SECURITIES PURCHASE AGREEMENT
Exhibit
5
This
SECURITIES PURCHASE AGREEMENT (this “Agreement”),
dated
as of October 17, 2005 is made by and among Sonus Pharmaceuticals, Inc.,
a
Delaware corporation, with headquarters located at 00000 00xx Xxxxxx X.X.,
Xxxxxxx, Xxxxxxxxxx 00000 (the “Company”),
and
Schering AG, a German corporation (“Schering
AG”),
and
Schering Berlin Venture Corporation, a Delaware corporation (“SBVC”,
and
collectively with Schering AG, the “Investor”).
RECITALS:
A. The
Company and Investor are executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by Section 4(2)
of the
Securities Act and Rule 506 under Regulation D.
B. The
Investor desires, upon the terms and conditions stated in this Agreement,
to
purchase 3,900,000 shares of the Company’s Common Stock (the “Common
Shares”)
and a
warrant in the form of Exhibit
A
hereto,
to purchase 975,000 shares of the Company’s Common Stock (the “Warrant”
and
collectively with the Common Shares, the “Securities”)
for an
aggregate purchase price of Fifteen Million Seven Hundred Ninety Nine Thousand
Eight Hundred Seventy-Five Dollars ($15,799,875). The purchase price per
share
of the Common Shares is $4.02, which is equal to the per share closing sale
price as reported on Nasdaq for the trading day immediately preceding the
date
of this Agreement, or, if this Agreement is entered into after 4:00 p.m.
Eastern
Standard Time, the day of this Agreement. The purchase price for the Warrant
is
$.125 multiplied by the number of shares of Common Stock exercisable under
the
Warrant (the “Warrant
Shares”).
C. Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement under which the
Company
has agreed to provide certain registration rights under the Securities Act,
the
rules and regulations promulgated thereunder and applicable state securities
laws.
D. The
capitalized terms used herein and not otherwise defined have the meanings
given
them in Article IX hereof.
In
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Company and Investor hereby agrees as
follows:
ARTICLE
I
PURCHASE
AND SALE OF SECURITIES
1.1 Purchase
and Sale of Securities.
On the
Closing Date, subject to the terms of this Agreement and the satisfaction
or
waiver of the conditions set forth in Articles VI and VII hereof, the Company
will issue and sell to (A) SBVC, and SBVC will purchase directly from the
Company, 3,900,000 Common Shares, to be registered in the name of SBVC, and
(B) Schering AG, and Schering AG will purchase directly from the Company,
the Warrant, to be registered in the name of Schering AG.
1.2 Payment.
At the
Closing, Investor will pay the purchase price for the Securities, by wire
transfer of immediately available funds in accordance with the wire instructions
set forth on
1
Exhibit
B
hereto.
The Company shall deliver to Investor a certificate representing the Common
Shares and a certificate representing the Warrant so purchased by Investor
on
the Closing Date against delivery of the purchase price as described
above.
1.3 Closing
Date.
Subject
to the satisfaction or waiver of the conditions set forth in Articles VI
and VII
hereof, the Closing will take place at 8 a.m. Pacific Standard Time on
October 17, 2005, or at such other date or time agreed upon by the parties
to this Agreement (the “Closing
Date”).
The
Closing will be held at the offices of Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx or at
such other place as the parties agree.
ARTICLE
II
INVESTOR’S
REPRESENTATIONS AND WARRANTIES
Investor
represents and warrants to the Company that:
2.1 Investment
Purpose.
Investor is purchasing Securities for its own account and not with a present
view toward the public sale or distribution thereof, except pursuant to sales
registered or exempted from registration under the Securities Act, provided,
however, that by making the representation herein, the Investor does not
agree
to hold any of the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance
with
or pursuant to a registration statement or an exemption from registration
under
the Securities Act, subject to the restrictions on transfer set forth in
the
Registration Rights Agreement.
2.2 Accredited
Investor.
Investor is an “accredited investor” as such term is defined in Regulation D
promulgated under the Securities Act.
2.3 Reliance
on Exemptions.
Investor understands that the Securities are being offered and sold to it
in
reliance upon specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying
upon
the truth and accuracy of, and Investor’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of Investor set
forth
herein in order to determine the availability of such exemptions and the
eligibility of Investor to acquire the Securities.
2.4 Information.
Investor has received and read the SEC Documents. Investor and its advisors,
if
any, have been furnished with all materials relating to the business, finances
and operations of the Company, and materials relating to the offer and sale
of
the Securities, that have been requested by Investor or its advisors, if
any.
Investor and its advisors, if any, have been afforded the opportunity to
ask
questions of the Company. Neither such inquiries nor any other due diligence
investigation conducted by Investor or any of its advisors or representatives
modify, amend or affect Investor’s right to rely on the Company’s
representations and warranties contained in Article III below. Investor
acknowledges and understands that its investment in the Securities involves
a
significant degree of risk, including the risks reflected in the SEC Documents.
2.5 Governmental
Review.
Investor understands that no United States federal or state agency or any
other
government or governmental agency has passed upon or made any recommendation
or
endorsement of the Securities or an investment therein.
2.6 Transfer
or Resale.
Investor understands that:
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(a) except
as
provided in the Registration Rights Agreement, the Securities have not been
and
are not being registered under the Securities Act or any applicable state
securities laws and, consequently, Investor will not be afforded the protection
of Section 11 of the Securities Act, and Investor may have to bear the risk
of
owning the Securities for an indefinite period of time because the Securities
may not be transferred unless (i) the resale of the Securities is registered
pursuant to an effective registration statement under the Securities Act;
(ii)
Investor has delivered to the Company an opinion of counsel (in form, substance
and scope customary for opinions of counsel in comparable transactions) to
the
effect that the Securities to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration; (iii) the Securities are
sold
or transferred pursuant to Rule 144; or (iv) the Securities are sold or
transferred to an affiliate (as defined in Rule 144) of Investor;
(b) any
sale
of the Securities made in reliance on Rule 144 may be made only in accordance
with the terms of Rule 144 and, if Rule 144 is not applicable, any resale
of the
Securities under circumstances in which the seller (or the person through
whom
the sale is made) may be deemed to be an underwriter (as that term is defined
in
the Securities Act) may require compliance with some other exemption under
the
Securities Act or the rules and regulations of the SEC thereunder; and
(c) except
as
set forth in the Registration Rights Agreement, neither the Company nor any
other person is under any obligation to register the Securities under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
2.7 Legends.
Investor understands that until (a) the Securities may be sold by Investor
under
Rule 144(k) or (b) such time as the resale of the Securities has been registered
under the Securities Act as contemplated by the Registration Rights Agreement,
the certificates representing the Securities will bear a restrictive legend
in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for such Securities):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF
THE
UNITED STATES. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN
THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT
TO
AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE
LAWS.
The
legend set forth above will be removed and the Company will issue a certificate
without the legend to the holder of any certificate upon which it is stamped,
in
accordance with the terms of Article V hereof.
2.8 Authorization;
Enforcement.
This
Agreement, the Registration Rights Agreement and the Warrant have been duly
and
validly authorized, executed and delivered on behalf of Investor and are
valid
and binding agreements of Investor enforceable in accordance with their terms,
subject to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and
the
application of general principles of equity.
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2.9 Residency.
Investor is a resident of (or, if an entity, has its principal place of business
in) the jurisdiction set forth immediately below Investor’s name on the
signature page hereto.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to Investor that:
3.1 Organization
and Qualification.
The
Company is duly incorporated, validly existing and in good standing under
the
laws of the jurisdiction in which it is incorporated, with full power and
authority (corporate and other) to own, lease, use and operate its properties
and to carry on its business as and where now owned, leased, used, operated
and
conducted. The Company is duly qualified to do business and is in good standing
in every jurisdiction in which the nature of the business conducted by it
makes
such qualification necessary, except where the failure to be so qualified
or in
good standing would not have a Material Adverse Effect.
3.2 Authorization;
Enforcement.
(a) The
Company has all requisite corporate power and authority to enter into and
to
perform its obligations under this Agreement, the Registration Rights Agreement
and the Warrant, to consummate the transactions contemplated hereby and thereby
and to issue the Securities in accordance with the terms hereof and thereof;
(b)
the execution, delivery and performance of this Agreement, the Registration
Rights Agreement and the Warrant by the Company and the consummation by it
of
the transactions contemplated hereby and thereby (including without limitation
the issuance of the Securities) have been duly authorized by the Company’s Board
of Directors and no further consent or authorization of the Company, its
Board
or Directors, or its shareholders is required; (c) this Agreement, the
Registration Rights Agreement and the Warrant have been duly executed by
the
Company; and (d) each of this Agreement, the Registration Rights Agreement
and
the Warrant constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to
the
effect of any applicable bankruptcy, insolvency, reorganization, or moratorium
or similar laws affecting the rights of creditors generally and the application
of general principles of equity.
3.3 Capitalization.
As of
the date hereof, the authorized capital stock of the Company consists of
(a)
75,000,000 shares of Common Stock, par value $.001 per share, of which
26,301,142 shares are issued and outstanding, 2,916,783 shares are reserved
for
issuance upon exercise of stock options outstanding under the Company’s employee
and director stock option plans, 1,341,677 shares are reserved for grants
of
rights to purchase under the Company’s employee and director stock option plans,
39,650 shares are reserved for issuance pursuant to the Company’s employee stock
purchase plan and 401(k) plan and 3,929,052 shares are reserved for issuance
under warrants issued by the Company on June 15, 2001, January 18, 2002,
July
28, 2003, and August 15, 2005, and (b) 5,000,000 shares of preferred stock,
par
value $.001 per share, 500,000 of which shares are designated Series A Junior
Participating Preferred Stock, par value $.001 per share, none of which is
issued and outstanding. All of such outstanding shares of capital stock are,
or
upon issuance will be, duly authorized, validly issued, fully paid and
nonassessable. No shares of capital stock of the Company, including the
Securities issuable pursuant to this Agreement, are subject to preemptive
rights
or any other similar rights of the stockholders of the Company or any liens
or
encumbrances imposed through the actions or failure to act of the Company.
Except as disclosed in this Section 3.3 and except for the transactions
contemplated hereby, (i) there are no outstanding options, warrants, scrip,
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rights
to
subscribe for, puts, calls, rights of first refusal or preemptive or other
similar rights, agreements, understandings, claims or other commitments or
rights of any character whatsoever relating to, or securities or rights directly
or indirectly convertible into, exercisable for, or exchangeable for any
shares
of capital stock of the Company, or arrangements by which the Company is
or may
become bound to issue additional shares of capital stock of the Company;
(ii)
there are no agreements or arrangements (other than the Registration Rights
Agreement, the separate Registration Rights Agreements entered into on June
15,
2001, January 18, 2002, July 28, 2003, May 7, 2004 and August 15, 2005 and
the
Purchase Warrants dated June 15, 2001) under which the Company is obligated
to
register the sale of any of its securities under the Securities Act and (iii)
there are no anti-dilution or price adjustment provisions contained in any
security issued by the Company (or in any agreement providing rights to security
holders) that will be triggered by the issuance of the Securities (other
than
the exercise price adjustments pursuant to the warrants to purchase an aggregate
of 385,800 shares of Common Stock, issued by the Company on January 18, 2002
and
the contingent obligation to issue additional warrants to purchase an aggregate
of 2,325,936 shares pursuant to the Securities Purchase Agreement dated August
15, 2005). The Company has furnished to Investor true and correct copies
of the
Company’s Certificate of Incorporation, as amended, as in effect on the date
hereof, the Company’s Bylaws as in effect on the date hereof and the terms of
all securities convertible into or exercisable for Common Stock of the Company
and the material rights of the holders thereof in respect thereto.
3.4 Issuance
of Securities.
The
Securities are duly authorized and, upon issuance in accordance with the
terms
of this Agreement, will be validly issued, fully paid and non-assessable,
free
from all taxes, liens, claims, encumbrances and charges with respect to the
issue thereof, will not be subject to preemptive rights or other similar
rights
of stockholders of the Company, and will not impose personal liability on
the
holders thereof. The Company has reserved a sufficient number of shares of
Common Stock for issuance upon exercise of the Warrant, and upon payment
of the
exercise price and exercise of the Warrant in accordance with its terms,
the
Warrant Shares will be validly issued, fully paid and non-assessable, free
from
all taxes, liens, claims, encumbrances and charges with respect to the issue
thereof, will not be subject to preemptive rights or other similar rights
of
stockholders of the Company and will not impose personal liability on the
holders thereof.
3.5 No
Conflicts; No Violation.
(a) The
execution, delivery and performance of this Agreement, the Registration Rights
Agreement and the Warrant by the Company and the consummation by the Company
of
the transactions contemplated hereby and thereby (including, without limitation,
the issuance of the Securities) will not (i) conflict with or result in a
violation of any provision of its Certificate of Incorporation or Bylaws
or (ii)
violate or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of time or both
could become a default) under, or give to others any rights of termination,
amendment (including without limitation, the triggering of any anti-dilution
provision), acceleration or cancellation of, any agreement, indenture, patent,
patent license, or instrument to which the Company is a party, or (iii) result
in a violation of any law, rule, regulation, order, judgment or decree
(including U.S. federal and state securities laws and regulations and
regulations of any self-regulatory organizations to which the Company or
its
securities are subject) applicable to the Company or by which any property
or
asset of the Company is bound or affected (except for such conflicts, breaches,
defaults, terminations, amendments, accelerations, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse Effect).
5
(b) The
Company is not in violation of its Certificate of Incorporation, Bylaws or
other
organizational documents and the Company is not in default (and no event
has
occurred which with notice or lapse of time or both could put the Company
in
default) under any agreement, indenture or instrument to which the Company
is a
party or by which any property or assets of the Company is bound or affected,
except for possible defaults as would not, individually or in the aggregate,
have a Material Adverse Effect.
(c) The
Company is not conducting its business in violation of any law, ordinance
or
regulation of any governmental entity, the failure to comply with which would,
individually or in the aggregate, have a Material Adverse Effect.
(d) Except
as
specifically contemplated by this Agreement and as required under the Securities
Act and any applicable state securities laws or any listing agreement with
any
securities exchange or automated quotation system, the Company is not required
to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or
self
regulatory agency in order for it to execute, deliver or perform any of its
obligations under this Agreement, the Registration Rights Agreement or the
Warrant, in each case in accordance with the terms hereof or thereof, or
to
issue and sell the Securities in accordance with the terms hereof. All consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected
on
or prior to the date hereof. The Company is not in violation of the listing
requirements of Nasdaq.
3.6 SEC
Documents, Financial Statements.
Since
June 30, 2002, the Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Exchange Act (all of the foregoing filed
prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits)
incorporated by reference therein, being hereinafter referred to herein as
the
“SEC
Documents”).
The
Company has delivered to Investor, or Investor has had access to, true and
complete copies of the SEC Documents, except for such exhibits and incorporated
documents. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act or the Securities
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents,
at
the time they were filed with the SEC, 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. As of their respective
dates, the financial statements of the Company included in the SEC Documents
complied in all material respects with applicable accounting requirements
and
the published rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with U.S. generally
accepted accounting principles, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements,
to
the extent they may not include footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial position
of the Company as of the dates thereof and the results of its operations
and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in
the
financial statements included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than liabilities incurred in
the
ordinary course of business subsequent to June 30, 2005, and liabilities
of the
type not required under generally accepted accounting principles to be reflected
in such financial statements. Such
6
liabilities
incurred subsequent to June 30, 2005, are not, in the aggregate, material
to the
financial condition or operating results of the Company.
3.7 Absence
of Certain Changes.
Except
as disclosed in the SEC Documents, since June 30, 2005, there has been no
material adverse change in the assets, liabilities, business, properties,
operations, financial condition, prospects or results of operations of the
Company, and the Company has not (i) varied its business plan or practices,
in
any material respect, from past practices, (ii) entered into any material
financing, joint venture, license or similar arrangements or (iii) suffered
or
permitted to be incurred any liability or obligation against any of its
properties or assets that would limit or restrict its ability to perform
its
obligations hereunder.
3.8 Absence
of Litigation.
Except
as disclosed in the SEC Documents, there is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body, (i) to the knowledge of the
Company, threatened against or affecting the Company or any of its officers
or
directors acting as such that could, individually or in the aggregate, have
a
Material Adverse Effect, or (ii) pending against or affecting the Company
or any of its officers or directors acting as such.
3.9 Intellectual
Property Rights.
The
Company owns or possesses the licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets, trademarks,
trademark applications, service marks, service names, trade names and copyrights
necessary to enable it to conduct its business as now operated or as currently
proposed to be operated (the “Intellectual
Property”).
Except as set forth in the SEC Documents, there are no material outstanding
options, licenses or agreements relating to the Intellectual Property, nor
is
the Company bound by or a party to any material options, licenses or agreements
relating to the patents, patent applications, patent rights, inventions,
know-how, trade secrets, trademarks, trademark applications, service marks,
service names, trade names or copyrights of any other person or entity. Except
as disclosed in the SEC Documents, there is no claim or action or proceeding
pending or, to the Company’s knowledge, threatened that challenges the right of
the Company with respect to any Intellectual Property. Except as set forth
in
the SEC Documents, to the knowledge of the Company, the Company’s Intellectual
Property does not infringe any intellectual property rights of any other
person
which, if the subject of an unfavorable decision, ruling or finding would
have a
Material Adverse Effect.
3.10 Tax
Status.
The
Company has timely made or filed all federal, state and foreign income and
all
other tax returns, reports and declarations required by any jurisdiction
to
which it is subject (unless and only to the extent that the Company has set
aside on its books provisions reasonably adequate for the payment of all
unpaid
and unreported taxes) and has timely paid all taxes and other governmental
assessments and charges, shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith, and has set
aside
on its books provisions reasonably adequate for the payment of all taxes
for
periods subsequent to the periods to which such returns, reports or declarations
apply. To the knowledge of the Company, there are no unpaid taxes claimed
to be
due by the taxing authority of any jurisdiction, and the officers of the
Company
know of no basis for any such claim. The Company has not executed a waiver
with
respect to the statute of limitations relating to the assessment or collection
of any foreign, federal, state or local tax. None of the Company’s tax returns
is presently being audited by any taxing authority.
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3.11 Environmental
Laws.
The
Company (i) is in compliance with all applicable foreign federal, state and
local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental
Laws”),
(ii)
has received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct its business and (iii) is in compliance
with all terms and conditions of any such permit, license or approval where,
in
each of the three foregoing clauses, the failure to so comply would have,
individually or in the aggregate, a Material Adverse Effect.
3.12 No
Brokers.
The
Company has taken no action which would give rise to any claim by any person
for
brokerage commissions, finder’s fees or similar payments relating to this
Agreement or the transactions contemplated hereby.
3.13 Insurance.
The
Company is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company believes
to be prudent and customary in the businesses in which the Company is
engaged.
3.14 Employment
Matters.
The
Company is in compliance with all federal, state, local and foreign laws
and
regulations respecting employment and employment practices, terms and conditions
of employment and wages and hours, except where failure to be in compliance
would not have a Material Adverse Effect. The Company is not 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 Company’s knowledge, 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 Company’s knowledge, 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 officers or
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.
3.15 Employee
Benefit Plans.
Except
as set forth in the SEC Documents, the Company does not have any Employee
Benefit Plans, as such term is defined in the Employee Retirement Security
Act
of 1974.
3.16 Investment
Company Status.
The
Company is not and upon consummation of the sale of the Securities will not
be
an “investment company,” a company controlled by an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for, an
“investment company” as such terms are defined in the Investment Company Act of
1940, as amended.
3.17 No
Subsidiaries.
Except
for Sonus Pharma, Limited, a wholly owned subsidiary of the Company organized
under the laws of the United Kingdom, the Company does not presently own
or
control, directly or indirectly, any interest in any other corporation,
association, joint venture, partnership or other business entity and the
Company
is not a direct or indirect participant in any joint venture or
partnership.
3.18 No
Conflict of Interest.
The
Company is not indebted, directly or indirectly, to any of its officers or
directors or to their respective spouses or children, in any amount whatsoever
other than in connection with expenses or advances of expenses incurred in
the
ordinary course of business or relocation expenses of employees. None of
the
Company’s officers, directors or employees, or any members of their immediate
families, are directly, or indirectly, indebted to the Company or, to
8
the
best
of the Company’s knowledge, have any direct or indirect ownership interest in
any entity with which the Company is affiliated or with which the Company
has a
business relationship, or any entity which competes with the Company, except
that officers, directors, employees and/or stockholders of the Company may
own
stock in (but not exceeding five percent (5%) of the outstanding capital
stock
of) any publicly traded company that may compete with the Company. To the
best
of the Company’s knowledge, none of the Company’s officers, directors or
employees or any members of their immediate families are, directly or
indirectly, interested in any material contract with the Company. The Company
is
not a guarantor or indemnitor of any indebtedness of any other person or
entity.
3.19 Nasdaq
Notification.
The
Company has notified Nasdaq of the issuance and listing of the Common Shares
and
Warrant Shares on Nasdaq and the Common Shares and Warrant Shares have been
approved for quotation on Nasdaq, upon official notice of issuance.
3.20 Reporting
Status; Eligibility to Use Form S-3.
The
Company’s Common Stock is registered under Section 12g of the Exchange Act. The
Company currently meets the “registrant eligibility” requirements set forth in
the general instructions to Form S-3 to enable the registration of the
Registrable Securities, as defined in the Registration Rights
Agreement.
3.21 No
Manipulation of Stock.
The
Company has not taken and will not, in violation of applicable law, take,
any
action designed to or that might reasonably be expected to cause or result
in
stabilization or manipulation of the price of the Common Stock to facilitate
the
sale or resale of the Securities.
3.22 Collaboration
and License Agreement.
The
representations and warranties made by the Company in Article X of that certain
Collaboration and License Agreement dated as of the date hereof (the
“License
Agreement”),
are
incorporated herein by this reference and made to Investor as though fully
set
forth herein.
3.23 Representations
Complete.
The
representations and warranties made by the Company in this Agreement, the
statements made in any certificates furnished by the Company
pursuant to this Agreement, and the statements made by the Company in any
documents mailed, delivered or furnished to Investor in connection with this
Agreement, taken as a whole, do not contain and will not contain, as of their
respective dates and as of the Closing Date, any untrue statement of a material
fact, nor do they omit or will they omit, as of their respective dates or
as of
the Closing Date, to state any material fact necessary in order to make
the statements
contained herein or therein, in the light of the circumstances under which
they
were made, not misleading.
ARTICLE
IV
COVENANTS
4.1 Best
Efforts.
Each
party will use its best efforts to satisfy in a timely fashion each of the
conditions to be satisfied by it under Articles VI and VII of this Agreement.
The Company shall use its best efforts to comply with each of its covenants
in
this Agreement, the Registration Rights Agreement and the Warrant, unless
the
use of best efforts conflicts with the standard of conduct set forth in any
such
covenant, in which case such other standard of conduct shall
control.
9
4.2 Form
D; Blue Sky Laws.
The
Company will timely file a Notice of Sale of Securities on Form D with respect
to the Securities, as required under Regulation D. The Company will, on or
before the Closing Date, take such action as it reasonably determines to
be
necessary to qualify the Securities for sale to Investor under this Agreement
under applicable securities (or “blue sky”) laws of the states of the United
States (or to obtain an exemption from such qualification).
4.3 Continued
Eligibility to Use Form S-3.
Throughout the Registration Period (as defined in the Registration Rights
Agreement), the Company will timely file all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC under
the
reporting requirements of the Exchange Act, and the Company will not terminate
its status as an issuer required to file reports under the Exchange Act even
if
the Exchange Act or the rules and regulations thereunder would permit such
termination. The Company will take all reasonably necessary action to continue
to meet the “registrant eligibility” requirements set forth in the general
instructions to Form S-3 to enable the registration of the Registrable
Securities as defined in the Registration Rights Agreement.
4.4 Expenses.
The
Company and Investor are liable for, and will pay, its own expenses incurred
in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the other agreements to be executed in connection herewith,
including, without limitation, attorneys’ and consultants’ fees and
expenses.
4.5 Financial
Information.
As long
as Investor owns any of the Securities or Warrant Shares, the financial
statements of the Company will be prepared in accordance with United States
generally accepted accounting principles, consistently applied, and will
fairly
present in all material respects the consolidated financial position of the
Company and results of its operations and cash flows as of, and for the periods
covered by, such financial statements (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
4.6 Compliance
with Law.
As long
as Investor owns any of the Securities or Warrant Shares, the Company will
conduct its 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, the failure to comply, individually or in the aggregate,
with
which would have a Material Adverse Effect.
4.7 Sales
by Investor.
Investor will sell any Securities sold by it in compliance with applicable
prospectus delivery requirements, if any, or otherwise in compliance with
the
requirements for an exemption from registration under the Securities Act
and the
rules and regulations promulgated thereunder and the restrictions on sales
or
transfers set forth in the Registration Rights Agreement. Investor will not
make
any sale, transfer or other disposition of the Securities in violation of
federal or state securities laws.
ARTICLE
V
TRANSFER
AGENT INSTRUCTIONS; REMOVAL OF LEGENDS
5.1 Issuance
of Certificates.
The
Company will, or will instruct its transfer agent to, issue certificates,
registered in the name of Investor or its nominee, for the Securities and,
promptly upon exercise of any portion of the Warrant Shares. All such
certificates will bear the restrictive legend described in Section 2.7, except
as otherwise specified in this Article V. The Company will
10
not
give
to its transfer agent any instruction other than as described in this Article
V
and stop transfer instructions to give effect to Section 2.7 hereof (prior
to
registration of the Securities under the Securities Act). Nothing in this
Section will affect in any way Investor’s obligations to comply with all
applicable prospectus delivery requirements, if any, upon resale of the Common
Shares and/or Warrant Shares.
5.2 Unrestricted
Securities.
If,
unless otherwise required by applicable state securities laws, (a) the
Securities or Warrant Shares represented by a certificate have been registered
under an effective registration statement filed under the Securities Act,
(b) a
holder of Securities or Warrant Shares provides the Company and its transfer
agent with an opinion of counsel, in form, substance and scope customary
for
opinions of counsel in comparable transactions, to the effect that a public
sale
or transfer of such Securities or Warrant Shares may be made without
registration under the Securities Act and such sale either has occurred or
may
occur without restriction on the manner of such sale or transfer, (c) such
holder provides the Company and its transfer agent with reasonable assurances
that such Securities or Warrant Shares can be sold under Rule 144, or (d)
the
Common Shares represented by a certificate can be sold without restriction
as to
the number of securities sold under Rule 144(k), the Company will permit
the
transfer of the Securities or Warrant Shares, and the Company’s transfer agent
will issue one or more certificates, free from any restrictive legend, in
such
name and in such denominations as specified by such holder. Notwithstanding
anything herein to the contrary, the Securities or Warrant Shares may be
pledged
as collateral in connection with a bona fide margin account or other lending
arrangement; provided,
that
such pledge will not alter the provisions of this Article V with respect
to the
removal of restrictive legends.
5.3 Enforcement
of Provision.
The
Company acknowledges that a breach by it of its obligations hereunder will
cause
irreparable harm to Investor by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that
the
remedy at law for a breach of its obligations under this Article V will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section, that Investor will be entitled,
in
addition to all other available remedies, to an injunction restraining any
breach and requiring immediate transfer of the Securities and/or Warrant
Shares,
as applicable, without the necessity of showing economic loss and without
any
bond or other security being required.
ARTICLE
VI
CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL
The
obligation of the Company to issue and sell the Securities to Investor at
the
Closing is subject to the satisfaction by such Investor, on or before the
Closing Date, of each of the following conditions. These conditions are for
the
Company’s sole benefit and may be waived by the Company at any time in its sole
discretion:
6.1 Investor
will have executed this Agreement, the Registration Rights Agreement, the
Warrant and the License Agreement and will have delivered those agreements
to
the Company.
6.2 Investor
will have delivered the purchase price for the Securities to the Company
in
accordance with this Agreement.
6.3 The
representations and warranties of Investor must be true and correct in all
material respects as of the Closing Date as though made at that time (except
for
representations and warranties
11
that
speak as of a specific date, which representations and warranties must be
correct as of such date), and Investor will have performed and complied in
all
material respects with the covenants and conditions required by this Agreement
to be performed or complied with by Investor at or prior to the Closing.
6.4 No
statute, rule, regulation, executive order, decree, ruling or injunction
will
have been enacted, entered, promulgated or endorsed by or in any court or
governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this
Agreement, the Registration Rights Agreement or the Warrant.
ARTICLE
VII
CONDITIONS
TO THE INVESTOR’S OBLIGATION TO PURCHASE
The
obligation of Investor hereunder to purchase the Securities from the Company
at
the Closing is subject to the satisfaction, on or before the Closing Date,
of
each of the following conditions. These conditions are for Investor’s benefit
and may be waived by Investor at any time in its sole discretion:
7.1 The
Company will have executed this Agreement, the Registration Rights Agreement,
the Warrant and the License Agreement and will have delivered those Agreements
to Investor.
7.2 Investor
shall have received an opinion of counsel from Xxxxxxxxx Xxxxx Xxxxxxx &
Xxxxx, counsel to the Company, reasonably acceptable to Investor and its
counsel.
7.3 Each
of
the representations and warranties of the Company qualified by materiality
must
be true and correct in all respects as of the Closing as though made at that
time (except for representations and warranties that speak as of a specific
date, which representations and warranties must be true and correct as of
such
date) and each of the representations and warranties of the Company not
qualified by materiality must be true and correct in all material respects
as of
the Closing as though made at that time (except for representations and
warranties that speak as of a specific date, which representations and
warranties must be true and correct as of such date) and the Company must
have
performed and complied in all material respects with the covenants and
conditions required by this Agreement to be performed or complied with by
the
Company at or prior to the Closing. Investor must have received a certificate
or
certificates dated as of the Closing Date and executed by the Chief Executive
Officer or the Chief Financial Officer of the Company certifying as to the
matters in contained in this Section 7.3 and as to such other matters as
may be
reasonably requested by such Investor, including, but not limited to, the
Company’s Certificate of Incorporation, Bylaws, Board of Directors’ resolutions
relating to the transactions contemplated hereby and the incumbency and
signatures of each of the officers of the Company who may execute on behalf
of
the Company any document delivered at the Closing.
7.4 No
litigation, statute, rule, regulation, executive order, decree, ruling or
injunction will have been enacted, entered, promulgated or endorsed by or
in any
court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions
12
contemplated
by this Agreement, the Registration Rights Agreement or the Warrant and which
could, individually or in the aggregate, have a Material Adverse
Effect.
7.5 Trading
and listing of the Common Stock on Nasdaq must not have been suspended by
the
SEC or Nasdaq.
7.6 Investor
shall have received certificates representing the Common Shares and the
Warrant.
ARTICLE
VIII
INDEMNIFICATION
In
consideration of Investor’s execution and delivery of this Agreement and its
acquisition of the Securities hereunder, and in addition to all of the Company’s
other obligations under this Agreement, the Registration Rights Agreement
and
the Warrant, the Company will defend, protect, indemnify and hold harmless
Investor and each other holder of the Securities and all of their stockholders,
officers, directors, employees and direct or indirect investors and any of
the
foregoing person’s agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated
by
this Agreement) (collectively, the “Indemnitees”)
from
and against any and all actions, causes of action, suits, claims, losses,
costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(regardless of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees
and disbursements (the “Indemnified
Liabilities”),
incurred by an Indemnitee as a result of, or arising out of, or relating
to (a)
any breach of any representation or warranty made by the Company herein or
in
any other certificate, instrument or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company contained
herein or in any other certificate, instrument or document contemplated hereby
or thereby or (c) any cause of action, suit or claim brought or made against
such Indemnitee and arising out of or resulting from the execution, delivery,
performance, breach or enforcement of this Agreement, the Registration Rights
Agreement or the Warrant by the Company. To the extent that the foregoing
undertaking by the Company is unenforceable for any reason, the Company will
make the maximum contribution to the payment and satisfaction of each of
the
Indemnified Liabilities that is permissible under applicable law.
The
Indemnitees shall have the right to employ separate counsel in any such
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnitees unless: (i) the
Company has agreed in writing to pay such fees and expenses; (ii) the Company
shall have failed to promptly assume the defense of such proceeding and to
employ counsel reasonably satisfactory to such Indemnitees in any such
proceeding; or (iii) the named parties to any such proceeding (including
any
impleaded parties) include both such Indemnitees and the Company, and such
Indemnitees shall have been advised by counsel that a conflict of interest
is
likely to exist if the same counsel were to represent such Indemnitees and
the
Company (in which case, if such Indemnitees notify the Company in writing
that
they elect to employ separate counsel at the expense of the Company, the
Company
shall not have the right to assume the defense thereof and such counsel shall
be
at the reasonable expense of the Company; provided, however, that in no event
shall the Company be responsible for the fees and expenses of more than one
separate counsel). The Company shall not be liable for any settlement of
any
such proceeding effected without its written consent, which consent shall
not be
unreasonably withheld. The Company shall not, without the prior written consent
of a majority of the Indemnitees, effect any settlement of any pending
13
proceeding
in respect of which Indemnitees are a party, unless such settlement includes
an
unconditional release of such Indemnitees from all liabilities that are the
subject matter of such proceeding. Subject to the foregoing, all fees and
expenses (including reasonable fees and expenses to the extent incurred in
connection with investigating or preparing to defend any such proceeding
in a
manner inconsistent with this Article VIII) of the Indemnitees shall be paid
to
the Indemnitees as incurred, within ten (10) business days of written notice
thereof to the Company, which notice shall be delivered no more frequently
than
on a monthly basis; provided, that the Indemnitees shall reimburse the Company
for any and all such fees and expenses to the extent it is finally judicially
determined that such Indemnitees are not entitled to indemnification
hereunder.
ARTICLE
IX
DEFINITIONS
9.1 “Closing”
means
the closing of the purchase and sale of the Securities under this
Agreement.
9.2 “Closing
Date”
has
the
meaning set forth in Section 1.3.
9.3 “Common
Shares”
has
the
meaning set forth in the Recitals.
9.4 “Common
Stock”
means
the common stock, par value $.001 per share, of the Company.
9.5 “Company”
means
Sonus Pharmaceuticals, Inc.
9.6 “Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
9.7 “Indemnified
Liabilities”
has
the
meaning set forth in Article VIII.
9.8 “Indemnitees”
has
the
meaning set forth in Article VIII.
9.9 “Investor”
has
the
meaning set forth in the preamble of this Agreement.
9.10 “License
Agreement”
has
the
meaning set forth in Section 3.22.
9.11 “Material
Adverse Effect”
means
a
material adverse effect on (a) the business, operations, prospects, assets
or
financial condition of the Company or (b) the ability of the Company to perform
its obligations pursuant to the transactions contemplated by this Agreement
or
under the agreements or instruments to be entered into or filed in connection
herewith, including the Registration Rights Agreement and the
Warrant.
9.12 “Nasdaq”
means
the Nasdaq National Market System.
9.13 “Registration
Rights Agreement”
means
the Registration Rights Agreement, dated as of the date of this Agreement
and
among the parties to this Agreement, in the form attached hereto as Exhibit
C.
9.14 “Regulation
D”
means
Regulation D as promulgated under by the SEC under the Securities
Act.
14
9.15 “Rule
144”
and
“Rule
144(k)”
mean
Rule 144 and Rule 144(k), respectively, promulgated under the Securities
Act, or
any successor rule.
9.16 “SEC”
means
the United States Securities and Exchange Commission.
9.17 “SEC
Documents”
has
the
meaning set forth in Section 3.6.
9.18 “Securities”
has
the
meaning set forth in the Recitals.
9.19 “Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute.
9.20 “Warrant”
and
“Warrant
Shares”
have
the meanings set forth in the Recitals.
ARTICLE
X
GOVERNING
LAW; MISCELLANEOUS
10.1 Governing
Law; Jurisdiction; Jury Trial Waiver.
This
Agreement will be governed by and interpreted in accordance with the laws
of the
State of New York without regard to the principles of conflict of laws. The
parties hereto hereby submit to the exclusive jurisdiction of the United
States
federal and state courts located in the State of New York with respect to
any
dispute arising under this Agreement, the agreements entered into in connection
herewith or the transactions contemplated hereby or thereby. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT THAT IT MAY HAVE TO, AND AGREES NOT TO REQUEST,
A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY.
10.2 Counterparts;
Signatures by Facsimile.
This
Agreement may be executed in two or more counterparts, all of which are
considered one and the same agreement and will become effective when
counterparts have been signed by each party and delivered to the other parties.
This Agreement, once executed by a party, may be delivered to the other parties
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
10.3 Headings.
The
headings of this Agreement are for convenience of reference only, are not
part
of this Agreement and do not affect its interpretation.
10.4 Severability.
If any
provision of this Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision will be deemed modified in order
to
conform with such statute or rule of law. Any provision hereof that may prove
invalid or unenforceable under any law will not affect the validity or
enforceability of any other provision hereof.
10.5 Entire
Agreement; Amendments.
This
Agreement, the Registration Rights Agreement and the Warrant (including all
schedules and exhibits thereto) and the Warrant constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement supersedes
all
prior agreements and understandings among the parties hereto with respect
to the
subject matter hereof. No provision of this Agreement may be
15
waived
or
amended other than by an instrument in writing signed by the party to be
charged
with enforcement.
10.6 Notices.
Any
notices required or permitted to be given under the terms of this Agreement
must
be sent by certified or registered mail (return receipt requested) or delivered
personally or by courier (including a recognized overnight delivery service)
or
by facsimile and will be effective three business days after being placed
in the
mail, if mailed by regular U.S. mail, or upon receipt, if delivered personally,
by courier (including a recognized overnight delivery service) or by facsimile,
in each case addressed to a party. The addresses for such communications
are:
If
to the
Company: Chief
Financial Officer
Sonus
Pharmaceuticals, Inc.
00000
00xx
Xxxxxx X.X.
Xxxxxxx,
Xxxxxxxxxx 00000
Fax:
(000)
000-0000
With
copies to:
X.X.
Xxxxxx, Esq.
Xxxxxxxxx
Xxxxx Xxxxxxx & Xxxxx
000
Xxxxxxx
Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
Fax:
(000)
000-0000
If
to
Investor: To the address set forth immediately below Investor’s name on the
signature pages hereto.
With
copies to: Schering
AG
Legal
Department
170-178
Muellerstrasse
D-13342
Berlin, Germany
Fax: x00-(0)00-000-00000
Each
party will provide written notice to the other parties of any change in its
address in accordance with the notice provisions hereof.
10.7 Successors
and Assigns.
This
Agreement is binding upon and inures to the benefit of the parties and their
successors and assigns. The Company will not assign this Agreement or any
rights
or obligations hereunder without the prior written consent of Investor, and
Investor may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Company. Notwithstanding the foregoing,
Investor may assign all or part of its rights and obligations hereunder to
any
of its “affiliates,” as that term is defined under the Securities Act, without
the consent of the Company so long as the affiliate is an accredited investor
(within the meaning of Regulation D under the Securities Act) and agrees
in
writing to be bound by this Agreement. This provision does not limit Investor’s
right to transfer the Securities pursuant to the terms of this Agreement
or to
assign Investor’s rights hereunder to any such transferee pursuant to the terms
of this Agreement.
16
10.8 Third
Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and, except as contemplated in Section
2.10,
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.
10.9 Survival.
The
representations and warranties of the Company and the agreements and covenants
set forth herein will survive the Closing hereunder for a period of twelve
(12)
months. The Company makes no representations or warranties in any oral or
written information provided to Investor,
other
than the representations and warranties included herein.
10.10 Further
Assurances.
Each
party will do and perform, or cause to be done and performed, all such further
acts and things, and will execute and deliver all other agreements,
certificates, instruments and documents, as another party may reasonably
request
in order to carry out the intent and accomplish the purposes of this Agreement
and the consummation of the transactions contemplated hereby.
10.11 No
Strict Construction.
The
language used in this Agreement is deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
10.12 Equitable
Relief.
The
Company recognizes that, if it fails to perform or discharge any of its
obligations under this Agreement, any remedy at law may prove to be inadequate
relief to Investor. The Company therefore agrees that Investor is entitled
to
seek temporary and permanent injunctive relief in any such case.
17
IN
WITNESS WHEREOF, the undersigned Investor and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first above
written.
|
COMPANY:
SONUS
PHARMACEUTICALS, INC.
|
|
By: /s/
|
|
Name: Xxxxxxx
X.
Xxxxxxx
|
|
Title: President
and
CEO
|
|
INVESTOR:
SCHERING
AG
|
|
|
By:
/s/
|
|
|
Name:______________________________________
|
|
|
Title: __________________________________
|
|
|
Address:
|
170-178
Xxxxxxxxxxxxxx
X-00000
Xxxxxx, Xxxxxxx
Fax: x00-(0)00-000-00000
Attn: Head
of Finance
|
|
SCHERING
BERLIN VENTURE CORPORATION
|
|
|
By:
/s/
|
|
|
Name:
______________________________________
|
|
|
Address:
|
000
Xxxxxxxxxxxx Xxxx
Xxxxxxxxx,
XX 00000
|
18
