investor Status; Etc. Such Purchaser
certifies and represents to the Company that it is now, and at the time
such Purchaser acquires any of the Securities, such Purchaser will be,
an "Accredited Investor" as defined in Rule 501 of Regulation D
promulgated under the Securities Act and was not organized for the
purpose of acquiring the Securities. Such Purchaser's financial
condition is such that it is able to bear the risk of holding the
Securities for an indefinite period of time and the risk of loss of its
entire investment. Such Purchaser has received, reviewed and considered
all information it deems necessary in making an informed decision to
make an investment in the Securities and has been afforded the
opportunity to ask questions of and receive answers from the management
of the Company concerning this investment and has sufficient knowledge
and experience in investing in companies similar to the Company in
terms of the Company's stage of development so as to be able to
evaluate the risks and merits of its investment in the Company.
4.4 Shares Not Registered. Such Purchaser
understands that the Securities have not been registered under the
Securities Act, by reason of their issuance by the Company in a
transaction exempt from the registration requirements of the Securities
Act, and that the Securities must continue to be held by such Purchaser
unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration. The Purchaser
understands that the exemptions from registration afforded by Rule 144
(the provisions of which are known to it) promulgated under the
Securities Act depend on the satisfaction of various conditions, and
that, if applicable, Rule 144 may afford the basis for sales only in
limited amounts.
-15-
4.5 No Conflict. The execution and delivery of
the Operative Agreements by such Purchaser and the consummation of the
transactions contemplated hereby and thereby will not conflict with or
result in any violation of or default by such Purchaser (with or
without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or
to a loss of a material benefit under (i) any provision of the
organizational documents of such Purchaser, (ii) any material agreement
or instrument, permit, franchise, or license or (iii) any judgment,
order, statute, law, ordinance, rule or regulations, applicable to such
Purchaser or its respective properties or assets.
4.6 Brokers. Such Purchaser has not retained,
utilized or been represented by any broker or finder in connection with
the transactions contemplated by this Agreement.
4.7 Consents. All consents, approvals, orders
and authorizations required on the part of such Purchaser in connection
with the execution, delivery or performance of this Agreement and the
consummation of the transactions contemplated herein have been obtained
and are effective as of the First Closing.
4.8 Acknowledgments Regarding Placement Agent.
Each Purchaser acknowledges that Pacific Growth Equities, LLC is acting
as placement agent (the "Placement Agent") for the Securities being
offered hereby and will be compensated by the Company for acting in
such capacity. Each Purchaser further acknowledges that the Placement
Agent has acted solely as placement agent for the Company in connection
with the offering of the Securities by the Company, that if the
Placement Agent provided any information and data to such Purchaser in
connection with the transactions contemplated hereby, that such
information and data have not been subjected to independent
verification by the Placement Agent, and that the Placement Agent makes
no representation or warranty with respect to the accuracy or
completeness of such information, data or other related disclosure
material. Each Purchaser further acknowledges that in making its
decision to enter into this Agreement and purchase the Securities it
has relied on its own examination of the Company and the terms of, and
consequences, of holding the Securities. The Purchaser agrees that
neither the Placement Agent nor any of its controlling persons,
Affiliates, directors, officers, employees or consultants shall have
any liability to the Purchaser or any person asserting claims on behalf
of or in right of the Purchaser for any losses, claims, damages,
liabilities or expenses arising out of or relating to this Agreement or
the Purchaser's purchase of Securities. Each Purchaser further
acknowledges that the provisions of this Section 4.8 are also for the
benefit of, and may also be enforced by, the Placement Agent.
-16-
4.9 Information. Each Purchaser and its
advisors, if any, have been furnished with all materials relating to
the business, finances and operations of the Company, and materials
relating to the offer and sale of the Securities, if any, that have
been requested by the Purchaser or its advisors, if any. The Purchaser
and its advisors, if any, have been afforded the opportunity to ask
questions of the Company. The Purchaser acknowledges and understands
that its investment in the Securities involves a significant degree of
risk, including the risks reflected in the SEC Documents.
4.10 No Public Offering. Such Purchaser has not
received any information relating to the Securities or the Company, and
is not purchasing the Securities as a result of, any form of general
solicitation or general advertising, including but not limited to, any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or
radio or pursuant to any seminar or meeting whose attendees were
invited by any general solicitation or general advertising.
4.11 Short Positions; Certain Trading
Limitations. Such Purchaser will not, at any time, use any of the
Securities acquired pursuant to this Agreement to cover any short
position in the Common Stock if doing so would be in violation of
applicable securities laws. The Purchaser (i) represents that on and
from the date the Purchaser first became aware of the offering of the
Shares until the date hereof neither it nor anyone acting on its behalf
has engaged in and (ii) covenants that for the period commencing on the
date hereof and ending on the earlier to occur of (A) the Company's
issuance of a press release disclosing the transactions contemplated
hereby and (B) the Company's filing of a Current Report on Form 8-K
disclosing the transactions contemplated hereby, neither it nor anyone
acting on its behalf will, engage in any hedging or other transaction
which is designed to or could reasonably be expected to lead to or
result in, or be characterized as, a sale, an offer to sell, a
solicitation of offers to buy, disposition of, loan, pledge or grant of
any right with respect to (collectively, a "Disposition") the Common
Stock of the Company by the Purchaser or any person or entity. Such
prohibited hedging or other transaction would include without
limitation effecting any short sale (whether or not such sale or
position is "against the box") or any purchase, sale or grant of any
right (including without limitation any put or call option) with
respect to the Common Stock of the Company or with respect to any
security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from
the Common Stock of the Company.
4.12 Broker-dealer. The Purchaser is not a
broker-dealer. If the Purchaser is an affiliate of a broker-dealer, the
Purchaser is acquiring the Shares in the ordinary course of its
business.
4.13 Affiliates. To the knowledge of the
Purchaser, the Purchaser is not an affiliate of the Company, except as
otherwise disclosed such Purchaser's Investor Questionnaire.
5. Conditions Precedent.
--------------------
5.1 Conditions to the Obligation of the
Purchasers to Consummate the Closings. The obligation of each Purchaser
to consummate the First Closing and the Additional Closing and to
purchase and pay for the Securities being purchased by it pursuant to
this Agreement is subject to the satisfaction of the following
conditions precedent:
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(a) The representations and warranties
of the Company contained herein shall be true and correct on and as of
the Closing Dates with the same force and effect as though made on and
as of the Closing Dates (it being understood and agreed by each
Purchaser that, in the case of any representation and warranty of the
Company contained herein which is not hereinabove qualified by
application thereto of a materiality standard, such representation and
warranty need be true and correct only in all material respects in
order to satisfy as to such representation or warranty the condition
precedent set forth in the foregoing provisions of this Section
5.1(a)).
(b) The Registration Rights Agreement
shall have been executed and delivered by the Company.
(c) The Company shall not have been
adversely affected in any material way prior to the Closing Dates; and
the Company shall have performed all obligations and conditions herein
required to be performed or observed by the Company on or prior to the
Closing Dates.
(d) The Company shall have filed with
Nasdaq a true and complete Notification Form: Listing of Additional
Shares covering the Shares and the Underlying Shares.
(e) No proceeding challenging this
Agreement or the transactions contemplated hereby, or seeking to
prohibit, alter, prevent or materially delay the First Closing or the
Additional Closing, shall have been instituted before any court,
arbitrator or governmental body, agency or official and shall be
pending.
(f) The purchase of and payment for the
Securities by the Purchasers shall not be prohibited by any law or
governmental order or regulation. All necessary consents, approvals,
licenses, permits, orders and authorizations of, or registrations,
declarations and filings with, any governmental or administrative
agency or of any other person with respect to any of the transactions
contemplated hereby shall have been duly obtained or made and shall be
in full force and effect.
(g) The Company shall have obtained and
delivered to the Purchasers the Lock-up Agreements referred to in
Section 3.25 hereof.
(h) A minimum of 80% of the funds to be
received by the Company shall have been received as payment for shares
of Common Stock in accordance with this Agreement.
(i) All instruments and corporate
proceedings in connection with the transactions contemplated by this
Agreement to be consummated at the First Closing and the Additional
Closing shall be reasonably satisfactory in form and substance to such
Purchaser, the Purchasers shall have received an opinion of legal
counsel to the Company substantially in the form of Exhibit C attached
hereto, and such Purchaser shall have received such certificates of the
Company's officers as such Purchaser may have reasonably requested in
connection with such transactions.
-18-
(j) No stop order or suspension of
trading shall have been imposed by Nasdaq, the SEC or any other
governmental or regulatory body with respect to public trading in the
Common Stock.
5.2 Conditions to the Obligation of the Company
to Consummate the Closings. The obligation of the Company to consummate
the First Closing and the Additional Closing and to issue and sell to
each of the Purchasers the Securities to be purchased by it at the
First Closing and the Additional Closing is subject to the satisfaction
of the following conditions precedent:
(a) The representations and warranties
contained herein of such Purchaser shall be true and correct on and as
of the Closing Dates with the same force and effect as though made on
and as of the Closing Dates (it being understood and agreed by the
Company that, in the case of any representation and warranty of each
Purchaser contained herein which is not hereinabove qualified by
application thereto of a materiality standard, such representation and
warranty need be true and correct only in all material respects in
order to satisfy as to such representation or warranty the condition
precedent set forth in the foregoing provisions of this Section
5.2(a)).
(b) The Registration Rights Agreement
shall have been executed and delivered by each Purchaser.
(c) The Purchasers shall have performed
all obligations and conditions herein required to be performed or
observed by the Purchasers on or prior to the Closing Dates.
(d) No proceeding challenging this
Agreement or the transactions contemplated hereby, or seeking to
prohibit, alter, prevent or materially delay the First Closing or the
Additional Closing, shall have been instituted before any court,
arbitrator or governmental body, agency or official and shall be
pending.
(e) The sale of the Securities by the
Company shall not be prohibited by any law or governmental order or
regulation. All necessary consents, approvals, licenses, permits,
orders and authorizations of, or registrations, declarations and
filings with, any governmental or administrative agency or of any other
person with respect to any of the transactions contemplated hereby
shall have been duly obtained or made and shall be in full force and
effect.
(f) Each of the Purchasers shall have
executed and delivered to the Company an Investor Questionnaire, in the
form attached hereto as Appendix I, pursuant to which each such
Purchaser shall provide information necessary to confirm each such
Purchaser's status as an "accredited investor" (as such term is defined
in Rule 501 promulgated under the Securities Act) and to enable the
Company to comply with the Registration Rights Agreement.
-19-
(g) Each of the other Purchasers shall
have purchased, in accordance with this Agreement, the number of shares
of Common Stock set forth opposite its name under the heading "Number
of Shares to be Purchased" and the number of Warrants set forth
opposite its name on Exhibit A.
(h) All instruments and corporate
proceedings in connection with the transactions contemplated by this
Agreement to be consummated at the First Closing and the Additional
Closing shall be satisfactory in form and substance to the Company, and
the Company shall have received counterpart originals, or certified or
other copies of all documents, including without limitation records of
corporate or other proceedings, which it may have reasonably requested
in connection therewith.
6. Transfer, Legends.
-----------------
6.1 Securities Law Transfer Restrictions.
(a) Each Purchaser understands that the
Securities have not been registered under the Securities Act or any
state securities laws, and each Purchaser agrees that it will not make
a Disposition of Securities nor will such Purchaser engage in any
hedging or other transaction which is designed to or could be
reasonably expected to lead to or result in a Disposition of Securities
by such Purchaser or any other person or entity unless (a) the resale
of the Securities is registered under the Securities Act, or (b) such
registration is not required under the Securities Act or any applicable
state securities law due to the applicability of an exemption
therefrom. In that connection, such Purchaser is aware of Rule 144
under the Securities Act and the restrictions imposed thereby. Such
Purchaser acknowledges and agrees that no sales of the Securities may
be made under a registration statement filed by the Company pursuant to
the Registration Rights Agreement ("Registration Statement") and that
the Securities are not transferable on the books of the Company unless
the certificate submitted to the transfer agent evidencing the
Securities is accompanied by a separate Purchaser's Certificate of
Subsequent Sale: (i) in the form of Exhibit D hereto; (ii) executed by
an officer of, or other authorized person designated by, the Purchaser;
and (iii) to the effect that (A) the shares have been sold in
accordance with a Registration Statement, the Securities Act and any
applicable state securities or blue sky laws, and (B) if the Company
has advised the Purchaser in writing that the Company no longer meets
the conditions for the use of Rule 172 and as a result the Purchaser is
required to deliver a prospectus in connection with such sale, that the
requirement of delivering a current prospectus has been satisfied. Such
prohibited hedging or other transactions would include, without
limitation, effecting any short sale or having in effect any short
position (whether or not such sale or position is against the box and
regardless of when such position was entered into) or any purchase,
sale or grant of any right (including, without limitation, any put or
call option) with respect to the Securities or with respect to any
security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from
the Securities.
-20-
(b) Each Purchaser acknowledges that no
action has been or will be taken in any jurisdiction outside the United
States by the Company or the Placement Agent that would permit an
offering of the Securities, or possession or distribution of offering
materials in connection with the issue of Securities, in any
jurisdiction outside of the United States where action for that purpose
is required. Each Purchaser outside the United States will comply with
all applicable laws and regulations in each foreign jurisdiction in
which it purchases, offers, sells or delivers Securities or has in its
possession or distributes any offering material, in all cases at its
own expense. The Placement Agent is not authorized to make any
representation or use any information in connection with the issue,
placement, purchase and sale of the Securities.
(c) Each Purchaser hereby covenants
with the Company not to make any sale of the Securities without
complying with the provisions of the Operative Agreements and such
Purchaser acknowledges that the certificates evidencing the Shares and
each Warrant will be imprinted with a legend that prohibits their
transference except in accordance therewith. Each Purchaser
acknowledges that there may occasionally be times when the Company,
based on the advice of its counsel, determines that it must suspend a
Registration Statement, until such time as an amendment to a
Registration Statement has been filed by the Company and declared
effective by the SEC or until the Company has amended or supplemented
such Prospectus.
6.2 Legends.
(a) Each certificate requesting any of
the Shares shall be endorsed with the legends set forth below, and each
Purchaser covenants that, except to the extent such restrictions are
waived by the Company, it shall not transfer the shares represented by
any such certificate without complying with the restrictions on
transfer described in this Agreement and the legends endorsed on such
certificate:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
OFFERED, SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM REGISTRATION UNDER SAID ACT AND, IF REQUESTED BY THE
COMPANY, UPON DELIVERY OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS
EXEMPT FROM SAID ACT."
(b) Upon the earlier of (i)
registration for resale pursuant to the Registration Rights Agreement
or (ii) Rule 144(k) becoming available the Company shall (A) deliver to
the transfer agent for the Common Stock (the "Transfer Agent")
irrevocable instructions that the Transfer Agent shall reissue a
certificate representing shares of Common Stock without legends upon
receipt by such Transfer Agent of the legended certificates for such
shares, together with either (1) a customary representation by the
Purchaser that Rule 144(k) applies to the shares of Common Stock
represented thereby or (2) a Purchaser's Certificate of Subsequent Sale
in the form of Exhibit D
-21-
hereto, and (B) cause its counsel to deliver to the Transfer Agent one
or more blanket opinions to the effect that the removal of such legends
in such circumstances may be effected under the Securities Act. From
and after the earlier of such dates, upon a Purchaser's written
request, the Company shall promptly cause certificates evidencing the
Purchaser's Securities to be replaced with certificates which do not
bear such restrictive legends, and Underlying Shares subsequently
issued upon due exercise of the Warrants shall not bear such
restrictive legends provided the provisions of either clause (i) or
clause (ii) above, as applicable, are satisfied with respect to such
Underlying Shares. When the Company is required to cause an unlegended
certificate to replace a previously issued legended certificate, if:
(1) the unlegended certificate is not delivered to a Purchaser within
three (3) Business Days of submission by that Purchaser of a legended
certificate and supporting documentation to the Transfer Agent as
provided above and (2) prior to the time such unlegended certificate is
received by the Purchaser, the Purchaser, or any third party on behalf
of such Purchaser or for the Purchaser's account, purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Purchaser of shares represented by such
certificate (a "Buy-In"), then the Company shall pay in cash to the
Purchaser (for costs incurred either directly by such Purchaser or on
behalf of a third party) the amount by which the total purchase price
paid for Common Stock as a result of the Buy-In (including brokerage
commissions, if any) exceeds the proceeds received by such Purchaser as
a result of the sale to which such Buy-In relates. The Purchaser shall
provide the Company written notice indicating the amounts payable to
the Purchaser in respect of the Buy-In.
(c) Notwithstanding the removal of legends as
provided in Section 6.2(b) and subject in all respects to the
requirements of a Purchasers' custodian, until a Purchaser's Shares are
sold pursuant to a Registration Statement or Rule 144(k) becomes
available to the Purchaser, the Purchaser shall continue to hold such
shares in the form of a definitive stock certificate and shall not hold
the shares in street name or in book-entry form with a securities
depository.
7. Termination; Liabilities Consequent Thereon. This Agreement
-------------------------------------------
may be terminated and the transactions contemplated hereunder abandoned at any
time prior to the First Closing only as follows:
(a) by any Purchaser (with respect to itself
only), upon notice to the Company if the conditions set forth in
Section 5.1 shall not have been satisfied on or prior to the fourth
Trading Day following the date of this Agreement; or
(b) by the Company, upon notice to the
Purchasers if the conditions set forth in Section 5.2 shall not have
been satisfied on or prior to the fourth Trading Day following the date
of this Agreement; or
(c) at any time by mutual agreement of the
Company and the Purchasers; or
-22-
(d) by any Purchaser (with respect to itself
only), if there has been any breach of any representation or warranty
or any material breach of any covenant of the Company contained herein
and the same has not been cured within 15 days after notice thereof (it
being understood and agreed by each Purchaser that, in the case of any
representation or warranty of the Company contained herein which is not
hereinabove qualified by application thereto of a materiality standard,
such representation or warranty will be deemed to have been breached
for purposes of this Section 7(d) only if such representation or
warranty was not true and correct in all material respects at the time
such representation or warranty was made by the Company); or
(e) by the Company, if there has been any breach
of any representation, warranty or any material breach of any covenant
of any Purchaser contained herein and the same has not been cured
within 15 days after notice thereof (it being understood and agreed by
the Company that, in the case of any representation and warranty of the
Purchaser contained herein which is not hereinabove qualified by
application thereto of a materiality standard, such representation or
warranty will be deemed to have been breached for purposes of this
Section 7(e) only if such representation or warranty was not true and
correct in all material respects at the time such representation or
warranty was made by such Purchaser).
In the event of termination by the Company or any Purchaser of its
obligations to effect the First Closing or the Additional Closing pursuant to
this Section 7, written notice thereof shall forthwith be given to the other
Purchasers and the other Purchasers shall have the right to terminate their
obligations to effect the First Closing or the Additional Closing upon written
notice to the Company and the other Purchasers. Any termination pursuant to this
Section 7 shall be without liability on the part of any party, unless such
termination is the result of a material breach of this Agreement by a party to
this Agreement in which case such breaching party shall remain liable for such
breach notwithstanding any termination of this Agreement.
-23-
8. Agreements of the Company.
-------------------------
8.1 Lock-Up. The Company agrees that it will
not, until 90 days after the Additional Closing Date, offer to sell,
solicit offers to purchase or sell any of its capital stock or
securities convertible into or exchangeable or exercisable for its
capital stock, 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 its capital stock, without the prior written consent of
the Majority Purchasers; provided, however, that the foregoing shall
not preclude the Company from issuing a pure debt instrument or from
issuing stock options or Common Stock issuable upon exercise of
outstanding options and warrants, or pursuant to employee benefit or
stock purchase plans. The Company has not offered to sell, solicited
offers to purchase or sold any securities during the six months
preceding the date of this Agreement, and the Company will not offer to
sell, solicit offers to purchase or sell, any securities during the six
months following the date of this Agreement, that would be required to
be integrated with the offer and sale of the Securities so as to
require registration of the offer and sale of the Securities under the
Securities Act of 1933, as amended.
8.2 Mergers. The Company agrees that it will
not, prior to the date that is six (6) months from the Additional
Closing Date, consummate a merger or other consolidation that could
result in short swing liability under Section 16 of the Securities
Exchange Act of 1934 ("Section 16") for any Purchaser; provided,
however, that the foregoing shall not preclude the Company from
entering into a definitive agreement with respect to such merger or
other business combination.
9. Miscellaneous Provisions.
------------------------
9.1 Public Statements or Releases. The Company
shall by 8:30 a.m. Eastern time on the business day following the
Closing Date, issue a press release and file a Current Report on Form
8-K, copies of each of which shall be provided to the Purchasers for
review, disclosing the transactions contemplated hereby and make such
other filings and notices in the manner and time required by the SEC.
The Company and each Purchaser shall consult with each other in issuing
any press releases and/or filing any Current Reports on Form 8-K or
other such SEC Documents with respect to the transactions contemplated
hereby, and none of the parties to this Agreement shall make, issue, or
release any announcement, whether to the public generally, or to any of
its suppliers or customers, with respect to this Agreement or the
transactions provided for herein, or make any statement or
acknowledgment of the existence of, or reveal the status of, this
Agreement or the transactions provided for herein, without the prior
consent of the other parties, which shall not be unreasonably withheld
or delayed, provided, that nothing in this Section 9.1 shall prevent
any of the parties hereto from making such public announcements as it
may consider necessary in order for it to satisfy its legal
obligations, but to the extent not inconsistent with such obligations,
it shall provide the other parties with an opportunity to review and
comment on any proposed public announcement before it is made.
-24-
9.2 Further Assurances. Each party agrees to
cooperate fully with the other party and to execute such further
instruments, documents and agreements and to give such further written
assurances, as may be reasonably requested by the other party to better
evidence and reflect the transactions described herein and contemplated
hereby, and to carry into effect the intents and purposes of this
Agreement.
9.3 Rights Cumulative. Each and all of the
various rights, powers and remedies of the parties shall be considered
to be cumulative with and in addition to any other rights, powers and
remedies which such parties may have at law or in equity in the event
of the breach of any of the terms of this Agreement. The exercise or
partial exercise of any right, power or remedy shall neither constitute
the exclusive election thereof nor the waiver of any other right, power
or remedy available to such party.
9.4 Pronouns. All pronouns or any variation
thereof shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as the identity of the person, persons, entity or
entities may require.
9.5 Notices. Any notices, reports or other
correspondence (hereinafter collectively referred to as
"correspondence") required or permitted to be given hereunder shall be
in writing and shall be sent by postage prepaid first class mail,
courier or telecopy or delivered by hand to the party to whom such
correspondence is required or permitted to be given hereunder, and
shall be deemed sufficient upon receipt when delivered personally or by
courier, overnight delivery service or confirmed facsimile, or three
(3) business days after being deposited in the regular mail as
certified or registered mail (airmail if sent internationally) with
postage prepaid, if such notice is addressed to the party to be
notified at such party's address or facsimile number as set forth
below:
(a) All correspondence to the Company shall be addressed
as follows:
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D.
President and Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) All correspondence to any Purchaser shall be sent to
such Purchaser at the address set forth in Exhibit A.
-25-
(c) Any entity may change the address to which
correspondence to it is to be addressed by written notification as
provided for herein.
9.6 Captions. The captions and paragraph
headings of this Agreement are solely for the convenience of reference
and shall not affect its interpretation.
9.7 Severability. Should any part or provision
of this Agreement be held unenforceable or in conflict with the
applicable laws or regulations of any jurisdiction, the invalid or
unenforceable part or provisions shall be replaced with a provision
which accomplishes, to the extent possible, the original business
purpose of such part or provision in a valid and enforceable manner,
and the remainder of this Agreement shall remain binding upon the
parties hereto.
9.8 Governing Law; Consent to Jurisdiction;
Waiver of Jury Trial; Injunctive Relief.
(a) This Agreement shall be governed by
and construed in accordance with the internal and substantive laws of
the State of New York and without regard to any conflicts of laws
concepts which would apply the substantive law of some other
jurisdiction.
(b) Each of the parties hereto
irrevocably submits to the exclusive jurisdiction of the courts of the
State of New York located in New York County and the United States
District Court for the Southern District of New York for the purpose of
any suit, action, proceeding or judgment relating to or arising out of
this Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may be
served on each party hereto anywhere in the world by the same methods
as are specified for the giving of notices under this Agreement. Each
of the parties hereto irrevocably consents to the jurisdiction of any
such court in any such suit, action or proceeding and to the laying of
venue in such court. Each party hereto irrevocably waives any objection
to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS
AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY
AS TO THIS WAIVER.
(c) Each of the parties hereto
acknowledges and agrees that damages will not be an adequate remedy for
any material breach or violation of this Agreement if such material
breach or violation would cause immediate and irreparable harm (an
"Irreparable Breach"). Accordingly, in the event of a threatened or
ongoing Irreparable Breach, each party hereto shall be entitled to
seek, equitable relief of a kind appropriate in light of the nature of
the ongoing or threatened Irreparable Breach, which relief may include,
without limitation, specific performance or injunctive relief;
provided, however, that if the party bringing such action is
unsuccessful in obtaining the relief sought, the moving party shall pay
the non-moving party's reasonable costs, including attorney's fees,
incurred in connection with defending such action. Such remedies shall
not be the parties' exclusive remedies, but shall be in addition to all
other remedies provided in this Agreement.
-26-
9.9 Amendments. This Agreement may not be
amended or modified except pursuant to an instrument in writing signed
by the Company and the Majority Purchasers; notwithstanding the
foregoing, Section 8.2 hereof cannot be amended or waived without the
consent of any purchaser that could incur short swing liability under
Section 16..
9.10 Waiver. No waiver of any term, provision or
condition of this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be, or be construed as, a
further or continuing waiver of any such term, provision or condition
or as a waiver of any other term, provision or condition of this
Agreement.
9.11 Expenses. Each party will bear its own costs
and expenses in connection with this Agreement.
9.12 Assignment. The rights and obligations of
the parties hereto shall inure to the benefit of and shall be binding
upon the authorized successors and permitted assigns of each party. No
party may assign its rights or obligations under this Agreement or
designate another person (i) to perform all or part of its obligations
under this Agreement or (ii) to have all or part of its rights and
benefits under this Agreement, in each case without the prior written
consent of the other party, provided, however, that a Purchaser may
assign its rights and delegate its duties hereunder in whole or in part
to an Affiliate or to a third party acquiring some or all of its
Securities in a transaction complying with applicable securities laws
without the prior written consent of the Company or the other
Investors; provided, that no such assignment shall affect the
obligations of such Purchaser hereunder. In the event of any assignment
in accordance with the terms of this Agreement, the assignee shall
specifically assume and be bound by the provisions of the Agreement by
executing and agreeing to an assumption agreement reasonably acceptable
to the other party.
9.13 Survival. The respective representations and
warranties given by the parties hereto, and the other covenants and
agreements contained herein, shall survive the Closing Dates and the
consummation of the transactions contemplated herein for a period of
two years, without regard to any investigation made by any party.
9.14 Counterpart. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original
and all of which together shall constitute one instrument.
-27-
9.15 Entire Agreement. This Agreement and the
Registration Rights Agreement constitute the entire agreement between
the parties hereto respecting the subject matter hereof and supersede
all prior agreements, negotiations, understandings, representations and
statements respecting the subject matter hereof, whether written or
oral. No modification, alteration, waiver or change in any of the terms
of this Agreement shall be valid or binding upon the parties hereto
unless made in writing and duly executed by the Company and the
Majority Purchasers.
9.16 Independent Nature of Purchasers'
Obligations and Rights. The obligations of each Purchaser under any
Operative Agreement are several and not joint with the obligations of
any other Purchaser, and no Purchaser shall be responsible in any way
for the performance of the obligations of any other Purchaser under any
Operative Agreement. Nothing contained herein or in any other Operative
Agreement, and no action taken by any Purchaser pursuant hereto or
thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create
a presumption that the Purchasers are in any way acting in concert or
as a group with respect to such obligations or the transactions
contemplated by the Operative Agreements and the Company acknowledges
that the Purchasers are not acting in concert or as a group with
respect to such obligations or the transactions contemplated by the
Operative Agreements. Each Purchaser confirms that it has independently
participated in the negotiation of the transaction contemplated hereby
with the advice of its own counsel and advisors. Each Purchaser 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 Operative Agreement, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding
for such purpose.
9.17 Equal Treatment of Purchasers. No
consideration shall be offered or paid to any Purchaser to amend or
consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration is also offered to
all of the parties to the Operative Agreements. For clarification
purposes, this provision constitutes a separate right granted to each
Purchaser by the Company and negotiated separately by each Purchaser,
and is intended for the Company to treat the Purchasers as a class and
shall not in any way be construed as the Purchasers acting in concert
or as a group with respect to the purchase, disposition or voting of
Securities or otherwise.
9.18 Costs of Enforcement. In the event that
legal proceedings are commenced by any party to this Agreement against
another party to this Agreement in connection with this Agreement or
the other Operative Agreements, the party or parties which do not
prevail in such proceedings shall severally, but not jointly, pay their
pro rata share of the reasonable attorneys' fees and other reasonable
out-of-pocket costs and expenses incurred by the prevailing party in
such proceedings.
[Signature Page to Follow]
-28-
IN WITNESS WHEREOF, the parties hereto have executed this Securities
Purchase Agreement as of the day and year first above written.
ADVANCIS PHARMACEUTICAL CORPORATION
By: /s/: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D.
Title: President and Chief Executive Officer
THE PURCHASER'S SIGNATURE TO THE INVESTOR QUESTIONNAIRE DATED OF EVEN DATE
HEREWITH SHALL CONSTITUTE THE PURCHASER'S SIGNATURE TO THIS SECURITIES PURCHASE
AGREEMENT.
Signature Page to Securities Purchase Agreement
EXHIBIT A
---------
SCHEDULE OF PURCHASERS
----------------------
NUMBER OF NUMBER OF
SHARES TO BE WARRANTS TO BE AGGREGATE PURCHASE
PURCHASER NAME AND ADDRESS PURCHASED PURCHASED PRICE CLOSING DATE
---------------------------------------------- ------------- ---------------- -------------------- ---------------
Playback & Company 2,000,000 1,500,000 $4,727,500.00 April 12, 2007
c/o Federated ▇▇▇▇▇▇▇ Fund
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
Tang Capital Partners, L.P. 1,900,000 1,425,000 $4,491,125.00 April 12, 2007
c/o Tang Capital Management, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Millennium Partners, L.P. 1,200,000 900,000 $2,836,500.00 April 12, 2007
c/o Millennium Mgmt, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇., ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Rho Ventures V, LP 1,103,144 827,358 $2,607,556.63 April 18, 2007
c/o RHO
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Rho Ventures V Affiliates, LP 96,856 72,642 $228,943.37 April 18, 2007
c/o RHO
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
HealthCare Ventures VI, L.P. 682,903 512,177 $1,614,211.97 April 12, 2007
c/o HealthCare Ventures
▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, CFO
HealthCare Ventures VII, L.P. 217,097 162,823 $513,163.03 April 12, 2007
c/o HealthCare Ventures
▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, CFO
Deerfield Special Situation Fund, LP 216,450 162,337 $511,633.69 April 12, 2007
c/o Deerfield
▇▇▇ ▇▇▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, CFO
Deerfield Special Situation Fund International 433,550 325,163 $1,024,803.81 April 12, 2007
c/o Deerfield
▇▇▇ ▇▇▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, CFO
Boxer Capital LLC 600,000 450,000 $1,418,250.00 April 12, 2007
c/o Tavistock Life Sciences
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
Frontpoint Healthcare Horizons Fund LP 357,800 268,350 $845,749.75 April 12, 2007
c/o FrontPoint Partners
Two ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
Frontpoint Long Horizons Healthcare Fund LP 142,200 106,650 $336,125.25 April 12, 2007
c/o FrontPoint Partners
Two Greenwich Plaza
Greenwich, CT 06830
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
SRB ▇▇▇▇▇▇▇▇ Capital, L.P. 36,400 27,300 $86,040.50 April 12, 2007
c/o Greenway Capital
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
SRB ▇▇▇▇▇▇▇▇ Capital, (Q.P), L.P. 315,200 236,400 $745,054.00 April 12, 2007
c/o Greenway Capital
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
SRB ▇▇▇▇▇▇▇▇ Offshore Operating Fund, LP 13,400 10,050 $31,674.25 April 12, 2007
c/o Greenway Capital
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
The ▇▇▇ ▇▇▇▇▇▇▇ Master L.P. 160,800 120,600 $380,091.00 April 12, 2007
c/▇ ▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Woodmont Investments, LTD 134,160 100,620 $317,120.70 April 12, 2007
c/▇ ▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Broadview Partners, LP 5,040 3,780 $11,913.30 April 12, 2007
c/▇ ▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
MKM Longboat Multistrategy Master Fund LTD 250,000 187,500 $590,937.50 April 12, 2007
c/o MKM Longboat
5th Floor, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇-▇ ▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Clarion Capital Corporation 125,000 93,750 $295,468.75 April 12, 2007
c/o Clarion Management Ltd
▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
Symmetry Capital Partners LP 18,440 13,830 $43,587.55 April 12, 2007
c/o Symmetry Capital
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Symmetry Capital Qualified Partners LP 37,083 27,812 $87,654.94 April 12, 2007
c/o Symmetry Capital
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Symmetry Parallax Partners LP 40,796 30,597 $96,431.55 April 12, 2007
c/o Symmetry Capital
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Symmetry Capital Offshore Fund LTD 28,681 21,511 $67,794.71 April 12, 2007
c/o Symmetry Capital
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇ 40,000 30,000 $94,550.00 April 12, 2007
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------- ---------------- --------------------
Total 10,155,000 7,616,250 $24,003,881.25
------------- ---------------- --------------------
EXHIBIT B
---------
FORM OF WARRANT
---------------
EXHIBIT C
---------
LEGAL OPINION
-------------
[Note: Opinion will be subject to customary assumptions and
qualifications]
1. The Company is a corporation validly existing and in good
standing under the laws of the State of Delaware, with the corporate power and
authority necessary to own and lease its properties and to conduct its business
as described in the SEC Documents. The Company is qualified to do business as a
foreign corporation in the State of Maryland.
2. The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under the Operative Agreements and
to issue and deliver the Securities. The Company has taken all necessary
corporate action to authorize its execution, delivery and performance of each of
the Operative Agreements and the issuance and delivery of the Securities.
3. Each of the Operative Agreements has been duly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company and is enforceable against the Company in accordance with its
terms except as limited by (a) bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or similar laws of general application now or
hereafter in effect affecting the rights and remedies of creditors; (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity); (c) the effect of judicial decisions which have
held that certain provisions are unenforceable when their enforcement would
violate the implied covenant of good faith and fair dealing, or would be
commercially unreasonable, or where their breach is not material; or (d) the
discretion of the court before which any proceeding therefor may be brought, and
except as the right to indemnification or contribution set forth in the
Operative Agreements may be limited by public policy or applicable securities
laws.
4. The execution, delivery and performance of the Operative
Documents and the issuance and sale of the Shares and Warrants by the Company
pursuant to the terms of the Purchase Agreement on the date hereof have been
duly authorized all required corporate action on the part of the Company and its
stockholders. When issued and delivered in accordance with the terms of the
Purchase Agreement against payment of the purchase price therefor, the Shares
will be validly issued, full paid and nonassessable. The Underlying Shares have
been duly authorized and reserved for issuance by the Company and, when issued
in accordance with the terms of the respective Warrants, will be validly issued,
fully paid and nonassessable.
5. The execution, deliver and performance of the Operative
Agreements do not, and the issuance and sale of the Shares and Warrants on the
date hereof as contemplated by the Purchase Agreement will not, (a) conflict
with or violate the Company's Sixth Restated Certificate of Incorporation, as
amended, or its Amended and Restated Bylaws, (b) conflict with or violate any
judgment, order or decree of any court or governmental authority which to our
knowledge is applicable to the Company or any of its properties, (c) result in a
material violation, or conflict with, any U.S. federal or New York State
statute, rule or regulation, or any provision of the Delaware General
Corporation Law, in any case known to us to be applicable to the Company or its
properties or (d) result in a material default by the Company under any of the
contracts or agreements filed as exhibits to the SEC Documents.
6. No consent, approval or authorization of or designation,
declaration or filing with, any U.S. federal or New York State governmental
authority, or any governmental authority, pursuant to the Delaware General
Corporation Law, on the part of the Company is required in connection with the
valid execution, delivery and performance of the Operative Agreements, or the
offer, sale or issuance of the Shares or the Warrants, other than (a) such as
have been made or obtained; (b) compliance with the Blue Sky laws or federal
securities laws applicable to the offering of the Shares, the Warrants and the
Underlying Shares; and (c) the filing of a Registration Statement in accordance
with the requirements of the Registration Rights Agreement.
7. Assuming (i) the accuracy and completeness of the
representations and warranties of each of the Investors set forth in the
Purchase Agreement and (ii) that neither the Company nor any other person
(including, without limitation, any placement agent for the transactions
contemplated by the Purchase Agreement) has engaged in any activity that would
be deemed a "general solicitation" under the provisions of Regulation D under
the Securities Act, the offer, issuance and sale of the Securities being
purchased by the Purchasers at the Closing and the Additional Closing on the
terms and conditions contemplated by the Purchase Agreement constitute
transactions exempt from the registration requirements of Section 5 of the
Securities Act (it being understood that we need express no opinion as to any
subsequent resales of the Securities by the Purchasers).
2
EXHIBIT D
---------
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
------------------------------------------
Attention: Advancis Pharmaceutical Corporation
Chief Financial Officer
The undersigned, [an officer of, or other person duly authorized by]
___________________________________________________________ [fill in official
name of individual or institution] hereby certifies that he/she [said
institution] is the Purchaser of the Securities evidenced by the attached
certificate, and as such, has disposed of such shares on _____________________
in accordance with the Company's Registration Statement and, in the event that
the Company has advised us in writing that the Company does not meet the
conditions for use of Rule 172 and as a result we are required to deliver a
prospectus in connection with such disposition, the requirement of delivering a
current prospectus forming a part of such Registration Statement has been
complied with in connection with such disposition.
Print or Type:
Name of Purchaser
(Individual or Institution): ___________________________
Name of Individual
Representing Purchaser
(if an institution): ___________________________
Title of Individual
Representing Purchaser
(if an institution): ___________________________
Signature by:
Individual Purchaser
or Individual Representing
Purchaser: ___________________________
SCHEDULE I
SCHEDULE OF LOCK-UP AGREEMENTS
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D., President and Chief Executive Officer
▇▇▇▇▇▇ ▇. Low, CPA, Vice President, Finance and Chief Financial Officer
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Ph.D., Vice President, Pharmaceutical Research
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Ph.D., Vice President, Analysis and Pharmaceutical
Quality
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President, Pharmaceutical Development Operations
HealthCare Ventures group
APPENDIX I
FORM OF INVESTOR QUESTIONNAIRE
------------------------------
THIS WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED,
SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION UNDER SAID ACT AND, IF REQUESTED BY THE COMPANY,
UPON DELIVERY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
THAT THE PROPOSED TRANSFER IS EXEMPT FROM SAID ACT.
WARRANT NO. ______ NUMBER OF SHARES: ____________
DATE OF ISSUANCE: April 12, 2007 (subject to adjustment)
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
ADVANCIS PHARMACEUTICAL CORPORATION
This Warrant is issued to [_____________], or its registered assigns
(the "Purchaser"), pursuant to that certain Securities Purchase Agreement, dated
as of April 9, 2007, between Advancis Pharmaceutical Corporation, a Delaware
corporation (the "Company"), the Purchaser and certain other purchasers
thereunder (the "Purchase Agreement") and is subject to the terms and conditions
of the Purchase Agreement.
1. EXERCISE OF WARRANT.
(a) Method of Exercise. Subject to the terms and conditions
herein set forth, upon surrender of this Warrant at the principal office of the
Company and upon payment of the Warrant Price (as defined below) by wire
transfer to the Company or cashier's check drawn on a United States bank made to
the order of the Company, or exercise of the right to credit the Warrant Price
against the fair market value of the Warrant Stock (as defined below) at the
time of exercise (the "Net Exercise Right") pursuant to Section 1(b), Purchaser
is entitled to purchase from the Company, at any time after the date hereof and
on or before the date that is five (5) years from the Date of Issuance set forth
above (the "Expiration Date"), up to ______ shares (as adjusted from time to
time pursuant to the provisions of this Warrant) of Common Stock of the Company
(the "Warrant Stock"), at a purchase price of $____ per share (the "Warrant
Price").
(b) Net Exercise Right. If the Company shall receive written
notice from the holder of this Warrant at the time of exercise of this Warrant
that the holder elects to exercise the Net Exercise Right, the Company shall
deliver to such holder (without payment by the Purchaser of any exercise price
in cash) that number of fully paid and nonassessable shares of Common Stock, par
value $0.01 per share, of the Company ("Common Stock") equal to the quotient
obtained by dividing (y) the value of this Warrant (or the specified portion
thereof) on the date of exercise, which value shall be determined by subtracting
(1) the aggregate Warrant Price of the Warrant Stock (or the specified portion
thereof) immediately prior to the exercise of this Warrant from (2) the
Aggregate Fair Market Value (as defined below) of the Warrant Stock (or the
specified portion thereof) issuable upon exercise of this Warrant (or specified
portion thereof) on the date of exercise by (z) the Fair Market Value (as
defined below) of one share of Common Stock on the date of exercise. The "Fair
Market Value" of a share of Common Stock shall mean the last reported sale price
and, if there are no sales, the last reported bid price, of the Common Stock on
the business day prior to the date of exercise as reported by the NASDAQ Global
Market or such other principal exchange or quotation system on which the Common
Stock is then traded or, if the Common Stock is not publicly traded, the price
determined in good faith by the Company's Board of Directors. The "Aggregate
Fair Market Value" of the Warrant Stock shall be determined by multiplying the
number of shares of Warrant Stock by the Fair Market Value of one share of
Warrant Stock.
2. CERTAIN ADJUSTMENTS.
(a) Mergers or Consolidations. If at any time after the date
hereof there shall be a capital reorganization (other than a combination or
subdivision of Warrant Stock otherwise provided for herein) (a
"Reorganization"), or a merger or consolidation of the Company with another
corporation (other than a merger with another corporation in which the Company
is a continuing corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant or a
merger effected exclusively for the purpose of changing the domicile of the
Company) (a "Merger"), then, as a part of such Reorganization or Merger, lawful
provision shall be made so that the Purchaser shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified in this
Warrant and upon payment of the Warrant Price, the number of shares of stock or
other securities or property of the Company or the successor corporation
resulting from such Reorganization or Merger, to which a holder of the Common
Stock deliverable upon exercise of this Warrant would have been entitled under
the provisions of the agreement in such Reorganization or Merger if this Warrant
had been exercised immediately before that Reorganization or Merger. In any such
case, appropriate adjustment (as determined in good faith by the Company's Board
of Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Purchaser after the
Reorganization or Merger to the end that the provisions of this Warrant
(including adjustment of the Warrant Price then in effect and the number of
shares of Warrant Stock) shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.
(b) Splits and Subdivisions; Dividends. In the event the
Company should at any time, or from time to time, fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common Stock
or the determination of the holders of Common Stock entitled to receive a
dividend or other distribution payable in additional shares of Common Stock or
other securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as the "Common Stock Equivalents") without payment of any
consideration by such holder for the additional shares of Common Stock or Common
Stock Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such distribution, split or subdivision if no record date is fixed), the per
share Warrant Price shall be appropriately decreased and the number of shares of
Warrant Stock shall be appropriately increased in proportion to such increase
(or potential increase) of outstanding shares.
-2-
(c) Combination of Shares. If the number of shares of Common
Stock outstanding at any time after the date hereof is decreased by a
combination of the outstanding shares of Common Stock, the per share Warrant
Price shall be appropriately increased and the number of shares of Warrant Stock
shall be appropriately decreased in proportion to such decrease in outstanding
shares.
(d) Adjustments for Other Distributions. In the event the
Company shall declare a distribution payable in securities of other persons,
evidences of indebtedness issued by the Company or other persons, assets
(excluding cash dividends paid out of net profits) or options or rights not
referred to in Section 2(b), then, in each such case for the purpose of this
Section 2(d), upon exercise of this Warrant the holder hereof shall be entitled
to a proportionate share of any such distribution as though such holder was the
holder of the number of shares of Common Stock into which this Warrant may be
exercised as of the record date fixed for the determination of the holders of
Common Stock entitled to receive such distribution.
3. NO FRACTIONAL SHARES. No fractional shares of Warrant Shares
will be issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would otherwise be issuable, the Company shall pay cash
equal to the product of such fraction multiplied by the Fair Market Value of one
share of Warrant Stock.
4. NO STOCKHOLDER RIGHTS. Until the exercise of this Warrant or any
portion of this Warrant, the Purchaser shall not have nor exercise any rights by
virtue hereof as a stockholder of the Company (including without limitation the
right to notification of stockholder meetings or the right to receive any notice
or other communication concerning the business and affairs of the Company).
5. RESERVATION OF STOCK. The Company covenants that during the
period this Warrant is exercisable, the Company will reserve from its authorized
and unissued Common Stock a sufficient number of shares of Common Stock (or
other securities, if applicable) to provide for the issuance of Warrant Stock
(or other securities) upon the exercise of this Warrant. The Company agrees that
its issuance of this Warrant shall constitute full authority to its officers who
are charged with the duty of executing stock certificates to execute and issue
the necessary certificates for the Warrant Stock upon the exercise of this
Warrant.
6. MECHANICS OF EXERCISE. This Warrant may be exercised by the
holder hereof, in whole or in part, by the surrender of this Warrant and the
Notice of Exercise attached hereto as Exhibit A duly completed and executed on
behalf of the holder hereof, at the principal office of the Company together
with payment in full of the Warrant Price then in effect with respect to the
number of shares of Warrant Stock as to which the Warrant is being exercised.
This Warrant shall be deemed to have been exercised immediately prior to the
close of business on the date of its surrender for exercise as provided above,
and the person entitled to receive the Warrant Stock issuable upon such exercise
shall be treated for all purposes as the holder of such shares of record as of
the close of business on such date. As promptly as practicable on or after such
date, the Company at its expense shall cause to be issued and delivered to the
person or persons entitled to receive the same a certificate or certificates for
the number of full shares of Warrant Stock issuable upon such exercise, together
with cash in lieu of any fraction of a share as provided above. The shares of
Warrant Stock issuable upon exercise hereof shall, upon their
-3-
issuance, be validly issued, fully paid and nonassessable, and free from all
preemptive rights, taxes, liens and charges with respect to the issue thereof.
In the event that this Warrant is exercised in part, the Company at its expense
will execute and deliver a new Warrant of like tenor exercisable for the number
of shares for which this Warrant may then be exercised. [If (1) a certificate
representing the Warrant Stock is not delivered to the holder within three (3)
Business Days of the due exercise of this Warrant by the holder and (2) prior to
the time such certificate is received by the holder, the holder, or any third
party on behalf of the holder or for the holder's account, purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the holder of shares represented by such certificate
(a "Buy-In"), then the Company shall pay in cash to the holder (for costs
incurred either directly by such holder or on behalf of a third party) the
amount by which the total purchase price paid for Common Stock as a result of
the Buy-In (including brokerage commissions, if any) exceeds the proceeds
received by such holder as a result of the sale to which such Buy-In relates.
The holder shall provide the Company written notice indicating the amounts
payable to the holder in respect of the Buy-In.]
7. CERTIFICATE OF ADJUSTMENT. Whenever the Warrant Price or number
or type of securities issuable upon exercise of this Warrant is adjusted, as
herein provided, the Company shall, at its expense, promptly deliver to the
record holder of this Warrant a certificate of an officer of the Company setting
forth the nature of such adjustment and showing in detail the facts upon which
such adjustment is based.
8. REPRESENTATIONS OF PURCHASER. As of the date hereof, the
Purchaser hereby confirms the representations and warranties made by the
Purchaser in Section 4 of the Purchase Agreement.
9. TRANSFER RESTRICTIONS.
(a) Unregistered Security. The holder of this Warrant
acknowledges that this Warrant and the Warrant Stock have not been registered
under the Securities Act of 1933, as amended (the "Securities Act") or
applicable state securities laws (collectively, the "Acts"), and agrees not to
sell, encumber or otherwise transfer this Warrant or any Warrant Stock issued
upon its exercise unless (i) there is an effective registration statement under
the Acts covering the transaction, (ii) the Company receives an opinion of
counsel satisfactory to the Company that such registration is not required under
the Acts, or (iii) the Company otherwise satisfies itself that registration is
not required under the Acts. Each certificate or other instrument for Warrant
Stock issued upon the exercise of this Warrant shall bear a legend substantially
to the foregoing effect.
10. NOTICES OF RECORD DATE. In the event of:
(a) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a cash dividend payable out of
earned surplus of the Company) or other distribution, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or
-4-
(b) any Reorganization or Merger; or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
Purchaser (or a permitted transferee pursuant to Section 9(b) above) a notice
specifying (i) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right, and stating the amount and character of
such dividend, distribution or right, and (ii) the date on which any such
Reorganization, Merger, dissolution, liquidation or winding-up is to take place,
and the time, if any, as of which the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of Common Stock (or
other securities) for securities or other property deliverable upon such
Reorganization, Merger, dissolution, liquidation or winding-up. Such notice
shall be mailed at least ten (10) business days prior to the date therein
specified.
11. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft, destruction or mutilation
of this Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.
12. NO IMPAIRMENT. Except to the extent as may be waived by the
holder of this Warrant, the Company will not, by amendment of its charter or
through a Reorganization, Merger, dissolution, sale of assets or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder of this
Warrant against impairment.
13. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or Sunday or shall be a legal U.S. holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday, Sunday or legal U.S. holiday.
14. MISCELLANEOUS. This Warrant shall be governed by the laws of the
State of New York. The Company and, by accepting this Warrant, the holder, each
irrevocably submits to the exclusive jurisdiction of the courts of the State of
New York located in New York County and the United States District Court for the
Southern District of New York for the purpose of any suit, action, proceeding or
judgment relating to or arising out of this Warrant and the transactions
contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Warrant. The
Company and, by accepting this Warrant, the holder, each irrevocably consents to
the jurisdiction of any such court in any such suit, action or proceeding and to
the laying of venue in such court. The Company and, by accepting this Warrant,
the holder, each irrevocably waives any objection to the laying of venue of any
such suit, action or proceeding brought in such courts and irrevocably waives
any claim that any such
-5-
suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE
HOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH
RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED
SPECIFICALLY AS TO THIS WAIVER. The headings in this Warrant are for purposes of
convenience and reference only, and shall not be deemed to constitute a part
hereof. Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the Company and the Purchaser. All notices and other communications from the
Company to the Purchaser shall be sufficient if in writing and delivered (i)
personally, (ii) by facsimile transmission (receipt verified), (iii) by
registered or certified mail (return receipt requested), postage prepaid, or
(iv) sent by express courier service (receipt verified), to the address
furnished to the Company in writing by the Purchaser. All such notices and
communications to the Company shall be effective if delivered (i) personally,
(ii) by facsimile transmission (receipt verified), (iii) by registered or
certified mail (return receipt requested), postage prepaid, or (iv) sent by
express courier service (receipt verified), at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D., President and Chief
Executive Officer, fax: (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Esq., fax: (▇▇▇) ▇▇▇-▇▇▇▇. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provisions.
[Signature Page Follows]
-6-
IN WITNESS WHEREOF, this Common Stock Purchase Warrant is issued
effective as of the Date of Issuance first set forth above.
ADVANCIS PHARMACEUTICAL CORPORATION
By:
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D.
Title: President and
Chief Executive Officer
SIGNATURE PAGE TO WARRANT
EXHIBIT A
---------
NOTICE OF INTENT TO EXERCISE
(To be signed only upon exercise of Warrant)
To: Advancis Pharmaceutical Corporation
The undersigned, the Purchaser of the attached Warrant, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
for, and to purchase thereunder, ______________ (________) shares of Common
Stock of Advancis Pharmaceutical Corporation and (choose one)
__________ herewith makes payment of __________________ Dollars
($_________) thereof
or
__________ exercises the Net Exercise Right pursuant to Section 1(b)
thereof and requests that the certificates for such shares be issued in the name
of, and delivered to ___________________________, whose address is
_______________________________________________________________________________
_________________.
DATED:
------------------------
(Signature must conform in all
respects to name of the Purchaser
as specified on the face of the
Warrant)
---------------------------------
---------------------------------
(Address)
EXHIBIT B
---------
NOTICE OF ASSIGNMENT FORM
FOR VALUE RECEIVED, ______________________ (the "Assignor") hereby
sells, assigns and transfers all of the rights of the undersigned Assignor under
the attached Warrant with respect to the number of shares of common stock of
Advancis Pharmaceutical Corporation (the "Company") covered thereby set forth
below, to the following "Assignee" and, in connection with such transfer,
represents and warrants to the Company that (i) such Assignee is a Qualifying
Holder (as such term is defined in the Registration Rights Agreement between the
Company and the Purchaser entered into in connection with the Purchase Agreement
dated as of even date herewith) of the Assignor and (ii) the transfer is
otherwise in compliance with Section 9(b) of the Warrant:
NAME OF ASSIGNEE ADDRESS/FAX NUMBER
Dated: Signature:
------------------------ ----------------------
Witness:
----------------------
ASSIGNEE ACKNOWLEDGMENT
The undersigned Assignee acknowledges that it has reviewed the attached
Warrant and by its signature below it hereby represents and warrants that it is
a Qualifying Holder and an "accredited investor" as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act of 1933, as amended, and
agrees to be bound by the terms and conditions of the attached Warrant as of the
date hereof.
Signature:
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By:
---------------------------
Its:
---------------------------
Address:
---------------------------