SECURITIES PURCHASE AGREEMENT
Exhibit
10.1
This
SECURITIES PURCHASE AGREEMENT (this “Agreement”)
is
dated as of the 8th day of January, 2007 (the “Effective
Date”)
by and
between Targeted Genetics Corporation, a Washington corporation, with its
principal office at 0000 Xxxxx Xxx Xxxxx 000, Xxxxxxx, XX 00000 (the
“Company”),
and
the several purchasers identified in the attached Exhibit A
(individually, a “Purchaser”
and
collectively, the “Purchasers”).
WHEREAS,
the Company desires to issue and sell to the Purchasers an aggregate of
(i) approximately 2,180,000 shares (the “Shares”)
of the
authorized but unissued shares of common stock, $0.01 par value per share,
of
the Company (the “Common
Stock”);
and
(ii) warrants in the form attached as Exhibit B
to
purchase an aggregate of approximately 763,000 shares of Common Stock (each,
a
“Warrant,”
and
collectively, the “Warrants”);
and
WHEREAS,
the Purchasers, severally, wish to purchase the Shares and the Warrants on
the
terms and subject to the conditions set forth in this Agreement.
NOW,
THEREFORE, in consideration of the mutual agreements, representations,
warranties and covenants herein contained, the parties hereto agree as
follows:
1. Definitions.
As used
in this Agreement, the following terms shall have the following respective
meanings:
(a) “Affiliate”
of
a
party means any corporation or other business entity controlled by, controlling
or under common control with such party. For this purpose “control”
shall
mean direct or indirect beneficial ownership of fifty percent (50%) or more
of the voting or income interest in such corporation or other business
entity.
(b) “Agreement”
means
this Securities Purchase Agreement.
(c) “Closing
Date”
means
the date of the Closing.
(d) “Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and all of the rules and
regulations promulgated thereunder.
(e) “Registration
Rights Agreement”
shall
mean that certain Registration Rights Agreement, dated as of the date hereof,
among the Company and the Purchasers.
(f) “Operative
Agreements”
shall
mean the Registration Rights Agreement and the Warrant together with this
Agreement.
(g) “Supermajority
Purchasers”
shall
mean Purchasers which, at any given time, hold greater than sixty-six and
two-thirds percent (66 2/3%) of the voting power of the outstanding Shares,
that have not been resold pursuant to an effective registration statement under
the Securities Act or Rule 144 under the Securities Act.
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(h) Material
Adverse Effect shall mean a material adverse change in the assets, liabilities
(contingent or other), affairs, operations or financial condition of the
Company.
(i) “Rules
and Regulations”
shall
mean the rules and regulations of the SEC.
(j) “SEC”
shall
mean the Securities and Exchange Commission.
(k) “SEC
Documents”
shall
have the meaning set forth in Section 3.27 below.
(l) “Securities”
shall
mean the Shares, the Warrants and the Underlying Shares.
(m) “Securities
Act”
shall
mean the Securities Act of 1933, as amended, and all of the rules and
regulations promulgated thereunder.
(n) “Underlying
Shares”
shall
mean the shares of Common Stock issuable upon exercise of the
Warrants.
2. Purchase
and Sale of Securities.
2.1 Purchase
and Sale.
Subject
to and upon the terms and conditions set forth in this Agreement, the Company
agrees to issue and sell to each Purchaser, and each Purchaser, severally,
hereby agrees to purchase from the Company, at the Closing (as defined below),
(i) the number of shares of Common Stock set forth opposite the name of such
Purchaser under the heading “Number
of Shares to be Purchased”
on
Exhibit A
hereto,
at a purchase price of $4.00 per share and (ii) a Warrant to purchase .35
share of Common Stock for every one Share purchased by the Purchaser at a
purchase price per Underlying Share of $0.0 and having an exercise price of
$5.41 per Underlying Share. The total purchase price payable by each Purchaser
for the Securities that such Purchaser is hereby agreeing to purchase is set
forth opposite the name of such Purchaser under the heading “Aggregate
Purchase Price”
on
Exhibit A
hereto.
The aggregate purchase price payable by the Purchasers to the Company for all
of
the Securities shall be approximately $8,720,000.
2.2 Closing.
The
purchase and sale of the Securities to be sold pursuant to this Agreement shall
take place at the offices of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, counsel to
the Company, at 000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx 00000, at
10:00 a.m., on January 11, 2007, or at such other time and place as the Company
and the Supermajority Purchasers agree upon orally or in writing (which time
and
place are designated as the “Closing”).
At
the Closing, the Company shall deliver to each Purchaser a single stock
certificate and a single Warrant representing the number of Securities purchased
by such Purchaser, each to be registered in the name of such Purchaser, or
in
such nominee’s or nominees’ name(s) as designated by such Purchaser in writing
in the form of the Investor Questionnaire attached hereto as Appendix I,
against
payment of the purchase price therefor by wire transfer of immediately available
funds to such account or accounts as the Company shall designate in
writing.
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3. Representations
and Warranties of the Company.
Except
as otherwise described in the SEC Documents (as defined below), the Company
hereby represents and warrants to each of the Purchasers as
follows:
3.1 Incorporation.
The
Company is a corporation duly organized, validly existing under the laws of the
state of Washington and is qualified to do business and in good standing (with
respect to jurisdictions that recognize such concept) in each jurisdiction
in
which the character of its properties or the nature of its business requires
such qualification, except where the failure to so qualify or be in good
standing would not have a Material Adverse Effect. Except for short-term
investments, the Company does not own any shares of stock or any other equity
or
long-term debt securities of any corporation or have any equity interest in
any
firm, partnership, limited liability company, joint venture, association or
other entity. Complete and correct copies of the Company’s Amended and Restated
Articles of Incorporation (the “Restated
Articles”)
and
its Amended and Restated Bylaws (the “Bylaws”)
as in
effect on the date hereof have been filed by the Company with the SEC. The
Company has all requisite corporate power and authority to carry on its business
as now conducted.
3.2 Authority.
The
Company has all requisite corporate power and authority to enter into this
Agreement and the other Operative Agreements and to perform the transactions
contemplated hereby and thereby. The Operative Agreements have been duly
authorized, executed and delivered by the Company and are valid and binding
agreements on the part of the Company, enforceable in accordance with their
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors’ rights generally or by general equitable principles. The execution
and delivery of the Operative Agreements by the Company and the consummation
of
the transactions contemplated thereby will not conflict with or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of
any obligation or to a loss of a material benefit under (i) any provision
of the Restated Articles or Bylaws, (ii) any material bond, debenture, note
or other evidence of indebtedness, or any material lease, contract, indenture,
mortgage, deed of trust, loan agreement, joint venture or other agreement or
instrument to which the Company is a party or by which it or its property is
bound or (iii) except as would not have a Material Adverse Effect, any
judgment, order, statute, law, ordinance, rule or regulation applicable to
the
Company or its properties or assets. No consent, approval, authorization or
order of or qualification with any Government Entity is required for the
execution and delivery of this Agreement or the other Operative Agreements
and
the consummation by the Company of the transactions herein and therein
contemplated, except such consents (i) that will be obtained prior to the
Closing Date and (ii) as may be required under the Securities Act, the Exchange
Act (if applicable), the Rules and Regulations, or under state or other
securities or blue sky laws or the National Association of Securities Dealers,
Inc. (the “NASD”),
all
of which requirements will be satisfied in all material respects at or prior
to
the Closing Date.
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3.3 Absence
of Litigation or Proceeding.
There
is no action, suit or proceeding or, to the Company’s knowledge, any
investigation, pending, or to the Company’s knowledge, threatened by or before
any court, governmental body or regulatory agency against the Company that
is
required to be disclosed in the SEC Documents and is not so disclosed. The
Company has not received any written or oral notification of, or request for
information in connection with, any formal or informal inquiry, investigation
or
proceeding from the SEC or the NASD.
3.4 Capitalization.
All
outstanding shares of capital stock of the Company have been duly authorized
and
validly issued and are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, and have not been issued
in violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities. The authorized capital stock of the Company consists
of (i) 18,000,000 shares of Common Stock, of which approximately 10,921,736
shares are outstanding on the date hereof and (ii) 600,000 shares of
preferred stock, none of which no shares are outstanding on the date hereof.
Except for options to purchase Common Stock or other equity awards issued to
employees and consultants of the Company pursuant to the employee benefit plans
disclosed in the SEC Documents and outstanding warrants to purchase Common
Stock
disclosed in the SEC Documents, there are no existing options, warrants, calls,
preemptive (or similar) rights, subscriptions or other rights, agreements,
arrangements or commitments of any character obligating the Company to issue,
transfer or sell, or cause to be issued, transferred or sold, any shares of
the
capital stock of the Company or other equity interests in the Company or any
securities convertible into or exchangeable for such shares of capital stock
or
other equity interests, and there are no outstanding contractual obligations
of
the Company to repurchase, redeem or otherwise acquire any shares of its capital
stock or other equity interests. There are no voting agreements or other similar
arrangements with respect to the Common Stock to which the Company is a party.
3.5 Valid
Issuance of Securities.
The
Securities being purchased by the Purchasers hereunder will, upon issuance
pursuant to the terms hereof, be duly authorized and validly issued, and the
Shares will, upon issuance pursuant to the terms hereof, be fully paid and
nonassessable. The Underlying Shares have been duly and validly authorized
and
reserved for issuance and, upon exercise of the Warrants in accordance with
their terms, including payment of the exercise price therefore, the Underlying
Shares will be validly issued, fully paid and nonassessable. Except
as
disclosed in the SEC Documents, the Company has granted no preemptive
rights,
co-sale rights, rights of first refusal or other similar rights to subscribe
for
or to purchase the Company’s capital stock exist with respect to the issuance
and sale of the Securities by the Company pursuant to this Agreement and the
terms of the Warrants. No shareholder of the Company has any right (which has
not been waived or has not expired by reason of lapse of time) to require the
Company to register the sale of any shares owned by such stockholder under
the
Securities Act in the registration statement to be filed by the Company pursuant
to the Registration Rights Agreement (the “Registration
Statement”).
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3.6 Accountants.
Ernst
& Young LLP, whose report on the financial statements of the Company is
filed with the SEC in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2005, are independent registered public accountants as
required by the Securities Act and the Rules and Regulations. Except as
described in the SEC Documents and as preapproved in accordance with the
requirements set forth in Section 10A of the Exchange Act, to the Company’s
knowledge, Ernst & Young LLP has not engaged in any “prohibited activities”
(as defined in Section 10A of the Exchange Act) on behalf of the
Company.
3.7 Financial
Statements.
The
financial statements of the Company, together with the related schedules and
notes: (i) present fairly, in all material respects, the financial position
of
the Company as of the dates indicated and the results of operations and cash
flows of the Company for the periods specified; (ii) have been prepared in
compliance with requirements of the Securities Act and the Rules and Regulations
and in conformity with generally accepted accounting principles in the United
States applied on a consistent basis during the periods presented and the
schedules included in the Registration Statement present fairly, in all material
respects, the information required to be stated therein (provided, however,
that
the statements that are unaudited are subject to normal year-end adjustments
and
do not contain certain footnotes required by generally accepted accounting
principles); (iii) comply with the antifraud provisions of the federal
securities laws; and (iv) describe accurately, in all material respects, the
controlling principles used to form the basis for their presentation. There
are
no financial statements (historical or pro forma) and/or related schedules
and
notes that are required to be included in the SEC Documents that are not
included as required by the Securities Act, the Exchange Act and/or the Rules
and Regulations.
3.8 No
Changes.
Except
as disclosed in the SEC Documents, subsequent to September 30, 2006 there has
not been (i) any change, development or event that might reasonably be expected
to result, individually or in the aggregate, in a Material Adverse Effect,
(ii)
any transaction that is material to the Company, (iii) any obligation, direct
or
contingent, that is material to the Company, incurred by the Company, (iv)
any
change in the capital stock or outstanding indebtedness of the Company that
is
material to the Company, (v) any dividend or distribution of any kind declared,
paid or made on the capital stock of the Company or (vi) any loss or damage
(whether or not insured) to the property of the Company that has been sustained
or will have been sustained that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
3.9 Property.
(a) Except
as
set forth in the SEC Documents: (i) the Company has good and marketable title
to
all properties and assets described in the SEC Documents as owned by it free
and
clear of any pledge, lien, security interest, encumbrance, claim or equitable
interest, whether imposed by agreement, contract, understanding, law, equity
or
otherwise, except for Permitted Liens (as defined below) or where any failure
to
have good and marketable title to such properties and assets, individually
or in
the aggregate, would not reasonably be expected to have, individually or in
the
aggregate, a Material Adverse Effect; and (ii) the Company has valid and
enforceable leases, including without limitation any leases that are the subject
of any sale and leaseback arrangement, for all properties described in the
SEC
Documents as leased by it, except as the enforcement thereof may be limited
by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors’ rights generally or by general
equitable principles. Except as set forth in the SEC Documents, the Company
owns
or leases all such properties as are necessary to its operations as now
conducted or as proposed to be conducted. A “Permitted
Lien”
shall
mean (i) liens for taxes not yet due, (ii) mechanics liens and similar liens
for
labor, materials or supplies incurred in the ordinary course of business for
amounts that are not delinquent and (iii) any liens that individually or in
the
aggregate are not material.
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(b) The
Company owns or has valid, binding and enforceable licenses or other rights
to
use the patents and patent applications, inventions, copyrights, trademarks,
service marks, trade names, service names, technology and know-how (including
trade secrets and other unpatented and/or unpatentable proprietary rights and
excluding generally commercially available “off the shelf” software programs
licensed pursuant to shrink wrap or “click and accept” licenses) necessary to
conduct its business in the manner described in the SEC Documents (collectively,
the “Company
Intellectual Property”),
except for any Company Intellectual Property the absence of which, individually
or in the aggregate, would not have a Material Adverse Effect. The Company
Intellectual Property is free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest, whether imposed by agreement,
contract, understanding, law, equity or otherwise, except for Permitted Liens
or
where any failure to have such adequate licenses or other rights of use to
such
Intellectual Property, individually or in the aggregate, would not reasonably
be
expected to have, individually or in the aggregate, a Material Adverse Effect.
The Company is not obligated to pay a royalty, grant a license or provide other
consideration to any third party in connection with the Company Intellectual
Property other than as disclosed in the SEC Documents. Except as disclosed
in
the SEC Documents or as would not have a Material Adverse Effect, (i) the
Company has not received any notice of infringement or conflict with asserted
rights of others with respect to any Company Intellectual Property, (ii) the
conduct of the business of the Company in the manner described in the SEC
Documents does not and will not, to the knowledge of the Company, infringe,
interfere or conflict with any valid issued patent claim or other intellectual
property right of any third party and (iii) no third party, including any
academic or governmental organization, possesses or could obtain rights to
the
Company Intellectual Property which, if exercised, could enable such party
to
develop products competitive to those of the Company. Except as disclosed in
the
SEC Documents, the Company has not received any notice or has any knowledge
of
(i) any potential infringement or misappropriation by others of the Company
Intellectual Property or (ii) any intellectual property of others that
potentially conflicts or interferes with the Company Intellectual Property,
that
might reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. To the Company’s knowledge, no claim of any patent or
patent application (assuming the claims of patent applications issue as
currently pending) included in the Company Intellectual Property is
unenforceable or invalid, except for such unenforceability or invalidity that
would not reasonably be expected to result, individually or in the aggregate,
in
a Material Adverse Effect. Each former and current employee and independent
contractor of the Company has signed and delivered one or more written contracts
with the Company pursuant to which such employee or independent contractor
assigns to the Company all of his, her or its rights in and to any inventions,
discoveries, improvements, works of authorship, know-how or information made,
conceived, reduced to practice, authored or discovered in the course of
employment by or performance of services for the Company and any and all patent
rights, copyrights, trademark and other intellectual property rights therein
or
thereto.
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3.10 Tax
Returns.
The
Company has timely filed all federal, state and foreign income and franchise
tax
returns required to be filed by the Company on or prior to the date hereof,
and
has paid all taxes shown thereon as due, and there is no tax deficiency that
has
been or, to the Company’s knowledge, might be asserted against the Company that
might reasonably be expected to have a Material Adverse Effect. All tax
liabilities are adequately provided for on the books of the
Company.
3.11 Internal
Controls.
The
Company has established and maintains a system of internal accounting controls
sufficient to provide reasonable assurances that: (i) transactions are executed
in accordance with management’s general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles in the
United States and to maintain accountability for assets; (iii) access to assets
is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared
with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
3.12 Audit
Committee.
The
Company’s Board of Directors has validly appointed an Audit Committee whose
composition satisfies the requirements of Rule 4350(d)(2) of the Rules of the
National Association of Securities Dealers, Inc. (the “NASD
Rules”)
and
the Board of Directors and/or the Audit Committee has adopted a charter that
satisfies the requirements of Rule 4350(d)(1) of the NASD Rules. The Audit
Committee has reviewed the adequacy of its charter within the past 12 months.
3.13 Disclosure
Controls.
The
Company has established and maintains disclosure controls and procedures (as
such term is defined in Rules 13a-15 and 15d-15 under the Exchange Act). Since
the date of the most recent evaluation of such disclosure controls and
procedures, there have been no significant changes in internal controls or
in
other factors that could significantly affect internal controls, including
any
corrective actions with regard to significant deficiencies and material
weaknesses. The Company is in compliance in all material respects with all
provisions currently in effect and applicable to the Company of the
Xxxxxxxx-Xxxxx Act of 2002, and all rules and regulations promulgated thereunder
or implementing the provisions thereof.
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3.14 Insurance.
The
Company maintains insurance with insurers of recognized financial responsibility
of the types and in the amounts it reasonably believes to be adequate for its
business and consistent with insurance coverage maintained by similar companies
in similar businesses, including, but not limited to, insurance covering the
acts and omissions of directors and officers, real and personal property owned
or leased by the Company against theft, damage, destruction, acts of vandalism
and all other risks customarily insured against, all of which insurance is
in
full force and effect; and the Company has no reason to believe that it will
not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that might not reasonably be expected to
have
a Material Adverse Effect.
3.15 Losses.
The
Company has not sustained since September 30, 2006 any losses or interferences
with its business from fire, explosion, flood or other calamity, whether or
not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, other than any losses or interferences which might not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
3.16 Labor
Disputes.
No
labor dispute with employees of the Company exists or, to the Company’s
knowledge, is imminent which might reasonably be expected to have a Material
Adverse Effect. No collective bargaining agreement exists with any of the
Company’s employees and, to the Company’s knowledge, no such agreement is
imminent.
3.17 NASDAQ
Capital Market.
The
Common Stock is registered pursuant to Section 12(g) of the Exchange Act and
is
listed on the NASDAQ Capital Market, and the Company has taken no action
designed to, or likely to have the effect of, terminating the registration
of
the Common Stock under the Exchange Act or delisting the Common Stock from
the
NASDAQ Capital Market. The Company has not received any notification that the
SEC or the NASDAQ Stock Market LLC is contemplating terminating such
registration or listing. The Company has taken all actions necessary to list
the
Securities for quotation on the NASDAQ Capital Market. The Company is in
compliance in all material respects with all corporate governance requirements
of the NASDAQ Capital Market. The Company shall comply with all requirements
of
the NASD with respect to the issuance of the Shares and the listing of the
Shares on the NASDAQ Capital Market.
3.18 Investment
Company Status.
The
Company is not and upon consummation of the sale of the Securities will not
be
an “investment company,” a company controlled by an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for, an
“investment company” as such terms are defined in the Investment Company Act of
1940, as amended.
3.19 Offering
Materials.
Other
than the SEC Documents and the Operative Agreements (collectively, the
“Offering
Materials”),
the
Company has not distributed and, prior to the Closing Date, will not distribute,
any offering materials in connection with the offering and sale of the
Securities. The Company has not in the past nor will it hereafter take any
action to sell, offer for sale or solicit offers to buy any securities of the
Company which would require the offer, issuance or sale of the Shares, as
contemplated by this Agreement, to be registered under Section 5 of the
Securities Act.
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3.20 No
Manipulation of Stock.
Neither
the Company nor, to its knowledge, any of its affiliates has taken, directly
or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result, under the Exchange Act or otherwise,
in the stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities.
3.21 ERISA.
The
Company is in compliance in all material respects with all currently applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
(“ERISA”),
except where a failure to so comply might not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; to the Company’s
knowledge, no unwaivable “reportable event” (as defined in ERISA) has occurred
with respect to any “pension plan” (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect
to
incur any material liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any “pension plan” or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the “Code”);
and
each “pension plan” for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in
all
material respects and nothing has occurred, whether by action or by failure
to
act, which would cause the loss of such qualification.
3.22 Environmental.
Except
as set forth in the SEC Documents: (i) the Company is in material compliance
with all rules, laws and regulations relating to the use, treatment, storage
and
disposal of toxic substances and protection of health or the environment
(“Environmental
Laws”)
which
are applicable to its business; (ii) the Company has not received any notice
from any governmental authority or third party of an asserted claim under
Environmental Laws, which claim is required to be disclosed in the SEC
Documents; (iii), to the Company’s knowledge, the Company is not currently
required to make future material capital expenditures to comply with
Environmental Laws; and (iv) to the Company’s knowledge, no property that is
owned, leased or occupied by the Company has been designated a Superfund site
pursuant to the Comprehensive Response, Compensation and Liability Act of 1980,
as amended (42 U.S.C. Section 9601, et seq.), or otherwise designated as a
contaminated site under applicable state or local law.
3.23 Outstanding
Loans to Officers or Directors.
There
are no outstanding loans, advances (except normal advances for business expenses
in the ordinary course of business) or guarantees of indebtedness by the Company
to or for the benefit of any of the officers or directors of the Company or
any
of the members of the families of any of them.
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3.24 Sales
or Issuances.
The
Company has not sold or issued any shares of Common Stock during the six-month
period preceding the Applicable Time, including any sales pursuant to Rule
144A
under, or Regulations D or S of, the Act, other than shares issued in a public
offering pursuant to a valid and effective registration statement filed with
the
SEC or shares issued pursuant to employee benefit plans, qualified stock option
plans or other employee compensation plans or pursuant to outstanding options,
rights or warrants.
3.25 Regulatory
Compliance.
(a) The
Company possess all certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct its business as currently conducted, including without limitation all
such certificates, authorizations and permits required by the United States
Food
and Drug Administration (the “FDA”)
or any
other federal, state or foreign agencies or bodies engaged in the regulation
of
pharmaceuticals or biohazardous materials, except where the failure to so
possess such certificates, authorizations and permits, individually or in the
aggregate, would not result in a Material Adverse Effect. The Company has not
received any notice of proceedings relating to the revocation or modification
of
any such certificate, authorization or permit which, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a Material Adverse Effect.
(b) Except
to
the extent disclosed in the General Disclosure Package, the Company has not
received any written notices or statements from the FDA, the European Medicines
Agency (the “EMEA”)
or any
other governmental agency, and otherwise has no knowledge or reason to believe,
that (i) any new drug application or marketing authorization application for
any
product or potential product of the Company is or has been rejected or
determined to be non-approvable or conditionally approvable; (ii) a delay in
time for review and/or approval of a marketing authorization application or
marketing approval application in any other jurisdiction for any product or
potential product of the Company is or may be required, requested or being
implemented; (iii) one or more clinical studies for any product or potential
product of the Company shall or may be requested or required in addition to
the
clinical studies described in the SEC Documents as a precondition to or
condition of issuance or maintenance of a marketing approval for such product
or
potential product; (iv) any license, approval, permit or authorization to
conduct any clinical trial of or market any product or potential product of
the
Company has been, will be or may be suspended, revoked, modified or limited,
except in the cases of clauses (i), (ii), (iii) and (iv) where such rejections,
determinations, delays, requests, suspensions, revocations, modifications or
limitations might not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(c) To
the
Company’s knowledge, the preclinical and clinical testing, application for
marketing approval of, manufacture, distribution, promotion and sale of the
products and potential products of the Company is in compliance, in all material
respects, with all laws, rules and regulations applicable to such activities,
including without limitation applicable good laboratory practices, good clinical
practices and good manufacturing practices, except for such non-compliance
as
would not, individually or in the aggregate, have a Material Adverse Effect.
The
descriptions of the results of such tests and trials contained in the SEC
Documents are accurate in all material respects. The Company has not received
notice of adverse finding, warning letter or clinical hold notice from the
FDA
or any non-U.S. counterpart of any of the foregoing, or any untitled letter
or
other correspondence or notice from the FDA or any other governmental authority
or agency or any institutional or ethical review board alleging or asserting
noncompliance with any law, rule or regulation applicable in any jurisdiction,
except notices, letters, and correspondences and non-U.S. counterparts thereof
alleging or asserting such noncompliance as would not, individually or in the
aggregate, have a Material Adverse Effect. The Company has not, either
voluntarily or involuntarily, initiated, conducted or issued, or caused to
be
initiated, conducted or issued, any recall, field correction, market withdrawal
or replacement, safety alert, warning, “dear doctor” letter, investigator
notice, or other notice or action relating to an alleged or potential lack
of
safety or efficacy of any product or potential product of the Company, any
alleged product defect of any product or potential product of the Company,
or
any violation of any material applicable law, rule, regulation or any clinical
trial or marketing license, approval, permit or authorization for any product
or
potential product of the Company, and the Company is not aware of any facts
or
information that would cause it to initiate any such notice or action and has
no
knowledge or reason to believe that the FDA, the EMEA or any other governmental
agency or authority or any institutional or ethical review board or other
non-governmental authority intends to impose, require, request or suggest such
notice or action.
-10-
3.26 Lock-Up
Agreements.
The
Company has caused each executive officer listed on Schedule
I
hereto
to furnish to the Purchasers, on or prior to the date of this Agreement, a
letter or letters, in form and substance satisfactory to the Purchasers (the
“Lock-up
Agreements”),
pursuant to which such person shall agree not to, directly or indirectly, for
a
period (the “Lock-up
Period”)
commencing on the date of this Agreement and ending on the close of business
on
the thirtieth (30th) day after the date of the effectiveness of a resale
registration statement filed pursuant to the terms of the Registration Rights
Agreement (the “Effective
Date of the S-3”),
offer, sell, pledge, contract to sell, grant any option to purchase, grant
a
security interest in, hypothecate or otherwise sell or dispose of (collectively,
a “Transfer”)
any
shares of Common Stock (including without limitation, shares of Common Stock
that may be deemed to be beneficially owned by such person in accordance with
the Rules and Regulations and shares of Common Stock that may be issued upon
the
exercise of a stock option or warrant) or any securities convertible into,
derivative of or exchangeable or exercisable for Common Stock (collectively,
“Covered
Securities”),
owned
directly by such person or as to which such person has the power of disposition,
in any such case whether owned as of the date of such letter or acquired
thereafter, except for such Transfers that are expressly permitted by the
Lock-up Agreements. The foregoing restrictions have been expressly agreed to
preclude the holder of the Covered Securities from engaging in any hedging
or
other transaction, as more fully described in the Lock-up Agreements.
Furthermore, such person has also agreed and consented to the entry of stop
transfer instructions with the Company’s transfer agent against the transfer of
the Covered Securities held by such person except in compliance with this
restriction. The Company hereby represents and warrants that it will not
release, prior to the expiration of the Lock-up Period, any of its officers
from
any Lock-up Agreements currently existing or hereafter effected without the
prior written consent of the Supermajority Purchasers.
-11-
3.27 SEC
Documents.
The
Company has made available (including via XXXXX) to each Purchaser, a true
and
complete copy of the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2005, the Company’s Quarterly Reports on Form 10-Q for
the periods ended March 31, 2006, June 30, 2006 and September 30, 2006, the
Company’s definitive proxy statement for the Annual Meeting held on May 8, 2006
and the Company’s Current Reports on Form 8-K filed after December 31, 2005 and
before the date hereof. The Company will, promptly upon the filing thereof,
also
make available (including via XXXXX) to each Purchaser all statements, reports
(including, without limitation, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K), and definitive proxy statements filed by the Company
with
the SEC during the period commencing on the date hereof and ending on the
Closing Date (all such materials required to be furnished to each Purchaser
pursuant to this sentence or pursuant to the next preceding sentence of this
Section 3.27 being called, collectively, the “SEC
Documents”).
The
Company has filed in a timely manner all documents that the Company was required
to file under the Exchange Act during the 12 months preceding the date of this
Agreement. As of their respective filing dates, the SEC Documents complied
in
all material respects with the requirements of the Exchange Act and none of
the
SEC Documents, as of their respective filing dates contained any untrue
statement of a material fact or omitted to state a material fact required to
be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading, except
to
the extent corrected by a subsequently filed SEC Document.
3.28 Brokers
or Finders.
Except
for Pacific Growth Equities, Inc., the Company has not dealt with any broker
or
finder in connection with the transactions contemplated by this Agreement,
and,
except for certain fees and expenses payable by the Company to Pacific Growth
Equities, Inc., the Company has not incurred, and shall not incur, directly
or
indirectly, any liability for any brokerage or finders’ fees or agents
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
3.29 No
Integrated Offering.
Neither
the Company, nor any of its affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales of any security
or
solicited any offers to buy any security under circumstances within the prior
six months that would require registration under the Securities Act of the
issuance of the Securities to the Purchasers.
3.30 No
General Solicitation.
Neither
the Company nor, to the knowledge of the Company, any person acting for the
Company, has conducted any “general solicitation” (as such term is defined in
Regulation D) with respect to any of the Securities being offered hereby. The
Company will not distribute any offering material in connection with the sale
of
the Securities prior to the Closing Date, other than this Agreement, the
Registration Rights Agreement and the SEC Documents.
-12-
4. Representations
and Warranties of the Purchasers.
Each
Purchaser severally for itself, and not jointly with the other Purchasers,
represents and warrants to the Company as follows:
4.1 Authorization.
All
action on the part of such Purchaser and, if applicable, its officers, directors
and shareholders necessary for the authorization, execution, delivery and
performance of the Operative Agreements and the consummation of the transactions
contemplated herein and therein has been taken. When executed and delivered,
each of the Operative Agreements will constitute the legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in accordance
with its terms, except as such may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors’ rights generally and by
general equitable principles. Such Purchaser has all requisite corporate power
to enter into each of the Operative Agreements and to carry out and perform
its
obligations under the terms of the Operative Agreements. Such Purchaser has
the
knowledge and experience in financial and business matters as to be capable
of
evaluating the merits and risks of an investment in the Securities and has
the
ability to bear the economic risks of an investment in the Securities for an
indefinite period of time. The Purchaser acknowledges that the Placement Agent
has made no representations or warranties regarding the Company; the Purchaser
agrees that neither the Placement Agent nor any of its controlling persons,
Affiliates, directors, officers, employees or consultants shall have any
liability to the Purchaser or any person asserting claims on behalf of or in
right of the Purchaser for any losses, claims, damages, liabilities or expenses
arising out of or relating to this Agreement or the Purchaser’s purchase of
Securities.
4.2 Purchase
Entirely for Own Account.
Such
Purchaser is acquiring the Securities being purchased by it hereunder for
investment, for its own account, and not for resale or with a view to
distribution thereof in violation of the Securities Act. Such Purchaser has
not
entered into an agreement or understanding with any other party to resell or
distribute such Securities.
4.3 Investor
Status; Etc.
Such
Purchaser certifies and represents to the Company that it is now, and at the
time such Purchaser acquires any of the Securities, such Purchaser will be,
an
“Accredited Investor” as defined in Rule 501 of Regulation D promulgated under
the Securities Act and was not organized for the purpose of acquiring the
Securities. Such Purchaser’s financial condition is such that it is able to bear
the risk of holding the Securities for an indefinite period of time and the
risk
of loss of its entire investment. Such Purchaser has received, reviewed and
considered all information it deems necessary in making an informed decision
to
make an investment in the Securities and has been afforded the opportunity
to
ask questions of and receive answers from the management of the Company
concerning this investment and has sufficient knowledge and experience in
investing in companies similar to the Company in terms of the Company’s stage of
development so as to be able to evaluate the risks and merits of its investment
in the Company.
-13-
4.4 Confidential
Information.
Each
Purchaser understands that any information, other than the SEC Documents,
provided to such Purchaser by the Company, including, without limitation, the
existence and nature of all discussions and presentations, if any, regarding
this offering and the Operative Agreements, is strictly confidential and
proprietary to the Company and is being submitted to the Purchaser solely for
such Purchaser’s confidential use in connection with its investment decision
regarding the Securities. Such Purchaser agrees to use such information for
the
sole purpose of evaluating a possible investment in the Securities and such
Purchaser hereby acknowledges that it is prohibited from reproducing or
distributing such information, the Operative Agreements, or any other offering
materials, in whole or in part, or divulging or discussing any of their contents
except for use internally and by its legal counsel and except as required by
law
or legal process. Such Purchaser understands that the federal securities laws
prohibit any person who possesses material nonpublic information about a company
from trading in securities of such company.
4.5 Shares
Not Registered.
Such
Purchaser understands that the Securities have not been registered under the
Securities Act, by reason of their issuance by the Company in a transaction
exempt from the registration requirements of the Securities Act, and that the
Securities must continue to be held by such Purchaser unless a subsequent
disposition thereof is registered under the Securities Act or is exempt from
such registration. The Purchaser understands that the exemptions from
registration afforded by Rule 144 (the provisions of which are known to it)
promulgated under the Securities Act depend on the satisfaction of various
conditions, and that, if applicable, Rule 144 may afford the basis for sales
only in limited amounts.
4.6 No
Conflict.
The
execution and delivery of the Operative Agreements by such Purchaser and the
consummation of the transactions contemplated hereby and thereby will not
conflict with or result in any violation of or default by such Purchaser (with
or without notice or lapse of time, or both) under, or give rise to a right
of
termination, cancellation or acceleration of any obligation or to a loss of
a
material benefit under (i) any provision of the organizational documents of
such Purchaser, (ii) any material agreement or instrument, permit,
franchise, or license or (iii) any judgment, order, statute, law, ordinance,
rule or regulations, applicable to such Purchaser or its respective properties
or assets.
4.7 Brokers.
Such
Purchaser has not retained, utilized or been represented by any broker or finder
in connection with the transactions contemplated by this Agreement.
4.8 Consents.
All
consents, approvals, orders and authorizations required on the part of such
Purchaser in connection with the execution, delivery or performance of this
Agreement and the consummation of the transactions contemplated herein have
been
obtained and are effective as of the Closing.
4.9 Acknowledgments
Regarding Placement Agent.
Each
Purchaser acknowledges that Pacific Growth Equities, Inc. is acting as placement
agent (the “Placement Agent”) for the Securities being offered hereby and will
be compensated by the Company for acting in such capacity. Each Purchaser
further acknowledges that the Placement Agent has acted solely as placement
agent for the Company in connection with the offering of the Securities by
the
Company, that if the Placement Agent provided any information and data to such
Purchaser in connection with the transactions contemplated hereby, that such
information and data have not been subjected to independent verification by
the
Placement Agent, and that the Placement Agent makes no representation or
warranty with respect to the accuracy or completeness of such information,
data
or other related disclosure material. Each Purchaser further acknowledges that
in making its decision to enter into this Agreement and purchase the Securities
it has relied on its own examination of the Company and the terms of, and
consequences, of holding the Securities. Each Purchaser further acknowledges
that the provisions of this Section 4.9 are also for the benefit of, and
may also be enforced by, the Placement Agent.
-14-
4.10 Information.
Each
Purchaser and its advisors, if any, have been furnished with all materials
relating to the business, finances and operations of the Company, and materials
relating to the offer and sale of the Securities, if any, that have been
requested by the Purchaser or its advisors, if any. The Purchaser and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company. The Purchaser acknowledges and understands that its investment in
the
Securities involves a significant degree of risk, including the risks reflected
in the SEC Documents.
4.11 No
Public Offering.
Such
Purchaser has not received any information relating to the Securities or the
Company, and is not purchasing the Securities as a result of, any form of
general solicitation or general advertising, including but not limited to,
any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio
or
pursuant to any seminar or meeting whose attendees were invited by any general
solicitation or general advertising.
4.12 Short
Positions.
Such
Purchaser will not use any of the Securities acquired pursuant to this Agreement
to cover any short position in the Common Stock if doing so would be in
violation of applicable securities laws.
5. Conditions
Precedent.
5.1 Conditions
to the Obligation of the Purchasers to Consummate the Closing.
The
obligation of each Purchaser to consummate the Closing and to purchase and
pay
for the Securities being purchased by it pursuant to this Agreement is subject
to the satisfaction of the following conditions precedent:
(a) The
representations and warranties of the Company contained herein shall be true
and
correct on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date (it being understood and agreed by each
Purchaser that, in the case of any representation and warranty of the Company
contained herein which is not hereinabove qualified by application thereto
of a
materiality standard, such representation and warranty need be true and correct
only in all material respects in order to satisfy as to such representation
or
warranty the condition precedent set forth in the foregoing provisions of this
Section 5.1(a)).
-15-
(b) The
Registration Rights Agreement shall have been executed and delivered by the
Company.
(c) The
Company shall not have suffered any Material Adverse Effect prior to the Closing
Date; and the Company shall have performed in all material respects all
obligations and conditions herein required to be performed or observed by the
Company on or prior to the Closing Date.
(d) No
proceeding challenging this Agreement or the transactions contemplated hereby,
or seeking to prohibit, alter, prevent or materially delay the Closing, shall
have been instituted before any court, arbitrator or governmental body, agency
or official and shall be pending.
(e) The
purchase of and payment for the Securities by the Purchasers shall not be
prohibited by any law or governmental order or regulation. All necessary
consents, approvals, licenses, permits, orders and authorizations of, or
registrations, declarations and filings with, any governmental or administrative
agency or of any other person with respect to any of the transactions
contemplated hereby shall have been duly obtained or made and shall be in full
force and effect.
(f) The
Company shall have obtained and delivered to the Purchasers the Lock-up
Agreements referred to in Section 3.26 hereof.
(g) The
Company shall have received executed copies of this Agreement from Purchasers
with respect to the purchase of Securities hereunder for an aggregate purchase
price of at least eight million dollars ($8,000,000).
(h) The
Secretary or other officer of the Company shall have delivered to the Purchasers
a certificate certifying the Restated Articles, the Bylaws and resolutions
of
the Company’s Board of Directors approving the Operative Agreements and the
transactions contemplated thereby.
(i) The
Company shall have delivered to the Purchasers an irrevocable letter of
instruction to Mellon Investor Services, LLC, as the Company’s transfer agent,
to issue certificates in the amounts and to the Purchasers listed on
Exhibit
A
hereto.
(j) All
instruments and corporate proceedings in connection with the transactions
contemplated by this Agreement to be consummated at the Closing shall be
satisfactory in form and substance to such Purchaser, the Purchasers shall
have
received an opinion of legal counsel to the Company substantially in the form
of
Exhibit C
attached
hereto, and such Purchaser shall have received such certificates of the
Company’s officers as such Purchaser may have reasonably requested in connection
with such transactions.
-16-
5.2 Conditions
to the Obligation of the Company to Consummate the Closing.
The
obligation of the Company to consummate the Closing and to issue and sell to
each of the Purchasers the Securities to be purchased by it at the Closing
is
subject to the satisfaction of the following conditions precedent:
(a) The
representations and warranties contained herein of such Purchaser shall be
true
and correct on and as of the Closing Date with the same force and effect as
though made on and as of the Closing Date (it being understood and agreed by
the
Company that, in the case of any representation and warranty of each Purchaser
contained herein which is not hereinabove qualified by application thereto
of a
materiality standard, such representation and warranty need be true and correct
only in all material respects in order to satisfy as to such representation
or
warranty the condition precedent set forth in the foregoing provisions of this
Section 5.2(a)).
(b) The
Registration Rights Agreement shall have been executed and delivered by each
Purchaser.
(c) Each
Purchasers shall have performed in all material respects all obligations and
conditions herein required to be performed or observed by the Purchasers on
or
prior to the Closing Date.
(d) No
proceeding challenging this Agreement or the transactions contemplated hereby,
or seeking to prohibit, alter, prevent or materially delay the Closing, shall
have been instituted before any court, arbitrator or governmental body, agency
or official and shall be pending.
(e) The
sale
of the Securities by the Company shall not be prohibited by any law or
governmental order or regulation. All necessary consents, approvals, licenses,
permits, orders and authorizations of, or registrations, declarations and
filings with, any governmental or administrative agency or of any other person
with respect to any of the transactions contemplated hereby shall have been
duly
obtained or made and shall be in full force and effect.
(f) Each
of
the Purchasers shall have executed and delivered to the Company an Investor
Questionnaire, in the form attached hereto as Appendix
I,
pursuant to which each such Purchaser shall provide information necessary to
confirm each such Purchaser’s status as an “accredited investor” (as such term
is defined in Rule 501 promulgated under the Securities Act) and to enable
the
Company to comply with the Registration Rights Agreement.
(g) Each
of
the other Purchasers shall have purchased, in accordance with this Agreement,
the number of shares of Common Stock set forth opposite its name under the
heading “Number
of Shares to be Purchased”
and
the
number of Warrants set forth opposite its name on Exhibit A.
(h) All
instruments and corporate proceedings in connection with the transactions
contemplated by this Agreement to be consummated at the Closing shall be
satisfactory in form and substance to the Company, and the Company shall have
received counterpart originals, or certified or other copies of all documents,
including without limitation records of corporate or other proceedings, which
it
may have reasonably requested in connection therewith.
-17-
6. Transfer,
Legends.
6.1 Securities
Law Transfer Restrictions.
(a) Each
Purchaser understands that, except as provided in the Registration Rights
Agreement, the Securities have not been registered under the Securities Act
or
any state securities laws, and each Purchaser agrees that it will not sell,
offer to sell, solicit offers to buy, dispose of, loan, pledge or grant any
right with respect to (collectively, a “Disposition”),
the
Securities unless (a) the resale of the Securities is registered under the
Securities Act, or (b) such Purchaser shall have delivered to the Company
an opinion of counsel in form, substance and scope reasonably acceptable to
the
Company, to the effect that registration is not required under the Securities
Act or any applicable state securities law due to the applicability of an
exemption therefrom; provided that no such opinion of counsel shall be required
in connection with a sale of the Securities pursuant to Rule 144 under the
Securities Act. In that connection, such Purchaser is aware of Rule 144
under the Securities Act and the restrictions imposed thereby. Such Purchaser
acknowledges and agrees that no sales of the Securities may be made under the
registration statement filed by the Company pursuant to the Registration Rights
Agreement (the “Registration
Statement”)
and
that the Securities are not transferable on the books of the Company unless
the
certificate submitted to the transfer agent evidencing the Securities is
accompanied by a separate Purchaser’s Certificate of Subsequent Sale:
(i) in the form of Exhibit D
hereto;
(ii) executed by an officer of, or other authorized person designated by,
the Purchaser; and (iii) to the effect that (A) the shares have been
sold in accordance with the Registration Statement, the Securities Act and
any
applicable state securities or blue sky laws, and (B) the requirement of
delivering a current prospectus has been satisfied.
(b) Each
Purchaser acknowledges that no action has been or will be taken in any
jurisdiction outside the United States by the Company or the Placement Agent
that would permit an offering of the Securities, or possession or distribution
of offering materials in connection with the issue of Securities, in any
jurisdiction outside of the United States where action for that purpose is
required. Each Purchaser outside the United States will comply with all
applicable laws and regulations in each foreign jurisdiction in which it
purchases, offers, sells or delivers Securities or has in its possession or
distributes any offering material, in all cases at its own expense. The
Placement Agent is not authorized to make any representation or use any
information in connection with the issue, placement, purchase and sale of the
Securities.
(c) Each
Purchaser hereby covenants with the Company not to make any sale of the
Securities without complying with the provisions of the Operative Agreements
and
such Purchaser acknowledges that the certificates evidencing the Shares and
each
Warrant will be imprinted with a legend that prohibits their transference except
in accordance therewith.
-18-
6.2 Legends.
(a) Each
certificate requesting any of the Shares and each Warrant shall be endorsed
with
the legends set forth below, and each Purchaser covenants that, except to the
extent such restrictions are waived by the Company, it shall not transfer the
shares represented by any such certificate without complying with the
restrictions on transfer described in this Agreement and the legends endorsed
on
such certificate:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION
UNDER SAID ACT AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY OF AN OPINION
OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS
EXEMPT FROM SAID ACT.”
(b) After
the
earlier of (i) the effectiveness of the Registration Statement and receipt
by
the Company of a Purchaser’s written confirmation that such Securities will not
be disposed of except in compliance with the prospectus delivery requirements
of
the Securities Act or (ii) Rule 144 under the Securities Act becoming available
to a Purchaser, the Company shall, upon such Purchaser’s written request,
promptly cause certificates evidencing the Purchaser’s Shares or the Warrant to
be replaced with certificates, or a Warrant, as the case may be, that do not
bear such restrictive legends. When the Company is required to cause unlegended
certificates to replace previously issued legended certificates, if unlegended
certificates or Warrants are not delivered to a Purchaser within three (3)
business days following submission by that Purchaser of legended certificate(s)
or Warrants to the Company’s transfer agent together with a representation
letter in customary form, the Company shall be liable to the Purchaser for
liquidated damages in an amount equal to 1.5% of the aggregate purchase price
of
the Shares evidenced by such certificate(s) or Warrant for each thirty (30)
day
period or portion thereof (on a pro rata basis following the first such thirty
(30) day period) beyond such three (3) business day period that the unlegended
certificates have not been so delivered. The Company’s obligation to issue
unlegended certificates or Warrants pursuant to this Section 6.2(b) shall
be excused if (i) the SEC promulgates any rule or interpretation expressly
prohibiting removal of legends in such circumstances, (ii) the SEC or other
regulatory authority instructs the Company or its transfer agent not to remove
such legends or (iii) the SEC makes it a condition to the effectiveness of
the
Registration Statement to that the Company continue to keep such legends in
place.
(c) Notwithstanding
the removal of legends as provided in Section 6.2(b), until a Purchaser’s
Shares are sold pursuant to the Registration Statement or Rule 144 becomes
available to the Purchaser, the Purchaser shall continue to hold such shares
in
the form of a definitive stock certificate and shall not hold the shares in
street name or in book-entry form with a securities depository.
-19-
7. Termination;
Liabilities Consequent Thereon.
This
Agreement may be terminated and the transactions contemplated hereunder
abandoned at any time prior to the Closing only as follows:
(a) by
each
Purchaser, upon notice to the Company if the conditions set forth in Section
5.1
shall not have been satisfied on or prior to January 11, 2007; or
(b) by
the
Company, upon notice to the Purchasers if the conditions set forth in Section
5.2 shall not have been satisfied on or prior to January 11, 2007;
or
(c) at
any
time by mutual agreement of the Company and the Purchasers; or
(d) by
the
Purchasers, if there has been any breach of any representation or warranty
or
any material breach of any covenant of the Company contained herein and the
same
has not been cured within 15 days after notice thereof (it being understood
and
agreed by each Purchaser that, in the case of any representation or warranty
of
the Company contained herein which is not hereinabove qualified by application
thereto of a materiality standard, such representation or warranty will be
deemed to have been breached for purposes of this Section 7(d) only if such
representation or warranty was not true and correct in all material respects
at
the time such representation or warranty was made by the Company);
or
(e) by
the
Company, if there has been any breach of any representation, warranty or any
material breach of any covenant of any Purchaser contained herein and the same
has not been cured within 15 days after notice thereof (it being understood
and
agreed by the Company that, in the case of any representation and warranty
of
the Purchaser contained herein which is not hereinabove qualified by application
thereto of a materiality standard, such representation or warranty will be
deemed to have been breached for purposes of this Section 7(e) only if such
representation or warranty was not true and correct in all material respects
at
the time such representation or warranty was made by such
Purchaser).
Any
termination pursuant to this Section 7 shall be without liability on the part
of
any party, unless such termination is the result of a material breach of this
Agreement by a party to this Agreement in which case such breaching party shall
remain liable for such breach notwithstanding any termination of this
Agreement.
8. Agreements
of the Company.
The
Company agrees not to, for a period commencing on the date of this Agreement
and
ending on the sixtieth (60th)
day
after the Effective Date of the S-3, without the prior written consent of the
Supermajority Purchasers, offer, sell or otherwise dispose of any Covered
Securities, other than the sale of Securities hereunder; provided that nothing
in this Agreement shall prevent the Company’s issuance of (i) equity securities
under the Company’s currently authorized equity incentive plans, or upon
exercise of outstanding equity awards granted pursuant to such plans, (ii)
securities issued or sold in connection with any corporate strategic development
or similar transaction (including, but not limited to, joint venture, technology
licensing or development activities) or (iii) any merger or acquisition
transaction approved by the Company’s Board of Directors.
-20-
9. Miscellaneous
Provisions.
9.1 Public
Statements or Releases.
The
Company shall, by 8:30 a.m. Eastern time on the business day following the
date
of this Agreement, file a Current Report on Form 8-K, disclosing the
transactions contemplated hereby and make such other filings and notices in
the
manner and time required by the SEC. Prior to the issuance by the Company of
a
press release announcing the transaction contemplated by this Agreement, no
Purchaser shall make, issue, or release any announcement, whether to the public
generally, or to any of its suppliers or customers, with respect to this
Agreement or the transactions provided for herein, or make any statement or
acknowledgment of the existence of, or reveal the status of, this Agreement
or
the transactions provided for herein, without the prior consent of the Company.
As of the time of the issuance of the press release, no Purchaser shall be
in
possession of any material, nonpublic information received from the Company
or
any of its respective officers, directors, employees or agents, that is not
disclosed in the press release. Except as expressly provided in the foregoing
sentence, the Company shall not, and shall cause its officers, directors,
employees and agents, not to, provide any Purchaser with any material, nonpublic
information regarding the Company from and after the filing of the press release
without the express written consent of such Purchaser.
9.2 Further
Assurances.
Each
party agrees to cooperate fully with the other party and to execute such further
instruments, documents and agreements and to give such further written
assurances, as may be reasonably requested by the other party to better evidence
and reflect the transactions described herein and contemplated hereby, and
to
carry into effect the intents and purposes of this Agreement.
9.3 Rights
Cumulative.
Each
and all of the various rights, powers and remedies of the parties shall be
considered to be cumulative with and in addition to any other rights, powers
and
remedies which such parties may have at law or in equity in the event of the
breach of any of the terms of this Agreement. The exercise or partial exercise
of any right, power or remedy shall neither constitute the exclusive election
thereof nor the waiver of any other right, power or remedy available to such
party.
9.4 Pronouns.
All
pronouns or any variation thereof shall be deemed to refer to the masculine,
feminine or neuter, singular or plural, as the identity of the person, persons,
entity or entities may require.
9.5 Notices.
Any
notice required or permitted by this Agreement shall be in writing and shall
be
sufficient upon receipt, when delivered personally or by courier, overnight
delivery service or confirmed facsimile, or three (3) business days after being
deposited in the regular mail as certified or registered mail (airmail if sent
internationally) with postage prepaid, if such notice is addressed to the party
to be notified at such party’s address or facsimile number as set forth
below:
-21-
(a) All
correspondence to the Company shall be addressed as follows:
0000
Xxxxx Xxx Xxxxx 000
Xxxxxxx,
XX 00000
Attention:
H.
Xxxxxxx Xxxxxx
CEO
&
President
Facsimile:
(000)
000-0000
with
a
copy to:
Xxxxxx,
Xxxxxxxxxx & Xxxxxxxxx LLP
000
Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
Attention:
Xxxxxxx
X. Xxxxxx
Facsimile: (000)
000-0000
(b) All
correspondence to any Purchaser shall be sent to such Purchaser at the address
set forth in Exhibit A.
(c) Any
entity may change the address to which correspondence to it is to be addressed
by written notification as provided for herein.
9.6 Captions.
The
captions and paragraph headings of this Agreement are solely for the convenience
of reference and shall not affect its interpretation.
9.7 Severability.
Should
any part or provision of this Agreement be held unenforceable or in conflict
with the applicable laws or regulations of any jurisdiction, the invalid or
unenforceable part or provisions shall be replaced with a provision which
accomplishes, to the extent possible, the original business purpose of such
part
or provision in a valid and enforceable manner, and the remainder of this
Agreement shall remain binding upon the parties hereto.
9.8 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the internal
and
substantive laws of the State of New York and without regard to any conflicts
of
laws concepts which would apply the substantive law of some other
jurisdiction.
9.9 Amendments.
This
Agreement may not be amended or modified except pursuant to an instrument in
writing signed by the Company and the Supermajority Purchasers.
9.10 Waiver.
No
waiver of any term, provision or condition of this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or be
construed as, a further or continuing waiver of any such term, provision or
condition or as a waiver of any other term, provision or condition of this
Agreement.
-22-
9.11 Expenses.
Each
party will bear its own costs and expenses in connection with this
Agreement.
9.12 Assignment.
The
rights and obligations of the parties hereto shall inure to the benefit of
and
shall be binding upon the authorized successors and permitted assigns of each
party. No party may assign its rights or obligations under this Agreement or
designate another person (i) to perform all or part of its obligations
under this Agreement or (ii) to have all or part of its rights and benefits
under this Agreement, in each case without the prior written consent of the
other party. In the event of any assignment in accordance with the terms of
this
Agreement, the assignee shall specifically assume and be bound by the provisions
of the Agreement by executing and agreeing to an assumption agreement reasonably
acceptable to the other party.
9.13 Survival.
The
respective representations and warranties given by the parties hereto, and
the
other covenants and agreements contained herein, shall survive the Closing
Date
and the consummation of the transactions contemplated herein for a period of
two
years, without regard to any investigation made by any party.
9.14 Counterpart.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original and all of which together shall constitute one
instrument.
9.15 Entire
Agreement.
This
Agreement and the Registration Rights Agreement constitute the entire agreement
between the parties hereto respecting the subject matter hereof and supersede
all prior agreements, negotiations, understandings, representations and
statements respecting the subject matter hereof, whether written or oral. No
modification, alteration, waiver or change in any of the terms of this Agreement
shall be valid or binding upon the parties hereto unless made in writing and
duly executed by the Company and the Supermajority Purchasers.
9.16 Independent
Nature of Purchasers' Obligations and Rights. The obligations of each
Purchaser under any Operative Agreement are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in
any
way for the performance of the obligations of any other Purchaser under any
Operative Agreement. Nothing contained herein or in any other Operative
Agreement, and no action taken by any Purchaser pursuant hereto or thereto,
shall be deemed to constitute the Purchasers as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Operative Agreements and
the
Company acknowledges that the Purchasers are not acting in concert or as a
group
with respect to such obligations or the transactions contemplated by the
Operative Agreements. Each Purchaser confirms that it has independently
participated in the negotiation of the transaction contemplated hereby with
the
advice of its own counsel and advisors. Each Purchaser shall be entitled to
independently protect and enforce its rights, including, without limitation,
the
rights arising out of this Agreement or out of any other Operative Agreement,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.
[Signature
Page to Follow]
-23-
IN
WITNESS WHEREOF, the parties hereto have executed this Securities Purchase
Agreement as of the day and year first above written.
| TARGETED GENETICS CORPORATION | ||
| |
|
|
| By: | /s/ H. Xxxxxxx Xxxxxx | |
|
Name:
H. Xxxxxxx Xxxxxx
Title:
Chief Executive Officer & President
|
||
THE
PURCHASER’S SIGNATURE TO THE INVESTOR QUESTIONNAIRE DATED OF EVEN DATE HEREWITH
SHALL CONSTITUTE THE PURCHASER’S SIGNATURE TO THIS SECURITIES PURCHASE
AGREEMENT.
-24-
Exhibit
A
SCHEDULE
OF PURCHASERS
|
Purchaser
Name and Address
|
Number
of Shares to
be
Purchased
|
Number
of Warrants to
be
Purchased
|
Aggregate
Purchase
Price
|
|
SRB
Greenway Capital, L.P.
Attn:
Xxxxx Xxxxxx
000
Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx,
XX 00000
|
63,000
|
22,050
|
$252,000
|
|||
|
SRB
Greenway Capital, Q.P.,
L.P.
Attn:
Xxxxx Xxxxxx
000
Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx,
XX 00000
|
616,000
|
215,600
|
$2,464,000
|
|||
|
SRB
Greenway Capital International
Attn:
Xxxxx Xxxxxx
000
Xxxxxxxx Xxxxx, Xxxxx 0 x 0 x
Xxxxxx,
XX 00000
|
21,000
|
7,350
|
$84,000
|
|||
|
|
||||||
|
Millennium
Partners, L.P.
c/o
Millennium Management, L.L.C.
000
Xxxxx Xxxxxx, 0xx Xxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxxx Xxxxxx
Fax:
(000) 000-0000
|
250,000
|
87,500
|
$1,000,000
|
|||
|
|
||||||
|
Pacific
Growth Equity Management, LLC
Xxx
Xxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxxxx, XX 00000
Attn:
Xxxxxx Xxxxxxxxx
|
80,000
|
28,000
|
$320,000
|
|||
|
|
||||||
|
Special
Situations Fund III, Q.P.,
L.P.
Attn:
Xxxxxx Xxxxx
000
Xxxxxxx Xxxxxx
Xxxxx
0000
Xxx
Xxxx, XX 00000
|
525,000
|
183,750
|
$2,100,000
|
|||
|
Special
Situations Life Sciences Fund, L.P.
Attn:
Xxxxxx Xxxxx
000
Xxxxxxx Xxxxxx
Xxxxx
0000
Xxx
Xxxx, XX 00000
|
375,000
|
131,250
|
$1,500,000
|
|||
|
|
||||||
|
Tang
Capital Partners, L.P.
Attn:
Xxxxx Xxxx
0000
Xxxxxxxx Xxxx
Xxx
Xxxxx, XX 00000
|
250,000
|
87,500
|
$1,000,000
|
Exhibit
B
FORM
OF WARRANT
THIS
WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD,
ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION UNDER SAID ACT AND, IF REQUESTED BY THE COMPANY,
UPON DELIVERY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
THAT THE PROPOSED TRANSFER IS EXEMPT FROM SAID ACT.
| WARRANT NO. ______ |
NUMBER
OF SHARES: ___________
|
|
| DATE OF ISSUANCE: January 11, 2007 |
(subject
to
adjustment)
|
WARRANT
TO PURCHASE SHARES
OF
COMMON
STOCK OF
TARGETED
GENETICS CORPORATION
This
Warrant is issued to [_____________], or its registered assigns (the
“Purchaser”),
pursuant to that certain Securities Purchase Agreement, dated as of January
8,
2007, among Targeted Genetics Corporation (the “Company”),
the
Purchaser and certain other purchasers thereunder (the “Purchase
Agreement”)
and is
subject to the terms and conditions of the Purchase Agreement.
1. EXERCISE
OF WARRANT.
(a) Method
of Exercise.
Subject
to the terms and conditions herein set forth, upon surrender of this Warrant
at
the principal office of the Company and upon payment of the Warrant Price
(as
defined below) by wire transfer to the Company or cashier’s check drawn on a
United States bank made to the order of the Company, or exercise of the right
to
credit the Warrant Price against the fair market value of the Warrant Stock
(as
defined below) at the time of exercise (the “Net
Exercise Right”)
pursuant to Section 1(b), Purchaser is entitled to purchase from the Company,
at
any time after the date that is six (6) months after the date of issuance
of this Warrant and on or before the date that is five (5) years from the
Date
of Issuance set forth above (the “Expiration
Date”),
up to
[______] shares (as adjusted from time to time pursuant to the provisions
of
this Warrant) of Common Stock of the Company (the “Warrant
Stock”),
at a
purchase price of $5.41 per share (the “Warrant
Price”).
(b) Net
Exercise Right.
If the
Company shall receive written notice from the holder of this Warrant at the
time
of exercise of this Warrant that the holder elects to exercise the Net Exercise
Right, the Company shall deliver to such holder (without payment by the
Purchaser of any exercise price in cash) that number of fully paid and
nonassessable shares of Common Stock, par value $0.01 per share, of the Company
(“Common
Stock”)
equal
to the quotient obtained by dividing (y) the value of this Warrant (or the
specified portion thereof) on the date of exercise, which value shall be
determined by subtracting (1) the aggregate Warrant Price of the Warrant
Stock
(or the specified portion thereof) immediately prior to the exercise of this
Warrant from (2) the Aggregate Fair Market Value (as defined below) of the
Warrant Stock (or the specified portion thereof) issuable upon exercise of
this
Warrant (or specified portion thereof) on the date of exercise by (z) the
Fair
Market Value (as defined below) of one share of Common Stock on the date
of
exercise. The “Fair
Market Value”
of
a
share of Common Stock shall mean the last reported sale price and, if there
are
no sales, the last reported bid price, of the Common Stock on the business
day
prior to the date of exercise as reported by the NASDAQ Global Market or
such
other principal exchange or quotation system on which the Common Stock is
then
traded or, if the Common Stock is not publicly traded, the price determined
in
good faith by the Company’s Board of Directors. The “Aggregate
Fair Market Value”
of
the
Warrant Stock shall be determined by multiplying the number of shares of
Warrant
Stock by the Fair Market Value of one share of Warrant Stock.
2. CERTAIN
ADJUSTMENTS.
(a) Mergers
or Consolidations.
If at
any time after the date hereof there shall be a capital reorganization (other
than a combination or subdivision of Warrant Stock otherwise provided for
herein) (a “Reorganization”),
or a
merger or consolidation of the Company with another corporation (other than
a
merger with another corporation in which the Company is a continuing corporation
and which does not result in any reclassification or change of outstanding
securities issuable upon exercise of this Warrant or a merger effected
exclusively for the purpose of changing the domicile of the Company) (a
“Merger”),
then,
as a part of such Reorganization or Merger, lawful provision shall be made
so
that the Purchaser shall thereafter be entitled to receive upon exercise
of this
Warrant, and upon payment of the Warrant Price, the number of shares of stock
or
other securities, cash or property of the Company or the successor corporation
resulting from such Reorganization or Merger, to which a holder of the Common
Stock deliverable upon exercise of this Warrant would have been entitled
under
the provisions of the agreement in such Reorganization or Merger if this
Warrant
had been exercised immediately before that Reorganization or Merger. At the
effective time of any such Reorganization or Merger, this Warrant (and the
right
to purchase securities upon exercise hereof) will terminate.
(b) Splits
and Subdivisions; Dividends.
In the
event the Company should at any time, or from time to time, fix a record
date
for the effectuation of a split or subdivision of the outstanding shares
of
Common Stock or the determination of the holders of Common Stock entitled
to
receive a dividend or other distribution payable in additional shares of
Common
Stock or other securities or rights convertible into, or entitling the holder
thereof to receive directly or indirectly, additional shares of Common Stock
(hereinafter referred to as the “Common
Stock Equivalents”)
without payment of any consideration by such holder for the additional shares
of
Common Stock or Common Stock Equivalents (including the additional shares
of
Common Stock issuable upon conversion or exercise thereof), then, as of such
record date (or the date of such distribution, split or subdivision if no
record
date is fixed), the per share Warrant Price shall be appropriately decreased
and
the number of shares of Warrant Stock shall be appropriately increased in
proportion to such increase (or potential increase) of outstanding
shares.
(c) Combination
of Shares.
If the
number of shares of Common Stock outstanding at any time after the date hereof
is decreased by a combination of the outstanding shares of Common Stock,
the per
share Warrant Price shall be appropriately increased and the number of shares
of
Warrant Stock shall be appropriately decreased in proportion to such decrease
in
outstanding shares.
(d) Adjustments
for Other Distributions.
In the
event the Company shall declare a distribution payable in securities of other
persons, evidences of indebtedness issued by the Company or other persons,
assets (excluding cash dividends paid out of net profits) or options or rights
not referred to in Section 2(b), then, in each such case for the purpose
of this
Section 2(d), upon exercise of this Warrant the holder hereof shall be entitled
to a proportionate share of any such distribution as though such holder was
the
holder of the number of shares of Common Stock into which this Warrant may
be
exercised as of the record date fixed for the determination of the holders
of
Common Stock entitled to receive such distribution.
3. NO
FRACTIONAL SHARES. No fractional shares of Warrant Shares will be issued
in
connection with any exercise of this Warrant. In lieu of any fractional shares
which would otherwise be issuable, the Company shall pay cash equal to the
product of such fraction multiplied by the Fair Market Value of one share
of
Warrant Stock.
4. NO
STOCKHOLDER RIGHTS. Until the exercise of this Warrant or any portion of
this
Warrant, the Purchaser shall not have nor exercise any rights by virtue hereof
as a stockholder of the Company (including without limitation the right to
notification of stockholder meetings or the right to receive any notice or
other
communication concerning the business and affairs of the Company).
5. RESERVATION
OF STOCK. The Company covenants that during the period this Warrant is
exercisable, the Company will reserve from its authorized and unissued Common
Stock a sufficient number of shares of Common Stock (or other securities,
if
applicable) to provide for the issuance of Warrant Stock (or other securities)
upon the exercise of this Warrant. The Company agrees that its issuance of
this
Warrant shall constitute full authority to its officers who are charged with
the
duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Stock upon the exercise of this
Warrant.
6. MECHANICS
OF EXERCISE. This Warrant may be exercised by the holder hereof, in whole
or in
part, by the surrender of this Warrant and the Notice of Exercise attached
hereto as Exhibit
A
duly
completed and executed on behalf of the holder hereof, at the principal office
of the Company together with payment in full of the Warrant Price then in
effect
(or an election in the Notice of Exercise to net exercise) with respect to
the
number of shares of Warrant Stock as to which the Warrant is being exercised.
This Warrant shall be deemed to have been exercised immediately prior to
the
close of business on the date of its surrender for exercise as provided above,
and the person entitled to receive the Warrant Stock issuable upon such exercise
shall be treated for all purposes as the holder of such shares of record
as of
the close of business on such date. Within three (3) days after such date,
the
Company at its expense shall cause to be issued and delivered to the person
or
persons entitled to receive the same a certificate or certificates for the
number of full shares of Warrant Stock issuable upon such exercise, together
with cash in lieu of any fraction of a share as provided above. The shares
of
Warrant Stock issuable upon exercise hereof shall, upon their issuance, be
validly issued, fully paid and nonassessable, and free from all preemptive
rights, taxes, liens and charges with respect to the issue thereof. In the
event
that this Warrant is exercised in part, the Company at its expense will execute
and deliver a new Warrant of like tenor exercisable for the number of shares
for
which this Warrant may then be exercised.
7. CERTIFICATE
OF ADJUSTMENT. Whenever the Warrant Price or number or type of securities
issuable upon exercise of this Warrant is adjusted, as herein provided, the
Company shall, at its expense, promptly deliver to the record holder of this
Warrant a certificate of an officer of the Company setting forth the nature
of
such adjustment and showing in detail the facts upon which such adjustment
is
based.
8. REPRESENTATIONS
OF PURCHASER. As of the date hereof, the Purchaser hereby confirms the
representations and warranties made by the Purchaser in Section 4 of the
Purchase Agreement.
9. TRANSFER
RESTRICTIONS.
(a) Unregistered
Security.
The
holder of this Warrant acknowledges that this Warrant and the Warrant Stock
have
not been registered under the Securities Act of 1933, as amended (the
“Securities
Act”)
or
applicable state securities laws (collectively, the “Acts”),
and
agrees not to sell, encumber or otherwise transfer this Warrant or any Warrant
Stock issued upon its exercise unless (i) there is an effective registration
statement under the Acts covering the transaction, (ii) the Company receives
an
opinion of counsel satisfactory to the Company that such registration is
not
required under the Acts; provided that no such opinion of counsel shall be
required in connection with a sale of the Securities pursuant to Rule 144
under
the Securities Act, or (iii) the Company otherwise satisfies itself that
registration is not required under the Acts. Each certificate or other
instrument for Warrant Stock issued upon the exercise of this Warrant shall
bear
a legend substantially to the foregoing effect.
(b) No
Transfer.
This
Warrant is not transferable without the Company’s prior written consent;
provided, however, such consent shall not be required in connection with
the
transfer by the Purchaser of such Warrant (but only with all related
obligations) without consideration to a Qualifying Holder (as such term is
defined in the Registration Rights Agreement between the Company and the
Purchaser entered into in connection with the Purchase Agreement dated as
of
even date herewith), provided that (i) written notice (in the form of
Exhibit
B
as
attached hereto) is provided to the Company at least five (5) business days
prior to any such transfer, (ii) the transferee is an “accredited investor” as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act
and
(iii) the transferee agrees in writing to be bound by all of the provisions
of
this Warrant.
10. NOTICES
OF RECORD DATE. In the event of:
(a) any
taking by the Company of a record of the holders of any class of securities
for
the purpose of determining the holders thereof who are entitled to receive
any
dividend (other than a cash dividend payable out of earned surplus of the
Company) or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities
or
property, or to receive any other right; or
(b) any
Reorganization or Merger; or
(c) any
voluntary or involuntary dissolution, liquidation or winding-up of the
Company,
then
and
in each such event the Company will mail or cause to be mailed to the Purchaser
(or a permitted transferee pursuant to Section 9(b) above) a notice
specifying (i) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right, and stating the amount and character
of
such dividend, distribution or right, and (ii) the date on which any such
Reorganization, Merger, dissolution, liquidation or winding-up is to take
place,
and the time, if any, as of which the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of Common Stock
(or
other securities) for securities or other property deliverable upon such
Reorganization, Merger, dissolution, liquidation or winding-up. Such notice
shall be mailed at least ten (10) business days prior to the date therein
specified.
11. REPLACEMENT
OF WARRANTS. On receipt of evidence reasonably satisfactory to the Company
of
the loss, theft, destruction or mutilation of this Warrant and, in the case
of
any such loss, theft, destruction or mutilation of this Warrant, on delivery
of
an indemnity agreement or security reasonably satisfactory in form and amount
to
the Company or, in the case of any such mutilation, on surrender and
cancellation of such Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
12. NO
IMPAIRMENT. Except to the extent as may be waived by the holder of this Warrant,
the Company will not, by amendment of its charter or through a Reorganization,
Merger, dissolution, sale of assets or any other voluntary action, avoid
or seek
to avoid the observance or performance of any of the terms of this Warrant,
but
will at all times in good faith assist in the carrying out of all such terms
and
in the taking of all such action as may be necessary or appropriate in order
to
protect the rights of the holder of this Warrant against
impairment.
13. SATURDAYS,
SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein shall be
a
Saturday or Sunday or shall be a legal U.S. holiday, then such action may
be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal U.S. holiday.
14. MISCELLANEOUS.
This Warrant shall be governed by the laws of the State of New York. The
headings in this Warrant are for purposes of convenience and reference only,
and
shall not be deemed to constitute a part hereof. Neither this Warrant nor
any
term hereof may be changed, waived, discharged or terminated orally but only
by
an instrument in writing signed by the Company and the Purchaser. All notices
and other communications from the Company to the Purchaser shall be sufficient
if in writing and delivered (i) personally, (ii) by facsimile transmission
(receipt verified), (iii) by registered or certified mail (return receipt
requested), postage prepaid, or (iv) sent by express courier service (receipt
verified), to the address furnished to the Company in writing by the Purchaser.
All such notices and communications to the Company shall be effective if
delivered (i) personally, (ii) by facsimile transmission (receipt verified),
(iii) by registered or certified mail (return receipt requested), postage
prepaid, or (iv) sent by express courier service (receipt verified), at 0000
Xxxxx Xxx Xxxxx 000, Xxxxxxx, XX 00000, H.
Xxxxxxx Xxxxxx, CEO & President, fax: (000) 000-0000, with a copy to Xxxxxx,
Xxxxxxxxxx & Xxxxxxxxx LLP, 000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000,
Xxxxxxx X. Xxxxxx, Esq. fax: (000) 000-0000. The invalidity or unenforceability
of any provision hereof shall in no way affect the validity or enforceability
of
any other provisions.
[Signature
Page Follows]
IN
WITNESS WHEREOF, this Common Stock Purchase Warrant is issued effective as
of
the Date of Issuance first set forth above.
| TARGETED GENETICS CORPORATION | ||
| |
|
|
| By: | ||
|
Name: H. Xxxxxxx Xxxxxx |
||
| Title: Chief Executive Officer & President | ||
EXHIBIT
A
NOTICE
OF
INTENT TO EXERCISE
(To
be
signed only upon exercise of Warrant)
To:
Targeted Genetics Corporation
The
undersigned, the Purchaser of the attached Warrant, hereby irrevocably elects
to
exercise the purchase right represented by such Warrant for, and to purchase
thereunder, ______________ (________) shares of Common Stock of Targeted
Genetics Corporation and (choose one)
__________
herewith makes payment of __________________ Dollars ($_________)
thereof
or
__________
exercises the Net Exercise Right pursuant to Section 1(b) thereof and requests
that the certificates for such shares be issued in the name of, and delivered
to
___________________________, whose address is
____________________________________________________________________________________________________.
DATED:
______________________
|
(Signature
must conform in all
respects
to name of the Purchaser
as
specified on the face of the
Warrant)
___________________________________
___________________________________
(Address)
|
EXHIBIT
B
NOTICE
OF
ASSIGNMENT FORM
FOR
VALUE
RECEIVED, ______________________ (the “Assignor”)
hereby
sells, assigns and transfers all of the rights of the undersigned Assignor
under
the attached Warrant with respect to the number of shares of common stock
of
Targeted Genetics Corporation (the “Company”)
covered thereby set forth below, to the following “Assignee”
and,
in
connection with such transfer, represents and warrants to the Company that
(i)
such Assignee is a Qualifying Holder (as such term is defined in the
Registration Rights Agreement between the Company and the Purchaser entered
into
in connection with the Purchase Agreement dated as of even date herewith)
of the
Assignor and (ii) the transfer is otherwise in compliance with Section 9(b)
of
the Warrant:
|
NAME
OF ASSIGNEE
|
ADDRESS/FAX
NUMBER
|
|
|
Dated:
______________________________
|
Signature:
______________________________
Witness:
______________________________
|
ASSIGNEE
ACKNOWLEDGMENT
The
undersigned Assignee acknowledges that it has reviewed the attached Warrant
and
by its signature below it hereby represents and warrants that it is a Qualifying
Holder and an “accredited investor” as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act of 1933, as amended, and agrees to be
bound
by the terms and conditions of the attached Warrant as of the date
hereof.
|
Signature:
______________________________
By:
____________________________________
Its:
____________________________________
Address:
________________________________
|
||
Exhibit
C
LEGAL
OPINION
1. The
Company is a corporation duly incorporated, validly existing under the laws
of
the State of Washington and has all corporate power and authority necessary
to
own and lease its properties and to conduct its business as described in the
SEC
Documents, except as would not have a material adverse effect upon the Company
taken as a whole.
2. The
Company has the requisite corporate power and authority to execute, deliver
and
perform its obligations under the Operative Agreements. The Company has taken
all necessary corporate action to authorize its execution, delivery and
performance of each of the Operative Agreements.
3. Each
of
the Operative Agreements has been duly executed and delivered by the Company
and
constitutes a legal, valid and binding obligation of the Company and is
enforceable against the Company in accordance with its terms except as limited
by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
or similar laws of general application now or hereafter in effect affecting
the
rights and remedies of creditors; (b) general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or in equity);
(c) the effect of judicial decisions which have held that certain provisions
are
unenforceable when their enforcement would violate the implied covenant of
good
faith and fair dealing, or would be commercially unreasonable, or where their
breach is not material; or (d) the discretion of the court before which any
proceeding therefor may be brought, and except as the right to indemnification
or contribution set forth in the Operative Agreements may be limited by public
policy or applicable securities laws.
4. The
issuance and sale of the Shares and Warrants by the Company pursuant to the
terms of the Purchase Agreement on the date hereof, and the reservation and
issuance of the Underlying Shares, have been duly approved by the date hereof,
and the reservation and issuance of the Underlying Shares, have been duly
approved by the Board of Directors of the Company. When issued and delivered
in
accordance with the terms of the Purchase Agreement, the Shares will be validly
issued, full paid and nonassessable. The Underlying Shares, when issued in
accordance with the terms of the respective Warrants, will be validly issued,
fully paid and nonassessable.
5. The
execution, deliver and performance of the Operative Agreements do not, and
the
issuance and sale of the Shares and Warrants on the date hereof as contemplated
by the Purchase Agreement will not, (a) conflict with or violate the Company’s
Amended and Restated Articles of Incorporation, or its Amended and Restated
Bylaws, (b) conflict with or violated any judgment, order or decree of any
court
or governmental authority of which we have knowledge applicable to the Company
or any of its properties, (c) result in a material violation, or conflict with,
any statute, rule or regulation known to us to be applicable to the Company
or
its properties or (d) result in a material default by the Company under any
of the contracts or agreements filed as exhibits to the SEC
Documents.
6. No
consent, approval or authorization of or designation, declaration or filing
with, any federal or state governmental authority on the part of the Company
is
required in connection with the valid execution, delivery and performance of
the
Operative Agreements, or the offer, sale or issuance of the Shares or the
Warrants, other than (a) such as have been made or obtained; (b) compliance
with
the Blue Sky laws or federal securities laws applicable to the offering of
the
Shares, the Warrants and the Underlying Shares; and (c) the filing of a
registration statement in accordance with the requirements of the Registration
Rights Agreement.
7. Assuming
(i) the accuracy and completeness of the representations and warranties of
each
of the Investors set forth in the Purchase Agreement and (ii) that neither
the
Company nor any other person (including, without limitation, any placement
agent
for the transactions contemplated by the Purchase Agreement) has engaged in
any
activity that would be deemed a “general solicitation” under the provisions of
Regulation D under the Securities Act, the offer, issuance and sale of the
Securities being purchased by the Purchasers at the Closing on the terms and
conditions contemplated by the Purchase Agreement constitute transactions exempt
from the registration requirements of Section 5 of the Securities
Act.
Exhibit
D
PURCHASER’S
CERTIFICATE OF SUBSEQUENT SALE
|
Attention:
|
Targeted
Genetics Corporation
Chief
Financial Officer
|
The
undersigned, [an officer of, or other person duly authorized by]
___________________________________________________________ [fill in official
name of individual or institution] hereby certifies that he/she [said
institution] is the Purchaser of the Securities evidenced by the attached
certificate, and as such, sold such shares on _____________________ in
accordance with the Registration Statement number ________________________
[fill
in the number of or otherwise identify Registration Statement] and the
requirement of delivering or deemed delivery of a current prospectus forming
a
part of such Registration Statement has been complied with in connection with
such sale.
Print
or
Type:
|
Name
of Purchaser
(Individual
or Institution):
|
|
|
|
Name
of Individual
Representing
Purchaser
(if
an institution):
|
|
|
|
Title
of Individual
Representing
Purchaser
(if
an institution):
|
|
Signature
by:
|
Individual
Purchaser
or
Individual Representing
Purchaser:
|
|
Schedule
I
SCHEDULE
OF LOCK-UP AGREEMENTS
1. H.
Xxxxxxx Xxxxxx
2. Xxxxx
X.
Xxxxxx
3. Xxxxxx
X.
Xxxxxx, Ph.D.
Appendix
I
FORM
OF INVESTOR QUESTIONNAIRE
INVESTOR
QUESTIONNAIRE
INSTRUCTIONS
The
purpose of this Questionnaire is to determine whether you meet the investor
suitability standards imposed by Regulation D promulgated under the Securities
Act of 1933, as amended the (“Act”),
and
generally to assist Targeted Genetics Corporation, a Washington corporation,
(the “Company”) in complying with the requirements of the Act and any applicable
state securities laws. The securities being offered have not been, and will
not
be, except pursuant to the Registration Rights Agreement, registered under
the
Act and are being sold in reliance upon an exemption from the registration
requirements of the Act and exemptions from applicable state securities laws.
The information furnished herein will be relied upon in connection with the
offering and sale of securities in compliance with the aforesaid exemption.
This
Questionnaire will also be used by the Company to prepare a registration
statement registering the securities being offered for resale. The information
contained in this Questionnaire about you may be included in the registration
statement and will be relied upon by the Company in preparing the registration
statement and filing the registration statement with the Securities and Exchange
Commission.
Please
direct any questions regarding this Questionnaire to Xxxxx X. Xxxxxxxx at
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, the Company’s counsel, telephone: (000)
000-0000.
All
information supplied will be treated in confidence, except that this
Questionnaire may be provided to such parties as deemed appropriate or necessary
to establish the availability of an exemption from registration under the
Act
and under state securities laws.
Please
complete, sign and date this questionnaire and return it to the attention
of:
A
pre-paid Federal Express envelope has been enclosed for your convenience.
PLEASE
ANSWER EACH
QUESTION.
(Please print or type.) If the answer to any question is “None” or “Not
Applicable,” please so state.
|
Name
of Investor:
|
||
|
Citizenship:
|
||
|
Residence
or Business Address:
|
||
|
Social
Security Number
or
Tax identification Number:
|
||
|
Occupation
or Business:
|
||
|
Telephone
Number:
|
||
|
Fax
Number:
|
| 1. |
Individuals
please respond to the following questions by placing an “X” next to the
appropriate answer.
|
| (a) |
Did
your individual
income
(without regard to that of your spouse) exceed $200,000 in each
of the
last two full calendar years, and do you reasonably expect such
individual
income to exceed $200,000 in the current year? For the purpose
of this
question, income includes earned income, as well as other items
of
ordinary income, such as dividends, interest, and royalties, but
excludes
capital gains.
|
Yes
o No
o
| (b) |
Did
your joint
income
with your spouse exceed $300,000 in each of the last two full calendar
years, and do you reasonably expect such joint income to exceed
$300,000
in the current year? For the purpose of this question, income includes
earned income, as well as other items of ordinary income, such
as
dividends, interest, and royalties, but excludes capital
gains.
|
Yes
o No
o
| (c) |
Does
your net worth or joint net worth with that of your spouse exceed
$1,000,000?
|
Yes
o No
o
| (d) |
Are
you a broker dealer, registered pursuant to Section 15 of the
Securities Exchange Act of 1934?
|
Yes
o No
o
| (e) |
Set
forth in the space provided below the state(s), if any, in the
United
States in which you maintained your residence during the past two
years
and the dates during which you resided in each
state:
|
| (f) |
Are
you a director or executive officer of the
Company?
|
Yes
o No
o
| 2. |
Corporations,
partnerships, limited liability companies and investors other than
individuals,
please answer the following
questions:
|
| (a) |
Under
the laws of what jurisdiction were you
formed?______________________________________________________
|
| (b) |
Were
you formed for the purpose of investing in the securities being
offered?
|
Yes
o No
o
| (c) |
Are
you a national bank or a banking institution organized under the
laws of
any state or any territory of the United States or the District
of
Columbia?
|
Yes
o No
o
| (d) |
Are
you a savings and loan association, building and loan association,
cooperative bank, homestead association, or similar institution,
which is
supervised and examined by any state or federal authority having
supervision over such institution?
|
Yes
o No
o
| (e) |
Are
you a broker dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934?
|
Yes
o No
o
| (f) |
Are
you a company (i) whose primary and predominant business is the
writing of insurance or the reinsuring of risks underwritten by
insurance
companies and who is subject to the supervision by a regulatory
agency
under the laws of any state or territory, or
(ii) registered as an investment company under the Investment Company
Act of 1940, or
(iii) a Small Business Investment Company licensed by the U.S. Small
Business Administration?
|
Yes
o No
o
| (g) |
Are
you a private business development company within the meaning of
the
Investment Advisers Act of 1940?
|
Yes
o No
o
| (h) |
Are
you an employee benefit plan under the Employee Retirement Income
Security
Act of 1974 (a “Plan”)
with assets in excess of
$5,000,000?
|
Yes
o No
o
If
you
are such a Plan, but if the Plan’s total assets do not exceed $5,000,000, are
investment decisions for the Plan made by a bank, savings and loan association,
insurance company or registered investment adviser acting as
fiduciary?
Yes
o No
o
If
Yes, please specify the name of the
fiduciary: __________________________________________________
If
you
are a self-directed Plan, but if the Plan’s total assets do not exceed
$5,000,000, are investment decisions made solely by persons or entities that
are
accredited investors, (i.e.,
can
answer yes to one or more of the questions under paragraphs (a) - (d) of
Item 1, or (c) - (k) under this Item 2)?
Yes
o No
o
If
Yes,
please specify the applicable Item and Paragraph:
__________________________________________________
| (i) |
Are
you (A)(i) a tax exempt organization which is qualified under Section
501(c)(3) of the Internal Revenue Code of 1986 as amended, or (ii) a
corporation, or (iii) a Massachusetts or similar business trust, or
(iv) partnership, not formed for the specific purpose of acquiring
the securities offered, and
(B) which has assets in excess of
$5,000,000?
|
Yes
o No
o
| (j) |
Are
you a trust, with total assets in excess of $5,000,000, not formed
for the
specific purpose of acquiring the securities offered, whose purchase
is
directed by a person who has such knowledge and experience in financial
and business matters that he is capable of evaluating the merits
and risks
of the prospective investment?
|
Yes
o No
o
If
yes,
please attach a memorandum describing such person’s educational background,
professional memberships or licenses, current employment, principal business
and
professional activities during the last five years, and experience as an
investor in securities. Include any additional information evidencing that
such
person has sufficient knowledge and experience in financial matters that
such
person would be capable of evaluating the merits and risks of investing in
the
securities being offered.
| (k) |
Are
you an entity in which all of the equity owners are persons who
are either
(i) entities described in paragraphs (c) through (j) above;
(ii) individuals whose net worth, or joint net worth with their
spouses, exceeds $1,000,000; (iii) individuals whose income without
regard to that of their spouses exceeded $200,000 or whose joint
income
with their spouses exceeded $300,000, in each of the last two years
and
who reasonably expect such individual income to exceed $200,000
or such
joint income to exceed $300,000 this year; or (iv) individuals who
are broker dealers registered pursuant to Section 15 of the
Securities Exchange Act of 1934?
|
Yes
o No
o
If
an
equity owner is an entity described in paragraphs (h) or (j) under this
item 2, please provide the information required by such paragraph.
| (l) |
Set
forth in the space provided below the (i) the state(s), if any, in
the United States in which you maintained your principal office
during the
past two years and the dates during which you maintained your office
in
each state, (ii) the state(s), if any, in which you are incorporated
or otherwise organized, and (iii) the state(s), if any, in which you
pay income taxes:
|
| 3. |
All
investors please
respond to the following questions:
|
| (a) |
Are
you the beneficial owner of any other securities of the
Company?
|
Yes
o No
o
If
Yes,
please describe the nature and amount of such ownership:
| (b) |
Have
you held any position or office, or had any other material relationship
in
the past three years with the Company or any of its predecessors
or
affiliates?
|
Yes
o No
o
If
Yes,
please describe the nature of such relationship:
| (c) |
Have
you made or are you aware of any arrangements relating to the distribution
of the shares?
|
Yes
o No
o
If
Yes,
please describe such arrangement:
The
undersigned hereby represents that all the information supplied herein is
true,
correct and complete as of the date hereof. The undersigned agrees to notify
the
Company promptly of any material change in the foregoing answers.
The
undersigned understands and acknowledges that the undersigned’s signature to
this Investor Questionnaire shall constitute the undersigned’s signature page to
the Securities Purchase Agreement and the Registration Rights Agreements,
each
dated as of January 8, 2007, and if accepted by the Company, will constitute
a
legally binding obligation of the undersigned; provided, however, if the
Company
does not accept the following signature page, the following signature page
shall
be void.
The
undersigned Purchaser hereby executes the Investor Questionnaire, Securities
Purchase Agreement and the Registration Rights Agreement with Targeted Genetics
Corporation, a Washington corporation (the “Company”)
and
hereby authorizes this signature page to be attached to a counterpart of
such
documents executed by a duly authorized officer of the Company.
| Number of Shares | _____________________________________________ | |
| to be Purchased:________________________________ | Name of Purchaser | |
| (PLEASE TYPE OR PRINT) | ||
| U.S. Taxpayer ID No., if any: | ||
| _____________________________________________ | By:_____________________________________________ | |
| Name (print):_____________________________________ | ||
| Title:____________________________________________ | ||
| Address: ________________________________________ | ||
| ________________________________________________ |
Please
set out below your registration requirements.
If
shares are to be registered in the name of more than one entity, provide
the
information requested below for each entity. (Please use multiple pages,
one for
each entity.)
Name
in which Securities
are
to be registered:____________________________________________________________
Number
of Shares to
be
purchased:_________________________________________________________________
Number
of Warrants to
be
purchased:_________________________________________________________________
Address
of registered holder
(if
different from above):________________________________________________________
________________________________________________________
Number
of Shares of the Company’s
Common
Stock currently held by the above named entity:____________________________
Contact
name and telephone
number
regarding settlement
and
registration: _______________________________________________________________
Name
_______________________________________________________________
Telephone
Number
Certificate
Delivery Instructions
Exact
address Certificates and Warrants are to be physically delivered
to:
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
Contact
at delivery address: _________________________________________________
Phone:
__________________________
