EXHIBIT 99.2
NASTECH PHARMACEUTICAL COMPANY INC.
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "AGREEMENT") is made as of the
3rd day of September, 2003, by and between Nastech Pharmaceutical Company Inc.,
a corporation organized under the laws of the State of Delaware (the "COMPANY"),
with its principal offices at 0000 Xxxxx Xxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxx
00000, and the purchaser whose name and address is set forth on the signature
page hereof (the "PURCHASER").
RECITALS
A. The Company desires to issue and sell to the Purchaser and
certain other investors ("the OTHER PURCHASERS" and together with the Purchaser,
the "PURCHASERS") in a private placement (the "OFFERING"), and the Purchasers
desire to purchase up to an aggregate of 1,513,069 units (each, a "UNIT"), each
Unit consisting of one share of common stock, par value $0.006 per share
("COMMON STOCK"), of the Company (the "PURCHASED SHARES") and 0.35 five year
warrant, substantially in the form attached to the Private Placement Memorandum
as Exhibit F. Each whole warrant included in the Units shall be exercisable to
purchase one share of Common Stock, at $11.09 per share (the "PURCHASED
WARRANTS" and collectively with the Purchased Shares, the "SECURITIES"). Each
Unit will be sold at a purchase price of $7.27 per Unit. This Agreement and the
Purchased Warrants shall be referred to herein collectively as the "TRANSACTION
DOCUMENTS".
B. In furtherance of the Offering, the Company has prepared and
delivered to the Purchaser a confidential private placement memorandum dated as
of August 1, 2003 and amended and supplemented as of September 2, 2003 (such
confidential private placement memorandum, as amended or supplemented and all
documents incorporated by reference therein, including, without limitation, any
SEC Filings (as defined in Section 4.16) and any other documents incorporated by
reference in the SEC Filings, collectively, the "PRIVATE PLACEMENT MEMORANDUM").
C. The Purchaser desires, upon the terms and conditions set forth
in this Agreement, to purchase Securities in the Offering.
D. The Company and the Purchaser are executing and delivering
this Agreement in reliance upon the exemption from securities regulation
afforded by Section 4(2) of the Securities Act (as defined in Section 3) and
Rule 506 under Regulation D.
IN CONSIDERATION of the premises and mutual covenants
contained in this Agreement and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchaser agree as follows:
SECTION 1. Authorization of Sale of the Securities. Subject to
the terms and conditions of this Agreement, the Company has authorized the sale
of up to an aggregate of 1,513,069 Units, consisting of up to an aggregate of
1,513,069 shares of Common Stock and 529,574 Purchased Warrants, at a purchase
price of $7.27 per Unit.
SECTION 2. Agreement to Sell and Purchase the Securities. 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 Securities set forth on the signature page hereto.
The Company proposes to enter into this same form of purchase
agreement with the Other Purchasers and expects to complete sales of the
Securities to them. This Agreement and the agreements executed by the Other
Purchasers are hereinafter sometimes collectively referred to as the
"AGREEMENTS." Notwithstanding any contrary provisions of the Agreements, the
obligations of each Purchaser are several and not joint with the obligations of
any other Purchaser, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser. Nothing contained herein,
and no action taken by any Purchaser, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Agreements. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of its Agreement and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. The term "PLACEMENT AGENT" shall mean Xxxxxx Brothers Inc.
SECTION 3. Delivery of the Purchased Shares and Purchased
Warrants at the Closing. Subject to the terms and conditions set forth in this
Agreement, the completion of the purchase and sale of the Purchased Shares and
the Purchased Warrants (the "CLOSING") shall occur at the offices of Xxxxxx
Xxxxx Xxxxxxxx & Xxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as
soon as practicable and as agreed by the parties hereto within three (3)
business days following the execution of the Agreements, or on such later date
or at such different location as the parties shall agree in writing (the
"CLOSING DATE"). The Closing shall occur at a time 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 (i) authorize its transfer
agent (the "TRANSFER AGENT") to arrange delivery to the Purchaser of one or more
stock certificates registered in the name of the Purchaser, or in such nominee
name(s) as designated by the Purchaser in writing, representing the number of
Purchased Shares set forth on the signature page hereto and (ii) issue the
number of Purchased Warrants set forth on the signature page hereto to the
Purchaser, each stock certificate and Purchased Warrant bearing an appropriate
legend referring to the fact that the Securities were sold in reliance upon the
exemption from registration under the Securities Act of 1933, as amended (the
"SECURITIES ACT") provided by Section 4(2) thereof and Rule 506 thereunder. At
the Closing, the Transfer Agent shall deliver to the Placement Agent a
certificate of the Transfer Agent, in form and substance reasonably acceptable
to the Placement Agent, certifying (i) that it is duly authorized to issue the
Purchased Shares and (ii) that the Company has reserved the Underlying Shares
(as defined in Section 4.4) for issuance upon the exercise of the Purchased
Warrants. The name(s) in which the stock certificates and the Purchased Warrants
are to be registered are set forth in the Securities Questionnaire attached
hereto as part of Appendix I (the "SECURITIES QUESTIONNAIRE"). The Company's
obligation to complete the purchase and sale of the Securities and deliver the
stock certificate(s) representing the Purchased Shares and the Purchased
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Warrants to the Purchaser at the Closing shall be subject to the following
conditions, any one or more of which may be waived in writing by the Company:
(a) receipt by the Company of same-day funds in the full amount of the purchase
price for the Securities being purchased hereunder; (b) completion of the
purchases and sales under the Agreements with Purchasers of Securities having an
aggregate purchase price of at least $7,500,000; (c) the accuracy of the
representations and warranties (as if such representations and warranties were
made on the Closing Date) made by the Purchasers and the fulfillment of those
undertakings and covenants of the Purchasers required to be fulfilled prior to
the Closing; (d) the Purchaser shall have executed and delivered to the Company
the Securities Questionnaire, pursuant to which the Purchaser shall provide
information necessary to confirm such Purchaser's status as an "accredited
investor" as defined in Rule 501 promulgated under the Securities Act; (e) no
proceeding challenging this Agreement or agreement with any Other Purchaser or
the transactions contemplated hereby or thereby or seeking to prohibit, alter,
prevent or materially delay the Closing shall have been instituted or shall be
pending before any court, arbitrator or governmental body, agency or official;
and (f) the sale of the Securities shall not be prohibited by any law or
governmental order or regulation. The Purchaser's obligation to accept delivery
of such stock certificate(s) and to pay for the Purchased Shares evidenced
thereby and the Purchased Warrants shall be subject to the conditions: (1) that
the representations and warranties made by the Company herein are accurate as of
the Closing Date; (2) that the Company has fulfilled all undertakings and
covenants set forth herein required to be fulfilled prior to the Closing; (3)
that the Common Stock shall be quoted on the Nasdaq National Market System; (4)
that the Purchasers have purchased Securities having an aggregate purchase price
of $7,500,000.
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 incorporated, validly existing and in good standing under the
laws of the State of Delaware and the Company is qualified to do business as a
foreign corporation in each jurisdiction in which qualification is required,
except where failure to so qualify would not reasonably be expected to have a
Material Adverse Effect (as defined in Section 4.23). Atossa Healthcare, Inc. is
the only entity of which the Company, directly or indirectly, owns at least 50%
of the outstanding equity of (or which is otherwise directly or indirectly
controlled by the Company) (the "SUBSIDIARY"). The Subsidiary is duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and is qualified to do business as a foreign corporation in each
jurisdiction in which qualification is required, except where failure to so
qualify would not have a Material Adverse Effect.
4.2. Authorized Capital Stock. As of July 29, 2003, (i)
the authorized capital stock of the Company consisted of 25,000,000 shares of
Common Stock and 100,000 shares of Preferred Stock, $.01 par value per share,
(the "PREFERRED STOCK"), of which 10,000 shares have been designated as Series A
Junior Participating Preferred Stock and none are outstanding; (ii) 10,284,933
shares of Common Stock and no shares of Preferred Stock were issued and
outstanding; (iii) there were outstanding options granted pursuant to its stock
purchase plans to purchase a total of 2,917,808 shares of Common Stock; (iv)
there were available for issuance under the Company's stock option plans a total
of 524,292 shares of Common Stock; and (v) there were outstanding warrants to
purchase 569,178 shares of Common Stock. The issued and outstanding shares of
the Company's Common Stock have been duly authorized and validly issued, are
fully paid and
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nonassessable, have been issued in compliance with all federal and state
securities laws and were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and conform in
all material respects to the description thereof contained in the Private
Placement Memorandum. Except for stock options and other awards granted under
the option, award and purchase plans of the Company described in the Private
Placement Memorandum or except as otherwise disclosed in or contemplated by the
Private Placement Memorandum, the Company does not have outstanding any options
or warrants 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, warrants, rights, convertible securities or obligations. The
description of the Company's stock, stock bonus and other stock plans or
arrangements and the options, warrants or other rights granted and exercised
thereunder, set forth or incorporated by reference in the Private Placement
Memorandum accurately and fairly presents in all material respects all
information pertaining to such plans, arrangements, options and rights. With
respect to the Subsidiary, (i) all the issued and outstanding shares of the
Subsidiary's capital stock have been duly authorized and validly issued, are
fully paid and nonassessable, have been issued in compliance with applicable
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 (ii) there are no outstanding options or warrants 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 the Subsidiary's capital stock or any such options,
rights, convertible securities or obligations. The Company owns 100% of the
outstanding equity of the Subsidiary.
4.3. Issuance, Sale and Delivery of the Securities. The
issuance of the Purchased Shares has been duly authorized by all necessary
corporate action on the part of the Company and, when issued to and paid for by
the Purchaser in accordance with this Agreement and the countersigning of the
certificate or certificates representing the Purchased Shares by a duly
authorized signator of the registrar for the Common Stock, the Purchased Shares
will be validly issued, fully paid and non-assessable. The issuance of the
Purchased Warrants has been duly authorized by all necessary corporate action on
the part of the Company. No preemptive rights or other rights to subscribe for
or purchase exist with respect to the issuance and sale of the Securities by the
Company pursuant to this Agreement. Except as set forth in this Agreement, the
Private Placement Memorandum or in any document incorporated by reference
therein, no Person (as defined below) 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 be filed by it pursuant
to Section 7.1 (the "REGISTRATION STATEMENT")) to require the Company to
register any of its currently outstanding securities or any securities issuable
upon exercise or conversion of its currently outstanding securities or pursuant
to other agreements or rights, nor is the Company obligated to register or
qualify any such securities under any state securities or Blue Sky laws. 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 Securities to be
sold by the Company as contemplated herein.
For purposes of the Agreement, "PERSON" shall mean any other
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.
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4.4. Underlying Shares. The issuance of the Underlying
Shares (as defined below) upon exercise of the Purchased Warrants has been duly
authorized, and the Underlying Shares have been, and at all times prior to such
exercise will have been, duly reserved for issuance upon such exercise and
payment of the exercise price of the Purchased Warrants and, when so issued,
will be validly issued, fully paid and non-assessable. "UNDERLYING SHARES" shall
mean any shares of Common Stock or other securities issued or issuable from time
to time upon the exercise of a Purchased Warrant.
4.5. Due Execution, Delivery and Performance of this
Agreement. The Company has all requisite corporate power and authority to enter
into the Transaction Documents and perform the transactions contemplated
thereby. The Transaction Documents have been duly authorized, executed and
delivered by the Company. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation of the transactions
therein contemplated will not violate any provision of the organizational
documents of the Company or its Subsidiary and will not result in the creation
of any lien, charge, security interest or encumbrance upon any assets of the
Company or of its Subsidiary pursuant to the terms or provisions of, or 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, contract, note, bond, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which the Company or its
Subsidiary is a party or by which the Company or its Subsidiary or any of their
respective properties may be bound or affected or, to the Knowledge of the
Company (as defined below), 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 its Subsidiary or
any of their respective properties where such conflict, breach, violation or
default is reasonably likely to result in a Material Adverse Effect. 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 the Transaction Documents or the consummation of the
transactions contemplated by the Transaction Documents, except for compliance
with the Blue Sky laws and federal securities laws applicable to the offering of
the Securities. Upon the execution and delivery of the Transaction Documents,
and assuming the valid execution of this Agreement by the Purchaser, the
Transaction Documents will constitute valid and binding obligations of the
Company, enforceable in accordance with their 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.
For purposes of this Agreement, "KNOWLEDGE OF THE COMPANY"
shall mean, with respect to a particular fact or other matter, the actual
current knowledge, after reasonable investigation, of the Chief Executive
Officer or Chief Financial Officer of the Company.
4.6 Accountants. The firm of KPMG LLP, which has
expressed its opinion with respect to the consolidated financial statements
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2002 (portions of which are incorporated by reference in the
Private Placement Memorandum), and has represented that it is an independent
accountant as
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required by the Securities Act and the rules and regulations promulgated
thereunder (the "RULES AND REGULATIONS").
4.7 Contracts. Except as disclosed in the Private
Placement Memorandum, the contracts that are material to the Company are in full
force and effect on the date hereof; and neither the Company nor its Subsidiary
nor, to the Knowledge of the Company, any other party thereto, is in breach of
or default under any of such contracts which breach or default would have a
Material Adverse Effect.
4.8 No Actions. Except as disclosed in the Private
Placement Memorandum, (i) there are no legal or governmental actions, suits,
proceedings, pending and (ii) to the Knowledge of the Company, there are no
inquiries or investigations, nor are there are any legal or governmental
actions, suits, or proceedings threatened, to which the Company or its
Subsidiary is or may be a party or subject or of which property owned or leased
by the Company or its Subsidiary is or may be the subject, or related to
environmental or discrimination matters, or instituted by the Commission (as
defined in Section 4.16), the National Association of Securities Dealers, Inc.,
any state securities commission or other governmental or regulatory entity,
which actions, suits or proceedings, individually or in the aggregate, would
prevent or might reasonably be expected to prevent or materially and adversely
affect the transactions contemplated by this Agreement or result in a Material
Adverse Effect; and no labor disturbance by the employees of the Company or of
its Subsidiary exists, or is imminent which is reasonably expected to have a
Material Adverse Effect. Except as disclosed in the Private Placement
Memorandum, neither the Company nor its Subsidiary is party to or subject to the
provisions of any injunction, judgment, decree or order of any court, regulatory
body administrative agency or other governmental body.
4.9. Properties. Each of the Company and its Subsidiary
has good and marketable title to all the properties and assets reflected as
owned by it in the consolidated financial statements incorporated by reference
in the Private Placement Memorandum (the "PROPRIETARY ASSETS"), subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if
any, reflected in such consolidated financial statements, or (ii) those which
are not material in amount and do not materially adversely affect the use made
of such property by the Company or its Subsidiary. Each of the Company and its
Subsidiary holds its leased properties under valid and binding leases, subject
to such exceptions as are not materially significant in relation to its
business. To the Knowledge of the Company, the Proprietary Assets of the Company
and its Subsidiary constitute all the Proprietary Assets necessary to enable the
Company and its Subsidiary to conduct their respective businesses in the manner
in which such businesses have been and are being conducted. Except as set forth
the Private Placement Memorandum and in Schedule 4.9, (i) neither the Company
nor any Subsidiary has licensed any of its Proprietary Assets to any individual,
sole proprietorship, partnership, corporation, limited liability company,
business trust, unincorporated association, joint stock corporation, trust,
joint venture or other entity, any university or similar institution, or any
government or any agency or instrumentality or political subdivision thereof
(each a "PERSON") on an exclusive, semi-exclusive or royalty-free basis, and
(ii) neither the Company nor any Subsidiary has entered into any covenant not to
compete or contract limiting such entity's ability to exploit fully any of such
entity's material Proprietary Assets or to transact business in any material
market or geographical area or with any Person. "PROPRIETARY ASSETS" shall
include, but shall not be limited to, the Intellectual Property of the Company,
as defined in Section 4.11 below.
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4.10. No Material Change. Since June 30, 2003 and except as
described in or specifically contemplated by the Private Placement Memorandum:
(i) neither the Company nor its Subsidiary has incurred any material liabilities
or obligations, indirect, or contingent, or entered into any material oral or
written agreement or other material transaction not in the ordinary course of
business or which could reasonably be expected to have a Material Adverse
Effect; (ii) neither the Company nor its Subsidiary has sustained any material
loss or damage to its physical properties or assets from fire, flood, windstorm,
accident or other calamity not covered by insurance; (iii) neither the Company
nor its Subsidiary has paid or declared any dividends or other distributions
with respect to its capital stock, and neither the Company nor its Subsidiary
has defaulted in the payment of principal or interest on any outstanding debt
obligations; (iv) there has not been any change in the capital stock of the
Company or of its Subsidiary, other than the issuance of the Securities
hereunder and shares or options issued pursuant to employee equity incentive
plans or purchase plans approved by the Company's Board of Directors and
repurchases of shares or options pursuant to repurchase plans already approved
by the Company's Board of Directors, or any increase in indebtedness material to
the Company or its Subsidiary; and (v) there has not been any other event which
has caused a Material Adverse Effect.
4.11. Intellectual Property. (a) Except as disclosed in the
Private Placement Memorandum: (i) the Company owns or has obtained valid and
enforceable rights, licenses or options for any inventions, patent applications,
patents, trademarks (both registered and unregistered), trade names, trademark
applications, copyrights, copyright applications, maskworks, maskwork
applications, trade secrets, fictitious business names, service marks, service
xxxx applications, know how, customer lists, franchise systems, computer
software, computer program, designs, blueprints, engineering drawings,
proprietary products, source code, technology, proprietary rights or other
intellectual property rights or intangible assets and all licenses and other
rights required to use or exploit any of the foregoing, currently used in the
conduct of the Company's business (collectively, the "INTELLECTUAL PROPERTY");
and (ii) there are no third parties who have any ownership rights to any
Intellectual Property that is owned by, or has been licensed to, the Company for
the products described in the Private Placement Memorandum that would preclude
the Company from conducting its business as currently conducted and have a
Material Adverse Effect, except for the ownership rights of the owners of the
Intellectual Property licensed or optioned by the Company. To the Knowledge of
the Company, (A) there are currently no sales of any products that would
constitute an infringement by third parties of any Intellectual Property owned,
licensed or optioned by the Company, which infringement would have a Material
Adverse Effect; (B) there is no pending or threatened action, suit, proceeding
or claim by others challenging the rights of the Company in or to any
Intellectual Property owned, licensed or optioned by the Company, other than
claims which would not reasonably be expected to have a Material Adverse Effect;
(C) there is no pending or threatened action, suit, proceeding or claim by
others challenging the validity or scope of any Intellectual Property owned,
licensed or optioned by the Company, other than any such actions, suits,
proceedings and claims that would not reasonably be expected to have a Material
Adverse Effect; and (D) there is no pending or threatened action, suit,
proceeding or claim by others that the Company infringes or otherwise violates
any patent, trademark, copyright, trade secret or other proprietary right of
others, other than non-material actions, suits, proceedings and claims.
(b) Each of the Company and its Subsidiary has
taken commercially reasonable and customary measures and precautions to protect
and maintain the confidentiality and
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secrecy of all Intellectual Property of the Company and its Subsidiary (except
Intellectual Property whose public disclosure (i) is required by law, (ii) would
not impair its value or (iii) would not have a Material Adverse Effect) and
otherwise to maintain and protect the value of all Intellectual Property of the
Company and its Subsidiary. Except as set forth in the Private Placement
Memorandum, neither the Company nor its Subsidiary has (other than pursuant to
license agreements identified in the Private Placement Memorandum) disclosed or
delivered to any Person, or permitted the disclosure or delivery to any Person
of (i) the source code, or any portion or aspect of the source code, of any
Intellectual Property, (ii) the object code, or any portion or aspect of the
object code, of any Intellectual Property of the Company and its Subsidiary,
except in the ordinary course of its business or (iii) any patent applications
(except as required by law).
(c) Except as set forth in the Private Placement
Memorandum, excluding warranty claims received by Company or its Subsidiary in
the ordinary course of business, to the Knowledge of the Company, neither the
Company nor its Subsidiary has received any claim by any customer or other party
alleging that any Intellectual Property of the Company or its Subsidiary
(including each version thereof that has ever been licensed or otherwise made
available by the Company to any Person) does not conform in all material
respects with any specification, documentation, performance standard,
representation or statement made or provided by or on behalf of the Company.
4.12. Compliance. To the Knowledge of the Company, neither
the Company nor its Subsidiary has been advised, nor has reason to believe, that
either of the Company or its Subsidiary is not conducting business in compliance
with all applicable laws, rules and regulations of the jurisdictions in which it
is conducting its business, including, without limitation, all applicable local,
state and federal environmental laws and regulations; in each case, except where
failure to be in compliance would not have a Material Adverse Effect.
4.13. Taxes. Each of the Company and its Subsidiary has
filed or has valid extensions of the time to file all necessary federal, state
and foreign income and franchise tax returns due prior to the date hereof and
has paid or accrued all taxes shown as due thereon where such failure to file
such return or to pay such taxes is reasonably likely to result in a Material
Adverse Effect, and, to the Knowledge of the Company, there is no material tax
deficiency which has not been reserved for which has been or might be asserted
or threatened against it and which is reasonably likely to have a Material
Adverse Effect.
4.14. Investment Company. The Company is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for an investment company, within the meaning of the Investment Company Act of
1940, as amended.
4.15. Offering Materials. Neither the Company nor, to the
Knowledge of the Company, any person acting on behalf of the Company, has
distributed or will distribute to the Purchaser prior to the Closing Date any
material non-public information, other than information related to the
transactions contemplated by this Agreement, including, without limitation, the
Private Placement Memorandum and any amendment or supplement thereto, all of
which information related to the transactions contemplated hereby shall be
disclosed by the Company pursuant to Section 4.28 hereof. Neither the Company
nor any person acting on its behalf has in the past or will hereafter take any
action independent of the Placement Agent to sell, offer for sale or
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solicit offers to buy any securities of the Company which would subject the
offer, issuance or sale of the Securities contemplated by this Agreement to the
registration requirements of Section 5 of the Securities Act.
4.16. Additional Information. (a) To the extent
incorporated by reference in the Private Placement Memorandum, including any
supplements thereto, the information contained in the following documents, did
not, as of the date of the applicable document, include any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
in which they were made, not misleading, as of their respective filing dates or,
if amended, as so amended (the following documents, collectively, the "SEC
FILINGS") each of which has been duly filed with the Securities and Exchange
Commission (the "COMMISSION") on the dates set forth below:
(i) the Company's Annual Report on Form 10-K for
the year ended December 31, 2002;
(ii) the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2003 and
June 30, 2003;
(iii) the Company's definitive Proxy Statement
with respect to its 2003 Annual Meeting of
Stockholders, filed with the Commission on
April 30, 2003; and
(iv) the Company's Current Reports on Form 8-K
filed with the Commission on May 14, 2003,
June 17, 2003, July 1, 2003, July 17, 2003
and August 6, 2003.
In addition, as of the date of this Agreement, the Private
Placement Memorandum, which, to the Knowledge of the Company, the Placement
Agent has furnished to the Purchaser, or will furnish prior to the Closing, when
read together with the information, qualifications and exceptions contained in
this Agreement, does not include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances in which they were made, not misleading.
(b) In furtherance and not in limitation of the
provisions of Section 4.16(a), the consolidated financial statements of the
Company and the related notes contained in or incorporated by reference into the
SEC Filings present fairly in all material respects, in accordance with
generally accepted accounting principles, the consolidated financial position of
the Company and its Subsidiary as of the dates indicated, and the results of
their operations, cash flows and the changes in stockholders' equity for the
periods therein specified, subject, in the case of unaudited financial
statements for interim periods, to normal year-end audit adjustments and the
absence of full footnote disclosure as required by generally accepted accounting
principles. Such consolidated financial statements (including the related notes)
have been prepared in all material respects in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods therein specified, subject, in the case of unaudited financial
statements for interim periods, to normal year-end audit adjustments, and except
as otherwise described therein and except that unaudited financial statements
may not contain all footnotes required by generally accepted
9
accounting principles.
4.17. Form D. No later than fifteen (15) days after the
Closing, the Company shall file a Form D with respect to the Securities as
required under Regulation D and shall provide a copy thereof to the Purchaser
promptly after filing.
4.18 Legal Opinion. Prior to the Closing, Xxxxxx Xxxxx
Xxxxxxxx & Xxxxxxx LLP, counsel to the Company, will deliver its legal opinion
to the Placement Agent and the Purchasers substantially in the form attached as
Exhibit A to this Agreement. Such opinion shall also state that each of the
Purchasers may rely thereon as though it were addressed directly to such
Purchaser.
4.19 Certificate. At the Closing, the Company will deliver
to the Purchaser a certificate executed by the chief executive officer, or the
chief financial or accounting officer of the Company, dated the Closing Date, in
form and substance reasonably satisfactory to the Purchaser, to the effect that
the representations and warranties of the Company set forth in this Section 4
are true and correct as of the Closing Date, and the Company has complied in all
material respects with all the agreements and satisfied all the conditions
herein on its part to be performed or satisfied on or prior to such Closing
Date.
4.20 Reporting Company; Form S-3. The Company is subject
to the reporting requirements of the Exchange Act and has filed all reports
required thereby since June 30, 2002. The Company is eligible to register the
Registrable Shares (as defined below) for resale by the Purchaser on a
registration statement on Form S-3 under the Securities Act. To the Knowledge of
the Company, there exist no facts or circumstances (including without limitation
any required approvals or waivers or any circumstances that may delay or prevent
the obtaining of accountant's consents) that reasonably could be expected to
prohibit or delay the preparation and filing of a registration statement on Form
S-3 that will be available for the resale of the Registrable Shares by the
Purchaser.
4.21 Quotation on Nasdaq. The Company has not, in the two
years preceding the date hereof, received notice (written or oral) from the
Nasdaq National Market System, any stock exchange, market or trading facility on
which the Common Stock is or has been listed (or on which it has been quoted) to
the effect that the Company is not in compliance with the listing or maintenance
requirements of such exchange, market or trading facility. The Company is, and
has no reason to believe that it will not in the foreseeable future continue to
be, in compliance with all such listing and maintenance requirements. The
Company shall use its best efforts to maintain the designation and quotation, or
listing, of the Common Stock on the Nasdaq National Market System or on another
national securities exchange for a minimum of two (2) years following the
Closing Date.
4.22 Use of Purchaser Name. Except as may be required by
applicable law or in connection with the registration of the Registrable Shares,
the Company shall not use, directly or indirectly, the Purchaser's name or the
name of any of its affiliates in any advertisement, announcement, press release
or other similar communication unless it has received the prior written consent
of the Purchaser for the specific use contemplated or as otherwise required by
applicable law or regulation.
10
4.23 Material Adverse Effect. As used in this Section 4,
the term "MATERIAL ADVERSE EFFECT" means a material adverse effect upon the
business, financial condition, results of operation, prospects to the extent
presented in the Private Placement Memorandum (subject to the safe harbor
provision therein), properties or operations of the Company and its Subsidiary,
taken as a whole.
4.24 No Defaults. Except as disclosed in the Private
Placement Memorandum, neither the Company nor its Subsidiary is in violation or
default of any provision of its articles of incorporation or bylaws, or 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 where such violation, breach or default is reasonably
likely to result in a Material Adverse Effect.
4.25 Transfer Taxes. On the Closing Date, all stock
transfer or other taxes (other than income or similar taxes) which are required
to be paid in connection with the sale and transfer of the Securities 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 complied with.
4.26 Use of Proceeds. The Company will use the proceeds
from the sale of the Securities as described under "Use of Proceeds" in the
Private Placement Memorandum.
4.27 Price of Common Stock. The Company has not taken any
action intended to stabilize or manipulate the price of the Company's shares of
the Common Stock to facilitate the sale or resale of the Securities. The Company
has not repurchased any of its shares of Common Stock since June 30, 2003.
4.28 Disclosure. Except as included in the Private
Placement Memorandum, neither the Company nor, to the Knowledge of the Company,
any Person acting on behalf of the Company, has provided the Purchaser with any
information that the Company believes constitutes material, non-public
information. On or before 9:00 a.m., New York City time, on the first business
day after the Closing Date, the Company shall (i) file a Current Report on Form
8-K describing the material terms of the transactions contemplated by this
Agreement, and disclosing such portions of the Private Placement Memorandum as
contain any material nonpublic information with respect to the Company that has
not previously been publicly disclosed by the Company, and attaching as an
exhibit to such Form 8-K a form of this Agreement (including such exhibit, the
"8-K FILING") and (ii) issue a press release in form reasonably acceptable to
counsel for the Purchaser describing the material terms of the transactions
contemplated by this Agreement (the "PRESS RELEASE"). Except for information
that may be provided to the Purchaser pursuant to Section 5(j) of this
Agreement, the Company shall not, and shall use commercially reasonable efforts
to cause each of its officers, directors, employees and agents not to, provide
Purchaser with any material nonpublic information regarding the Company from and
after the filing of the 8-K Filing and the issuance of the Press Release without
the express written consent of such Purchaser. The Company understands and
confirms that the Purchaser will rely on the representations and covenants set
forth in this Section 4.28 in effecting transactions in securities of the
Company.
4.29 Private Offering. Neither the Company nor anyone
acting on its behalf has within the last 12 months issued, sold or offered any
security of the Company (including, without
11
limitation, any Common Stock or warrants of similar tenor to the Purchased
Warrants) to any Person under circumstances that would cause the issuance and
sale of the Securities, as contemplated by this Agreement, to be subject to the
registration requirements of the Securities Act. The Company agrees that neither
the Company nor anyone acting on its behalf will offer the Securities or any
part thereof or any similar securities for issuance or sale to, or solicit any
offer to acquire any of the same from, anyone so as to make the issuance and
sale of the Securities subject to the registration requirements of Section 5 of
the Securities Act.
4.30 Related Party Transactions. Except as set forth in
the Private Placement Memorandum, since January 1, 2002, no transaction has
occurred between or among the Company, the Subsidiary and their affiliates,
officers or directors or any affiliate or affiliates of any such officer or
director.
4.31 Off-Balance Sheet Arrangements. There is no
transaction, arrangement or other relationship between the Company and an
unconsolidated or other off-balance sheet entity that is required to be
disclosed by the Company in its Exchange Act filings and is not so disclosed or
that otherwise would be reasonably likely to have a Material Adverse Effect.
There are no such transactions, arrangements or other relationships with the
Company that may create contingencies or liabilities that are not otherwise
disclosed by the Company in its Exchange Act filings.
4.32 Governmental Permits, Etc. Each of the Company and
its Subsidiary has all franchises, licenses, certificates and other
authorizations from such federal, state or local government or governmental
agency, department or body that are currently required for the operation of the
business of the Company and its Subsidiary as currently conducted, except where
the failure to possess currently such franchises, licenses, certificates and
other authorizations is not reasonably expected to have a Material Adverse
Effect. The Company and its Subsidiary have not received any written notice of
proceedings relating to the revocation or modification of any such permit which,
if the subject of an unfavorable decision, ruling or finding, could reasonably
be expected to have a Material Adverse Effect.
4.33 Solvency. Based on the financial condition of the
Company as of the Closing Date, (a) the Company's fair saleable value of its
assets exceeds the amount that will be required to be paid on or in respect of
the Company's existing debts and other liabilities (including known contingent
liabilities) as they mature; (b) the Company's assets do not constitute
unreasonably small capital to carry on its business for the current fiscal year
as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business
conducted by the Company, and project capital requirements and capital
availability thereof; and (c) the current cash flow of the Company, together
with the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such amounts are
required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).
SECTION 5. Representations, Warranties and Covenants of the
Purchaser.
12
(a) The Purchaser represents and warrants to, and
covenants with, the Company that: (i) the Purchaser 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 Securities, including investments in
securities issued by the Company and comparable entities, and has requested,
received, reviewed and considered all information it deems relevant in making an
informed decision to purchase the Securities; (ii) the Purchaser is acquiring
the Securities set forth on the signature page hereto in the ordinary course of
its business and for its own account for investment only and with no present
intention or view toward the public sale or distribution thereof, and no
arrangement or understanding exists with any other persons regarding the public
sale or distribution of any Securities (this representation and warranty not
limiting the Purchaser's right to sell any Registrable Shares pursuant to the
Registration Statement or in compliance with an exemption from registration
under the Securities Act or, other than with respect to any claims arising out
of a breach of this representation and warranty, the Purchaser's right to
indemnification under Section 7.3); (iii) the Purchaser has completed or caused
to be completed the Registration Statement Questionnaire attached hereto as part
of Appendix I, for use in the preparation of the Registration Statement, and the
answers thereto are true and correct in all material respects as of the date
hereof and will be true and correct in all material respects as of the effective
date of the Registration Statement, and the Purchaser will notify the Company
immediately of any material change in any such information provided in the
Registration Statement Questionnaire; (iv) the Purchaser has, in connection with
its decision to purchase the number of Purchased Shares and Purchased Warrants
set forth on the signature page hereto, relied solely upon the Private Placement
Memorandum and the documents included therein or incorporated by reference and
the representations and warranties of the Company contained herein; (v) the
Purchaser is an "accredited investor" within the meaning of Rule 501(a) of
Regulation D promulgated under the Securities Act; and (vi) the Purchaser agrees
to notify the Company immediately of any change in any of the foregoing
information until such time as the Purchaser has sold all of its Securities or
the Company is no longer required to keep the Registration Statement effective.
The Purchaser acknowledges that it may not, except in compliance with the
Securities Act, the Rules and Regulations and such other securities or Blue Sky
laws as may be applicable, 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 Securities or engage in any Short Sale
(as defined below).
(b) The Purchaser represents and warrants to, and
covenants with, the Company that neither it nor any Purchaser/Affiliate (as
defined in Section 7.3 and which (x) had knowledge about the transactions
contemplated hereby, (y) has or shares discretion relating to Purchaser's
investments or trading or information concerning Purchaser's investments,
including the Units, or (z) is subject to Purchaser's review or input concerning
such Purchaser/Affiliate's investments or trading) has or will, directly or
indirectly, during the period beginning on the date on which the Purchaser was
first notified that the Company intended to engage in the transactions
contemplated by this Agreement and ending on the date that the Company files the
8-K Filing (as defined in Section 4.28) in accordance with Section 4.28 hereof,
engage (i) in any "short sale" (as defined in Rule 3b-3 promulgated under the
Exchange Act), including, without limitation, the maintaining of any short
position with respect to, establishing or maintaining a "put equivalent
position" (within the meaning of Rule 16a-1(h) under the Exchange Act) with
respect to, entering into any swap, derivative transaction or other arrangement
(whether any such transaction is to be settled by delivery of Common Stock,
other securities, cash or other consideration) that transfers to another, in
13
whole or in part, any of the economic consequences of ownership, or otherwise
dispose of, any of the Securities by Purchaser or (ii) in any hedging
transaction which establishes a net short position with respect to the
Securities (clauses (i) and (ii) together, a "SHORT SALE"); except for (A) Short
Sales by a Purchaser/Affiliate which was, prior to the date on which the
Purchaser was first notified that the Company intended to engage in the
transactions contemplated by this Agreement, a market maker for the Common
Stock, provided that such Short Sales are in the ordinary course of such
Purchaser/Affiliate's business and are in compliance with the Securities Act,
the Rules and Regulations and such other securities or Blue Sky laws as may be
applicable or (B) Short Sales by a Purchaser/Affiliate which by virtue of the
procedures of the Purchaser are made without knowledge of the transactions
contemplated in this Agreement and were not induced or encouraged by the
Purchaser.
(c) The Purchaser understands that the Securities are
being offered and sold to it in reliance upon specific exemptions from the
registration requirements of Securities Act, the Rules and Regulations and state
securities laws, and that the Company is relying upon the truth and accuracy of,
and the Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set forth herein
in order to determine the availability of such exemptions and the eligibility of
the Purchaser to acquire the Securities.
(d) The Purchaser agrees to use the information contained
in the Private Placement Memorandum for the sole purpose of evaluating a
possible investment in the Securities and the Purchaser hereby acknowledges that
it is prohibited from reproducing or distributing the Private Placement
Memorandum, this Purchase Agreement, or any other offering materials or other
information provided by the Company in connection with the Purchaser's
consideration of its investment in the Company, in whole or in part, or
divulging or discussing any of their contents except to its advisors and
representatives for the purpose of evaluating such investment. The Purchaser
shall maintain in confidence the receipt and content of any notice of a
Suspension (as defined in Section 5(h) below). The foregoing agreements shall
not apply to any information that is or becomes publicly available through no
fault of the Purchaser, or that the Purchaser is legally required to disclose;
provided, however, that if the Purchaser is requested or ordered to disclose any
such information pursuant to any court or other government order or any other
applicable legal procedure, it shall provide the Company with prompt notice of
any such request or order in time sufficient to enable the Company to seek an
appropriate protective order and shall provide the Company with reasonable
assistance in obtaining such protective order at the Company's sole expense.
(e) The Purchaser understands that its investment in the
Securities involves a significant degree of risk and that the market price of
the Common Stock has been and continues to be volatile and that no
representation is being made as to the future value of the Common Stock. The
Purchaser has the knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of an investment in the
Securities and has the ability to bear the economic risks of an investment in
the Securities. The Purchaser has had a reasonable opportunity to ask questions
of the Company and its representatives; and the Company has answered all
inquiries that the Purchaser or the Purchaser's representatives have put to it.
14
(f) The Purchaser 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.
(g) The Purchaser understands that the Purchased Shares
have not been registered under the Securities Act and will not sell, offer to
sell, assign, pledge, hypothecate or otherwise transfer any of the Purchased
Shares unless (i) pursuant to an effective registration statement under the
Securities Act, (ii) the Purchaser provides the Company with an opinion of
counsel, in a generally acceptable form, to the effect that a sale, assignment
or transfer of the Securities may be made without registration under the
Securities Act and the transferee agrees to be bound by the terms and conditions
of this Agreement, (iii) the Purchaser provides the Company with evidence of
compliance with Rule 144 promulgated under the Securities Act ("RULE 144"),
including reasonable assurances (in the form of seller and broker representation
letters) that the Purchased Shares can be sold pursuant to Rule 144, (iv)
pursuant to Rule 144(k) following the applicable holding period, (v) pursuant to
any other exception contained in the Securities Act provided that the Purchaser
provides the Company with an opinion of counsel, in a generally acceptable form.
(h) The Purchaser understands that, until such time as
the Registration Statement has been declared effective or the Purchased Shares
and Underlying Shares (the "REGISTRABLE SHARES") may be sold by non-affiliates
of the Company pursuant to Rule 144 under the Securities Act without any
restriction as to the number of securities as of a particular date that can then
be immediately sold, the certificates for the Registrable Shares shall bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for the Registrable
Shares):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF ANY OTHER
JURISDICTION. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER THE SECURITIES ACT."
(i) The Purchaser's principal executive offices are in
the jurisdiction set forth immediately below the Purchaser's name on the
signature pages hereto.
(j) The Purchaser hereby covenants with the Company not
to make any sale of the Registrable Shares under the Registration Statement
without effectively causing the prospectus delivery requirement under the
Securities Act to be satisfied, and the Purchaser acknowledges and agrees that
such Registrable Shares are not transferable on the books of the Company unless
the certificate submitted to the Transfer Agent evidencing the Registrable
Shares is accompanied by a
15
separate Purchaser's Certificate of Subsequent Sale (i) in the form of Appendix
II hereto, (ii) executed by an officer of, or other authorized person on behalf
of, the Purchaser, and (iii) to the effect that (A) the Registrable Shares have
been sold in accordance with the Registration Statement, the Securities Act and
any applicable state securities or Blue Sky laws and (B) if applicable, 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 (a
"SUSPENSION") until such time as an amendment to the Registration Statement has
been filed by the Company and declared effective by the Commission, or such time
as such prospectus has been supplemented, 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 Registrable Shares
pursuant to said prospectus during the period commencing at the time at which it
receives written notice of the Suspension of the use of said prospectus and
ending at the time the Company gives the Purchaser written notice that the
Purchaser may thereafter effect sales pursuant to said prospectus. The Purchaser
shall not be prohibited from selling the Registrable Shares under the
Registration Statement as a result of a Suspension or Suspensions: (i) for more
than thirty (30) days in the case of any Suspension, (ii) Suspensions on more
than one (1) occasion in any 6-month period, (iii) Suspensions on more than two
(2) occasions in any 12-month period or (iv) Suspensions aggregating forty-five
(45) days or more in any 12-month period; provided that the Company shall remain
liable for liquidated damages pursuant to Section 7.6 hereof with respect to any
Suspension or Suspensions exceeding the maximum allowed period for a Suspension
or Suspensions (or maximum number of Suspensions).
(k) 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; (ii) upon the
execution and delivery of this Agreement, this Agreement shall constitute a
legal, 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.
(l) The Purchaser acknowledges the following disclosure,
which is set forth herein as required pursuant to Section 25102(a) of the
California Corporate Securities Law of 1968:
"THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE
OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR THE PAYMENT OR
RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM
THE QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED
16
UPON THE QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT."
SECTION 6. Survival of Representations and Warranties.
Notwithstanding any investigation made by any party to this Agreement or by the
Placement Agent, all representations and warranties made by the Company and the
Purchaser in this Agreement shall survive the execution and delivery of this
Agreement, the delivery to the Purchaser of Securities being purchased and the
payment therefor until the first anniversary of the Closing. The covenants of
the Company in this Agreement shall remain in effect as set forth in this
Agreement.
SECTION 7. Registration of the Shares; Compliance with the
Securities Act.
7.1. Registration Procedures and Expenses. The Company
shall:
(a) as soon as reasonably practicable, but in no event
later than fifteen (15) business days following the Closing Date (the "FILING
DATE"), subject to timely receipt of necessary information in writing from the
Purchasers, prepare and file with the Commission a Registration Statement on
Form S-3 relating to the sale of the Registrable Shares by the Purchaser and the
Other Purchasers from time to time on the Nasdaq National Market System or the
facilities of any national securities exchange on which the Common Stock is then
traded or in privately-negotiated transactions (the "REGISTRATION STATEMENT").
If Form S-3 is not available at that time, then the Company will file a
registration statement or such form as is then available to effect a
registration of the Registrable Shares, subject to the consent of the
Purchasers, representing a majority of the Registrable Shares, which consent
shall not be unreasonably withheld;
(b) use its reasonable best efforts, to cause the
Commission to declare the Registration Statement effective as soon as
practicable but in no event later than sixty (60) calendar days after the
Closing Date (the "REQUIRED EFFECTIVE DATE"), subject to timely receipt of
necessary information in writing from the Purchasers. However, so long as the
Company filed the Registration Statement by the Filing Date, if the Registration
Statement receives Commission review, then the Required Effective Date will be
the ninetieth (90th) calendar day after the Closing Date. The Company's best
efforts will include, but not be limited to, promptly responding to all comments
received from the staff of the Commission. If the Company receives notification
from the Commission that the Registration Statement will receive no action or
review from the Commission, then the Company will, subject to its rights under
Section 7.2, use its commercially reasonably efforts to cause the Registration
Statement to become effective within five (5) business days after such
Commission notification;
(c) use its best efforts to promptly 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 earliest of (i) two years
after the effective date of the Registration Statement, (ii) the date on which
the Purchasers may sell all of the Registrable Shares then held by the
Purchasers, without registration, pursuant to Rule 144(k) of the Securities Act
or (iii) such time as all Registrable Shares purchased by all Purchasers in the
Offering have been sold pursuant to a Registration Statement or Rule 144 of the
Securities Act;
17
(d) furnish to the Purchaser with respect to the
Registrable Shares registered under the Registration Statement (and to each
underwriter, if any, of such Registrable Shares) such 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
Registrable Shares by the Purchaser;
(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 (i) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 7.1; (ii) file a general consent to service of process in any such
jurisdiction; or (iii) subject itself to taxation in any such jurisdiction; 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
Registrable 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.
Notwithstanding the foregoing, it shall be a condition
precedent to the obligations of the Company to take any action pursuant to
paragraphs (a) through (f) of this Section 7.1, that the Purchaser shall furnish
to the Company such information regarding itself, the Registrable Shares to be
sold by the Purchaser, and the intended method of disposition of such
Registrable Shares as shall be required to effect the registration of the
Registrable Shares, all of which information shall be furnished to the Company
in writing specifically for use in the Registration Statement. The Purchaser
shall update such information as and when necessary by written notice to the
Company.
The Company understands that the Purchaser disclaims being an
underwriter, but the Purchaser being deemed an underwriter shall not relieve the
Company of any obligations it has hereunder. Notwithstanding the foregoing, the
parties understand and agree that the Company shall not be obligated to retain
an underwriter with respect to the offer and sale of Registrable Shares pursuant
to the Registration Statement.
The Company shall promptly notify the Purchaser of the
effectiveness of the Registration Statement, and any post-effective amendments
thereto, as well as of the receipt by the Company of any stop orders of the
Commission with respect to the Registration Statement.
7.2. Transfer of Registrable Shares After Registration.
While the Registration Statement is effective and available for resale, the
Purchaser agrees that it will not effect any disposition of the Registrable
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
hereof in the section titled "Plan of Distribution" or otherwise permitted by
law and that it will promptly notify the Company of any changes 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 mean
any affiliate of the Purchaser (as defined
in Rule 405 under the Securities Act) and
any
18
person who controls the Purchaser or any
affiliate of the Purchaser within the
meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act; and
(ii) the term "REGISTRATION STATEMENT" shall
include any final prospectus, exhibit,
supplement or amendment included in or
relating to, and any document incorporated
by reference in, the Registration Statement
referred to in Section 7.1 hereof.
(a) The Company agrees to indemnify and hold
harmless the Purchaser and the Purchaser/Affiliate against any losses, claims,
damages, liabilities or expenses, to which the Purchaser or Purchaser/Affiliate
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 Rules and 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 the Registration Statement or any
amendment or supplement thereto not misleading or in the Prospectus or any
amendment or supplement thereto not misleading in the light of the circumstances
under which they were made, or arise out of or are based in whole or in part on
any material breach of the representations and warranties of the Company
contained in this Agreement, or any material breach by the Company of its
obligations hereunder, and will reimburse the Purchaser or Purchaser/Affiliate
for any legal and other expenses as such expenses are reasonably incurred by the
Purchaser or Purchaser/Affiliate 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, but only to the extent, that any such loss, claim,
damage, liability or expense arises out of or is based upon (i) 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 by or on behalf of the Purchaser expressly for use therein, (ii) the
failure of the Purchaser to comply with the covenants and agreements contained
in Section 7.2 hereof respecting the sale of the Registrable Shares, (iii) the
inaccuracy of any representations made by the Purchaser herein, or (iv) 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.
(b) The Purchaser will severally, but not
jointly, 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 Section 15 of
19
the Securities Act or Section 20 of the Exchange 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 common law
or otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Purchaser which consent shall not be
unreasonably withheld) insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon (i) any failure to comply with the covenants and agreements
contained in Section 7.2 hereof respecting the sale of the Registrable Shares or
(ii) 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 in the Registration Statement or any amendment or supplement
thereto not misleading or in the Prospectus or any amendment or supplement
thereto not misleading in the light of the circumstances under which they were
made, 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 the Purchaser expressly for use therein, and the Purchaser
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; provided, however, that
the obligations of the Purchaser under this Section 7.3 shall not exceed the net
proceeds to such Purchaser from the sale of Registrable Shares pursuant to such
Registration Statement.
(c) Promptly after receipt by an indemnified
party under this Section 7.3 of notice of the threat or 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, promptly notify the
indemnifying party in writing 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 (except to the extent that such omission
materially and adversely affects the indemnifying person's ability to defend
such action). Subject to provisions hereinafter stated, 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 indemnifying party and the
indemnified party, based upon the advice of such indemnified party's counsel,
shall have reasonably concluded that there may be a conflict of interest 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
20
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 (including indemnified parties under
Agreements with Other Purchasers), plus local counsel, if appropriate) or (ii)
the indemnifying 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
reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party. In no event shall any indemnifying person be liable in
respect of any amounts paid in settlement of any action unless the indemnifying
person shall have approved in writing the terms of such settlement; provided
that such consent shall not be unreasonably withheld. No indemnifying person
shall, without the prior written consent of the indemnified person, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified person is or could have been a party and indemnification could have
been sought hereunder by such indemnified person, unless such settlement
includes an unconditional release of such indemnified person from all liability
on claims that are the subject matter of such proceeding.
(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 the Common Stock contemplated by this Agreement 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 or the Registration Statement
that resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Purchaser on the other shall be deemed to
be in the same proportion as the amount paid by the Purchaser to the Company
pursuant to this Agreement for the Registrable Shares purchased by the Purchaser
that were sold (including the exercise price of the Purchased Warrants, if any)
pursuant to the Registration Statement bears to the difference (the
"DIFFERENCE") between the amount the Purchaser paid for the Registrable Shares
that were sold (including the exercise price of the Purchased Warrants, if any)
pursuant to the Registration Statement and the amount received by the Purchaser
from such sale. The relative fault of the Company on the one hand and the
Purchaser on the other 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 the Purchaser and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such untrue
21
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 out-of-pocket 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 the notice of the threat or commencement of any threat or 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 threat or action for which notice has been given under paragraph (c) for
purposes of indemnification. The Company and the 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
take account of the equitable considerations referred to in this paragraph.
Notwithstanding the provisions of this Section 7.3, the Purchaser shall not be
required to contribute any amount in excess of the amount by which the
Difference exceeds the amount of any damages which 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 Purchaser's obligation to contribute pursuant to this
Section 7.3 is several and not joint.
7.4. Termination of Conditions and Obligations. The
conditions precedent imposed by Section 5 or this Section 7 upon the
transferability of the Registrable Shares shall cease and terminate as to any
particular number of the Registrable Shares upon the earliest to occur of (i)
the sale of the Registrable Shares pursuant to the Registration Statement, (ii)
the sale of the Registrable Shares pursuant to Rule 144 under the Securities Act
or (iii) the passage of two (2) years from the effective date of the
Registration Statement covering such Registrable Shares or at such time as an
opinion of counsel satisfactory in form and substance to the Company shall have
been rendered to the effect that such conditions are not necessary in order to
comply with the Securities Act in connection with the resale of the Registrable
Shares.
7.5. Information Available. As long as any Purchaser owns
the Registrable Shares and the Company is subject to the filing requirements of
the Exchange Act, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. So long as the Registration Statement is effective covering the
resale of the Registrable Shares owned by the Purchaser, the Company will
furnish to the Purchaser upon such Purchaser's request:
(a) as soon as practicable after available (but in the
case of the Company's Annual Report to Stockholders, concurrently with delivery
to its shareholders generally) one copy of (i) its Annual Report to Stockholders
(which Annual Report shall contain financial statements audited in accordance
with U.S. generally accepted accounting principles by a national firm of
certified public accountants), (ii) if not included in substance in the Annual
Report to Stockholders, upon the request of the Purchaser, its Annual Report on
Form 10-K, (iii) upon the request of the Purchaser, its Quarterly Reports on
Form 10-Q, (iv) upon the request of the Purchaser, its Current Reports on Form
8-K, and (v) a full copy of the particular Registration Statement covering the
Registrable Shares;
22
(b) upon the reasonable request of the Purchaser, a
reasonable number of copies of the prospectuses and supplements thereto to
supply to any other party requiring such prospectuses and supplements; 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
information relevant for disclosure in the Registration Statement covering the
Registrable Shares and will otherwise cooperate with any Purchaser conducting an
investigation for the purpose of reducing or eliminating such Purchaser's
exposure to liability under the Securities Act, including the reasonable
production of information at the Company's headquarters, subject to appropriate
confidentiality limitations.
7.6 Delay in Filing or Effectiveness of Registration
Statement. If the Registration Statement is not filed by the Company with the
Commission on or prior to the Filing Date, then for each day following the
Filing Date, until but excluding the date the Registration Statement is filed,
or if the Registration Statement has been filed but is not declared effective by
the Commission by the Required Effective Date, then for each day following the
Required Effective Date, until but excluding the date the Commission declares
the Registration Statement effective, the Company shall, for each such day, pay
the Purchaser with respect to any such failure, as liquidated damages and not as
a penalty, an amount equal to 0.033% of the purchase price paid by such
Purchaser for the Securities it continues to hold pursuant to this Agreement as
of such day; and for any such day, such payment shall be made no later than the
tenth business day of the calendar month next succeeding the month in which such
day occurs. If the Purchaser shall be prohibited from selling the Registrable
Shares under the Registration Statement as a result of (i) a Suspension of more
than thirty (30) days, (ii) Suspensions on more than one (1) occasion in any
6-month period, (iii) Suspensions on more than two (2) occasions in any 12-month
period or (iv) Suspensions aggregating forty-five (45) days or more in any
12-month period, then for each day on which a Suspension is in effect that
exceeds the maximum allowed period for a Suspension or Suspensions (or maximum
number of Suspensions), but not including any day on which a Suspension is
lifted, the Company shall pay the Purchaser, as liquidated damages and not as a
penalty, an amount equal to 0.033% per day of the purchase price paid by the
Purchaser for the Registrable Shares the Purchaser continues to hold pursuant to
this Agreement as of such day, and such payment shall be made no later than the
tenth business day of the calendar month next succeeding the month in which such
day occurs. For purposes of this Section 7.6, a Suspension shall be deemed
lifted on the date that notice that the Suspension has been lifted is delivered
to the Purchaser pursuant to Section 9 of this Agreement. Any payments made
pursuant to this Section 7.6 shall not constitute the Purchaser's exclusive
remedy for such events. Notwithstanding the foregoing provisions, in no event
shall the Company be obligated to pay such liquidated damages to more than one
Purchaser in respect of the same Registrable Shares for the same period of time.
Such payments shall be made to the Purchaser in cash.
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 Securities to the Purchaser. The Purchaser and the Company hereby agree that
the Purchaser shall not be responsible for such fee and that the Company will
indemnify and hold harmless the Purchaser and each Purchaser/Affiliate against
any losses, claims, damages, liabilities or expenses, joint or several, to which
such Purchaser or Purchaser/Affiliate may become subject with respect to such
fee. Each of the parties hereto hereby represents that, on the
23
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 Securities 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, confirmed facsimile or nationally recognized
overnight express courier postage prepaid, and shall be deemed given (i) when so
faxed , (ii) the day after so mailed by such overnight express courier and (iii)
two days after so mailed otherwise than by such overnight express courier,
(except that notices of Suspensions or stop orders must be made by facsimile) as
follows:
(a) if to the Company, to:
Nastech Pharmaceutical Company Inc.
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and
(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.
SECTION 10. Changes. No provision of this Agreement may be
waived, 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; Jurisdiction. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York. Any legal suit, action or proceeding arising out of or based upon this
Agreement or the transactions contemplated hereby
24
("RELATED PROCEEDINGS") may be instituted in the federal courts of the United
States of America located in New York, New York (collectively, the "SPECIFIED
COURTS"), and each party irrevocably submits to the non-exclusive jurisdiction
of such Specified Courts of such courts in any such suit, action or proceeding.
Service of any process, summons, notice or document by mail to such party's
address set forth above shall be effective service of process for any suit,
action or other proceeding brought in any such court. The parties irrevocably
and unconditionally waive any objection to the laying of venue of any suit,
action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum. With respect to any Related Proceeding, each party
irrevocably waives, to the fullest extent permitted by applicable law, all
immunity (whether on the basis of sovereignty or otherwise) from jurisdiction,
service of process, attachment (both before and after judgment) and execution to
which it might otherwise be entitled in the Specified Courts or any other court
of competent jurisdiction.
SECTION 14. Counterparts. This Agreement may be executed in
two (2) 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. Facsimile signatures shall be
deemed original signatures.
SECTION 15. Entire Agreement. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Purchaser
makes any representation, warranty, covenant or undertaking with respect to such
matters. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
SECTION 16. Third Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
SECTION 17. Successors and Assigns. This Agreement is binding
upon and inures to the benefit of the parties and their successors and assigns;
provided that the Company may only assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Purchaser in
connection with a merger, consolidation or sale of all or substantially all of
the Company's assets. The Purchaser may assign its rights under this Agreement
to any person to whom the Purchaser assigns any of the Securities, so long as
(i) such transfer is in compliance with the federal and state securities laws,
(ii) such transferee is an "accredited investor" (within the meaning of
Regulation D under the Securities Act), (iii) such transferee agrees in writing
to be bound by the terms and provisions of this Agreement, (iv) such transferee
completes and delivers to the Company the Securities Questionnaire and
Registration Statement Questionnaire attached as Appendix I and (v) any transfer
of Shares to such transferee complies with Section 5 and Section 7.2 hereof;
provided, however that if such assignment is made to 10 or more separate persons
or entities, then the Purchaser, and not any subsequent assignee, shall have the
right to enforce the terms of, and receive notices under, Section 7.3.
25
SECTION 18. Force Majeure. Neither party shall be deemed in
default of any provision of this Agreement (other than provisions regarding
confidentiality), to the extent that performance of its obligations or attempts
to cure a breach are materially delayed or prevented by any event reasonably
beyond the control of such party, including, without limitation, war,
hostilities, acts of terrorism, revolution, riot, civil commotion, national
emergency, strike, lockout, unavailability of supplies, epidemic, fire, flood,
earthquake, force of nature, explosion, embargo, or any other Act of God, or any
law, proclamation, regulation, ordinance, or other act or order of any court,
government or governmental agency, provided that such party gives the other
party written notice thereof promptly upon discovery thereof and uses reasonable
efforts to cure or mitigate the delay or failure to perform.
SECTION 19. 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.
SECTION 20. 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.
[Remainder of page is intentionally blank]
26
SIGNATURE PAGE
TO
NASTECH PHARMACEUTICAL COMPANY INC.
SUBSCRIPTION AGREEMENT
Dated __________ __, 2003
IN WITNESS WHEREOF, the undersigned has executed this Agreement this
___ day of __________, 2003.
Number of units to be purchased:
_______________, including
____________ Purchased Shares and
________ Purchased Warrants
Purchase Price for Units to be Purchased:
$___________
__________________________________________
Print Full Legal Name of Partnership,
Company, Limited Liability Company, Trust
or Other Entity
By: ______________________________________
(Authorized Signatory)
Name: ____________________________________
Title: ___________________________________
Address and Fax Number: __________________
__________________________________________
Taxpayer Identification Number: __________
Date and State of Incorporation or Organization: _____________
Date on which Taxable Year Ends: _____________________________
E-mail Address: __________________________
ACCEPTED AND AGREED:
NASTECH PHARMACEUTICAL COMPANY INC.
By: ______
Name:_____________________________
Title:
Dated:
