EXHIBIT 1
Execution Copy
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of January
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7th, 2000, among Ribozyme Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), and Elan International Services, Ltd., a Bermuda exempted limited
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liability company ("EIS"), and a wholly-owned subsidiary of Elan Corporation,
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plc, an Irish public limited company ("Elan").
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R E C I T A L S:
A. The Company desires to issue and sell to EIS, and EIS desires to
purchase from the Company, (i) initially 12,015 shares of a newly-created series
of the Company's preferred stock, par value U.S.$.01 per share, captioned
"Series A Convertible Exchangeable Preferred Stock" (the "Series A Preferred
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Stock"), (ii) a warrant (as amended at any time, the "A Warrant") to purchase up
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to 200,000 shares of the Company's common stock, par value U.S.$.01 per share
(the "Common Stock"), as provided therein, in the form attached hereto as
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Exhibit A, and (iii) a warrant (as amended at any time, the "B Warrant";
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together with the A Warrant, the "Warrants") to purchase up to 300,000 shares of
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Common Stock as provided therein, in the form attached hereto as Exhibit B. The
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Company also desires to issue and sell to EIS, and EIS desires to purchase from
the Company, within 60 days of the date hereof 641,026 shares of the Company's
Common Stock. The Company also desires to issue and sell to EIS, and EIS
desires to purchase from the Company, a convertible promissory note in the
maximum outstanding principal amount of $12,015 million in the form attached
hereto as Exhibit C (the "Note"), which shall be exchangeable, as provided
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herein, for initially up to 12,015 shares of a newly-created series of the
Company's preferred stock, par value U.S.$.01 per share, captioned "the Series B
Convertible Preferred Stock" (the "Series B Preferred Stock"; together with the
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Series A Preferred Stock and the Common Stock, the "Shares"; and together with
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the Warrants and the Note, the "Securities"), which Securities shall be issued
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to EIS pursuant to this Agreement, in accordance with its terms and subject to
the conditions contained herein. The rights, preferences and privileges of the
Series A Preferred Stock and, when issued, the Series B Preferred Stock, are as
set forth in the Certificate of Designations, Preferences and Rights (the
"Certificate of Designations"), in the form attached hereto as Exhibit D.
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B. The Company and EIS have formed Medizyme Pharmaceutical Ltd., an
exempted limited liability company incorporated under the laws of Bermuda
("Newco"), and pursuant to the terms of a Subscription, Joint Development and
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Operating Agreement, dated as of the date hereof (as amended at any time, the
"JDOA"), simultaneously with the transactions contemplated by this Agreement,
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(i) the Company shall acquire 6,000 voting common shares of Newco, par value
U.S.$1.00 per share (the "Newco Common Shares"), representing 100% of the issued
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and outstanding shares of such class of stock, and 3,612 non-voting convertible
preference shares of Newco, par value of U.S.$1.00 (the "Newco Preferred
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Shares"; together with the Newco Common Shares, the "Newco Shares"),
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representing 60.2% of the aggregate outstanding Newco Preferred Shares and, on a
fully diluted basis, 30.1% of the aggregate outstanding Newco Shares, and (ii)
EIS shall acquire 2,388 Newco Preferred Shares, representing 39.8% of the
aggregate outstanding Newco Preferred Shares, and, on a fully diluted
basis, 19.9% of the Newco Shares. Additionally, as of the date hereof, Newco has
entered into license agreements with (i) Elan and its subsidiary Elan Pharma
International Limited (such agreements, as amended at any time, collectively,
the "Elan License Agreement"), and (ii) the Company (such agreement, as amended
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at any time, the "Company License Agreement"; together with the Elan License
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Agreement, the "License Agreements").
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C. The Company and EIS are executing and delivering on the date
hereof a Registration Rights Agreement, in the form attached hereto as Exhibit E
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(as amended at any time, the "Company Registration Rights Agreement"), in
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respect of (i) the Common Stock issued or issuable upon conversion of the Series
A Preferred Stock or Series B Preferred Stock or exercise of all or any portion
of the Warrants and/or (ii) the Common Stock being issued and purchased
hereunder, and any other Common Stock issued to EIS or any of its affiliates or
permitted transferees upon any stock split, stock dividend, recapitalization or
similar event affecting the Securities. The Company, EIS and Newco are also
executing and delivering on the date hereof a Registration Rights Agreement in
the form attached hereto as Exhibit F (as amended at any time, the "Newco
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Registration Rights Agreement"). Additionally, the Company and EIS are
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executing and delivering on the date hereof a Funding Agreement in the form
attached hereto as Exhibit G (the "Funding Agreement"; together with this
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Agreement, the Certificate of Designations, the JDOA, the Company Registration
Rights Agreement, the Newco Registration Rights Agreement, the License
Agreements and each other document or instrument executed and delivered in
connection with the transactions contemplated hereby and by the JDOA, the
"Transaction Documents").
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A G R E E M E N T:
The parties hereto agree as follows:
SECTION 1. Closing.
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(a) Time and Place. The closings of the transactions contemplated
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hereby shall occur (i) on the date hereof (the "Initial Closing; the date
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thereof, the "Initial Closing Date"), (ii) on the date that is 60 days after the
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date hereof (the "Stock Purchase Closing"; the date thereof, the "Stock Purchase
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Closing Date") and (iii) the date that is 15 months after the date hereof (the
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"Subsequent Closing"; the date thereof, the "Subsequent Closing Date"; together
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with the Initial Closing Date and the Stock Purchase Closing Date, a "Closing
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Date"), in each case at the offices of Xxxxx Xxxxxxxxxxx LLC, 000 Xxxxx Xxxxxx,
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00/xx/ Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
(b) Issuance of Securities. At the Initial Closing, subject to the
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terms and conditions hereof, the Company shall issue and sell to EIS, and EIS
shall purchase from the Company: (i) 12,015 shares of Series A Preferred Stock
and (ii) the Warrants. At the Stock Purchase Closing, subject to the terms and
conditions hereof, the Company shall issue and sell to EIS, and EIS shall
purchase from the Company, 641,026 shares of Common Stock. At the Subsequent
Closing, subject to the terms and conditions hereof, the Company shall issue and
sell to EIS, and EIS shall purchase from the Company a number of shares of
Common Stock set forth below.
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(c) Purchase Price. The purchase price for (i) the 12,015 shares
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Series A Preferred Stock and the Warrants shall be U.S.$12,015,000 (the
"Initial Purchase Price"), (ii) the 641,026 shares of Common Stock shall be
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$5,000,000 (the "Common Stock Purchase Price") and (iii) the shares of Common
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Stock at the Subsequent Closing shall be $5,000,000 (the "Subsequent Purchase
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Price"; together with Initial Purchase Price and the Common Stock Purchase
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Price, the "Purchase Price").
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(d) Initial Closing Delivery. On the Initial Closing Date, subject to
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the terms and conditions hereof and applicable regulatory approvals, (i) EIS
shall pay the Initial Purchase Price by wire transfer to an account designated
by the Company, (ii) the parties hereto shall execute and deliver to each other,
as applicable: (A) certificates for the Series A Preferred Stock; (B) the
Warrants; (C) the Company Registration Rights Agreement; (D) the Newco
Registration Rights Agreement; (E) the JDOA; (F) the Certificate of
Designations, as filed with the Secretary of State of the State of Delaware; (G)
the License Agreements; (H) the Funding Agreement; (I) certificates as to the
incumbency of the officers of the Company executing any of the Transaction
Documents; and (J) any other documents or instruments reasonably requested by a
party hereto and (iii) the Company shall cause to be delivered to EIS an opinion
of counsel in the form attached hereto as Exhibit H.
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(e) Common Stock Closing Delivery. On the Stock Purchase Closing Date,
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subject to the terms and conditions hereof and applicable regulatory approvals,
EIS shall pay the Common Stock Purchase Price by wire transfer to an account
designated by the Company and the Company shall execute and deliver to EIS: (A)
certificates for the Common Stock and (B) any other documents or instruments
reasonably requested by EIS, including updates of the documents referred to in
clauses 1(d)(ii)(I) and 1(d)(iii) above as well as a certification that the
representations in Section 2 hereof are, as of such date, true and correct in
all material respects.
(f) Subsequent Closing Delivery. On the Subsequent Closing Date,
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subject to the terms and conditions hereof, the Company shall issue and sell to
EIS, and EIS shall purchase from the Company additional shares of Common Stock,
in accordance with the following terms and conditions:
(i) The purchase price per share shall be a price equal to 30%
premium over the Market Price Per Share of such Common Stock. The Market
Price Per Share shall be the average closing price for the 45 trading days
preceding the day that is two business days prior to the Subsequent Closing
Date. If Newco shall have determined not to file and investigational new
drug application (an "IND") with the U.S. Food and Drug Administration in
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respect of a compound or compounds mutually reasonably determined by EIS
and the Company or no such determination shall have been made by the
Subsequent Closing Date, then, in such event, the Purchase Price Per Share
shall be recalculated to reduce the premium of the Market Price Per Share
of such Common Stock by 5% for each full calendar month following the
Subsequent Closing Date that an affirmative determination to file an IND
shall not have been made (as reasonably determined by Newco upon the
reasonable and good faith agreement of Newco's management committee or,
failing such agreement, agreement of senior management of each of RPI and
Elan); provided, that such premium to the Market Price Per Share shall
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not be reduced below zero. If the purchase price is so adjusted, additional
shares of Common Stock shall be issued to EIS within 10 business days of
the earlier of (x) the date of such affirmative determination to file an
IND, as described above, and (y) the date that is six months after the
Subsequent Closing Date to reflect such adjustment;
(ii) EIS shall pay the Subsequent Purchase Price by wire
transfer to an account designated by the Company; and
(iii) The Company shall deliver to EIS (A) a certificate or
certificates representing such Common Stock and (B) any other documents or
instruments reasonably requested by EIS, including updates of the documents
referred to in clauses 1(d)(ii)(I) and 1(d)(iii) above as well as a
certification that the representations in Section 2 hereof are, as of such
date, true and correct in all material respects.
(g) Note and Series B Preferred Stock. The Company shall issue and
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sell to EIS, and EIS shall purchase from the Company, the Note. Drawdowns
thereunder shall be made as provided in the Note, upon at least 10 days' written
notice from the Company to EIS, which notices shall set forth a closing date; on
each such closing date, (x) EIS shall fund the amount requested, as provided
herein, and (y) the Company shall cause to be delivered to EIS a certificate or
certificates in respect thereof and a confirmation that the conditions described
in clause (iii) above have been satisfied and the Company shall furnish such
documents and instruments that EIS shall reasonably request, including updates
of the documents referred to in clauses 1(d)(ii)(I) and 1(d)(iii) above as well
as a certification that the representations in Section 2 hereof are, as of such
date, true and correct in all material respects.
The Company presently has outstanding a class of preferred stock
captioned Series L Preferred Stock (the "Series L Preferred Stock"). At such
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time, if any, during the term of the Note that the Series L Preferred Stock has
been redeemed, converted or otherwise paid in full (and EIS is otherwise
satisfied that the holder(s) thereof do not have any right of seniority over the
Series B Preferred Stock, as contemplated to be issued hereunder), then, in such
event, upon at least 10 business days' written request of the Company, the Note
shall be exchanged for shares of Series B Preferred Stock, as follows. In such
event, the Note shall be marked canceled and returned to the Company,
simultaneously with the delivery of shares of Series B Preferred Stock to EIS by
the Company; the initial number of shares shall be equal to aggregate amount
funded under the Note and accrued and unpaid interest thereon, divided by
$1,000. Thereafter, additional shares of Preferred Stock (having up to a
maximum aggregate Original Issue Price, including those previously issued, of
$12.015 million) shall be issued, at the request of the Company, as follows:
(i) Each purchase and sale of shares shall be made at such
time that Newco's board of directors shall have determined that funding is
required under the JDOA, in accordance with and as permitted by the terms
thereof, and Newco shall have provided written notice thereof to EIS and to
the Company; the proceeds of the Series B Preferred Stock shall be used
solely to satisfy the Company's obligation to provide such funding;
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(ii) The price per share shall be U.S.$1,000.00, and shares
shall be issued only in 250-share or greater increments;
(iii) A condition to each such purchase shall be (A) that such
purchase shall occur during the Development Period (as such term is
defined in the JDOA) and (B) that there is no material breach or default by
the Company hereunder or under the JDOA or the Funding Agreement and the
representations herein shall be true and correct in all material respects
as of the date made and as of the proposed funding date (updated as to SEC
Filings and similar matters) and (c) all appropriate and applicable
regulatory approvals shall have been obtained; and
(iv) Purchases and sales of shares of Series B Preferred Stock
shall be made upon at least 10 days' written notice from the Company to
EIS, which notices shall set forth a closing date; on each such closing
date, (x) EIS shall fund the amount required to purchase such shares, as
provided herein, and (y) the Company shall cause to be delivered to EIS a
certificate or certificates in respect thereof and a confirmation that the
conditions described in clause (iii) above have been satisfied and the
Company shall furnish such documents and instruments that EIS shall
reasonably request, including updates of the documents referred to in
clauses 1(d)(ii)(I) and 1(d)(iii) above as well as a certification that the
representations in Section 2 hereof are, as of such date, true and correct
in all material respects.
(f) Exemption from Registration. The Securities and any underlying
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shares of Common Stock will be issued under an exemption or exemptions from
registration under the Securities Act of 1933, as amended (the "Securities
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Act"). Accordingly, the certificates evidencing the Series A Preferred Stock,
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the Series B Preferred Stock, the Common Stock, the Warrants and any shares of
Common Stock or other securities issuable upon the exercise, conversion or
exchange of any of the Securities shall, upon issuance, contain a legend,
substantially in the form as follows:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS AND NO INTEREST MAY BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE
STATE SECURITIES LAWS OR THIS CORPORATION RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
SATISFACTORY TO THIS CORPORATION THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS ALSO SUBJECT TO THE
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RESTRICTIONS CONTAINED IN THAT CERTAIN SECURITIES PURCHASE
AGREEMENT, DATED AS OF JANUARY 7th, 2000, BY AND BETWEEN
RIBOZYME PHARMACEUTICALS, INC. AND ELAN INTERNATIONAL
SERVICES, LTD.
SECTION 2. Representations and Warranties of the Company. The
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Company hereby represents and warrants to EIS, as of each Closing Date, as
follows:
(a) Organization. The Company is a corporation duly organized, and
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validly existing under the laws of the state of Delaware and has all requisite
corporate power and authority to own and lease its properties, to carry on its
business as presently conducted and as proposed to be conducted and to
consummate the transactions contemplated hereby. The Company is duly qualified
as a foreign corporation and in good standing to do business in each
jurisdiction in which the nature of the business conducted or the property owned
by it requires such qualification, except where the failure to be so qualified
would not, individually or in the aggregate, have a material adverse effect on
the business, assets, liabilities (contingent or otherwise), operations,
condition (financial or otherwise), or prospects of the Company (a "Company
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Material Adverse Effect").
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(b) Capitalization. As of the Closing Date, the Company has reserved
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a sufficient number of shares of Common Stock (i) for issuance upon conversion
of the Series A Preferred Stock and the Series B Preferred Stock being purchased
hereunder by EIS (including dividends thereon), and (ii) for issuance upon
exercise of the Warrants. The Securities, when issued against payment therefor
in accordance with this Agreement, will be duly and validly issued, fully paid
and nonassessable, and will not be issued in violation of any preemptive or
similar rights. The shares of Common Stock underlying the Series A Preferred
Stock, the Series B Preferred Stock and the Warrants (the "Underlying Shares"),
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when issued upon conversion or exercise in accordance with the terms thereof,
will be duly and validly issued, fully paid and nonassessable, and will not be
issued in violation of any preemptive or similar rights.
(b) Authorization of Transaction Documents. The Company has full
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corporate power and authority to execute and deliver this Agreement and each of
the other Transaction Documents to which it is a party, and to perform its
obligations hereunder and thereunder. The execution, delivery and performance
by the Company of this Agreement and each of the other Transaction Documents to
which it is a party, including the issuance and sale of the Securities, have
been duly authorized by all requisite corporate action by the Company and, when
executed and delivered by the Company, this Agreement and each of the other
Transaction Documents to which it is a party will be the valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms.
(c) No Violation. The execution, delivery and performance by the
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Company of this Agreement and each other Transaction Document to which it is a
party, including the issuance and sale of the Securities, and compliance with
the provisions hereof and thereof by the Company, does not conflict with or
constitute or result in a breach of or default under (or an event which with
notice or passage of time or both would constitute a default) or give rise to
any right of termination, cancellation or acceleration under (i) the Certificate
of Incorporation, as
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amended, or by-laws, of the Company, (ii) applicable law, statute, rule or
regulation, or any ruling, writ, injunction, order, judgment or decree of any
court, arbitrator, administrative agency or other governmental body applicable
to the Company or any of its properties or assets, or (iii) any material
contract or agreement affecting the Company, including any contract filed or
required by applicable law to be filed as an exhibit to the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 (the "1998 Form 10-K")
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or any subsequent interim quarterly report, except where such breach, default,
termination, cancellation or acceleration would not, individually or in the
aggregate, have a Company Material Adverse Effect
(e) Approvals. Except as set forth on Schedule 2(e), no permit,
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authorization, consent, approval, or order of or by, or any notification of or
filing with, any person or entity (governmental or otherwise) is required in
connection with the execution, delivery or performance of this Agreement or the
Transaction Documents, including the issuance and sale of the Securities, by the
Company.
(f) SEC Filings. The Company has timely filed with the Securities
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and Exchange Commission (the "SEC") all forms, reports, schedules, statements,
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exhibits and other documents (collectively, the "SEC Filings") required to be
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filed by the Company on or before the date hereof. At the time filed, the SEC
Filings, including without limitation, any financial statements, exhibits and
schedules included therein or documents incorporated therein by reference (i)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (ii) complied in all material respects with the applicable
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as the case may be.
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(g) Financial Statements. The audited balance sheet of the Company
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at December 31, 1998 and 1997 and unaudited balance sheet September 30, 1999,
together with the related statements of operations, stockholders' equity
(deficit) and cash flows for each of the two years ended December 31, 1998 and
1997 and the nine months ended September 30, 1999, together with the reports and
opinions thereon of Ernst & Young, contained in the Company's 1998 and 1997 Form
10-K, comply as to form in all material respects with applicable accounting
requirements and the published rules and regulation of the SEC with respect
thereto, and fairly present, in all material respects, the financial position of
the Company and the results of its operations and its cash flows at such dates
and for the years then ended and were prepared in conformity in all material
respects with generally accepted accounting principles applied on a consistent
basis.
(h) Litigation. There is no legal, administrative, arbitration or
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other action or proceeding or governmental or investigation pending, or to the
Company's knowledge, threatened against the Company, or any director, officer or
employee of the Company that challenges the validity or performance of this
Agreement or the other Transaction Documents to which the Company is a party.
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(i) Absence of Certain Events. Since September 30, 1999, except as
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contemplated by the Transaction Documents or as set forth on Schedule 2(i)
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hereto, (A) the Company has not (i) made, paid or declared any dividend or
distribution to any equity holder (in such capacity) or redeemed any of its
capital stock, (ii) varied its business plan or practices, in any material
respect, from past practices, (iii) entered into any financing, joint venture,
license or similar arrangement that would limit or restrict its ability to
perform its obligations hereunder and under each of the other Transaction
Documents to which it is a party, or (iv) suffered or permitted to be incurred
any liability or obligation or any lien or encumbrance against any of its
properties or assets that would limit or restrict its ability to perform its
obligations hereunder and under each of the other Transaction Documents to which
it is a party, and (B) there has not been any change or development which has
had, or in the Company's reasonable judgement is likely to have, a Company
Material Adverse Effect except as disclosed on Schedule 2 (i) hereto.
(j) Disclosure. The representations and warranties set forth
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herein and in the other Transaction Documents, when viewed collectively, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements contained herein not misleading in light
of the circumstances in which they were made.
(k) Brokers or Finders. There have been no investment bankers,
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brokers or finders used by the Company in connection with the transactions
contemplated by the Transaction Documents and no persons or entities are
entitled to a fee or compensation in respect thereof.
SECTION 3. Representation and Warranties of EIS. EIS hereby
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represents and warrants to the Company, as of each Closing Date, as follows:
(a) Organization. EIS is an exempted company duly organized, validly
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existing and in good standing under the laws of Bermuda and has all requisite
corporate power and authority to own and lease its properties, to carry on its
business as presently conducted and as proposed to be conducted and to
consummate the transactions contemplated hereby. EIS is duly qualified as a
foreign corporation and in good standing to do business in each jurisdiction in
which the nature of the business conducted or the property owned by it requires
such qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on the
business, assets, liabilities (contingent or otherwise), operations, condition
(financial or otherwise), or prospects of EIS (an "EIS Material Adverse
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Effect").
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(b) Authorization of Transaction Documents. EIS has full corporate
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power and authority to execute and deliver this Agreement and each of the other
Transaction Documents to which it is a party, and to perform its obligations
hereunder and thereunder. The execution, delivery, and performance by EIS of
this Agreement and each other Transaction Document to which it is a party,
including the purchase and acceptance of the Securities, have been duly
authorized by all requisite corporate action by EIS and, when executed and
delivered by EIS, this Agreement and each of the other Transaction Documents to
which it is a party, will be the valid and binding obligations of EIS,
enforceable against it in accordance with their respective terms.
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(c) No Violation. The execution, delivery and performance by EIS
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of this Agreement and each other Transaction Document to which it is a party,
including the purchase and acceptance of the Securities, and compliance with
provisions hereof and thereof by EIS, will not conflict with or constitute or
result in a breach of or default under (or an event which with notice or passage
of time or both would constitute a default) or give rise to any right of
termination, cancellation or acceleration under (i) the by-laws of EIS, (ii)
applicable law, statute, rule or regulation, or any ruling, writ, injunction,
order, judgment or decree of any court, arbitrator, administrative agency or
other governmental body applicable to EIS or any of its properties or assets, or
(iii) any material contract to which EIS is a party, except where such breach,
default, termination, cancellation or acceleration would not, individually or in
the aggregate, have an EIS Material Adverse Effect.
(d) Approvals. Except for consent required under the Mergers and
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Takeovers (Control) Acts 1978-1996 (Ireland), no material permit, authorization,
consent, approval or order of or by, or any notification of or filing with, any
person or entity (governmental or otherwise) is required in connection with the
execution, delivery or performance of this Agreement or the Transaction
Documents by EIS.
(e) Investment Representations.
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(i) EIS is sophisticated in transactions of this type and
capable of evaluating the merits and risks of the transactions described
herein and in the other Transaction Documents to which it is a party, and
has the capacity to protect its own interests. EIS has not been formed
solely for the purpose of entering into the transactions described herein
and therein and is acquiring the Securities (and the Underlying Shares) for
investment for its own account, not as a nominee or agent, and not with the
view to, or for resale, distribution or fractionalization thereof, in whole
or in part, and no other person (other than Elan) has a direct or indirect
interest, beneficial or otherwise in the Securities (or the Underlying
Shares); provided, however, that EIS shall be permitted to convert or
exchange such Securities in accordance with their terms.
(ii) EIS has not and does not intend to enter into any
contract, undertaking, agreement or arrangement with any person or entity
to sell, transfer or pledge the Securities (or the Underlying Shares).
(iii) EIS acknowledges its understanding that the private
placement and sale of the Securities (and the Underlying Shares) is exempt
from registration under the Securities Act. In furtherance thereof, EIS
represents and warrants that it is an "accredited investor" as that term is
defined in the regulations under the Securities Act, has the financial
ability to bear the economic risk of its investment, has adequate means for
providing for its current needs and personal contingencies and has no need
for liquidity with respect to its investment in the Company.
(iv) EIS agrees that it shall not sell or otherwise
transfer any of the Securities (or the Underlying Shares) without
registration under the Securities Act or pursuant to an opinion of counsel
reasonably satisfactory to the Company that an
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exemption from registration is available, and fully understands and agrees
that it must bear the total economic risk of its purchase for an indefinite
period of time because, among other reasons, none of the Securities (or the
Underlying Shares) have been registered under the Securities Act or under
the securities laws of any applicable state or other jurisdiction and,
therefore, cannot be resold, pledged, assigned or otherwise disposed of
unless subsequently registered under the Securities Act and under the
applicable securities laws of such states or jurisdictions or an exemption
from such registration is available. EIS understands that the Company is
under no obligation to register the Securities (or the Underlying Shares)
on its behalf with the exception of certain registration rights with
respect to certain of the Securities (and the Underlying Shares), as
provided in the Company Registration Rights Agreement. EIS understands the
lack of liquidity and restrictions on transfer of the Securities (and the
Underlying Shares) and that this investment is suitable only for a person
or entity of adequate financial means that has no need for liquidity of
this investment and that can afford a total loss of its investment.
(f) Litigation. There is no legal, administrative, arbitration or
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other action or proceeding or governmental investigation pending, or to EIS's
knowledge threatened, against EIS that challenges the validity or performance of
this Agreement or the other Transaction Documents to which EIS is a party.
(g) Brokers or Finders. There have been no investment bankers,
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brokers or finders used by EIS in connection with the transactions contemplated
by the Transaction Documents and no persons or entities are entitled to a fee or
compensation in respect thereof.
SECTION 4. Covenants of the Parties.
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(a) Certain Covenants. From and after the Closing Date and until the
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earlier to occur of the exercise or expiration of the EIS Exchange Right (as
such term is defined in Section 5(c) hereof), the Company shall not without the
prior written consent of EIS: (i) sell, transfer, encumber, pledge or otherwise
affect, in any respect, (A) any Newco Preferred Shares owned by the Company,
including, without limitation, those Newco Preferred Shares transferable to EIS
upon exercise by EIS of the EIS Exchange Right, or (B) affect, in any respect,
the Company's ability to permit EIS to exercise the EIS Exchange Right in full,
as provided herein or (ii) enter into any material transaction with a director,
officer or more than 20% beneficial owner of Common Stock on other than an arm's
length basis.
(b) Fully-diluted Stock Ownership. Notwithstanding any other
-----------------------------
provision of this Agreement, in the event that EIS shall have determined that at
any time it (together with its affiliates, if applicable) holds or has the right
to receive Common Stock (or securities or rights, options or warrants
exercisable, exchangeable or convertible for or into Common Stock) representing
in the aggregate in excess of 9.9% of the Company's outstanding Common Stock on
a fully diluted basis, EIS shall have the right to convert the Series A
Preferred Stock, the Note, the Series B Preferred Stock, and the Warrants into
other junior, non-voting securities of the Company (to be specified by EIS and
reasonably agreed to by the Company and not having superior rights to the rights
attendant to the Common Stock) such that EIS and its affiliates will
10
not directly or indirectly own more than 9.9% of the Common Stock for a period
of at least two years from the election to convert any of the Series A Preferred
Stock, the Note, Series B Preferred Stock or the Warrants. Each of the Company
and EIS shall use commercially reasonable efforts to effect such transactions
and any required subsequent conversions or adjustments to EIS's securities
position, on a quarterly basis, within 15 business days of the end of each of
Elan's fiscal quarters.
(c) Use of Proceeds. The Company shall use the proceeds of (i) the
---------------
issuance and sale of the Series A Preferred Stock solely to fund its initial
capital contribution to and funding of Newco as described in the JDOA, and (ii)
the issuance and sale of the Note and the Series B Preferred Stock solely to
fund development amounts in connection with the business of Newco, as described
in the Funding Agreement; and, in each case, for no other purpose.
(d) Confidentiality; Non-Disclosure.
-------------------------------
(i) Subject to clauses (ii) and (iii) below, from and after
the date hereof, neither the Company nor EIS (nor their respective
affiliates) shall disclose to any person or entity this Agreement or the
other Transaction Documents or the contents thereof or the parties thereto,
except that such parties may make such disclosure (x) to their directors,
officers, employees and advisors, so long as they shall have advised such
persons of the obligation of confidentiality herein and for whose breach or
default the disclosing party shall be responsible, or (y) as required by
applicable law, rule, regulation or judicial or administrative process,
provided that the disclosing party uses reasonable efforts to obtain an
order or ruling protecting the confidentiality of confidential information
of the other party contained herein or therein. The parties shall be
entitled to seek injunctive or other equitable relief in respect of any
breach or threatened breach of the foregoing covenant without the
requirement of posting a bond or other collateral.
(ii) Prior to issuing any press release or public disclosure
in respect of this Agreement or the transactions contemplated hereby, the
party proposing such issuance, shall obtain the consent of the other party
to the contents thereof, which consent shall not be unreasonably withheld
or delayed; it being understood that if such second party shall not have
responded to such consent request within two business days, such consent
shall be deemed given.
(e) Further Assurances. From and after the date hereof, each of the
------------------
parties hereto agree to do or cause to be done such further acts and things and
deliver or cause to be delivered to each other such additional assignments,
agreements, powers and instruments, as each may reasonably require or deem
advisable to carry into effect the purposes of this Agreement and the other
Transaction Documents.
SECTION 5. Certain Rights of EIS. (a) Preemptive Right. Until
--------------------- ----------------
the fourth anniversary of the Initial Closing Date, EIS shall have the right
(but not the obligation) to participate in any equity, warrant, or convertible
or exchangeable for equity financing consummated by the Company, in order for
EIS to maintain its pro rata interest in the Company, based on the number of
shares of Common Stock owned by EIS and its affiliates, assuring the conversion
or exercise of all Securities and the actual number of shares of Common Stock
11
outstanding on the date such financing is consummated; provided, that such right
shall not apply to any public offering under the Securities Act, offering under
an option plan, or asset or company acquisition paid for, in whole or in part,
in shares of Common Stock. Such right shall be exercised by EIS within 10 days
of receipt of notice of such financing from the Company, which notice shall be
provided by the Company at least 15 days prior to such financing. Such
participation by EIS shall be on the same terms and conditions offered to any
other potential investor in such offering.
(b) Company Board of Directors. For so long as (i) EIS and/or its
--------------------------
affiliates or subsidiaries collectively own Securities that represent ownership
of at least 10% of the Common Stock (or Securities convertible, exchangeable or
exercisable for or into the Common Stock) on a fully diluted basis (assuming the
exercise, conversion or exchange by EIS and its affiliates but no other Common
Stock equivalents), or (ii) until the date that is five years after the date
hereof, EIS shall be entitled to nominate one director (the "EIS Director") for
------------
election to the Company's Board. In connection with the foregoing, the Company
will take all necessary and/or appropriate steps to effect such appointment,
including the inclusion of the designated EIS Director on the recommended slate
of directors presented at any regular or special meeting of the stockholders of
the Company at which directors of the Company are to be elected. Prior to such
election, the designated EIS Director shall be entitled to be an observer at the
meetings of the Company's board of directors.
(c) Conversion and Exchange Rights; Etc. (i) The Certificate of
-----------------------------------
Designations sets forth certain rights of the holders of shares of Series A
Preferred Stock to convert such shares of preferred stock into newly issued
shares of Common Stock, or to exchange such shares of Series A Preferred Stock,
subject to the provisions in Section 5 of the Certificate of Designations, for
certain shares of Newco Stock (the "EIS Exchange Right"), both on the terms and
------------------
conditions set forth therein.
(ii) In the event that all or any portion of the issued and
outstanding shares of Series A Preferred Stock are converted into shares of
Common Stock on or prior to the last day permitted to exercise the EIS Exchange
Right, as permitted by the Certificate of Designations, as a result of a merger,
consolidation or similar transaction involving the Company (each, a "Merger
------
Conversion"), then, in such event, the EIS Exchange Right shall not be
----------
terminated, as otherwise provided in the Certificate of Designations, but
rather, EIS and the holders of the Series A Preferred Stock shall retain the EIS
Exchange Right until the Exchange Right Termination Date (as defined in the
Certificate of Designations); provided, that the consideration payable to the
Company to exercise the EIS Exchange Right shall be the shares of Common Stock
issued to the holders of the Series A Preferred Stock in connection with a
Merger Conversion rather than the shares of Series A Preferred Stock as
originally provided for in the Certificate of Designations.
SECTION 6. [intentionally omitted]
SECTION 7. Survival and Indemnification. (a) Survival. The
----------------------------- --------
representations and warranties of the Company and EIS contained herein and the
other Transaction Documents shall survive for a period of 24 months from and
after the date hereof.
12
(b) Indemnification. In addition to all rights and remedies
---------------
available to the parties hereto at law or in equity, the Company (in such
capacity, "Indemnifying Party") shall indemnify EIS, its stockholders, officers,
------------------
directors and assigns, their affiliates, and its affiliates' stockholders,
officers, directors, employees, agents, representatives, successors and assigns
(collectively, the "Indemnified Person"), and save and hold each Indemnified
------------------
Person harmless from and against and pay on behalf of or reimburse each such
Indemnified Person, as and when incurred, for any and all loss, liability,
demand, claim, action, cause of action, cost, damage, deficiency, tax, penalty,
fine or expense, whether or not arising out of any claims by or on behalf of
such Indemnified Person or any third party, including interest, penalties,
reasonable attorneys' fees and expenses and all amounts paid in investigation,
defense or settlement of any of the foregoing (collectively, "Losses"), that any
------
such Indemnified Person may suffer, sustain incur or become subject to, as a
result of, in connection with, relating or incidental to or by virtue of:
(i) any misrepresentation or breach of warranty on the part of
the Indemnifying Party in the case of the Company under Section 2 of this
Agreement or in the case of EIS under Section 3 of this Agreement or, in
each case, under any of the other Transaction Documents; or
(ii) any nonfulfillment, default or breach of any covenant or
agreement on the part of the Indemnifying Party under Section 4 of this
Agreement or any of the other Transaction Documents.
(c) Maximum Recovery. Notwithstanding anything in this Agreement
----------------
to the contrary, in no event shall the Indemnifying Parties be liable, in the
case of the Company, for indemnification under this Section 7 in an amount in
excess of the aggregate of the purchase price paid for the Securities, including
the amounts advanced and not repaid under the Note, or, in the case of EIS, for
indemnification hereunder in an amount in excess the Company's costs and
expenses incurred in connection with the transactions contemplated hereby. No
Indemnified Person shall assert any such claim unless Losses in respect thereof
incurred by any Indemnified Person, when aggregated with all previous Losses
hereunder, equal or exceed U.S.$50,000, but at such time that an Indemnified
Person is entitled to assert a claim, such claim shall include all Losses
covered by this Section 7.
(d) Exception. Notwithstanding the foregoing, upon judicial
---------
determination that is final and no longer appealable, that the act or omission
giving rise to the indemnification set forth above resulted primarily out of or
was based primarily upon the Indemnified Person's negligence (unless such
Indemnified Person's negligence was based upon the Indemnified Person's reliance
in good faith upon any of the representations, warranties, covenants or promises
made by the Indemnifying Party herein) the Indemnifying Party shall not be
responsible for any Losses sought to be indemnified in connection therewith, and
the Indemnifying Party shall be entitled to recover from the Indemnified Person
all amounts previously paid in full or partial satisfaction of such indemnity,
together with all costs and expenses (including reasonable attorneys fees) of
the Indemnifying Party reasonably incurred in connection with the Indemnified
Persons claim for indemnity, together with interest at the rate per annum
publicly announced by
13
Xxxxxx Guaranty Trust Company as its prime rate from the time of payment of such
amounts to the Indemnified Person until repayment to the Indemnifying Party.
(e) Investigation. All indemnification rights hereunder shall
-------------
survive the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, to the extent provided in Section 7(g) below,
irrespective of any investigation, inquiry or examination made for or on behalf
of, or any knowledge of the Indemnified Person or the acceptance of any
certificate or opinion.
(f) Contribution. If the indemnity provided for in this Section 7
------------
shall be, in whole or in part, unavailable to any Indemnified Person, due to
Section 7(b) being declared unenforceable by a court of competent jurisdiction
based upon reasons of public policy, so that Section 7(b) shall be insufficient
to hold each such Indemnified Person harmless from Losses which would otherwise
be indemnified hereunder, then the Indemnifying Party and the Indemnified Person
shall each contribute to the amount paid or payable for such Loss in such
proportion as is appropriate to reflect not only the relative benefits received
by the Indemnifying Party on the one hand and the Indemnified Person on the
other, but also the relative fault of the Indemnifying Party and be in addition
to any liability that the Indemnifying Party may otherwise have. The indemnity,
contribution and expense reimbursement obligations that the Indemnifying Party
has under this Section 7 shall survive the expiration of the Transaction
Documents. The parties hereto further agree that the indemnification and
reimbursement commitments set forth in this Agreement shall apply whether or not
the Indemnified Person is a formal party to any such lawsuit, claims or other
proceedings.
(g) Limitation. No claim shall be brought by an Indemnified Person
----------
in respect of any misrepresentation or breach of warranty under this Agreement
after 24 months from the date hereof; and any claim for nonfulfillment, default
or breach of any covenant or any misrepresentation shall be brought within one
year of the date of that such Indemnified Person became aware or should have
become aware of the nonfulfillment, default or breach. Except as set forth in
the previous sentence and in Section 7(c) above, this Section 7 is not intended
to limit the rights or remedies otherwise available to any party hereto with
respect to this Agreement or the Transaction Documents.
SECTION 8. Notices. All notices, demands and requests of any kind to
-------
be delivered to any party in connection with this Agreement shall be in writing
and shall be deemed to have been duly given if personally or hand delivered or
if sent by an internationally-recognized overnight delivery or by registered or
certified mail, return receipt requested and postage prepaid, or by facsimile
transmission addressed as follows:
(i) if to the Company, to:
Ribozyme Pharmaceuticals, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: 000-000-0000
14
with a copy to:
Rothgerber Xxxxxxx & Xxxxx LLC
0000 00/xx/ Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
Facsimile: (000) 000-0000
(ii) if to EIS, to:
Elan International Services, Ltd.
000 Xx. Xxxxx Xxxxx
Xxxxxx, Xxxxxx Xxxxxx
Xxxxxxx, XX 04
Attention: Director
Facsimile: 000-000-0000
with a copy to:
Xxxxx Xxxxxxxxxxx LLC
000 Xxxxx Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile: 000-000-0000
or to such other address as the party to whom notice is to be given may have
furnished to the other party hereto in writing in accordance with provisions of
this Section 8. Any such notice or communication shall be deemed to have been
effectively given (i) in the case of personal or hand delivery, on the date of
such delivery, (ii) in the case of an internationally-recognized overnight
delivery service, on the second business day after the date when sent, (iii) in
the case of mailing, on the fifth business day following that day on which the
piece of mail containing such communication is posted, and (iv) in the case of
facsimile transmission, on the date of telephone confirmation of receipt.
SECTION 9. Entire Agreement. This Agreement and the other
----------------
Transaction Documents contain the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings among the parties with respect thereto.
SECTION 10. Amendments. This Agreement may not be modified or
----------
amended, or any of the provisions hereof waived, except by written agreement of
the Company and EIS dated after the date hereof.
SECTION 11. Counterparts and Facsimile. The Transaction Documents
--------------------------
may be executed in any number of counterparts, and each such counterpart hereof
shall be deemed to be
15
an original instrument, but all such counterparts together shall constitute one
agreement. Each of the Transaction Documents may be signed and delivered to the
other party by facsimile transmission; such transmission shall be deemed a valid
signature.
SECTION 12. Headings. The section and paragraph headings contained
--------
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of the Agreement.
SECTION 13. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws of the State of Delaware, without
giving effect to principles of conflicts of laws. Any dispute hereunder may be
adjudicated, on a non-exclusive basis, in any federal or state court sitting in
the County, City and State of New York.
SECTION 14. Expenses. Each of the parties shall be responsible for
--------
its own costs and expenses incurred in connection with the transactions
contemplated hereby and by the other Transaction Documents.
SECTION 15. Assignments and Transfers. This Agreement and all of the
-------------------------
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. This Agreement,
the shares of Series A Preferred Stock, the Series B Preferred Stock and Common
Stock being purchased hereunder by EIS, the Warrants, the Note and the shares of
Common Stock underlying the Series A Preferred Stock, the Series B Preferred
Stock, the Note and the Warrants may be transferred by EIS to its affiliates and
subsidiaries, as well as any special purpose financing or similar vehicle
established by EIS or its affiliates; provided, however, that EIS shall remain
liable for its obligations hereunder after any such assignment. Other than as
set forth above, no party shall transfer or assign this Agreement or such
securities without the prior written consent of the other party, which will not
be unreasonably withheld.
SECTION 16. Severability. In case any provision of this Agreement
------------
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not be in any way affected or
impaired thereby.
16
IN WITNESS WHEREOF, each of the undersigned has duly executed this
Agreement as of the date first written above.
RIBOZYME PHARMACEUTICALS, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: VP, Corporate Development
ELAN INTERNATIONAL SERVICES, LTD.
By: ___________________________________
Name:
Title:
