Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is entered
into as of August 8, 2000, by and among Nastech Pharmaceutical Company Inc., a
Delaware corporation ("Parent"), Atossa Acquisition Corporation, a Delaware
corporation and wholly owned subsidiary of Parent ("Sub"), and Atossa
HealthCare, Inc., a Delaware corporation (the "Company"). Parent, the Company,
and Sub are sometimes referred to herein individually as a "Party" and
collectively as the "Parties."
RECITALS
A. Pursuant to the Certificate of Merger in the form attached hereto as
Exhibit A (the "Certificate of Merger") providing for the merger of Sub with and
into the Company (the "Merger") pursuant to the Delaware General Corporation
Law, the shares of capital stock of the Company issued and outstanding
immediately prior to the Effective Time will be converted into rights to acquire
Common Stock of Parent.
B. The Parties desire to enter into this Agreement for the purpose of
setting forth certain representations, warranties and covenants made as an
inducement to the execution and delivery of this Agreement, and to serve as
conditions precedent to the consummation of the Merger.
C. The respective Boards of Directors of Parent, Sub and the Company have
approved and adopted this Agreement, and (i) the Agreement is intended to be a
plan of reorganization under the provisions of Section 368(a) of the Internal
Revenue Code of 1986, as amended, and (ii) the Merger is intended to be
accounted for as a purchase.
D. Concurrent with the execution of this Agreement, as a material
inducement to Parent and Sub, Steven C. Quay, President and Chief Executive
Officer of the Company ("Quay"), is entering into an employment agreement with
Parent, a copy of which is attached hereto as Exhibit B hereto (the "Employment
Agreement").
NOW, THEREFORE, in consideration of these premises and of the mutual
agreements, representations, warranties and covenants herein contained, the
Parties do hereby agree as follows:
AGREEMENT
1. Certain Definitions. As used in this Agreement, the following terms
have the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and vice versa). Certain other terms are defined
in the text of this Agreement.
"Affiliate" of a Person means any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with such Person.
"Best Efforts" means the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible; provided, however, that an obligation
to use Best Efforts under this Agreement does not require the
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Person subject to that obligation to take actions that would result in a
materially adverse change in the benefits to such Person of this Agreement and
the Contemplated Transactions.
"Business Condition" means the current business, financial
condition, results of operations and assets of a corporate entity.
"Company Disclosure Letter" means the Company Disclosure Letter
delivered by the Company to the Parent concurrently with the execution and
delivery of this Agreement.
"Company Intellectual Property" means any and all Technology and any
and all Intellectual Property Rights, including the Company Registered
Intellectual Property Rights (as defined below), that is or are owned (in whole
or in part) by or exclusively licensed to the Company.
"Company Stockholders" shall mean the stockholders of record of the
Company immediately prior to the Effective Time (other than the holders of
Dissenting Shares, if any).
"Contemplated Transactions" means all of the transactions
contemplated by this Agreement, including:
(a) the merger of Sub with the Company, the issuance by Parent of
the Parent Common Stock and Parent's acquisition and ownership of the Company
and exercise of control over the Company;
(b) the execution, delivery, and performance of the Employment
Agreement;
(c) the performance by Parent, the Company and Sub of their
respective covenants and obligations under this Agreement.
"Governmental Body" means any:
(a) nation, province, state, county, city, town, village, district,
or other jurisdiction of any nature;
(b) federal, provincial, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"Intellectual Property Rights" means any or all of the following and
all rights in and arising out of: (i) all United States and foreign patents and
utility models and applications therefor and all reissues, divisions,
re-examinations, renewals, extensions, provisionals, and continuations, and
equivalent rights arising therefrom anywhere in the world in inventions and
discoveries including without limitation invention disclosures ("Patents"); (ii)
all trade secrets and other rights in know-how and confidential or proprietary
information; (iii) all copyrights, copyrights registrations and applications
therefor and all other rights corresponding thereto throughout the world
("Copyrights"); (iv) all chemical formulations,
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clinical data and pre-clinical data; (v) all industrial designs and any
registrations and applications therefor throughout the world; (vi) all rights in
World Wide Web addresses and domain names and applications and registrations
therefor; (vii) all trade names, logos, common law trademarks and service marks,
trademark and service mark registrations and applications therefor and all
goodwill associated therewith throughout the world ("Trademarks"); and (viii)
any similar, corresponding or equivalent rights to any of the foregoing anywhere
in the world, including, without limitation, moral rights.
"Knowledge" --an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or other matter;
or
(b) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation concerning the existence of such fact or
other matter.
A Person (other than an individual) will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving as a director, officer, partner, executor, or trustee of such Person (or
in any similar capacity) has, or at any time had, Knowledge of such fact or
other matter.
"Material Adverse Effect" shall mean a material adverse effect on
the Business Condition of the corporate entity and its subsidiaries, taken as a
whole, other than as a result of (i) general economic or industry conditions, or
(ii) performance by such corporate entity of its obligations under this
Agreement.
"Ordinary Course of Business" --an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority) and is not required to be specifically authorized by the
parent company (if any) of such Person; and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
"Parent SEC Reports" has the meaning set forth in Section 6.5.
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Registered Intellectual Property Rights" means all United States,
international and foreign: (i) Patents, including applications therefor; (ii)
registered Trademarks, applications to register Trademarks, including
intent-to-use applications, or other registrations or applications related to
Trademarks; (iii) Copyrights registrations and applications to register
Copyrights; and (iv) any other
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Technology that is the subject of an application, certificate, filing,
registration or other document issued by, filed with, or recorded by, any state,
government or other public or private legal authority at any time.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable, (c) purchase
money liens and liens securing rental payments under capital lease arrangements,
and (d) other liens arising in the Ordinary Course of Business and not incurred
in connection with the borrowing of money.
"SEC" means the United States Securities and Exchange Commission.
"Technology" shall mean any or all of the following: (i) works of
authorship; (ii) inventions (whether or not patentable), improvements, and
technology; (iii) proprietary and confidential information, including technical
data and customer and supplier lists, trade secrets and know how; (iv)
databases, data compilations and collections and technical data; (v) logos,
trade names, trade dress, trademarks, service marks; (vi) World Wide Web
addresses, domain names and sites; (vii) tools, methods and processes; and
(viii) all instantiations of the foregoing in any form and embodied in any
media.
2. The Merger
2.1 Merger; Effective Time. Subject to the terms and conditions of
this Agreement and the applicable provisions of the Delaware General Corporation
Law ("Delaware Law"), Sub will be merged with and into the Company (the
"Merger"), the separate existence of Sub shall cease and the Company shall
continue as the surviving corporation and as a wholly owned subsidiary of
Parent. In accordance with the provisions of this Agreement, the Certificate of
Merger shall be filed with the Delaware Secretary of State in accordance with
Delaware Law and each issued and outstanding share of capital stock, of the
Company ("Company Capital Stock"), shall be converted into shares of Common
Stock, $0.006 par value, of Parent ("Parent Common Stock") in the manner
contemplated by Section 3. The Merger shall become effective at the time of the
acceptance of the Certificate of Merger by the Delaware Secretary of State (the
date of such acceptance being hereinafter referred to as the "Effective Date"
and the time of such acceptance being hereinafter referred to as the "Effective
Time").
2.2 Closing. The closing of the Merger (the "Closing") will take at
the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 5300
Carillon Point, Kirkland, Washington 98033, on the date hereof, or at such other
time, date and location as the Parties hereto agree in writing (the "Closing
Date").
2.3 Effect of the Merger. At the Effective Time, (i) the separate
existence of Sub shall cease and Sub shall be merged with and into the Company
(Sub and the Company are sometimes referred to herein as the "Constituent
Corporations" and the Company after the Merger is sometimes referred to herein
as the "Surviving Corporation"), (ii) the Certificate of Incorporation of Sub in
effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation; provided, however, that Article I of
the Certificate of Incorporation of the Surviving Corporation shall be amended
to read as follows: "The name of the corporation is Atossa HealthCare, Inc.",
(iii) the Bylaws of Sub in effect immediately prior to the Effective Time shall
be the Bylaws of the Surviving Corporation, (iv) the directors of Sub shall be
the directors of the Surviving Corporation until their successors shall have
been duly elected and qualified, (v) the officers of Sub shall be the initial
officers of the Surviving Corporation until their successors have been duly
appointed and qualified,
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(vi) all shares of capital stock of Sub shall be canceled, and (vii) the Merger
shall, from and after the Effective Time, have all the effects provided by
applicable law.
3. Effect of Merger on the Capital Stock of the Constituent Corporations;
Exchange of Certificates; Additional Payments3.1 Exchange of Stock; Rights to
Additional Payments. As of the Effective Time, the shares of Company Capital
Stock that are issued and outstanding immediately prior to the Effective Time
(other than shares, if any, held by Persons exercising dissenters' rights in
accordance with Delaware Law as provided for in Section 3.8 below) shall, by
virtue of the Merger and without any action on the part of Company Stockholders,
be converted into the right to receive 600,000 shares of Parent Common Stock
(the "Merger Consideration") on a pro rata basis based upon the number of shares
of Company Capital Stock held by each.
3.2 Conversion of Sub Common Stock. Each share of common stock,
$0.01 par value, of Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, $0.01 par value, of the
Surviving Corporation. Each stock certificate of Sub evidencing ownership of any
such shares shall continue to evidence ownership of such shares of capital stock
of the Surviving Corporation.
3.3 Adjustments to Parent Common Stock. The number of shares of
Parent Common Stock issuable hereunder shall be adjusted to reflect fully the
effect of any stock split, reverse stock split, stock dividend (including any
dividend or distribution of securities convertible into Parent Common Stock or
Company Capital Stock), reorganization, recapitalization or other like change
with respect to Parent Common Stock or Company Capital Stock occurring after the
date hereof.
3.4 Fractional Shares. No fractional shares of Parent Common Stock
shall be issued in the Merger. In lieu thereof, any fractional share shall be
rounded up to the nearest whole share of Parent Common Stock.
3.5 Exchange of Certificates.
(a) Exchange Agent. Prior to the Closing Date, Parent shall
appoint itself or American Stock Transfer and Trust Co. to act as the exchange
agent (the "Exchange Agent") in the Merger.
(b) Parent to Provide Parent Common Stock. Promptly after the
Effective Date, Parent shall make available for exchange in accordance with this
Section 3, through such reasonable procedures as Parent may adopt, the shares of
Parent Common Stock issuable pursuant to Section 3.1 in exchange for outstanding
shares of Company Capital Stock.
(c) Exchange Procedures. Within ten (10) days after the
Effective Date, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Capital Stock (the "Certificates")
whose shares are being converted into the Merger Consideration pursuant to
Section 3.1 hereof, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and which
shall be in such form and have such other provisions as Parent may reasonably
specify, including appropriate investment representations)(the "Letter of
Transmittal") and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Parent,
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together with such letter of transmittal and a Stockholder Certificate in the
form of Exhibit C, duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor the number of shares of Parent Common
Stock to which the holder of Company Common Stock is entitled pursuant to
Section 3.1 hereof. The Certificate so surrendered shall forthwith be canceled.
No interest will accrue or be paid to the holder of any outstanding Company
Common Stock. From and after the Effective Date, until surrendered as
contemplated by this Section 3.6, each Certificate shall be deemed for all
corporate purposes to evidence the number of shares of Parent Common Stock into
which the shares of Company Common Stock represented by such Certificate have
been converted.
(d) No Further Ownership Rights in Capital Stock of the
Company. The Merger Consideration delivered upon the surrender for exchange of
shares of Company Capital Stock in accordance with the terms hereof shall be
deemed to have been delivered in full satisfaction of all rights pertaining to
such Company Capital Stock. There shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of Company Capital
Stock which were outstanding immediately prior to the Effective Date. If, after
the Effective Date, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Section
3.6, provided that the presenting holder is listed on the Company's stockholder
list as a holder of Company Capital Stock.
(e) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Stock with a record date after the Effective Time will
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock represented thereby until the holder of record of
such Certificate shall surrender such Certificate. Subject to applicable law,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, at the time of such surrender,
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock.
(f) Transfers of Ownership. If any certificate for shares of
Parent Common Stock is to be issued in a name other than that in which the
certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the Person
requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of a certificate
for shares of Parent Common Stock in any name other than that of the registered
holder of the certificate surrendered, or established to the satisfaction of
Parent or any agent designated by it that such tax has been paid or is not
payable.
(g) Lost, Stolen or Destroyed Certificates. In the event that
any certificates evidencing shares of Company Capital Stock shall have been
lost, stolen or destroyed, the Exchange Agent shall issue in exchange for such
lost, stolen or destroyed certificates, upon the making of an affidavit of that
fact by the holder thereof, such shares of Parent Common Stock as may be
required pursuant to Section 3.1.
(h) No Liability. Notwithstanding anything to the contrary in
this Section 3.6, none of the Exchange Agent, the Surviving Corporation or any
Party hereto shall be liable to a holder of shares of Parent Common Stock or
Company Capital Stock for any amount properly paid to a public official pursuant
to any applicable abandoned property, escheat or similar law.
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3.6 Taking of Necessary Action; Further Action. Parent, Sub and the
Company shall take all such actions as may be necessary or appropriate in order
to effect the Merger as promptly as possible. If, at any time after the
Effective Date, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company, the officers and directors of such corporation
are fully authorized in the name of the corporation or otherwise to take, and
shall take, all such action.
3.7 Dissenters' Rights.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of Company Capital Stock held by a holder who has exercised
and perfected appraisal rights for such shares in accordance with Delaware Law
and who, as of the Effective Time, has not effectively withdrawn or lost such
appraisal rights ("Dissenting Shares"), shall not be converted into or represent
a right to receive the Merger Consideration, but the holder thereof shall only
be entitled to such rights as are granted by Delaware Law.
(b) Notwithstanding the provisions of subsection (a), if any
holder of Dissenting Shares shall effectively withdraw or lose (through failure
to perfect or otherwise) his or her appraisal rights, then, as of the later of
the Effective Time and the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to receive the
Merger Consideration, without interest thereon, upon surrender of the
Certificate representing such shares.
(c) The Company shall give Parent (i) prompt notice of any
written demand for appraisal received by the Company pursuant to the applicable
provisions of Delaware Law and (ii) the opportunity to participate in all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, voluntarily make any
payment with respect to any such demands or offer to settle or settle any such
demands.
3.8 Dissenting Shares After Payment of Fair Value. Dissenting
Shares, if any, after payments of fair value in respect thereto have been made
to dissenting stockholders of the Company pursuant to Delaware Law, shall be
canceled.
3.9 Tax and Accounting Consequences. It is intended by the Parties
hereto that the Merger shall (i) constitute a reorganization within the meaning
of Section 368 of the Internal Revenue Code of 1986, as amended (the "Code") and
(ii) qualify for accounting treatment as a purchase. Each Party has consulted
with its own tax advisors and accountants with respect to the tax and accounting
consequences, respectively, of the Merger.
4. Securities Act Compliance. The shares of Parent Common Stock issued in
connection with the Merger will be issued in a transaction exempt from
registration under the Securities Act of 1933, as amended (the "Securities
Act"), by reason of Rule 506 of Regulation D thereof and, as such, will
constitute "restricted securities" within the meaning of Rule 144 promulgated
thereunder. The certificates for the shares of Parent Common Stock to be issued
in the Merger shall bear appropriate legends to identify such privately placed
shares as being restricted under the Securities Act, to comply with applicable
state securities laws and, if applicable, to notice the restrictions on transfer
of such shares. It is acknowledged and understood that Parent is relying upon
certain written representations made by the Company Stockholders in the
Stockholder Certificates in substantially the form attached hereto as Exhibit C.
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5. Representations and Warranties of the Company. The Company hereby
represents and warrants to Parent that the statements contained in this Section
5 are correct and complete as of the date of this Agreement.
5.1 Organization, Qualification, and Corporate Power. The Company is
a corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. The Company is duly authorized to conduct
business and is in good standing under the laws of each other jurisdiction where
such qualification is required. There is no state other than Washington in which
the Company owns any property or in which it has any employees, offices or
operations. The Company has full corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it. The operations now being conducted by the Company have not been
conducted under any other name since its inception. The copies of the Company's
Certificate of Incorporation, Bylaws, minute books, and stock ledger which have
been delivered to Parent are accurate, correct and complete as of the date
hereof and shall be as of the Effective Time.
5.2 Authorization. The Company has full power and authority to
execute and deliver this Agreement and all agreements and instruments delivered
pursuant hereto (the "Ancillary Agreements") to which it is a Party, and,
subject to receipt of the requisite approval of its stockholders, to consummate
the transactions contemplated hereunder and to perform its obligations hereunder
and no other proceedings on the part of the Company are necessary to authorize
the execution, delivery and performance of this Agreement. This Agreement and
the Contemplated Transactions have been approved by the unanimous vote of the
Company's Board of Directors. This Agreement constitutes the valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms and conditions. Other than (i) such
consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities laws, and (ii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, the Company need not give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
5.3 Capitalization.
(a) Capital Stock. The entire authorized capital stock of the
Company consists of 20,000,000 shares of Common Stock, 3,030,612 of which are
issued and outstanding, and 10,000,000 shares of Preferred Stock, none of which
are issued or outstanding. All of the issued and outstanding shares of capital
stock have been duly authorized, are validly issued, fully paid, non-assessable
and were not issued in violation of any preemptive rights, rights of first
refusal, or any similar rights and are held of record by the Company
Stockholders as set forth in Section 5.3(a) of the Company Disclosure Letter.
All of the outstanding shares of capital stock have been offered, issued and
sold by the Company in compliance with applicable federal and state securities
laws.
(b) No Other Rights or Agreements. There are no subscriptions,
options, warrants, equity securities, partnership interests or similar ownership
interests, calls, rights (including preemptive rights), commitments or
agreements of any character to which Company is a party or by which it is bound
obligating Company to issue, deliver or sell, or cause to be issued, delivered
or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase,
redemption or acquisition of, any shares of capital stock, partnership interests
or similar ownership interests of Company or obligating Company to grant,
extend, accelerate the vesting of or enter into any such subscription, option,
warrant, equity security, call, right, commitment or agreement. As of the date
of this Agreement, there are no
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registration rights and there is no voting trust, proxy, rights plan,
antitakeover plan or other agreement or understanding to which Company is a
party or by which it is bound with respect to any equity security of any class
of Company. As a result of the Merger, Parent will be the sole beneficial owner
of all outstanding Company Capital Stock and all rights to acquire or receive
any Company Capital Stock, whether or not such Company Capital Stock is
outstanding.
5.4 Noncontravention. Neither the execution and the delivery of this
Agreement by the Company nor the consummation of the Contemplated Transactions
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any provision
of its Certificate of Incorporation or bylaws, or (B) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any Party the right to accelerate, terminate, modify, or cancel, or require any
notice or consent under, any agreement, contract, lease, license, instrument,
franchise, permit, mortgage, indenture or other arrangement to which the Company
is a Party or by which it is bound or to which any of its assets are subject (or
result in the imposition of any Security Interest upon any of its assets).
5.5 Fees. The Company has no liability or obligation to pay any fees
or commissions to any broker, finder, agent or attorney, with respect to the
transactions contemplated by this Agreement.
5.6 Financial Statements. Section 5.6 of the Company Disclosure
Letter contains the following financial statements (collectively the "Financial
Statements"): (i) unaudited balance sheets and statements of income and cash
flows as of and for the fiscal years ended December 31, 1999 for the Company;
and (ii) an unaudited balance sheet and statements of income and cash flows (the
"Most Recent Financial Statements") as of and for the 6 months ended June 30,
2000 (the "Most Recent Fiscal Period End") for the Company. The Financial
Statements are in accordance with the books and records of the Company and
present fairly the financial condition of the Company as of such dates and the
results of operations of the Company for such periods.
5.7 Subsidiaries. The Company does not have, and never has had, any
subsidiaries and does not otherwise own, and has not otherwise owned, any shares
of or any interest in, or control, directly or indirectly, any other
corporation, partnership, association, joint venture or other business entity.
5.8 Title to Assets and Property. Company does not own (and has
never owned) any real property. Company does not lease any real or personal
properties. Company has good and defensible title to all of its real and
personal properties and assets, free and clear of all liens, charges and
encumbrances except liens for taxes not yet due and payable and such liens or
other imperfections of title, if any, as do not materially detract from the
value of or interfere with the present use of the property affected thereby.
5.9 Events Subsequent to Most Recent Fiscal Period End. Since the
Most Recent Fiscal Period End, there has not been any material adverse change in
the Business Condition of the Company.
5.10 Legal Compliance. The Company has complied with all material
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof). No
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action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, notice or inquiry has been filed or commenced against the Company by any
governmental body alleging any failure to so comply.
5.11 Tax Matters All taxes, including without limitation, income,
property, sales, use, franchise, added value, withholding, and social security
taxes, imposed by the United States, any state, municipality, other local
government or other subdivision or instrumentality of the United States, or any
foreign country or any state or other government thereof, or any other taxing
authority, that are due or payable by Company, and all interest and penalties
thereon (unless disputed), other than taxes which are not yet due and payable,
have been paid in full, all tax returns required to be filed in connection
therewith have been prepared accurately and duly and timely filed, and all
deposits required by law to be made by Company with respect to employees'
withholding taxes have been duly made. Company is not delinquent in the payment
of any foreign or domestic tax, assessment or governmental charge or deposits,
and Company does not have a tax deficiency or claim outstanding, proposed or
assessed against it, and there is no basis for any such deficiency or claim.
Company is not a party to a tax allocation or sharing agreement.
5.12 Intellectual Property. 5.12(a) of the Company Disclosure Letter
lists all rights to Company Intellectual Property, including but not limited to,
Registered Intellectual Property Rights owned by, filed in the name of, or
applied for, by the Company (the "Company Registered Intellectual Property
Rights") and lists any proceedings or actions before any court, tribunal
(including the United States Patent and Trademark Office (the "PTO") or
equivalent authority anywhere in the world) related to any of the Company
Registered Intellectual Property Rights or Company Intellectual Property.
(b) The Company has no knowledge of any facts or circumstances
that would render any Company Intellectual Property invalid or unenforceable.
Without limiting the foregoing, Company knows of no information, materials,
facts, or circumstances, including any information or fact that would constitute
prior art, that would render any of the Company Registered Intellectual Property
Rights invalid or unenforceable, or would adversely effect any pending
application for any Company Registered Intellectual Property Right which the
Company has a present duty to disclose and the Company has not misrepresented,
or failed to disclose, and has no knowledge of any misrepresentation or failure
to disclose, any fact or circumstances in any application for any Company
Registered Intellectual Property Right that would constitute fraud or a
misrepresentation with respect to such application or that would otherwise
affect the validity or enforceability of any Company Registered Intellectual
Property Right.
(c) Each item of Company Intellectual Property is free and
clear of any Security Interests. The Company is the exclusive owner or exclusive
licensee of all Company Intellectual Property.
(d) All Company Intellectual Property will be fully
transferable, alienable or licensable by Surviving Corporation and/or Parent
without restriction and without payment of any kind to any third party.
(e) All Technology used in or necessary to the conduct of
Company's business as presently conducted or currently contemplated to be
conducted by the Company was written and created solely by either (i) employees
of the Company acting within the scope of their employment or (ii) by third
parties who have validly and irrevocably assigned all of their rights, including
Intellectual
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Property Rights therein, to the Company, and no third party owns or has any
rights to any of the Company Intellectual Property.
(f) The Company has not transferred ownership of, or granted
any exclusive license of or right to use, or authorized the retention of any
exclusive rights to use or joint ownership of, any Technology or Intellectual
Property Right that is or was Company Intellectual Property, to any other
person.
(g) To the Company's knowledge, no person is infringing or
misappropriating any Company Intellectual Property Right.
(h) No Company Intellectual Property or service of the Company
is subject to any proceeding or outstanding decree, order, judgment or
settlement agreement or stipulation that restricts in any manner the use,
transfer or licensing thereof by the Company or may affect the validity, use or
enforceability of such Company Intellectual Property.
(i) Neither this Agreement nor the transactions contemplated
by this Agreement, including the assignment to Parent or Surviving Corporation,
by operation of law or otherwise, of any contracts or agreements to which the
Company is a party, will result in (i) either Parent's or the Surviving
Corporation's granting to any third party any right to or with respect to any
Technology or Intellectual Property Right owned by, or licensed to, either of
them, (ii) either the Parent's or the Surviving Corporation's being bound by, or
subject to, any non-compete or other restriction on the operation or scope of
their respective businesses, or (iii) either the Parent's or the Surviving
Corporation's being obligated to pay any royalties or other amounts to any third
party in excess of those payable by Parent or Surviving Corporation,
respectively, prior to the Closing.
(j) There are no royalties, fees, honoraria or other payments
payable by the Company to any person or entity by reason of the ownership,
development, use, license, sale or disposition of the Company Intellectual
Property.
5.13 Contracts. Section 5.13 of the Company Disclosure Letter lists
all of the written or oral contracts, agreements, commitments and other
arrangements to which the Company is a Party or by which the Company or any of
its assets is bound.
5.14 Absence of Litigation. There are (and since Company's inception
there have been) no claims, actions, suits or proceedings pending or, to the
knowledge of Company, threatened (or any governmental or regulatory
investigation pending or, to the knowledge of Company, threatened) against
Company or any properties or rights of Company, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign. Neither Company nor any of its properties or rights is subject to any
outstanding court or Governmental Body injunction, order, decree, ruling or
charge.
5.15 Guaranties. The Company is not a guarantor or otherwise
responsible for any liability or obligation (including indebtedness) of any
other Person.
6. Representations and Warranties of Parent and Sub. Parent and Sub
represent and warrant to the Company that the statements contained in this
Section 6 are correct and complete as of the date of this Agreement.
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6.1 Organization, Qualification, and Corporate Power. Parent and Sub
are corporations duly organized, validly existing, and in good standing under
the laws of the State of Delaware. Parent and Sub are duly authorized to conduct
business and are in good standing under the laws of each other jurisdiction
where such qualification is required and in which the failure to so qualify is
reasonably likely to have a Material Adverse Effect on Parent or Sub
respectively. Parent and Sub have full corporate power and authority, and have
all necessary licenses and permits, to carry on the businesses in which they are
engaged and to own and use the properties owned and used by them.
6.2 Authorization. Parent and Sub have full power and authority to
execute and deliver this Agreement and the Ancillary Agreements to which they
are Parties, and to consummate the transactions contemplated hereunder and to
perform their obligations hereunder, and no other proceedings on the part of
Parent or Sub are necessary to authorize the execution, delivery and performance
of this Agreement and the Ancillary Agreements to which they are Parties. This
Agreement and the Ancillary Agreements to which they are Parties and the
transactions contemplated hereby and thereby have been approved by the Board of
Directors of both Parent and Sub. The consummation of the Contemplated
Transactions does not require the approval or consent of the stockholders of
Parent. This Agreement and the Ancillary Agreements to which they are Parties
constitute the valid and legally binding obligations of Parent and/or Sub,
enforceable against Parent and/or Sub in accordance with their respective terms
and conditions. Other than (i) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal and state securities laws, (iv) the filing of the Merger
Amendment with the Secretary of State of the State of Delaware, and (iii) any
applicable filings required under the HSR Act, neither Parent nor Sub need give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
6.3 Capitalization.
(a) As of April 10, 2000, the authorized capital stock of
Parent consists of (i) 100,000 shares of Preferred Stock, $0.01 par value, none
of which is issued or outstanding, and (ii) 25,000,000 shares of Common Stock,
$0.006 par value, of which 6,190,485 shares are issued and outstanding. All of
the outstanding shares of Parent's capital stock have been duly authorized and
validly issued and are fully paid and nonassessable. Except as set forth in this
Section 6.3 or as described in the Parent SEC Reports, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of Parent or
obligating Parent to issue or sell any shares of capital stock of, or other
equity interests in, Parent.
(b) The shares of Parent Common Stock to be issued pursuant to
Section 3.1 of this Agreement are duly authorized and reserved for issuance, and
upon issuance thereof in accordance with this Agreement and the Certificate of
Merger will be validly issued, fully paid and nonassessable.
6.4 Noncontravention. Neither the execution and the delivery of this
Agreement nor the consummation of the Contemplated Transactions, will (A)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Parent or Sub is subject or any provision
of their respective charters or bylaws, or (B) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
Party the right to accelerate, terminate, modify, or cancel, or require any
notice under, any agreement, contract, lease, license, instrument, or other
arrangement to which Parent or Sub is a Party or by which either is bound or to
which any of their assets is subject which has been filed as an exhibit to the
Parent SEC Reports.
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6.5 SEC Filings. Parent has filed all forms, reports and documents
required to be filed with the SEC since December 31, 1999, and has heretofore
made available to the Company, in the form filed with the SEC, (i) its Annual
Report on Form 10-K for the fiscal year ended December 31, 1999, (ii) its
Quarterly Report on Form 10-Q for the period ended March 31, 2000, (iii) the
proxy statement relating to Parent's annual meeting of stockholders held on June
20, 2000 and (iv) its Current Reports on Form 8-K dated March 16, 2000, and July
18, 2000, (collectively, the "Parent SEC Reports"). The Parent SEC Reports (i)
were prepared in accordance with the requirements of the Securities Exchange Act
of 1934, as amended, and (ii) did not at the time they were filed (or if amended
or superseded by a filing prior to the date of this Agreement, then on the date
of such filing) 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 the light of the circumstances under which they were
made, not misleading.
6.6 Brokers' Fees. Parent does not have any liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
6.7 Rights Agreement. In connection with and as a result of the
Contemplated Transactions, neither Quay nor his Affiliates, individually or
together, shall be deemed an "Acquiring Person" pursuant to the Rights Agreement
between Parent and American Stock Transfer & Trust Company dated as of February
22, 2000 (the "Rights Agreement").
7. Post-Closing Covenants. With respect to the period following the
Effective Time:
7.1 General. In case at any time after the Effective Time any
further action is necessary to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party.
7.2 Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction (A) on or
prior to the Effective Time involving the Company or (B) arising out of Parent's
operation of the business of the Surviving Corporation following the Effective
Time in the manner in which it is presently conducted and planned to be
conducted, each of the other Parties will cooperate with the Party and its
counsel in the contest or defense, make available their personnel, and provide
such testimony and access to their books and records as shall be reasonably
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending Party.
7.3 Confidentiality. Each of the Parties hereto hereby agrees to
keep such information or Knowledge obtained in any due diligence or other
investigation pursuant to the negotiation and execution of this Agreement or the
effectuation of the transactions contemplated hereby, confidential, except to
the extent that such information is or becomes publicly known or available or is
independently acquired or developed. In this regard, the Company and its
employees and agents acknowledge that Parent's Common Stock is publicly traded
and that any information obtained during the course of its due diligence could
be considered to be material non-public information within the meaning of
federal and state securities laws. Accordingly, the Company and its employees
and agents, acknowledge and agree
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not to engage in any transactions in Parent's Common Stock in violation of
applicable insider trading laws.
7.4 Tax Free Reorganization. The Parties intend to adopt this
Agreement and the Merger as a tax-free plan of reorganization under Section
368(a)(1)(A) of the code by virtue of the provisions of Section 368(a)(2)(E) of
the Code. The Parent Common Stock issued in the Merger will be issued solely in
exchange for the Company Capital Stock, and no other transaction other than the
Merger represents, provides for or is intended to be an adjustment to the
consideration paid for the Company Capital Stock. No consideration that could
constitute "other property" within the meaning of Section 356(b) of the Code is
being transferred by Parent for the Company Capital Stock in the Merger. The
Parties shall not take a position on any tax return inconsistent with this
Section 7.4 unless there has been a final "determination" (within the meaning of
Section 1313(a) of the Code) to the contrary. From and after the Effective Time,
neither Parent, Sub nor, the Company shall take any action that could reasonably
be expected to cause the Merger not to be treated as a reorganization within the
meaning of Section 368 of the Code.
8. Closing Deliverables.
8.1 Items to Be Delivered to Parent and Sub. At the Closing, the
following shall be delivered to Parent and Sub unless waived, in writing, by
Parent and Sub:
(a) [reserved]
(b) Legal Opinion. Parent and Sub shall have received a legal
opinion from Wilson Sonsini Goodrich & Rosati, P.C., legal counsel to Company,
substantially in the form attached hereto as Exhibit D.
(c) Employment Agreement. Steven C. Quay shall have entered
into the Employment Agreement in substantially the form attached hereto as
Exhibit B.
(d) Good Standing Certificate. The Company shall deliver to
Parent and Sub a Certificate of Good Standing issued by the Delaware Secretary
of State and dated as of the Closing Date.
(e) Secretary's Certificate. The Company shall deliver a
certified true copy of the resolutions of its Board of Directors and its
stockholders evidencing approval of this Agreement and the Contemplated
Transactions.
8.2 Items to Be Delivered to the Company. At the Closing, the
following shall be delivered to the Company unless waived, in writing, by the
Company:
(a) [reserved]
(b) Legal Opinion. The Company shall have received from Bruce
R. Thaw, Esq., counsel to Parent and Sub, an opinion in form and substance as
set forth in Exhibit E attached hereto, addressed to the Company, and dated as
of the Closing Date.
(c) Employment Agreement. Parent shall have entered into the
Employment Agreement in substantially the form attached hereto as Exhibit B.
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(d) Good Standing Certificate. Parent and Sub shall each
deliver to the Company a Certificate of Good Standing issued by the Delaware
Secretary of State and dated as of the Closing Date.
(e) Secretary's Certificate. Parent shall deliver to the
Company a certified true copy of the resolutions of its Board of Directors
evidencing (i) approval of this Agreement and the Contemplated Transactions,
(ii) the election of Steven C. Quay ("Quay") as Chairman, Chief Executive
Officer and President of Parent, (iii) the election of Quay to the Board of
Directors of the Company, (iv) that Quay and any of his Affiliates, individually
or together, are exempted by the Board from the definition of "Acquiring Person"
as set forth in and pursuant to the Board's authority under the Rights
Agreement, and (v) the grant to Quay of options to purchase common stock of
Parent, as provided by the Employment Agreement. Sub shall deliver to the
Company a certified true copy of the resolutions of its Board of Directors and
its stockholders evidencing approval of this Agreement and the Contemplated
Transactions.
9. Survival of Representations, Warranties and Covenants. All covenants of
Parent and the Company to be performed prior to the Effective Time, and all
representations and warranties of Parent and the Company in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Merger for
a period ending six (6) months from the Effective Time.
10. Miscellaneous.
10.1 Press Releases and Public Announcements. No Party shall issue
any press release or make any public announcement relating to the subject matter
of this Agreement prior to the Closing without the prior written approval of the
other Party; provided, however, that Parent may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case Parent will
use its Best Efforts to advise the Company prior to making the disclosure). In
furtherance of the foregoing sentence, the Parties agree and acknowledge that
Parent will issue a press release following the execution and delivery of this
Agreement by the Parties.
10.2 No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties, and their
respective successors and permitted assigns.
10.3 Entire Agreement and Modification. This Agreement (including
the exhibits hereto) constitutes the entire agreement among the Parties with
respect to the subject matter hereof and supersedes any prior understandings,
agreements, or representations by or among the Parties, written or oral, to the
extent they related in any way to the subject matter hereof. This Agreement may
not be amended except by a written agreement executed by all Parties.
10.4 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Parties; provided, however, that Parent may (i) assign any
or all of its rights and interests hereunder to one or more of its Affiliates
and (ii) designate one or more of its Affiliates to perform its obligations
hereunder.
10.5 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
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10.6 Headings. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.7 Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt or, if earlier, (a) five
(5) days after deposit with the U.S. Postal Service or other applicable postal
service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand, (c) one business day after the business day of deposit
with Federal Express or similar overnight courier, freight prepaid or (d) one
business day after the business day of facsimile transmission, if delivered by
facsimile transmission with copy by first class mail, postage prepaid, and shall
be addressed to the intended recipient as set forth below:
If to Parent:
Nastech Pharmaceutical Company Inc.
45 Davids Drive
Hauppauge, NY 11758
Attention: Andrew Zinzi
If to the Company:
Atossa HealthCare, Inc.
23632 Highway 99, Suite F-454
Edmonds, WA 98026
Attention: Steven C. Quay
Facsimile: 425-697-6226
Copy to:
Wilson Sonsini Goodrich & Rosati
5300 Carillon Point
Kirkland, WA 98033
Attention: Patrick J. Schultheis
Facsimile: 425-576-5899
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties ten (10) days' advance written notice to the other Parties pursuant to
the provisions above.
10.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
10.9 Waivers. The rights and remedies of the Parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any Party in exercising any right, power or privilege under this Agreement or
the documents referred to in this Agreement will operate as a waiver of such
right, power or privilege, and no single or partial exercise of such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or
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right arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one Party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other Party;
(b) no waiver that may be given by a Party will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on one
Party will be deemed to be a waiver of any obligation of such Party or of the
right of the Party giving such notice or demand to take further action without
notice or demand as provided in this Agreement or the documents referred to in
this Agreement.
10.10 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
10.11 Expenses. Each Party will bear its own costs and expenses
(including legal and accounting fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby; provided, however, that
in the event the Merger is consummated, Parent will bear the costs and expenses
(including accounting and legal fees and expenses) of the Company incurred in
connection with this Agreement and the transactions contemplated thereby.
10.12 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
10.13 Company Disclosure Letter.
(a) The disclosures in the Company Disclosure Letter, and
those in any Supplement thereto, must relate only to the representations and
warranties in the Section of the Agreement to which they expressly relate and
not to any other representation or warranty in this Agreement.
(b) In the event of any inconsistency between the statements
in the body of this Agreement and those in the Company Disclosure Letter (other
than an exception expressly set forth as such in the Company Disclosure Letter
with respect to a specifically identified representation or warranty), the
statements in the body of this Agreement will control.
10.14 Attorneys' Fees. If any legal proceeding or other action
relating to this Agreement is brought or otherwise initiated, the prevailing
Party shall be entitled to recover reasonable attorneys fees, costs and
disbursements (in addition to any other relief to which the prevailing Party may
be entitled).
10.15 Further Assurances. The Parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other Party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
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10.16 Time of Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on of
the date first above written.
Parent: NASTECH PHARMACEUTICAL COMPANY, INC.
By: /s/ Andrew Zinzi
-----------------------------------
Title: Chief Financial Officer
Company: ATOSSA HEALTHCARE, INC.
By: /s/ Steven C. Quay
-----------------------------------
Name: Steven C. Quay
Title: President & CEO
Sub: ATOSSA ACQUISITION CORPORATION
By: /s/ Andrew Zinzi
-----------------------------------
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Exhibits A, B, C, D & E Omitted
