Exhibit 10.1
EXECUTION COPY
NOVARTIS PHARMA AG
AND
ALNYLAM PHARMACEUTICALS, INC.
STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
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1. Purchase and Sale of Common Stock.................................. 1
1.1 SALE OF THE COMMON SHARES.................................. 1
2. Closing Date; Deliveries........................................... 2
2.1 CLOSING DATE............................................... 2
2.2 DELIVERIES................................................. 2
2.3 FURTHER ASSURANCES......................................... 3
3. Representations and Warranties of the Company...................... 3
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION.............. 3
3.2 CAPITALIZATION AND VOTING RIGHTS........................... 4
3.3 SUBSIDIARIES............................................... 5
3.4 AUTHORIZATION.............................................. 6
3.5 NO CONFLICT................................................ 6
3.6 VALID ISSUANCE OF COMMON STOCK............................. 6
3.7 GOVERNMENTAL CONSENTS...................................... 7
3.8 LITIGATION................................................. 7
3.9 EMPLOYEES AND CONSULTANTS.................................. 7
3.10 PROPRIETARY RIGHTS......................................... 8
3.11 AGREEMENTS; ACTION......................................... 8
3.12 REGISTRATION RIGHTS........................................ 9
3.13 TITLE TO PROPERTY AND ASSETS............................... 9
3.14 FINANCIAL STATEMENTS AND SEC FILINGS....................... 9
3.15 EMPLOYEE BENEFIT PLANS..................................... 10
3.16 TAX RETURNS, PAYMENTS AND ELECTIONS........................ 10
3.17 INSURANCE.................................................. 11
3.18 LABOR AGREEMENTS AND ACTIONS............................... 11
3.19 REAL PROPERTY HOLDING CORPORATION.......................... 11
3.20 OFFERING................................................... 11
3.21 ENVIRONMENTAL MATTERS...................................... 11
3.22 LICENSES AND OTHER RIGHTS; COMPLIANCE WITH LAWS............ 12
3.23 BROKER OR FINDERS.......................................... 13
3.24 MARKET LISTING............................................. 13
3.25 RELIANCE................................................... 13
4. Representations and Warranties of the Investor..................... 13
4.1 AUTHORIZATION, GOVERNMENTAL CONSENTS AND COMPLIANCE WITH
OTHER INSTRUMENTS.......................................... 13
4.2 PURCHASE ENTIRELY FOR OWN ACCOUNT.......................... 13
4.3 DISCLOSURE OF INFORMATION.................................. 14
4.4 INVESTMENT EXPERIENCE AND ACCREDITED INVESTOR STATUS....... 14
4.5 RESTRICTED SECURITIES...................................... 14
4.6 LEGENDS.................................................... 14
5. Conditions to Closing of Investor.................................. 15
5.1 REPRESENTATIONS AND WARRANTIES CORRECT..................... 15
5.2 COVENANTS.................................................. 15
5.3 LEGAL OPINION.............................................. 15
5.4 NO MATERIAL ADVERSE EFFECT................................. 15
5.5 RESEARCH COLLABORATION AND LICENSE AGREEMENT............... 15
5.6 MARKET LISTING............................................. 15
6. Conditions to Closing of the Company............................... 15
6.1 REPRESENTATIONS AND WARRANTIES CORRECT..................... 15
6.2 COVENANTS.................................................. 16
6.3 RESEARCH COLLABORATION AND LICENSE AGREEMENT............... 16
7. Mutual Conditions to Closing....................................... 16
7.1 HSR ACT AND OTHER QUALIFICATIONS........................... 16
7.2 ABSENCE OF LITIGATION...................................... 16
8. Additional Covenants and Agreements................................ 16
8.1 UPDATES FROM COMPANY....................................... 16
8.2 HSR FILING................................................. 16
8.3 MARKET LISTING............................................. 17
8.4 SHARE LEGEND REMOVAL....................................... 17
8.5 USE OF PROCEEDS............................................ 17
8.6 CONSENTS................................................... 17
8.7 OTHER AGREEMENTS........................................... 17
8.8 WRITTEN INTERPRETATION OR STOCKHOLDER APPROVAL............. 18
9. Termination........................................................ 18
10. Miscellaneous...................................................... 18
10.1 SURVIVAL OF WARRANTIES..................................... 18
10.2 REMEDIES................................................... 18
10.3 SUCCESSORS AND ASSIGNS..................................... 18
10.4 ENTIRE AGREEMENT........................................... 19
10.5 GOVERNING LAW AND CONSENT TO JURISDICTION.................. 19
10.6 COUNTERPARTS............................................... 19
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10.7 TITLES AND SUBTITLES....................................... 19
10.8 NOUNS AND PRONOUNS......................................... 19
10.9 NOTICES.................................................... 19
10.10 FINDER'S FEE............................................... 20
10.11 EXPENSES................................................... 20
10.12 AMENDMENTS AND WAIVERS..................................... 20
10.13 SEVERABILITY............................................... 21
10.14 CONFIDENTIALITY AND PUBLICITY.............................. 21
10.15 DISCLOSURE SCHEDULE........................................ 21
10.16 DEFINITIONS................................................ 22
Annex A - Disclosure Schedule
Exhibit A - Legal Opinion
Exhibit B - Cross Receipt
Exhibit C - Research Collaboration and License Agreement
Exhibit D - Redacted Research Collaboration and License Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of September 6,
2005, by and between Novartis Pharma AG ("Novartis" or the "Investor"), a
corporation organized under the laws of Switzerland, with its principal place of
business at Xxxxxxxxxxxx 00, XX-0000, Xxxxx, Xxxxxxxxxxx, and Alnylam
Pharmaceuticals, Inc., (the "Company"), a Delaware corporation with its
principal place of business at 000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx 00000, X.X.X.
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF COMMON STOCK.
1.1 SALE OF THE COMMON SHARES.
(a) Subject to the terms and conditions of this Agreement, the Company
shall issue and sell to the Investor and the Investor shall purchase from the
Company:
(i) at the First Closing (as defined below) subject to Section
2.1(c), that number of shares of common stock, par value $0.01 per
share of the Company (the "Common Stock") representing 19.9% of the
outstanding equity securities of the Company immediately prior to such
issuance (the "Initial Shares") for an aggregate purchase price (the
"Initial Purchase Price") equal to the product obtained by multiplying
the number of Initial Shares by $11.11 (the "Share Price"); provided,
however, that in the event of any stock dividend, stock split,
combination of shares, recapitalization or other similar change in the
capital structure of the Company after the date hereof and on or prior
to the First Closing which affects or relates to the Common Stock, the
Share Price shall be adjusted proportionately; and
(ii) at the Second Closing (as defined below) subject to 2.1(c),
that number of shares of Common Stock such that the percentage of the
outstanding shares of Common Stock held by the Investor immediately
following, and giving effect to, such issuance and the issuance of the
Initial Shares is 19.9% of the outstanding equity securities of the
Company (such amount of shares, the "Remaining Shares") for an
aggregate purchase price (the "Remaining Purchase Price") equal to the
product obtained by multiplying the number of Remaining Shares by the
Share Price; provided, however, that in the event of any stock
dividend, stock split, combination of shares, recapitalization or
other similar change in the capital structure of the Company after the
date hereof and on or prior to the Second Closing which affects or
relates to the Common Stock, the Share Price shall be adjusted
proportionately.
(b) The applicable number of Initial Shares, Remaining Shares, the
Initial Purchase Price and the Remaining Purchase Price, as applicable, shall be
set forth on a Cross Receipt in the form of Exhibit B attached hereto delivered
at each Closing.
(c) The parties agree that, prior to the First Closing, Novartis may
assign the right and obligation to purchase the Shares and all of its other
rights and obligations under this
Agreement, to an Affiliate, in which case the term "Investor" shall refer herein
to such Affiliate; provided that in the event of any such assignment Novartis
shall remain liable for all its obligations under this Agreement.
2. CLOSING DATE; DELIVERIES.
2.1 CLOSING DATE.
(a) FIRST CLOSING. Subject to the terms and conditions of this
Agreement, the closing of the purchase and sale of the Initial Shares (the
"First Closing") shall be held on or prior to the second business day after the
satisfaction or waiver of all of the conditions to the First Closing (other than
those conditions that by their nature are to be satisfied or waived at the First
Closing) or such other date as the Company and the Investor may agree upon at
10:00 a.m. at the offices of Xxxxx Xxxxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx, 00000. The date of the First Closing is hereinafter referred
to as the "First Closing Date."
(b) SECOND CLOSING. Subject to the terms and conditions of this
Agreement, the closing of the purchase and sale of the Remaining Shares (the
"Second Closing") shall be held on or prior to the second business day after the
satisfaction or waiver of all of the conditions to the Second Closing (other
than those conditions that by their nature are to be satisfied or waived at the
Second Closing) or such other date as the Company and the Investor may agree
upon at 10:00 a.m. at the offices of Xxxxx Xxxxxxxxxx LLP, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, 00000. The date of the Second Closing is
hereinafter referred to as the "Second Closing Date."
(c) The parties agree that, in the event that the Company has obtained
the Written Interpretation or the Stockholder Approval, as applicable, before
the First Closing Date and has provided to the Investor written evidence
reasonably satisfactory to the Investor that the Company has obtained the
Written Interpretation or the Stockholder Approval, as applicable, the closing
of the purchase and sale of all the Shares shall occur in a single closing on
the First Closing Date. In such event, the Company shall not be obligated to
issue or sell, and the Investor shall not be obligated to purchase, any other
securities of the Company pursuant to this Agreement.
2.2 DELIVERIES.
(a) DELIVERIES BY THE COMPANY. At each Closing, the Company shall
deliver to the Investor a facsimile of the stock certificate (front and back),
registered in the Investor's name, representing the Shares being purchased by
the Investor at that Closing and the Company shall instruct its transfer agent
to deliver by overnight courier to the Investor the original certificate prior
to the end of the fifth business day after the applicable Closing Date. The
Company will also make the following deliveries in connection with each Closing:
(i) a certificate, signed by an officer of the Company, which contains the
representation and warranty set forth in Section 3.2(a) but substituting the
then-current numbers of shares for the numbers of shares set forth in Section
3.2(a) and attaching a pro forma capitalization table showing the outstanding
capital stock of the Company after giving effect to the applicable Closing; (ii)
a certificate or certificates, dated the applicable Closing Date, of the
Secretary or Assistant
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Secretary of the Company certifying as to (A) the resolutions of the Company's
Board of Directors authorizing the execution and delivery of this Agreement and
the Investor Rights Agreement, the issuance of the applicable Shares to the
Investor, the execution and delivery of such other documents and instruments as
may be required by this Agreement or the Investor Rights Agreement and the
consummation of the transactions contemplated hereby and thereby and certifying
that such resolutions were duly adopted and have not been rescinded or amended
as of said date, and (B) the name and the signature of the officers of the
Company authorized to sign, as appropriate, this Agreement, the Investor Rights
Agreement and the other documents and certificates to be delivered pursuant to
this Agreement or the Investor Rights Agreement by either the Company or any of
its officers; (iii) copies of (A) the Restated Certificate, certified by the
Secretary of State of Delaware as of a date not earlier than five (5) business
days prior to the applicable Closing Date and accompanied by a certificate of
the Secretary or Assistant Secretary of the Company, dated as of the applicable
Closing Date, stating that no amendments have been made to such Restated
Certificate since such date, and (B) the By-laws of the Company certified by the
Secretary or Assistant Secretary of the Company; (iv) (A) a good standing
certificate dated as of a date not earlier than five (5) business days prior to
the applicable Closing Date issued with respect to the Company by the Secretary
of State of Delaware and (B) good standing certificates as of a date not earlier
than five (5) business days prior to the applicable Closing Date issued with
respect to the Company by the Secretary of State (or other applicable
Governmental Authority) in each state in where the Company is qualified as a
foreign corporation; and (v) a duly executed Cross Receipt setting forth the
number of Shares being purchased at that Closing, the applicable Share Price and
the applicable Purchase Price determined in accordance with Section 1.1
substantially in the form of Exhibit B attached hereto.
(b) DELIVERIES BY THE INVESTOR. At each Closing, the Investor shall
deliver the applicable Purchase Price by wire transfer of same day funds per the
Company's wiring instructions (which shall have been delivered to the Investor
not less than two business days before the applicable Closing Date). The
Investor will also make all the following delivery in connection with each
Closing: a duly executed Cross Receipt setting forth the number of Shares being
purchased at that Closing, the applicable Share Price and the applicable
Purchase Price determined in accordance with Section 1.1 substantially in the
form of Exhibit B attached hereto.
2.3 FURTHER ASSURANCES. The Company and the Investor hereby covenant and
agree without the necessity of any further consideration, to execute,
acknowledge and deliver any and all such other documents, obtain waivers and
consents and take any such other action and corporate and other proceedings as
may be reasonably necessary to carry out the intent and purposes of this
Agreement and to provide to the other party copies (executed or certified, as
may be appropriate) of all documents which they or their counsel may reasonably
have requested in connection with the transactions contemplated by this
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents
and warrants to the Investor that the statements contained in this Section 3 are
true and correct as of the date hereof, except as set forth herein or in the
disclosure schedule delivered by the Company to the Investor dated as of the
date of this Agreement (the "Disclosure Schedule"):
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of
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Delaware. The Company has all requisite corporate power and corporate authority
to own and operate its properties and assets, to carry on its business as now
conducted and as proposed to be conducted, to enter into this Agreement, to sell
the Shares and to carry out the other transactions contemplated hereunder, which
shall include in the case of the Remaining Shares, receipt on or prior to the
Second Closing of either (i) approval of the Company's stockholders for the
issuance and sale to the Investor of the Remaining Shares in compliance with
Rule 4350(i) of the Marketplace Rules of the National Association of Securities
Dealers, Inc. (the "Stockholder Approval") or (ii) a written interpretative
opinion from the National Association of Securities Dealers to the effect that
such Stockholder Approval is not required (the "Written Interpretation"). The
Company is qualified to transact business and is in good standing in each
jurisdiction in which the failure to qualify could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. For purposes
of this Agreement, the term "Material Adverse Effect" means a material adverse
effect on the business, properties, financial condition or results of operations
of the Company and its Subsidiaries, taken as a whole; provided, however, that
none of the following shall constitute, or shall be considered in determining
whether there has occurred, a Material Adverse Effect: (a) changes that are the
result of general economic or political factors affecting the national, or world
economy or acts of war or terrorism (except to the extent that such changes have
a disproportionate effect on the Company and its Subsidiaries, taken as a
whole); (b) changes that are the result of factors generally affecting the
industries or markets in which the Company operates (except to the extent that
such changes have a disproportionate effect on the Company and its Subsidiaries,
taken as a whole); (c) any adverse change, effect or circumstance arising out of
or resulting from actions contemplated by the parties in connection with this
Agreement or the pendency or announcement of the transactions contemplated by
this Agreement; (d) changes in law, rule or regulations or generally accepted
accounting principles and (e) any action taken pursuant to or in accordance with
this Agreement or at the request of the Investor. The Company has made available
to the Investor true, correct and complete copies of the Company's Restated
Certificate of Incorporation (the "Restated Certificate") and the Company's
By-laws in effect on the date hereof.
3.2 CAPITALIZATION AND VOTING RIGHTS.
(a) As of September 2, 2005, the authorized capital of the Company
consists of:
(i) Preferred Stock. 5,000,000 shares of Preferred Stock, par
value $0.01 per share (the "Preferred Stock"), of which 125,000 shares
have been designated Series A Junior Participating Preferred Stock
(the "Series A Preferred Stock"), none of which are issued and
outstanding; and
(ii) Common Stock. 125,000,000 shares of Common Stock, of which
21,200,676 shares are issued and outstanding.
(b) Except as set forth in Section 3.2(b) of the Disclosure Schedule,
as of the date hereof, there are: (i) no outstanding options, warrants, rights
(including conversion or preemptive rights) or agreements pursuant to which the
Company is or may become obligated to issue, sell or repurchase any shares of
its capital stock or any other securities of the Company; (ii) no restrictions
on the transfer of capital stock of the Company imposed by the Restated
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Certificate or By-laws of the Company, any agreement to which the Company is a
party, or any order of any court or any governmental agency to which the Company
is subject; and (iii) no cumulative voting rights for any of the Company's
capital stock.
(c) As of September 2, 2005, of the authorized Common Stock (i) 52,630
shares have been reserved for issuance upon exercise of outstanding warrants,
and (ii) 3,163,710 shares have been reserved for issuance upon exercise of
outstanding options or other stock-based awards under the 2002 Employee Director
and Consultant Stock Plan, 2003 Employee Director and Consultant Stock Plan,
2004 Stock Incentive Plan and 2004 Employee Stock Purchase Plan. Other than as
set forth in the preceding sentence, there are no other shares of Common Stock
reserved for issuance. There is no capital stock of the Company held by the
Company. As of the date hereof, all of the Series A Preferred Stock is reserved
for issuance under the Shareholder Rights Plan and is the only Preferred Stock
reserved for issuance.
(d) Except as set forth in the Company's Annual Report on Form 10-K
for the year ended December 31, 2004, the Company's Quarterly Report on Form
10-Q for the period ended March 31, 2005 and the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 2005 (collectively, the "Company's
Public Filings"), or in Section 3.2(d) of the Disclosure Schedule, the Company
is not a party to or is not subject to any agreement or understanding relating
to, and to the Company's knowledge there is no agreement or understanding
between any Persons which affects or relates to, the voting of shares of capital
stock of the Company or the giving of written consents by a stockholder or
director of the Company.
3.3 SUBSIDIARIES. Except as set forth in the Company's Public Filings or in
Section 3.3 of the Disclosure Schedule:
(a) The Company does not presently own or control, directly or
indirectly, any other corporation, association, partnership, trust, joint
venture or other business entity and does not currently own or control, directly
or indirectly, any capital stock or other ownership interest, directly or
indirectly, in any corporation, association, partnership, trust, joint venture
or other entity, other than securities in a publicly traded company or mutual
fund held for investment by the Company or any of its Subsidiaries and
consisting of less than five percent of the outstanding capital stock of such
company. Each of the Subsidiaries is duly organized and existing under the laws
of its jurisdiction or organization, is in good standing under such laws and is
duly qualified to do business as a foreign corporation in each jurisdiction in
which a failure to so qualify would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
(b) All the outstanding shares of capital stock of each Subsidiary are
validly issued, fully paid and nonassessable, and are owned by the Company free
and clear of any Encumbrances, other than restrictions under securities laws.
(c) There are no options, warrants, convertible securities, or other
rights, agreement, arrangements or commitments of any character relating to the
capital stock of any Subsidiary.
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(d) No Subsidiary is a member of (nor is any part of its business
conducted through) any partnership, nor is it a participant in any joint venture
or similar arrangement.
(e) There are no voting trust, stockholder agreements, proxies or
other agreements or understandings in effect with respect to the voting or
transfer of any shares of capital stock of or any other interests in any
Subsidiary.
3.4 AUTHORIZATION. All corporate action on the part of the Company
necessary for the authorization, execution and delivery of this Agreement and
the Investor Rights Agreement, the performance of all obligations of the Company
hereunder and thereunder and the authorization, issuance and delivery of the
Shares to be sold hereunder, has been taken or will be taken prior to the
applicable Closing. This Agreement and the Investor Rights Agreement have been
duly executed and delivered by the Company and constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors rights and subject to general equity
principles.
3.5 NO CONFLICT. The execution, delivery and performance of this Agreement
and the Investor Rights Agreement and compliance with the provisions hereof and
thereof by the Company, will not:
(a) violate any provision of law, statute, ordinance, rule or
regulation or any ruling, writ, injunction, order, judgment or decree of any
court, administrative agency or other governmental body, the violation of which
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect;
(b) conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute (with due notice or lapse of time, or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under (i) any agreement, document, instrument, contract,
understanding, arrangement, note, indenture, mortgage or lease to which the
Company is a party or under which the Company or any of its assets is bound or
affected, except for any such conflicts, breaches, defaults, terminations,
cancellations or accelerations that could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, (ii) the Company's
Restated Certificate, or (iii) the By-laws of the Company; or
(c) result in the creation of any Encumbrance upon any of the Shares,
other than restrictions on resale pursuant to securities laws, or on any of the
properties or assets of the Company or any Subsidiary.
3.6 VALID ISSUANCE OF COMMON STOCK.
When issued, sold and delivered in accordance with the terms hereof for the
consideration expressed herein, the Shares will be duly authorized, validly
issued, fully paid and nonassessable, and will not be subject to any
antidilution rights, rights of first refusal or other similar rights or
restrictions on transfer, other than under securities laws.
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3.7 GOVERNMENTAL CONSENTS. Assuming the accuracy of the Investor's
representations contained in Section 4 of this Agreement, no consent, approval,
order or authorization of, or registration, qualification, designation,
declaration, notification or filing with, any federal, state or local
Governmental Authority, the National Association of Securities Dealers or such
other self-regulatory organization or stock exchange on which the Common Stock
is listed, on the part of the Company, is required in connection with the
execution, delivery and performance of this Agreement, the execution and
delivery of the Investors Rights Agreement, the offer, sale, or issuance of the
Shares or the consummation of any other transactions contemplated hereby, except
(i) the qualification (or the taking of such action as may be necessary to
secure an exemption from qualification) of the offer and sale of the Shares
under applicable Blue Sky laws, which filings and qualifications, if required,
shall be accomplished prior to the applicable Closing, (ii) as may be required
pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act, as amended ("HSR
Act"), if applicable, (iii) a notice of (A) listing of additional shares with
respect to the Shares and (B) a change in the number of outstanding shares of
the Company, each to the NASDAQ Stock Market, Inc and (iv) in the case of the
Remaining Shares, receipt of either the Stockholder Approval or the Written
Interpretation.
3.8 LITIGATION. Except as set forth in Section 3.8 of the Disclosure
Schedule or in the Company's Public Filings, there is no action, suit,
proceeding or investigation pending or, to the Company's knowledge, currently
threatened against the Company or any Subsidiary which questions the validity of
this Agreement or the Investor Rights Agreement or the right of the Company to
enter into such agreements, or to consummate the transactions contemplated
hereby or thereby, or which could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect, or result in any change in the
current equity ownership of the Company, nor is the Company aware that there is
any basis for the foregoing. To the Company's knowledge, there are no legal
actions or investigations pending or threatened involving the employment by or
with the Company of any of the Company's current or former employees, their use
in connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers or alleging a violation of any
federal, state or local statute or common law relationship with the Company. The
Company is not a party to any order, writ, injunction, judgment or decree of any
court. There is no action, suit, proceeding or investigation by the Company
currently pending or that the Company intends to initiate.
3.9 EMPLOYEES AND CONSULTANTS. Except as set forth in Section 3.9 of the
Disclosure Schedule:
(a) To the Company's knowledge, none of its employees is obligated
under any contract (including licenses, covenants or contracts of any nature) or
other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his or her best
efforts to promote the interests of the Company or that would conflict with the
Company's business as proposed to be conducted.
(b) Except as set forth in Section 3.9 of the Disclosure Schedule,
each employee of, or consultant to, the Company, who has or is proposed to have
access to material confidential or proprietary information of the Company, is a
signatory to, and is bound by, an
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agreement with the Company relating to nondisclosure, proprietary information
and assignment of patent, copyright and other intellectual property rights.
3.10 PROPRIETARY RIGHTS.
(a) Except as set forth in the Company's Public Filings or Section
3.10(a) of the Disclosure Schedule: (i) the Company or one of its Subsidiaries
owns, free and clear of any lien or encumbrance, or has a valid license to, or
has an enforceable right to use, without the payment of any royalty except
pursuant to the Material IP Contracts (defined below) listed on Section 3.10(b)
of the Disclosure Schedule, all U.S. and non-U.S. patents, trade secrets,
know-how, trademarks, service marks, copyrights, and other proprietary and
intellectual property rights, and all grants and applications with respect to
the foregoing (collectively, the "Proprietary Rights") necessary for the conduct
of the Company's business as now conducted, the absence of which would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect (such Proprietary Rights owned by or licensed to the Company
collectively, the "Company Rights"); (ii) to the Company's knowledge, the
Company's rights in the Company Rights are valid and enforceable; (iii) to the
Company's knowledge, all necessary registration, maintenance and renewal fees in
respect of the Company Rights have been paid on time; (iv) none of the Company
or its Subsidiaries have or are infringing or otherwise violating the
appropriate Proprietary Rights of any Person, and have not received any notice
or are subject to any actual or threatened proceedings alleging such, except for
infringements or other violations that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; (v) the Company and
its Subsidiaries have taken reasonable measures to protect the Company Rights,
consistent with prudent commercial practices in the biotechnology industry; (vi)
other than the Material IP Contracts, there are no outstanding material options,
licenses or agreements of any kind relating or affecting to the Company Rights
except for options, licenses or agreements specifically referenced in the
Research Collaboration and License Agreement; and (vii) there are no breaches or
defaults of, or any disputes or threatened disputes concerning, any of the
Material IP Contracts, except for breaches, defaults and disputes in Material IP
Contracts which are not and will not be sublicensed to NIBRI pursuant to the
Research Collaboration and License Agreement that would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(b) Schedule 3.10(b) contains a complete and accurate list of (i) all
patents, registered trademarks, registered copyrights and applications for the
foregoing included in the Company Rights that are owned by the Company or one of
its Subsidiaries, indicating the owner(s) thereof, and all applications,
registrations and grants with respect thereto, except that such list does not
include registered trademarks and applications therefor that the Company has
determined that it will abandon, and (ii) all material agreements granting any
rights (whether to or by the Company or any of its Subsidiaries) with respect to
any of the Company Rights (collectively, the "Material IP Contracts"),
specifically indicating, as applicable, each amendment thereto.
3.11 AGREEMENTS; ACTION.
(a) Except as set forth in the Company's Public Filings or in Section
3.11(a) of the Disclosure Schedule, since December 31, 2004, the Company has not
(i) declared or paid any dividends, or authorized or made any distribution upon
or with respect to any class or
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series of its capital stock, or (ii) sold, exchanged or otherwise disposed of
any of its material assets or rights, other than in the ordinary course of
business.
(b) Since December 31, 2004, the Company has not admitted in writing
its inability to pay its debts generally as they become due, filed or consented
to the filing against it of a petition in bankruptcy or a petition to take
advantage of any insolvency act, made an assignment for the benefit of
creditors, consented to the appointment of a receiver for itself or for the
whole or any substantial part of its property, or had a petition in bankruptcy
filed against it, been adjudicated a bankrupt, or filed a petition or answer
seeking reorganization or arrangement under the federal bankruptcy laws or any
other laws of the United States or any other jurisdiction.
(c) The Company is in compliance with all obligations, agreements and
conditions contained in any evidence of indebtedness or any loan agreement or
other contract or agreement (whether or not relating to indebtedness) to which
the Company is a party or is subject (collectively, the "Obligations"), the lack
of compliance with which would afford to any Person the right to (i) accelerate
any material indebtedness or (ii) terminate any right or agreement of the
Company, the termination of which would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. To the Company's
knowledge, all other parties to such Obligations are in compliance with the
terms and conditions of such Obligations, except for any non-compliance that
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
3.12 REGISTRATION RIGHTS. Except as provided in Section 3.12 of the
Disclosure Schedule, the Company has not granted or agreed to grant any
registration rights with respect to shares of the Company's capital stock under
the Securities Act of 1933, as amended (the "Securities Act"), including
piggyback rights, to any Person.
3.13 TITLE TO PROPERTY AND ASSETS. Except as provided in the Company's
Public Filings, the Company or one of its Subsidiaries has good title to, a
valid leasehold interest in, or a valid license to use, all of the material
tangible property and assets reflected on the Company's balance sheet as of June
30, 2005, free and clear of all material liens, claims, restrictions or
Encumbrances, except those assets sold, consumed or otherwise disposed of since
the date of such balance sheet in the ordinary course of business, none of which
either alone or in the aggregate are material, either in nature or amount, to
the business of the Company and its Subsidiaries taken as a whole.
3.14 FINANCIAL STATEMENTS AND SEC FILINGS.
(a) The Company has made available to the Investor (i) the Company's
audited financial statements for the year ended December 31, 2004 contained in
the Company's annual report on Form 10-K (the "Audited Financial Statements");
and (ii) the Company's unaudited financial statements for the quarter ended
March 31, 2005 and the quarter ended June 30, 2005 contained in the Company's
quarterly reports on Form 10-Q (collectively with the Audited Financial
Statements, the "Financial Statements"). The Financial Statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the
9
periods indicated (except as may be indicated in notes or as permitted by Form
10-Q) and fairly present in all material respects the financial condition and
operating results of the Company as of the dates, and for the periods, indicated
therein (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Since December 31, 2004, the Company has conducted its business in
the ordinary course, and there has not been any Material Adverse Effect. Since
June 30, 2005, the Company has incurred no liabilities (contingent or otherwise)
outside the ordinary course of business that would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. Except as
disclosed in the Financial Statements, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation that
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(b) Since May 27, 2004, the Company has filed all required reports,
schedules, forms, statements and other documents (including exhibits and all
other information incorporated therein) with the SEC ("Company SEC Documents").
As of their respective dates, the Company SEC Documents complied as to form in
all material respects with the requirements of the Securities Act or the
Securities Exchange Act, as the case may be, and the rules and regulations of
the SEC promulgated thereunder applicable to such Company SEC Documents, and no
Company SEC Documents when filed contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in Company SEC Documents complied as to form, as of their
respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto.
3.15 EMPLOYEE BENEFIT PLANS. Except as set forth in Section 3.15 of the
Disclosure Schedule or the Company's Public Filings, there are no "employee
benefit plans" as such term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA") maintained by the Company or
any Subsidiary or any stock purchase plan, stock option plan, fringe benefit
plan, bonus plan or any other deferred compensation agreement, plan, practice or
pending arrangement involving more than one person sponsored, maintained or to
which contributions are made by the Company by or on behalf of current or former
employees of the Company or their dependents. Any of the foregoing that involve
an "officer" of the Company, as defined in Section 16 of the Securities Exchange
Act, are described in the Company's Public Filings. The Company is in compliance
in all material respects with applicable laws governing such employee benefit,
employee pension benefit or other plans arrangements or practices, except for
any failure to comply that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
3.16 TAX RETURNS, PAYMENTS AND ELECTIONS. The Company has filed all
material tax returns and reports as required, and within the time prescribed, by
law. These returns and reports are true and correct in all material respects.
The Company has paid or made provision for the payment of all accrued and unpaid
taxes and other charges to which the Company is subject and which are not
currently due and payable. The federal income tax returns of the Company have
never been audited by the Internal Revenue Service, and the Company has not
agreed to an
10
extension of the statute of limitations with respect to any of its tax years.
Neither the Internal Revenue Service nor any other taxing authority is now
asserting against the Company any deficiency or claim for additional material
taxes or interest thereon or penalties in connection therewith. The Company has
not made any elections pursuant to the Code (other than elections which relate
solely to methods of accounting, depreciation or amortization) which would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
3.17 INSURANCE. The Company has in full force and effect fire, casualty and
liability insurance policies, with coverage, in the case of property insurance,
sufficient in amount (subject to reasonable deductibles) to allow it to replace
any of its properties that might be damaged or destroyed, and in the case of
casualty and liability insurance, in amounts customary for businesses similar to
the business of the Company.
3.18 LABOR AGREEMENTS AND ACTIONS. The Company does not have any collective
bargaining agreements covering any of its employees, nor is the Company bound by
or subject to (and none of its assets or properties is bound by or subject to)
any written or oral, express or implied, contract, commitment or arrangement
with any labor union, and no labor union has requested or, to the knowledge of
the Company, has sought to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute involving the
Company pending, or to the knowledge of the Company threatened, nor is the
Company aware of any labor organization activity involving its employees. The
Company is not aware that any officer or key employee or that any group of key
employees intends to terminate their employment with the Company, nor does the
Company have a present intention to terminate the employment of any of the
foregoing.
3.19 REAL PROPERTY HOLDING CORPORATION. The Company is not, and has not
been during the applicable period specified in Section 897 of the Code, a United
States real property holding corporation, as defined in Section 897 of the Code.
3.20 OFFERING. Subject to the accuracy of the Investor's representations
set forth in Section 4 of this Agreement, the offer, sale and issuance of the
Shares to be issued in conformity with the terms of this Agreement constitute
transactions which are exempt from the registration requirements of the
Securities Act and from all applicable state registration or qualification
requirements, other than those with which the Company has complied or will
comply with prior to the applicable Closing.
3.21 ENVIRONMENTAL MATTERS. Notwithstanding any other term of this
Agreement, all representations relating to or arising from Environmental Laws
(as defined below) are contained only in this Section 3.21.
(a) To the Company's knowledge, the Company is not in violation of any
Environmental Law and to its knowledge, no material expenditures are or will be
required in order to comply with any Environmental Law. As used in this
Agreement, "Environmental Law" shall mean any applicable law, ordinance, rule or
regulation of any Governmental Authority that regulates, fixes liability for, or
otherwise relates to, the handling, use (including use in industrial processes,
in construction, as building materials, or otherwise), treatment, storage and
disposal of hazardous and toxic wastes and substances, and to the discharge,
leakage,
11
presence, migration, actual Release (as hereinafter defined) or threatened
Release (whether by disposal, a discharge into any water source or system or
into the air, or otherwise) of any pollutant or effluent.
(b) To the Company's knowledge, the Company has not used, generated,
manufactured, refined, treated, transported, stored, handled, disposed,
transferred, produced, processed or released (hereinafter together defined as
"Release") any Hazardous Materials (as hereinafter defined) on, from or
affecting any Property (as hereinafter defined) in any manner or by any means in
violation of any Environmental Laws and to the Company's knowledge there is no
threat of such Release. As used herein, the term "Property" shall include,
without limitation, land, buildings and laboratory facilities owned or leased by
the Company or as to which the Company now has any duties, responsibilities (for
cleanup, remedy or otherwise) or liabilities under any Environmental Laws, or as
to which the Company or any Subsidiary of the Company may have such duties,
responsibilities or liabilities because of past acts or omissions of the Company
or any such Subsidiary or their predecessors, or because the Company or any such
Subsidiary or their predecessors in the past was such an owner or operator of,
or bore some other relationship with, such land, buildings or laboratory
facilities. The term "Hazardous Materials" shall include, without limitation,
any flammable explosives, petroleum products, petroleum by-products, radioactive
materials, hazardous wastes, hazardous substances and toxic substances, all as
defined by Environmental Laws.
(c) The Company has not received written notice that the Company is a
party potentially responsible for costs incurred at a cleanup site or corrective
action under any Environmental Laws. The Company has not received any written
requests for information in connection with any inquiry by any Governmental
Authority (as hereinafter defined) concerning disposal sites or other
environmental matters. As used herein, "Governmental Authority" shall mean any
nation or government, any federal, state, municipal, local, provincial, regional
or other political subdivision thereof, and any Person exercising executive,
legislative, judicial regulatory or administrative functions of or pertaining to
government.
(d) The stockholders of the Company have had no control over, or
authority with respect to, the waste disposal operations of the Company, in
their capacity as stockholders of the Company.
3.22 LICENSES AND OTHER RIGHTS; COMPLIANCE WITH LAWS. The Company has all
franchises, permits, licenses and other rights and privileges from Governmental
Authorities necessary to permit it to own its properties and to conduct its
business as presently conducted and is in compliance in all material respects
thereunder. The Company and each Subsidiary are in compliance with all laws and
governmental rules and regulations applicable to its business, properties and
assets, including, without limitation, all such rules, laws and regulations
relating to fair employment practices, occupational safety and health and public
safety, except for any non-compliance that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. The Company
has never received any request for information, notice, demand letter,
administrative inquiry or formal or informal complaint or claim from any
regulatory agency with respect to any aspect of the business, affairs,
properties or assets of the Company, outside the ordinary course of business of
the Company.
12
3.23 BROKER OR FINDERS. The Company has not incurred, nor will incur,
directly or indirectly, as a result of any action taken by the Company, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement, the Investor Rights Agreement or any
transaction contemplated hereby or thereby.
3.24 MARKET LISTING. The Common Stock is listed for trading on the NASDAQ
National Market and the Company is in compliance in all material respects with
the rules, regulations and requirements of the NASDAQ National Market relating
to the continued listing of the Common Stock.
3.25 RELIANCE. The Company understands that the foregoing representations
and warranties and the certificates to be delivered pursuant to Sections 5.1 and
5.2 shall be deemed material and to have been relied upon by the Investor.
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor hereby
represents and warrants to the Company that the statements contained in Section
4 are true and correct as of the date hereof and as of each Closing Date:
4.1 AUTHORIZATION, GOVERNMENTAL CONSENTS AND COMPLIANCE WITH OTHER
INSTRUMENTS. All corporate action on the part of the Investor necessary for the
authorization, execution and delivery of this Agreement and the Investors Rights
Agreement and the performance of all obligations of the Investor hereunder and
thereunder has been taken or will be taken prior to the applicable Closing. This
Agreement and the Investors Rights Agreement have been duly executed and
delivered by the Investor and constitute valid and legally binding obligations
of the Investor, enforceable against the Investor in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other
laws of general application relating to or affecting enforcement of creditors
rights and subject to general equity principles. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration,
notification or filing with, any federal, state or local Governmental Authority
on the part of the Investor is required in connection with the consummation of
the transactions contemplated by this Agreement and the Investors Rights
Agreement, except as may be required by the HSR Act. The execution, delivery and
performance of this Agreement and the Investors Rights Agreement and compliance
with the provisions hereof and thereof by the Investor, will not (a) violate any
provision of law, statute, ordinance, rule or regulation or any ruling, writ,
injunction, order, judgment or decree of any court, administrative agency or
other governmental body; or (b) conflict with or result in any breach of any of
the terms, conditions or provisions of, or constitute (with due notice or lapse
of time, or both) a default (or give rise to any right of termination,
cancellation or acceleration) under (i) any agreement, document, instrument,
contract, understanding, arrangement, note, indenture, mortgage or lease to
which the Investor is a party or under which the Investor or any of its assets
is bound or affected, except for any violations, conflicts, breaches or defaults
which would not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the ability of the Investor to
consummate the transactions contemplated by this Agreement, or (ii) the
governing documents of the Investor.
4.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Investor is acquiring the Shares
for investment for the Investor's own account, not as a nominee or agent, and
not with a view to the
13
resale or distribution of any part thereof, and the Investor has no present
intention of selling, granting any participation, or otherwise distributing the
Shares. To the Investor's knowledge, the Investor does not own of record or
beneficially own (as defined in Rule 13d-3 of the Securities Exchange Act) any
voting securities of the Company, or any securities convertible into or
exercisable for any such voting securities.
4.3 DISCLOSURE OF INFORMATION. The Investor has received all the
information from the Company and its management that the Investor considers
necessary or appropriate for deciding whether to purchase the Shares hereunder.
The Investor further represents that it has had an opportunity to ask questions
and receive answers from the Company regarding the terms and conditions of the
offering of the Shares. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 3 of this Agreement.
4.4 INVESTMENT EXPERIENCE AND ACCREDITED INVESTOR STATUS. The Investor
either (i) is an accredited investor (as defined in Regulation D promulgated
under the Securities Act) or (ii) is not a United States Person as that term is
defined in Regulation S of the Securities Act, as amended and is not acquiring
the Shares for the account or benefit of any United States Person. The Investor
is an investor in securities of companies in the development stage and
acknowledges that it is able to fend for itself, and bear the economic risk of
its investment and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
in the Shares hereunder.
4.5 RESTRICTED SECURITIES. The Investor understands that the Shares, when
issued, will be restricted securities under the federal securities laws inasmuch
as they are being acquired from the Company in a transaction not involving a
public offering and that under such laws and applicable regulations such
securities may be resold without registration under the Securities Act only in
certain limited circumstances. In this connection, the Investor represents that
it is familiar with Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.
4.6 LEGENDS. The Shares shall not be sold or transferred unless either (i)
they first shall have been registered under the Securities Act, (ii) they are
sold pursuant to Rule 144 under the Securities Act and, if requested by the
Company's transfer agent, the Company is furnished with an opinion of Xxxxx
Xxxxxxxxxx LLP, or other legal counsel reasonably satisfactory to the Company,
to the effect that such sale or transfer is exempt from the registration
requirements of the Securities Act or (iii) the Company first shall have been
furnished with an opinion of Xxxxx Xxxxxxxxxx LLP, or other legal counsel
reasonably satisfactory to the Company, to the effect that such sale or transfer
is exempt from the registration requirements of the Securities Act. It is
understood that the certificates evidencing the Shares will bear the following
legend until such legend is removed in accordance with Section 8.4:
"These securities have not been registered under the Securities Act of
1933, as amended. They may not be sold, offered for sale, pledged, hypothecated
or otherwise transferred in the absence of a registration statement in effect
with respect to the securities under such Act or, if requested, an opinion of
counsel satisfactory to the Company is obtained to the effect that such
registration is not required."
14
5. CONDITIONS TO CLOSING OF INVESTOR. The Investor's obligation to purchase the
applicable Shares at each Closing is subject to the fulfillment as of such
Closing of the following conditions (unless waived in writing by the Investor):
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct as
of the date of this Agreement and as of such Closing Date as though made on and
as of such Closing Date (except (i) to the extent such representations and
warranties are specifically made as of a particular date, in which case such
representations and warranties shall be true and correct as of such date, and
(ii) where the failure to be true and correct (without regard to any materiality
or Material Adverse Effect qualifications contained therein), individually or in
the aggregate, has not had and could not reasonably be expected to have a
Material Adverse Effect), and the Company shall have delivered to the Investor a
certificate, dated as of the applicable Closing Date, executed by the President
and Chief Executive Officer of the Company, certifying to the fulfillment of the
foregoing.
5.2 COVENANTS. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the applicable Closing
Date shall have been performed or complied with in all material respects, and
the Company shall have delivered to the Investor a certificate, dated as of the
applicable Closing Date, executed by the President and Chief Executive Officer
of the Company, certifying to the fulfillment of the foregoing.
5.3 LEGAL OPINION. The Investor shall have received an opinion from Xxxxxx
Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP (or other legal counsel to the Company
reasonably satisfactory to the Investor) addressed to the Investor and dated as
of the applicable Closing Date, in the form of Exhibit A attached hereto.
5.4 NO MATERIAL ADVERSE EFFECT. There shall not have occurred any event or
events that have had or would, individually or in the aggregate, reasonably be
expected to have, a Material Adverse Effect.
5.5 RESEARCH COLLABORATION AND LICENSE AGREEMENT. On the First Closing
Date, the Company shall have duly executed and delivered to the Investor the
Research Collaboration and License Agreement in the form of Exhibit C attached
hereto and thereafter such agreement shall be in full force and effect.
5.6 MARKET LISTING. On each Closing Date, the Shares to be delivered at
that Closing shall be approved for listing on the NASDAQ National Market.
6. CONDITIONS TO CLOSING OF THE COMPANY. The Company's obligation to sell the
applicable Shares at each Closing is subject to the fulfillment as of such
Closing of the following conditions (unless waived in writing by the Company):
6.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Investor in Section 4 hereof shall be true and correct as
of the date of this Agreement and as of such Closing Date as though made on and
as of such Closing Date (except (i) to the extent such representations and
warranties are specifically made as of a particular date,
15
in which case such representations and warranties shall be true and correct as
of such date, and (ii) where the failure to be true and correct (without regard
to any materiality qualifications contained therein), individually or in the
aggregate, has not had and could not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the ability of
the Investor to consummate the transactions contemplated by this Agreement.
6.2 COVENANTS. All covenants, agreements and conditions contained in this
Agreement to be performed by the Investor on or prior to the applicable Closing
Date shall have been performed or complied with in all material respects.
6.3 RESEARCH COLLABORATION AND LICENSE AGREEMENT. On the First Closing,
NIBRI shall have duly executed and delivered to the Company the Research
Collaboration and License Agreement in the form of Exhibit C attached hereto and
thereafter such agreement shall be in full force and effect.
7. MUTUAL CONDITIONS TO CLOSING. The obligations of each of the Investor and the
Company to consummate the Closings are subject to the fulfillment as of the
applicable Closing Date of the following conditions:
7.1 HSR ACT AND OTHER QUALIFICATIONS. The filings required under the HSR
Act shall have been made and the required waiting period shall have elapsed as
of the First Closing Date and the Second Closing Date, and all other
authorizations, consents, waivers, permits, approvals, qualifications and
registrations to be obtained or effected with any Governmental Authority,
including, without limitation, necessary Blue Sky law permits and qualifications
required by any state, for the offer and sale to the Investor of the applicable
Shares shall have been duly obtained and effective as of the applicable Closing
Date, and in the case of the closing relating to the issuance of the Remaining
Shares, the Company shall have received either the Stockholder Approval or the
Written Interpretation.
7.2 ABSENCE OF LITIGATION. There shall be no injunction, action, suit,
proceeding or investigation pending or currently threatened in writing against
the Company or the Investor which questions the validity of this Agreement or
the Investor Rights Agreement, the right of the Company or the Investor to enter
into this Agreement or the Investor Rights Agreement or to consummate the
transactions contemplated hereby or thereby.
8. ADDITIONAL COVENANTS AND AGREEMENTS.
8.1 UPDATES FROM COMPANY. The Company shall permit the Investor from time
to time, at the Investor's expense, to visit the Company's properties and to
discuss the Company's affairs, finances and accounts with its officers, all at
such reasonable times as may be requested by the Investor; provided, however,
that the Company shall not be obligated pursuant to this Section 8.1 to provide
access to any information which it reasonably considers to be a trade secret or
similar confidential information, the disclosure of which would unfairly
competitively disadvantage the Company.
8.2 HSR FILING. The Investor and the Company shall, to the extent required,
within five business days after the date hereof, make an initial filing of
notification and report form pursuant to the HSR Act, and thereafter make any
other required submissions with respect to this
16
Agreement and the consummation of the transactions contemplated hereby, if
required under the HSR Act. The Investor and the Company shall promptly furnish
each other (or their counsel) all such necessary information and reasonable
assistance as the other may request in connection with its preparation of the
necessary filings or submissions under the HSR Act. Each of the Investor and the
Company shall use its commercially reasonable efforts to take such actions as
may be required to cause the expiration of the notice periods under the HSR Act
as promptly as possible after the execution of this Agreement.
8.3 MARKET LISTING. The Company shall use commercially reasonable efforts
to maintain the listing and trading of the Common Stock on the NASDAQ National
Market. The Company shall use its best efforts to effect the listing of the
Shares on the NASDAQ National Market, including submitting a notice of listing
of additional shares with respect to the Shares to the NASDAQ Stock Market, Inc.
no later than 15 calendar days prior to the First Closing Date.
8.4 SHARE LEGEND REMOVAL. The legend set forth in Section 4.6 hereof shall
be removed from the certificate evidencing the Shares and the Company shall, or
shall cause its transfer agent to, issue, no later than five business days from
receipt of a request from the Investor pursuant to this Section 8.4, a
certificate or certificates evidencing all or a portion of the Shares, as
requested by the Investor, without such legend if: (i) such securities have been
resold under an effective registration statement under the Securities Act, (ii)
such securities have been or will be transferred in compliance with Rule 144
under the Securities Act, (iii) such securities are eligible for resale pursuant
to Rule 144(k) under the Securities Act or (iv) the Investor shall have provided
the Company with an opinion of counsel, reasonably satisfactory to the Company,
stating that such securities may lawfully be transferred without registration
under the Securities Act.
8.5 USE OF PROCEEDS. The Company shall use all payments received from the
Investor pursuant to this Agreement primarily for the purpose of funding
research and development activities, including the activities that are the
subject matter of the Research Collaboration and License Agreement.
8.6 CONSENTS. The Company shall not, prior to the Second Closing, take any
action or enter into any material contract, arrangement, agreement or
understanding that would require the consent, waiver, approval or authorization
of any third party to effect the transactions contemplated by this Agreement and
the Investor Rights Agreement.
8.7 OTHER AGREEMENTS.
(a) Upon the satisfaction or waiver of all the conditions to the First
Closing set forth in Sections 5 and 7, the Investor shall cause NIBRI to execute
and deliver to the Company the Research Collaboration and License Agreement.
(b) Upon the satisfaction or waiver of all the conditions to the First
Closing set forth in Sections 6 and 7, the Company shall execute and deliver to
NIBRI the Research Collaboration and License Agreement.
17
8.8 WRITTEN INTERPRETATION OR STOCKHOLDER APPROVAL. The Company shall
provide to the Investor, at least three (3) days before the Second Closing;
written evidence reasonably satisfactory to the Investor that the Company has
obtained the Written Interpretation or Stockholder Approval, as applicable.
9. TERMINATION.
(a) This Agreement may be terminated at any time prior to the Second
Closing:
(i) by mutual written consent of the Company and the Investor;
(ii) the Investor may terminate this Agreement by giving written
notice to the Company if (i) the First Closing shall not have occurred
on or before March 31, 2006 or (ii) the Second Closing shall not have
occurred within one hundred and twenty (120) days of the First Closing
Date, in each case by reason of the failure of any condition precedent
under Section 5 or 7; or
(iii) the Company may terminate this Agreement by giving written
notice to the Investor if (i) the First Closing shall not have
occurred on or before March 31, 2006 or (ii) the Second Closing shall
not have occurred within one hundred and twenty (120) days of the
First Closing Date, in each case by reason of the failure of any
condition precedent under Section 6 or 7.
(b) In the event that this Agreement is terminated after the First
Closing, the respective obligations of the Company and the Investor to sell and
purchase the Remaining Shares and other deliveries contemplated by Sections
2.2(a), 2.2(b) and 5 at the Second Closing shall become void and be of no
further force or effect with respect to the Second Closing only and the
remaining provisions of this Agreement shall survive such termination and remain
in full force and effect.
10. MISCELLANEOUS.
10.1 SURVIVAL OF WARRANTIES. The representations and warranties of the
Company and the Investor contained in this Agreement (except for those contained
in Section 3.16 and Section 3.21) shall survive the First Closing for three
years. The representations and warranties of the Company set forth in Section
3.16 shall survive until the expiration of the applicable statute of limitations
and those set forth in Section 3.21 shall survive indefinitely.
10.2 REMEDIES. The rights, powers and remedies of the parties under this
Agreement are cumulative and not exclusive of any other right, power or remedy
which such parties may have under any other agreement or law. No single or
partial assertion or exercise of any right, power or remedy of a party hereunder
shall preclude any other or further assertion or exercise thereof.
10.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the
18
respective successors and assigns of the parties, including, without limitation,
successors through merger, consolidation, reorganization, recapitalization, any
similar transaction or otherwise. Neither this Agreement nor any rights or
duties of a party hereto may be assigned by such party, in whole or in part,
without the prior written consent of the other party hereto (which consent may
not be unreasonably withheld), other than, in the case of an assignment, in
whole or in part, by the Investor, to an Affiliate of the Investor as set forth
in Section 1.1(c), in which case consent of the Company shall not be required.
10.4 ENTIRE AGREEMENT. This Agreement and the other writings referred to
herein or delivered pursuant hereto which form a part hereof contain the entire
agreement among the parties with respect to the subject matter hereof and
thereof and supersede all prior and contemporaneous arrangements or
understandings, whether written or oral, with respect thereto.
10.5 GOVERNING LAW AND CONSENT TO JURISDICTION. This Agreement shall be
governed by and construed under the laws of the State of Delaware (without
regard to the conflict of law principles thereof).
10.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.7 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
10.8 NOUNS AND PRONOUNS. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of names and pronouns shall include the plural and
vice-versa.
10.9 NOTICES. Unless otherwise provided, all notices, requests, consents
and other communications hereunder to any party shall be given in writing and
shall be deemed effectively given upon personal delivery to the party to be
notified or five business days after being duly sent by first class registered
or certified mail, or other courier service, postage prepaid, or the following
business day after being telecopied with a confirmation copy by regular mail,
and addressed or telecopied to the party to be notified at the address or
telecopier number indicated for such party, as the case may be, set forth below
or such other address or telecopier number, as the case may be, as may hereafter
be designated in writing by the addressees to the addressor listing all parties:
To the Company:
Alnylam Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Operating Officer
Fax: (000) 000-0000
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With a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
To the Investor:
Novartis Pharma AG
Xxxxxxxxxxxx 00
XX-0000 Xxxxx
Xxxxxxxxxxx
Attention: Xxxxxx X. Xxxxx
Fax: 00 00 000 0000
With a copy (which shall not constitute notice) to:
Novartis Institutes for BioMedical Research, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
With a copy (which shall not constitute notice) to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
10.10 FINDER'S FEE. The Investor agrees to indemnify and to hold harmless
the Company from any liability for any commission or compensation in the nature
of a finder's fee (and the reasonable costs and expenses of defending against
such liability or asserted liability) for which the Investor or any of its
officers, partners, employees, or representatives is responsible. The Company
agrees to indemnify and hold harmless the Investor from any liability for any
commission or compensation in the nature of a finder's fee (and the reasonable
costs and expenses of defending against such liability or asserted liability)
for which the Company or any of its officers, employees or representatives is
responsible.
10.11 EXPENSES. Except as otherwise contemplated herein, each party shall
pay its own fees and expenses with respect to this Agreement.
10.12 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular
20
instance and either retroactively or prospectively), only with the written
consent of the Company and the Investor (other than the waiver of any condition
set forth in Section 5, which may be waived in the sole discretion of the
Investor, and other than the waiver of any condition set forth in Section 6,
which may be waived in the sole discretion of the Company).
10.13 SEVERABILITY. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, in any jurisdiction, such provision shall
be ineffective, as to such jurisdiction, and the balance of the Agreement shall
be interpreted as if such provision were so excluded, without invalidating the
remaining provisions of this Agreement; and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.14 CONFIDENTIALITY AND PUBLICITY. The Company and the Investor will
consult with one another as to the form and substance of any press release
relating to the terms of this Agreement, the Research License and Collaboration
Agreement or the transactions contemplated hereby or thereby prior to issuing
any such press release. Either party may only disclose the terms of the Research
Collaboration and License Agreement if such party reasonably determines, based
on advice from its counsel, that it is required to make such disclosure by
applicable law, regulation or legal process (whether in connection with its
ongoing disclosure obligations, in connection with a corporate activity or
otherwise), including without limitation by the rules or regulations of the SEC
or similar regulatory agency in a country other than the United States or of any
stock exchange or NASDAQ, in which event such party shall provide prior notice
of such intended disclosure to the other party sufficiently in advance to enable
the other party to seek confidential treatment or other protection for such
information unless the disclosing party is prevented by law or regulation from
providing such advance notice and shall disclose only such terms of the Research
Collaboration and License Agreement as such disclosing party reasonably
determines, based on advice from its counsel, are required by applicable law,
regulation or legal process to be disclosed (whether in connection with its
ongoing disclosure obligations, in connection with a corporate activity or
otherwise). In the event that either party determines that it must publicly file
the Research Collaboration and License Agreement with the SEC such party shall
(i) initially file a redacted copy of the Research Collaboration and License
Agreement (the "Redacted Research Collaboration and License Agreement") in the
form of Exhibit D attached hereto, (ii) request, and use commercially reasonable
efforts to obtain, confidential treatment of all terms redacted from such
Redacted Research Collaboration and License Agreement; provided that the
redaction of such terms is permitted by the applicable rules and regulations of
the SEC, (iii) permit the other party to review and approve such initial request
for confidential treatment and any subsequent correspondence with respect
thereto at least two (2) Business Days prior to its submission to the SEC, and
(iv) promptly deliver to the other party any written correspondence received by
it or its representatives from the SEC with respect to such confidential
treatment request and promptly advise the other party of any other material
communications between it or its representatives with SEC with respect to such
confidential treatment request.
10.15 DISCLOSURE SCHEDULE. The Disclosure Schedule shall be arranged in
Subsections corresponding to the numbered Subsections contained in Section 3,
and the disclosure in any Subsection of the Disclosure Schedule shall qualify
the corresponding Subsection in Section 3. The inclusion of any information in
the Disclosure Schedule shall not be deemed to be an
21
admission or acknowledgment, in and of itself, that such information is required
by the terms hereof to be disclosed, is material, has resulted in or would
result in a Material Adverse Effect, or is outside the ordinary course of
business.
10.16 DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
"Affiliate" shall mean, with respect to any Person, any other Person which
directly or indirectly, by itself or through one or more intermediaries,
controls, or is controlled by, or is under common control with, such Person. The
term "control" means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise. Control
will be presumed if one Person owns, either of record or beneficially, at least
50% of the voting stock of any other Person.
"Audited Financial Statements" shall have the meaning set forth in Section
3.14(a).
"Closing Date" shall mean the First Closing Date or the Second Closing
Date, as applicable.
"Closing" shall mean the First Closing or the Second Closing, as
applicable.
"Code" shall mean the U.S. Internal Revenue Code of 1986, as amended.
"Common Stock" shall have the meaning set forth in Section 1.1(a).
"Company" shall have the meaning set forth in the Preamble.
"Company's Public Filings" shall have the meaning set forth in Section
3.2(d).
"Company Rights" shall have the meaning set forth in Section 3.10(a).
"Company SEC Documents" shall have the meaning set forth in Section
3.14(b).
"Disclosure Schedule" shall have the meaning set forth in Section 3.
"Encumbrance(s)" shall mean any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, or restriction of any kind, including, without
limitation, any restriction on the use, voting, transfer, receipt of income or
other exercise of any attributes of ownership.
"Environmental Law" shall have the meaning set forth in Section 3.21(a).
"ERISA" shall have the meaning set forth in Section 3.15.
"Financial Statements" shall have the meaning set forth in Section 3.14(a).
"GAAP" shall have the meaning set forth in Section 3.14(a).
22
"Governmental Authority" shall have the meaning set forth in Section
3.21(c).
"Hazardous Materials" shall have the meaning set forth in Section 3.21(b).
"HSR Act" shall have the meaning set forth in Section 3.7.
"Initial Purchase Price" shall have the meaning set forth in Section
1.1(a)(i).
"Investor" shall have the meaning set forth in the Preamble and Section
1.1(b).
"Investor Rights Agreement" shall mean that certain Investor Rights
Agreement between the Company and the Investor dated as of the date hereof.
"Material Adverse Effect" shall have the meaning set forth in Section 3.1.
"Material IP Contracts" shall have the meaning set forth in Section
3.10(b).
"NIBRI" means Novartis Institutes for BioMedical Research, Inc.
"Novartis" shall have the meaning set forth in the Preamble.
"Obligations" shall have the meaning set forth in Section 3.11(c).
"Person" means any individual, partnership, firm, corporation, association,
trust, unincorporated organization, government or any department or agency
thereof or other entity, as well as any syndicate or group that would be deemed
to be a Person under Section 13(d)(3) of the Securities Exchange Act.
"Preferred Stock" shall have the meaning set forth in Section 3.2(a)(i).
"Property" shall have the meaning set forth in Section 3.21(b).
"Proprietary Rights" shall have the meaning set forth in Section 3.10(a).
"Purchase Price" shall mean the Initial Purchase Price and/or the Remaining
Purchase Price, as applicable.
"Redacted Research Collaboration and License Agreement" shall have the
meaning set forth in Section 10.14.
"Release" shall have the meaning set forth in Section 3.21(b).
"Remaining Purchase Price" shall have the meaning set forth in Section
1.1(a)(ii).
"Remaining Shares" shall have the meaning set forth in Section 1.1(a)(ii).
"Research Collaboration and License Agreement" shall mean that certain
Research Collaboration and License Agreement between the Company and NIBRI to be
dated as of the First Closing Date, the form of which is attached as Exhibit C
hereto.
23
"Restated Certificate" shall have the meaning set forth in Section 3.1.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Second Closing" shall have the meaning set forth in Section 1.1(a)(ii).
"Securities Act" shall have the meaning set forth in Section 3.12.
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Series A Preferred Stock" shall have the meaning set forth in Section
3.2(a)(i).
"Shares" shall mean the Initial Shares and/or the Remaining Shares, as
applicable.
"Share Price" shall have the meaning set forth in Section 1.1(a).
"Shareholder Rights Plan" shall mean the rights agreement between the
Company and Equiserve Trust Company, N.A., as rights agent, dated as of July 13,
2005.
"Stockholder Approval" shall have the meaning set forth in Section 3.1.
"Subsidiary" shall mean any and all corporations, partnerships, joint
ventures, associations and other entities controlled by the Company directly or
indirectly through one or more intermediaries, including, without limitation,
Alnylam U.S., Inc. and Alnylam Europe, AG.
"Written Interpretation" shall have the meaning set forth in Section 3.1.
(Signature Page Follows)
24
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
NOVARTIS PHARMA AG
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Head Operational Treasury
By: /s/ Xxxxxxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxxxxxx Xxxxxxxxx
Title: Head Legal Pharma
General Medicine
ALNYLAM PHARMACEUTICALS, INC.
By: /s/ Xxxx Xxxxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxxxx
Title: President and CEO
