PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 28th day of January, 1997, by and
among Inhale Therapeutic Systems (the "Company"), a corporation organized
under the laws of the State of California, with its principal offices at 0000
Xxxx Xxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx, 00000, and the purchaser whose
name and address is set forth on the signature page hereof (the "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this
Agreement, the Company, and the Purchaser agree as follows:
SECTION 1. AUTHORIZATION OF SALE OF THE SHARES. Subject to the
terms and conditions of this Agreement, the Company has authorized the sale
of up to 1,800,000 shares of the common stock (the "Common Stock"), no par
value per share (the "Shares"), of the Company.
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES. At the
Closing (as defined in Section 3), the Company will sell to the Purchaser,
and the Purchaser will buy from the Company upon the terms and conditions
hereinafter set forth, the number of Shares (at the purchase price) shown
below:
Price Per
Number to Be Share In Aggregate
Purchased Dollars Price
------------ ---------- ---------
The Company proposes to enter into this same form of purchase
agreement with certain other investors (the "Other Purchasers") and expects
to complete sales of the Shares to them. The Purchaser and the Other
Purchasers are hereinafter sometimes collectively referred to as the
"Purchasers," and this Agreement and the agreements executed by the Other
Purchasers are hereinafter sometimes collectively referred to as the
"Agreements." The term "Placement Agent" shall mean Vector Securities
International, Inc.
SECTION 3. DELIVERY OF THE SHARES AT THE CLOSING. The completion
of the purchase and sale of the Shares (the "Closing") shall occur as soon as
practicable following notification by the Securities and Exchange Commission
(the "Commission") to the Company of the Commission's willingness to declare
effective the
registration statement to be filed by the Company pursuant to
Section 7.1 (the "Registration Statement") at a place and time (the "Closing
Date") to be agreed upon by the Company, and the Placement Agent and of which
the Purchasers will be notified by facsimile transmission or otherwise.
At the Closing, the Company shall deliver to the Purchaser one or
more stock certificates registered in the name of the Purchaser, or in such
nominee name(s) as designated by the Purchaser, representing the number of
Shares set forth in Section 2 above. The name(s) in which the stock
certificates are to be registered are set forth in the Stock Certificate
Questionnaire attached hereto as part of Appendix I. The Company's
obligation to complete the purchase and sale of the Shares and deliver such
stock certificate(s) to the Purchaser at the Closing shall be subject to the
following conditions, any one or more of which may be waived by the Company:
(a) receipt by the Company of New York Clearing House funds in the full
amount of the purchase price for the Shares being purchased hereunder; (b)
completion of the purchases and sales under the Agreements with Other
Purchasers; and (c) the accuracy of the representations and warranties made
by the Purchasers and the fulfillment of those undertakings of the Purchasers
to be fulfilled prior to the Closing. The Purchaser's obligation to accept
delivery of such stock certificate(s) and to pay for the Shares evidenced
thereby shall be subject to the following conditions: (a) the Registration
Statement is effective and was first declared effective on or prior to the
60th day after the date such Registration Statement was filed by the Company;
and (b) the accuracy in all material respects of the representations and
warranties made by the Company herein and the fulfillment in all material
respects of those undertakings of the Company to be fulfilled prior to
Closing. The Purchaser's obligations hereunder are expressly not conditioned
on the purchase by any or all of the Other Purchasers of the Shares that they
have agreed to purchase from the Company.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company hereby represents and warrants to, and covenants with, the Purchaser as
follows:
4.1. ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California and has all requisite corporate power and authority to
conduct its business as currently conducted.
4.2. AUTHORIZED CAPITAL STOCK. Except as disclosed in or
contemplated by the Confidential Private Placement Memorandum dated January
27, 1997 prepared by the Company (the "Private Placement Memorandum"), the
Company had authorized and outstanding capital stock as set forth under the
heading "Capitalization" in the Private Placement Memorandum as of the
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date set forth therein; the issued and outstanding shares of the Company's
Common Stock have been duly authorized and validly issued, are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and conform
to the description thereof contained in or incorporated by reference into the
Private Placement Memorandum. All issued and outstanding shares of capital
stock of each subsidiary of the Company have been duly authorized and validly
issued and are fully paid and nonassessable. Except as disclosed in or
contemplated by the Private Placement Memorandum and the financial statements
of the Company, and the related notes thereto, incorporated by reference into
the Private Placement Memorandum, neither the Company nor any subsidiary has
outstanding any options to purchase, or any preemptive rights or other rights
to subscribe for or to purchase, any securities or obligations convertible
into, or any contracts or commitments to issue or sell, shares of its capital
stock or any such options, rights, convertible securities or obligations.
The description of the Company's stock, stock bonus and other stock plans or
arrangements and the options or other rights granted and exercised
thereunder, set forth in the Private Placement Memorandum, or incorporated by
reference therein, accurately and fairly presents the information required to
be shown with respect to such plans, arrangements, options and rights.
4.3. ISSUANCE, SALE AND DELIVERY OF THE SHARES. The Shares have
been duly authorized and, when issued, delivered and paid for in the manner
set forth in this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable, and will conform to the description thereof contained
in the Registration Statement. No preemptive rights or other rights to
subscribe for or purchase exist with respect to the issuance and sale of the
Shares by the Company pursuant to this Agreement. No stockholder of the
Company has any right (which has not been waived or has not expired by reason
of lapse of time following notification of the Company's intent to file the
Registration Statement) to require the Company to register the sale of any
shares owned by such stockholder under the Securities Act of 1933, as
amended, (the "Securities Act") in the Registration Statement. No further
approval or authority of the stockholders or the Board of Directors of the
Company will be required for the issuance and sale of the Shares to be sold
by the Company as contemplated herein.
4.4. DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS.
The Company has full legal right, power and authority to enter into the
Agreements and perform the transactions contemplated hereby. The Agreements
have been duly authorized, executed and delivered by the Company and
constitute valid and binding obligations of the Company in accordance with
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their terms. The making and performance of the Agreements by the Company and
the consummation of the transactions herein contemplated will not violate any
provision of the certificate of incorporation or bylaws, or other
organizational documents, of the Company or any of its subsidiaries, and will
not conflict with, result in the breach or violation of, or constitute,
either by itself or upon notice or the passage of time or both, a default
under any agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of its respective properties may be bound or affected, any statute or any
authorization, judgment, decree, order, rule or regulation of any court or
any regulatory body, administrative agency or other governmental body
applicable to the Company or any of its subsidiaries or any of their
respective properties. No consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other governmental body
is required for the execution and delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement, except for
compliance with the Blue Sky laws applicable to the offering of the Shares.
Upon their execution and delivery, and assuming the valid execution thereof
by the respective Purchasers, the Agreements will constitute valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law) and except as the indemnification agreements of the Company in Section
7.3 hereof may be legally unenforceable.
4.5. ACCOUNTANTS. Ernst & Young LLP, who have expressed their
opinion with respect to the financial statements and schedules to be filed
with the Commission as a part of the Registration Statement and included in
the Registration Statement and the Prospectus which forms a part thereof, are
independent accountants as required by the Securities Act and the rules and
regulations promulgated thereunder (the "Rules and Regulations").
4.6. NO DEFAULTS. Except as to defaults, violations and breaches
which individually or in the aggregate would not be material to the Company,
neither the Company nor any of its subsidiaries is in violation or default of
any provision of its certificate of incorporation or bylaws, or other
organizational documents, or is in breach of or default with respect to any
provision of any agreement, judgment, decree, order, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument to which it
is a party or by which it or any of its properties are bound; and there does
not exist any state of
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fact which constitutes an event of default on the part of the Company or
any such subsidiary as defined in such documents or which, with notice or
lapse of time or both, would constitute such an event of default, except such
defaults which individually or in the aggregate would not be material to the
Company.
4.7. CONTRACTS. The contracts so described in the Private
Placement Memorandum or incorporated by reference therein are in full force
and effect on the date hereof; and neither the Company nor any of its
subsidiaries, nor to the best of the Company's knowledge, any other party is
in breach of or default under any of such contracts.
4.8. NO ACTIONS. Except as disclosed in the Private Placement
Memorandum or incorporated by reference therein, there are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened to which the Company or any of its
subsidiaries is or may be a part or of which property owned or leased by the
Company or any of its subsidiaries is or may be the subject, or related to
environmental or discrimination matters, which actions, suits or proceedings
might, individually or in the aggregate, prevent or adversely affect the
transactions contemplated by this Agreement or result in a material adverse
change in the condition (financial or otherwise), properties, business,
results of operations or prospects of the Company and its subsidiaries; and
no labor disturbance by the employees of the Company or any of its
subsidiaries exists or is imminent which might be expected to affect
adversely such condition, properties, business, results of operations or
prospects. Neither the Company nor any of its subsidiaries is party or
subject to the provisions of any material injunction, judgment, decree or
order of any court, regulatory body administrative agency or other
governmental body.
4.9. PROPERTIES. The Company has good and marketable title to all
the properties and assets reflected as owned in the financial statements
included in the Private Placement Memorandum or incorporated by reference
therein, subject to no lien, mortgage, pledge, charge or encumbrance of any
kind except (i) those, if any, reflected in such financial statements, or
(ii) those which are not material in amount and do not adversely affect the
use made and promised to be made of such property by the Company and its
subsidiaries. The Company or the applicable subsidiary holds its leased
properties under valid and binding leases, with such exceptions as are not
materially significant in relation to the business of the Company. Except as
disclosed in the Private Placement Memorandum or incorporated by reference
therein, the Company owns or leases all such properties as are necessary to
its operations as now conducted or as proposed to be conducted.
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4.10. NO MATERIAL CHANGE. Since September 30, 1996 and except as
described in or specifically contemplated by the Private Placement
Memorandum, (i) the Company and its subsidiaries have not incurred any
material liabilities or obligations, indirect, or contingent, or entered into
any material verbal or written agreement or other transaction which is not in
the ordinary course of business or which could result in a material reduction
in the future earnings of the Company and its subsidiaries; (ii) the Company
and its subsidiaries have not sustained any material loss or interference
with their respective businesses or properties from fire, flood, windstorm,
accident or other calamity, whether or not covered by insurance; (iii) the
Company has not paid or declared any dividends or other distributions with
respect to its capital stock and the Company and its subsidiaries are not in
default in the payment of principal or interest on any outstanding debt
obligations; (iv) there has not been any change in the capital stock other
than the sale of the Shares hereunder, shares issued pursuant to employee
equity incentive plans or purchase plans approved by the Company's Board of
Directors, and 272,456 shares issued to Pfizer Inc., or indebtedness material
to the Company and its subsidiaries (other than in the ordinary course of
business); and (v) there has not been any material adverse change in the
condition (financial or otherwise), business, properties, results of
operations or prospects of the Company and its subsidiaries.
4.11. INTELLECTUAL PROPERTY. Except as disclosed in or
specifically contemplated by the Private Placement Memorandum or incorporated
by reference therein, the Company has sufficient trademarks, trade names,
patent rights, copyrights, licenses, and governmental authorizations to
conduct its businesses as now conducted; and the Company has no knowledge of
any material infringement by it of trademark, trade name rights, patent
rights, copyrights, licenses, trade secrets or other similar rights of
others, and no claim has been made against the Company regarding trademark,
trade name, patent, copyright, license, trade secrecy or other infringement
which could have a material adverse effect on the condition (financial or
otherwise), business, results of operations or prospects of the Company.
4.12. COMPLIANCE. The Company has not been advised, and has no
reason to believe, that either it or any of its subsidiaries is not
conducting business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business,
including, without limitation, all applicable local, state and federal
environmental laws and regulations; except where failure to be so in
compliance would not materially adversely affect the condition (financial or
otherwise), business, results of operations or prospects of the Company and
its subsidiaries.
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4.13. TAXES. The Company and its subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns and
have paid or accrued all taxes shown as due thereon, and the Company has no
knowledge of tax deficiency which has been or might be asserted or threatened
against the Company or its subsidiaries which could materially and adversely
affect the business, operations or properties of the Company and its
subsidiaries.
4.14. TRANSFER TAXES. On the Closing Date, all stock transfer or
other taxes (other than income taxes) which are required to be paid in
connection with the sale and transfer of the Shares to be sold to the
Purchaser hereunder will be, or will have been, fully paid or provided for by
the Company and all laws imposing such taxes will be or will have been fully
complied with.
4.15. INVESTMENT COMPANY. The Company is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
4.16. OFFERING MATERIALS. The Company has not distributed and
will not distribute prior to the Closing Date any offering material in
connection with the offering and sale of the Shares other than the Private
Placement Memorandum.
4.17. INSURANCE. Each of the Company and its subsidiaries
maintains insurance of the types and in the amounts generally deemed adequate
for its business, including, but not limited to, insurance covering all real
and personal property owned or leased by the Company and its subsidiaries
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and
effect.
4.18. CONTRIBUTIONS. Neither the Company nor any of its
subsidiaries has, directly or indirectly, at any time during the last five
years (i) made any unlawful contribution to any candidate for public office,
or failed to disclose fully any contribution in violation of law, or (ii)
made any payment to any federal or state governmental officer or official, or
other person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof.
4.19. ADDITIONAL INFORMATION. The Company represents and
warrants that the information contained in the following documents, which the
Placement Agent have furnished to the Purchaser, or will furnish prior to the
Closing, is or will be true and correct in all material respects as of their
respective final dates:
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(a) the Company's 1996 Annual Report to Shareholders;
(b) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 (without exhibits);
(c) Notice to Shareholders and Proxy Statement for the Company's
Annual Meeting of Shareholders held on May 15, 1996;
(d) the Confidential Placement Memorandum dated January 27, 1997
containing certain summary information relating to the sale by
the Company of the Shares pursuant to the Agreements,
including all addenda and exhibits thereto (other than the
Appendices) (the "Private Placement Memorandum");
(e) all other documents, if any, filed by the Company
with the Securities and Exchange Commission since December 31,
1995 pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
4.20. LEGAL OPINION. Prior to the Closing, Xxxxxx Godward LLP,
counsel to the Company, will deliver its legal opinion to the Placement Agent
reasonably satisfactory to the Placement Agent and counsel to the Placement
Agent. Such opinion shall also state that each of the Purchasers may rely
thereon as though it were addressed directly to such Purchaser.
4.21. CERTIFICATE. A certificate of the Company executed by the
Chairman of the Board or President and the chief financial or accounting
officer of the Company, dated the Closing Date in form and substance
satisfaction to the Purchasers to the effect that the representations and
warranties of the Company set forth in this Section 4 are true and correct as
of the date of this Agreement and as of the Closing Date, and the Company has
complied with all the agreements and satisfied all the conditions on its part
to be performed or satisfied on or prior to such Closing Date.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
PURCHASER. (a) The Purchaser represents and warrants to, and covenants with,
the Company that: (i) the Purchaser, taking into account the personnel and
resources it can practically bring to bear on the purchase of the Shares
contemplated hereby, is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to investments in
shares representing an investment decision like that involved in the purchase
of the Shares, including investments in securities issued by the Company, and
has requested, received, reviewed and considered all information it deems
relevant in making an
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informed decision to purchase the Shares; (ii) the Purchaser is acquiring the
number of Shares set forth in Section 2 above in the ordinary course of its
business and for its own account for investment (as defined for purposes of
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976 and the regulations
thereunder) only and with no present intention of distributing any of such
Shares or any arrangement or understanding with any other persons regarding
the distribution of such Shares; (iii) the Purchaser will not, directly or
indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of
the Shares except in compliance with the Act, and the Rules and Regulations;
(iv) the Purchaser has completed or caused to be completed the Registration
Statement Questionnaire and the Stock Certificate Questionnaire, both
attached hereto as Appendix I, for use in preparation of the Registration
Statement and the answers thereto are true and correct to the best knowledge
of the Purchaser as of the date hereof and will be true and correct as of the
effective date of the Registration Statement; (v) the Purchaser has, in
connection with its decision to purchase the number of Shares set forth in
Section 2 above, relied solely upon the Private Placement Memorandum and the
documents included therein and the representations and warranties of the
Company contained herein; and (vi) the Purchaser is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the
Securities Act.
(b) The Purchaser hereby covenants with the Company not to make
any sale of the Shares without effectively causing the prospectus delivery
requirement under the Securities Act to be satisfied, and the Purchaser
acknowledges and agrees that such Shares are not transferable on the books of
the Company unless the certificate submitted to the transfer agent evidencing
the Shares is accompanied by a separate officer's certificate: (i) in the
form of Appendix II 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 the Registration Statement,
the Securities Act and the Rules and Regulations and any applicable state
securities or blue sky laws and (B) the requirement of delivering a current
prospectus has been satisfied. The Purchaser acknowledges that there may
occasionally be times when the Company must suspend the use of the prospectus
forming a part of the Registration Statement until such time as an amendment
to the Registration Statement has been filed by the Company and declared
effective by the Commission, or until such time as the Company has filed an
appropriate report with the Commission pursuant to the Exchange Act. The
Purchaser hereby covenants that it will not sell any Shares pursuant to said
prospectus during the period commencing at the time at which the Company
gives the Purchaser
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notice of the suspension of the use of said prospectus and ending at the time
the Company gives the Purchaser notice that the Purchaser may thereafter
effect sales pursuant to said prospectus. The Purchaser further covenants to
notify the Company promptly of the sale of all of its Shares.
(c) The Purchaser further represents and warrants to, and
covenants with, the Company that (i) the Purchaser has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement, and (ii)
upon the execution and delivery of this Agreement, this Agreement shall
constitute a valid and binding obligation of the Purchaser enforceable in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law) and except as the indemnification agreements of the Purchaser in Section
7.3 hereof may be legally unenforceable.
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. Notwithstanding any investigation made by any party to this
Agreement or by the Placement Agent, all covenants, agreements,
representations and warranties made by the Company and the Purchaser herein
and in the certificates for the Shares delivered pursuant hereto shall
survive the execution of this Agreement, the delivery to the Purchaser of the
Shares being purchased and the payment therefor.
SECTION 7. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE
SECURITIES ACT.
7.1. REGISTRATION PROCEDURES AND EXPENSES. The Company shall:
(a) as soon as practicable, prepare and file
with the Commission the Registration Statement on Form
S-3 relating to the sale of the Shares by the Purchaser
from time to time through the automated quotation system
of The Nasdaq Stock Market or the facilities of any
national securities exchange on which the Company's
common stock is then traded or in privately-negotiated
transactions;
(b) use its reasonable efforts, subject to
receipt of necessary information from the Purchasers, to
cause the Commission to notify the Company of the
Commission's willingness to declare the Registration
Statement effective within 60 days after the Registration
Statement is filed by the Company;
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(c) prepare and file with the Commission such
amendments and supplements to the Registration Statement
and the prospectus used in connection therewith as may be
necessary to keep the Registration Statement effective
until the date on which the Shares may be resold by the
Purchasers without registration by reason of Rule 144(k)
under the Securities Act or any other rule of similar
effect;
(d) furnish to the Purchaser with respect to
the Shares registered under the Registration Statement
(and to each underwriter, if any, of such Shares) such
reasonable number of copies of prospectuses and such
other documents as the Purchaser may reasonably request,
in order to facilitate the public sale or other
disposition of all or any of the Shares by the Purchaser,
PROVIDED, HOWEVER, that the obligation of the Company to
deliver copies of prospectuses to the Purchaser shall be
subject to the receipt by the Company of reasonable
assurances from the Purchaser that the Purchaser will
comply with the applicable provisions of the Securities
Act and of such other securities or blue sky laws as may
be applicable in connection with any use of such
prospectuses;
(e) file documents required of the Company
for normal blue sky clearance in states specified in
writing by the Purchaser, PROVIDED, HOWEVER, that the
Company shall not be required to qualify to do business
or consent to service of process in any jurisdiction in
which it is not now so qualified or has not so consented;
and
(f) bear all expenses in connection with the
procedures in paragraphs (a) through (e) of this Section
7.1 and the registration of the Shares pursuant to the
Registration Statement, other than fees and expenses, if
any, of counsel or other advisers to the Purchaser or the
Other Purchasers or underwriting discounts, brokerage
fees and commissions incurred by the Purchaser or the
Other Purchasers, if any.
7.2. TRANSFER OF SHARES AFTER REGISTRATION. The Purchaser agrees
that it will not effect any disposition of the Shares or its right to
purchase the Shares that would constitute a sale within the meaning of the
Securities Act except as contemplated in the Registration Statement referred
to in Section 7.1 and that it will promptly notify the Company of any changes
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in the information set forth in the Registration Statement regarding the
Purchaser or its Plan of Distribution.
7.3. INDEMNIFICATION. For the purpose of this Section 7.3:
(i) the term "Purchaser/Affiliate" shall include the Purchaser
and any affiliate of such Purchaser;
(ii) the term "Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in or
relating to the Registration Statement referred to in
Section 7.1.
(a) The Company agrees to indemnify and hold harmless each of the
Purchasers and each person, if any, who controls any Purchaser within the
meaning of the Securities Act, against any losses, claims, damages,
liabilities or expenses, joint or several, to which such Purchasers or such
controlling person may become subject, under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation, or at common
law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company), insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, including the prospectus, financial statements and
schedules, and all other documents filed as a part thereof, as amended at the
time of effectiveness of the Registration Statement, including any
information deemed to be a part thereof as of the time of effectiveness
pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434, of the Rules
and Regulations, or the prospectus, in the form first filed with the
Commission pursuant to Rule 424(b) of the Regulations, or filed as part of
the Registration Statement at the time of effectiveness if no Rule 424(b)
filing is required (the "Prospectus"), or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state in any of them a material fact required to be stated therein or
necessary to make the statements in any of them not misleading, or arise out
of or are based in whole or in part on any inaccuracy in the representations
and warranties of the Company contained in this Agreement, or any failure of
the Company to perform its obligations hereunder or under law, and will
reimburse each Purchaser and each such controlling person for any legal and
other expenses as such expenses are reasonably incurred by such Purchaser or
such controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action; PROVIDED, HOWEVER, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage,
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liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, the Prospectus or any amendment or supplement thereto
in reliance upon and in conformity with written information furnished to the
Company (i) by or on behalf of the Purchaser expressly for use therein or
(ii) the failure of such Purchaser to comply with the covenants and
agreements contained in Sections 5(b) or 7.2 hereof respecting sale of the
Shares, the inaccuracy of any representations made by such Purchaser herein
or any statement or omission in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to the Purchaser prior to the
pertinent sale or sales by the Purchaser.
In addition to its other obligations under this paragraph (a), the
Company agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based
upon any statement or omission, or any alleged statement or omission, or any
inaccuracy in the representations and warranties of the Company in this
Agreement or failure to perform its obligations in this Agreement, all as
described in this paragraph (a), it will reimburse each Purchaser on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Company's obligation, to reimburse each Purchaser for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, each Purchaser shall
promptly return it to the Company together with interest, compounded daily,
determined on the basis of the Prime Rate (or other commercial lending rate
for borrowers of the highest credit standing) announced from time to time by
Bank of America National Trust and Savings Association, San Francisco,
California (the "Prime Rate"). Any such interim reimbursement payments which
are not made to a Purchaser within 30 days of a request for reimbursement
shall bear interest at the Prime Rate from the date of such request. This
indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(b) Each Purchaser will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company
within the meaning of the Securities Act, against any losses, claims,
damages, liabilities or expenses to which the Company, each of its directors,
each of its officers who signed the Registration Statement or controlling
person may become subject, under the Securities Act, the Exchange Act, or any
other federal or state statutory law or regulation, or at
-13-
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Purchaser) insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon any failure to
comply with the covenants and agreements contained in Sections 5(b) or 7.2
hereof respecting the sale of the Shares, the inaccuracy of any
representation made by such Purchaser herein or any untrue or alleged untrue
statement of any material fact contained in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Purchaser
expressly for use therein, and will reimburse the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person for any legal and other expense reasonably incurred by the
Company, each of its directors, each of its officers who signed the
Registration Statement or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action. In addition to its other
obligations under this paragraph (b), each Purchaser severally agrees that,
as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
failure to comply, statement or omission, or any alleged failure to comply,
statement or omission, described in this paragraph (b) which relates to
written information furnished to the Company by or on behalf of any
Purchaser, it will reimburse the Company (and, to the extent applicable, each
officer, director or controlling person) on a quarterly basis for all
reasonable legal or other expenses incurred in connection with investigating
or defending any such claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the Purchaser's obligations to reimburse the
Company (and, to the extent applicable, each officer, director or controlling
person) for such expenses and the possibility that such payments might later
be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, the Company (and, to the extent applicable, each officer, director
or controlling person) shall promptly return it to such Purchaser together
with interest, compounded daily, determined on the basis of the Prime Rate.
Any such interim reimbursement payments which are not made to the Company
within 30 days of a request for reimbursement shall bear interest
-14-
at the Prime Rate from the date of such request. This indemnity agreement
will be in addition to any liability which such Purchaser may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
7.3 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 7.3 notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have
to any indemnified party for contribution or otherwise than under the
indemnity agreement contained in this Section 7.3 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it may wish,
jointly with all other indemnifying parties similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified
party; provided, however, if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be a conflict between the
positions of the indemnifying party and the indemnified party in conducting
the defense of any such action or that there may be legal defenses available
to it and/or other indemnified parties which are different from or additional
to those available to the indemnifying party, the indemnified party or
parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf
of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 7.3 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the preceding
sentence (it being understood, however, that the indemnifying party shall not
be liable for the expenses of more than one separate counsel, approved by
such indemnifying party in the case of paragraph (a), representing the
indemnified parties who are parties to such action) or (ii) the indemnified
party shall not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.
-15-
(d) If the indemnification provided for in this Section 7.3 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a), (b) or (c) of this Section 7.3 in respect to any losses, claims,
damages, liabilities or expenses referred to herein, then each applicable
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of any losses, claims, damages, liabilities or
expenses referred to herein (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Purchaser from
the placement of Common Stock or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but the relative fault of the Company and the Purchaser in
connection with the statements or omissions or inaccuracies in the
representations and warranties in this Agreement which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The respective relative benefits received
by the Company on the one hand and each Purchaser on the other shall be
deemed to be in the same proportion as the amount paid by such Purchaser to
the Company pursuant to this Agreement for the Shares purchased by such
Purchaser that were sold pursuant to the Registration Statement bears to the
difference (the "Difference") between the amount such Purchaser paid for the
Shares that were sold pursuant to the Registration Statement and the amount
received by such Purchaser from such sale. The relative fault of such
Selling Shareholders and each Purchaser shall be determined by reference to,
among other things, whether the untrue or alleged statement of a material
fact or the omission or alleged omission to state a material fact or the
inaccurate or the alleged inaccurate representation and/or warranty relates
to information supplied by the Company or by such Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The amount paid or payable by a party
as a result of the losses, claims, damages, liabilities and expenses referred
to above shall be deemed to include, subject to the limitations set forth in
paragraph (c) of this Section 7.3 any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in paragraph (c) of
this Section 7.3 with respect to notice of commencement of any action shall
apply if a claim for contribution is to be made under this paragraph (d);
PROVIDED, HOWEVER, that no additional notice shall be required with respect
to any action for which notice has been give under paragraph (c) for purposes
of indemnification. The Company and each Purchaser agree that it would not
be just and equitable if contribution pursuant to this Section 7.3 were
determined solely by pro rata allocation (even if the Purchaser were treated
as one entity for such purpose) or by any other method of allocation which
does not
-16-
take account of the equitable considerations referred to in this paragraph.
Notwithstanding the provisions of this Section 7.3, no Purchaser shall be
required to contribute any amount in excess of the amount by which the
Difference exceeds the amount of any damages that such Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Purchasers' obligations to contribute
pursuant to this Section 7.3 are several and not joint.
(e) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in paragraphs
(a) and (b) of this Section 7.3, including the amounts of any requested
reimbursement payments and the method of determining such amounts, shall be
settled by arbitration conducted under the provisions of the Constitution and
Rules of the Board of Governors of The New York Stock Exchange, Inc. Any
such arbitration must be commenced by service of a written demand for
arbitration or a written notice of intention to arbitrate, therein electing
the arbitration tribunal. In the event the party demanding arbitration does
not make such designation of any arbitration tribunal in such demand or
notice, then the party responding to said demand or notice is authorized to
do so. Such an arbitration would be limited to the operation of the interim
reimbursement provisions contained in paragraphs (a) and (b) of this Section
7.3 and would not resolve the ultimate propriety or enforceability of the
obligation to reimburse expenses which is created by the provisions of such
paragraphs (a) and (b).
7.4. TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions
precedent imposed by Section 5 or this Section 7 upon the transferability of
the Shares shall cease and terminate as to any particular number of the
Shares when such Shares shall have been effectively registered under the
Securities Act and sold or otherwise disposed of in accordance with the
intended method of disposition set forth in the Registration Statement
covering such Shares or at such time as an opinion of counsel satisfactory to
the Company shall have been rendered to the effect that such conditions are
not necessary in order to comply with the Securities Act.
7.5. INFORMATION AVAILABLE. So long as the Registration Statement
is effective covering the resale of Shares owned by the Purchaser, the
Company will furnish to the Purchaser:
(a) as soon as practicable after available
(but in the case of the Company's Annual Report to
Shareholders, within 120 days after the end of each
fiscal year of the Company), one copy of (i)
-17-
its Annual Report to Shareholders (which Annual Report shall
contain financial statements audited in accordance with
generally accepted accounting principles by a national firm of
certified public accountants), (ii) if not included in
substance in the Annual Report to Shareholders, its
Annual Report on Form 10-K, (iii) if not included in
substance in its Quarterly Reports to Shareholders, its
quarterly reports on Form 10-Q, and (iv) a full copy of
the particular Registration Statement covering the Shares
(the foregoing, in each case, excluding exhibits);
(b) upon the reasonable request of the Purchaser, a
reasonable number of copies of the prospectuses to supply
to any other party requiring such prospectuses;
and the Company, upon the reasonable request of the Purchaser, will meet with
the Purchaser or a representative thereof at the Company's headquarters to
discuss all information relevant for disclosure in the Registration Statement
covering the Shares subject to appropriate confidentiality limitations.
SECTION 8. BROKER'S FEE. The Purchaser acknowledges that the
Company intends to pay to the Placement Agent a fee in respect of the sale of
the Shares to the Purchaser. Each of the parties hereto hereby represents
that, on the basis of any actions and agreements by it, there are no other
brokers or finders entitled to compensation in connection with the sale of
the Shares to the Purchaser.
SECTION 9. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, or nationally recognized overnight express
courier postage prepaid, and shall be deemed given when so mailed and shall
be delivered as addressed as follows:
(a) if to the Company, to:
Inhale Therapeutic Systems
0000 Xxxx Xxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: President
-18-
with a copy so mailed to:
Xxxxxx Godward LLP
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx, Esq.
or to such other person at such other place as the Company shall
designate to the Purchaser in writing;
(b) if to the Purchaser, at its address as
set forth at the end of this Agreement, or at such other
address or addresses as may have been furnished to the
Company in writing; and
SECTION 10. CHANGES. This Agreement may not be modified or
amended except pursuant to an instrument in writing signed by the Company and
the Purchaser.
SECTION 11. HEADINGS. The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.
SECTION 12. SEVERABILITY. In case any provision contained in
this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
SECTION 13. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York and the
federal law of the United States of America.
SECTION 14. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument, and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties.
-19-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized representatives as of the day and
year first above written.
INHALE THERAPEUTIC SYSTEMS
By_________________________________
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:
_________________________________
Address:___________________________
Telephone:_________________________
Telecopier:________________________
-20-
SUMMARY INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire
Purchase Agreement which follows)
A. Complete the following items on BOTH Purchase Agreements:
1. Page 20 - Signature:
(i) Name of Purchaser (Individual or Institution)
(ii) Name of Individual representing Purchaser (if an Institution)
(iii) Title of Individual representing Purchaser (if an Institution)
(iv) Signature of Individual Purchaser or Individual representing
Purchaser
2. Appendix I - Stock Certificate Questionnaire:
Provide the information requested by the Stock Certificate
Questionnaire.
Appendix I - Registration Statement Questionnaire:
Provide the information requested by the Registration Statement
Questionnaire.
3. Return BOTH properly completed and signed Purchase Agreements
including the properly completed Appendix I to:
Vector Securities International, Inc.
Xxxxx 000
0000 Xxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx
B. Instructions regarding the transfer of funds for the purchase of Shares
will be sent by facsimile to the Purchaser by the Placement Agents at a
later date.
C. Upon the resale of the Shares by the Purchasers after the Registration
Statement covering the Shares is effective, as described in the Purchase
Agreement, the Purchaser:
(i) must deliver a current prospectus of the Company to the buyer
(prospectuses must be obtained from the Company at the
Purchaser's request); and
(ii) must send a letter in the form of Appendix II to the Company so
that the Shares may be properly transferred.
Appendix I
(one of two)
INHALE THERAPEUTIC SYSTEMS
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares are to be registered in (this is the name
that will appear on your stock certificate(s)). You may use a nominee name
if appropriate: _______________________
2. The relationship between the Purchaser of the Shares and the Registered
Holder listed in response to item 1 above: ______________________
3. The mailing address of the Registered Holder listed in
response to item 1 above: ______________________
______________________
______________________
______________________
4. The Social Security Number or Tax Identification Number of the Registered
Holder listed in response to item 1 above: ______________________
Appendix I
(two of two)
INHALE THERAPEUTIC SYSTEMS
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement,
please provide us with the following information:
1. Pursuant to the "Selling Shareholder" section of the
Registration Statement, please state your or your organization's name exactly
as it should appear in the Registration Statement:
2. Please provide the number of shares that you or your
organization will own immediately after Closing, including those Shares
purchased by you or your organization pursuant to this Purchase Agreement and
those shares purchased by you or your organization through other
transactions:
3. Have you or your organization had any position, office or
other material relationship within the past three years with the Company or
its affiliates other than as disclosed in the Prospectus included in the
Registration Statement?
_____ Yes _____ No
If yes, please indicate the nature of any such relationships below:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
APPENDIX II
Attention:
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
The undersigned, [an officer of, or other person duly author-
ized by] _____________________________________________________________
[fill in official name of individual or institution]
hereby certifies that he/she [said institution] is the Purchaser of
the shares evidenced by the attached certificate, and as such,
sold such shares on____________________in accordance with
[date]
Registration Statement number ________________________________________
[fill in the number of or otherwise
________________________________ and the requirement of delivering a
identify Registration Statement]
current prospectus by the Company has been complied with in connection with such
sale.
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 repre-
senting Purchaser: ______________________
