NOTE EXCHANGE
AGREEMENT
This Note Exchange Agreement (this “
Agreement ”), dated as of ●, 2007, is made by
and among PharmAthene, Inc., a Delaware corporation previously
known as Healthcare Acquisition Corp. (the “ Company
”) and the holders identified on Annex I (together
with their respective successors and assigns, the “
Holders ”; the Holders are each individually referred
to herein as a “ Holder ”).
WHEREAS, Healthcare Acquisition Corp. (“ HAQ
”), PAI Acquisition Corp., a wholly owned subsidiary of HAQ
(“ Merger Sub ”), and PharmAthene, Inc. (“
Old PharmAthene ”), entered into an Agreement and Plan
of Merger, dated January ●, 2007 (the “ Merger
Agreement ”) pursuant to which Old PharmAthene merged
with Merger Sub and Old PharmAthene was the surviving entity (the
“ Merger ”), and HAQ simultaneously changed its
name to “PharmAthene, Inc.” upon the consummation of
the Merger.
WHEREAS, Old PharmAthene and the Holders (other than
Canadian Medical Discoveries Fund Inc. (“ CMDF
”))entered into a Note Purchase Agreement dated May 5, 2006
(the “ U.S. Note Purchase Agreement ”) pursuant
to which Old PharmAthene issued an aggregate initial principal
amount of $9,768,089 of its 8% Senior Secured Convertible Notes
(the “ Old U.S. Notes ”) to the Holders (other
than CMDF), as set forth in Annex II .
WHEREAS, PharmAthene Canada, Inc. (“ PharmAthene
Canada ”), a wholly owned subsidiary of Old PharmAthene,
Old PharmAthene and CMDF entered into a Note Purchase Agreement
dated July 24, 2006 (the “ Canadian Note Purchase
Agreement ”) and, collectively with the U.S. Note
Purchase Agreement, the “ Note Purchase Agreements
”) pursuant to which PharmAthene Canada issued an 8% Senior
Secured Convertible Note with a principal amount of $2,000,000 (the
“ Old Canadian Note ” and, collectively with the
Old U.S. Notes, the “ Old Notes ”) to CMDF as
set forth in Annex II .
WHEREAS , Sections 6.2(i) and 6.3(iv) of the Merger
Agreement contemplate as a condition to the
Merger Closing that the Company issue senior unsecured convertible
notes in the initial principal amount of $12,500,000 on the terms
described herein (the “ New Notes ”), in
exchange for the Old Notes (principal and interest) outstanding
immediately prior to the closing of the Merger (“ Merger
Closing ”).
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties and covenants herein contained, and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and the Holders
mutually agree as follows. Capitalized terms used and not otherwise
defined herein shall have the meanings given such terms in the
Merger Agreement or Note.
ARTICLE
1
EXCHANGE OF
NOTES
1.1 Issuance of New Notes in Exchange for Old
Notes .
In full
satisfaction of Old PharmAthene’s obligations (all
outstanding principal and accrued interest thereon) under the
outstanding Old Notes, the Company shall issue New Notes on the
terms and in the form set forth in Annex III in the initial
aggregate principal amount of $12,500,000 (the “
Exchange ”). As of a result the Exchange, the Old
Notes shall cease to be outstanding obligations of Old PharmAthene
and the Old Canadian Note shall cease to be an outstanding
obligation of PharmAthene Canada.
(a) and all rights of the Holders under the Note
Purchase Agreements and related obligations and agreements referred
to therein shall be terminated in full.
(b) Subject to the satisfaction or waiver of the
conditions set forth in Article 3, the closing of the Exchange
shall simultaneously with the Merger Closing or such other time as
the parties may mutually agree (the “ Closing Date
”).
ARTICLE
2
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company and Old PharmAthene represent and
warrant to each of the Holders that, except as set forth on the
Schedule of Exceptions attached hereto as Schedule ●
(the “ Schedule of Exceptions ”), the statements
contained in this Article II are true and correct as of the Closing
Date as though made as of the Closing Date, except to the extent
such representations and warranties are specifically made as of a
particular date (in which case such representations and warranties
are true and correct as of such date). The Schedule of Exceptions
shall be arranged in sections and subsections corresponding to the
numbered and lettered sections and subsections contained in this
Article II, but any information disclosed under any section or
subsection of the Schedule of Exceptions shall be deemed to be
disclosed into any other section or subsection where such
disclosure would be reasonably apparent.
2.1 Organization, Qualifications and Corporate
Power
(a) The Company and Old PharmAthene are each
corporations duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and are each duly
licensed or qualified to transact business as a foreign corporation
and is in good standing in each jurisdiction in which the nature of
the business transacted by it or the character of the properties
owned or leased by it requires such licensing or qualification.
Pharmathene Canada, Inc., a Canadian corporation (“
Pharmathene Canada ”) is a corporation duly
incorporated, validly existing and in good standing under the laws
of Canada and is duly licensed or qualified to transact business
and is in good standing, in each jurisdiction in which the nature
of the business transacted by it or the character of the properties
owned or leased by it requires such licensing or qualification. The
Company and Old PharmAthene and each of its Subsidiaries has the
corporate power and authority to own and hold its properties and to
carry on its business as now conducted and as proposed to be
conducted, and in the case of the Company, to execute, deliver and
perform the Transaction Documents to which it is a party. The
Company and Old PharmAthene have the corporate power and authority
to issue, sell and deliver the New Notes and to issue and deliver
the shares of common stock issuable upon conversions of the Notes
(the “ Conversion Shares ”).
2.2 Authorization of Agreements, Etc
.
(a) The execution and delivery by the Company of
the Transaction Documents to which it is a party, the performance
by the Company of its obligations thereunder, the issuance, sale
and delivery of the New Notes by the Company and the
reservation of the Conversion Shares by the Company have been
duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other
agency of government, the Certificate of Incorporation of the
Company, as amended to date (the “ Charter ”) or
the By-laws of the Company, as amended to date (the “
By-laws ”), or any provision of any indenture,
agreement or other instrument to which the Company or any of its
Subsidiaries or any of its properties or assets is bound, or
conflict with, result in a breach of or constitute (with due notice
or lapse of time or both) a default under any such indenture,
agreement or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim or encumbrance
of any nature whatsoever upon any of the properties or assets of
the Company or any of its Subsidiaries.
(b) The New Notes have been duly authorized and,
when issued and delivered pursuant to this Agreement, will have
been duly executed, issued and delivered and will constitute valid
and legally binding obligations of the Company, enforceable in
accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors’ rights and
to general equity principles.
(c) The Company has an authorized capitalization
and outstanding shares of capital stock as set forth in Schedule
●, and all of the issued shares of capital stock of the
Company been duly authorized and validly issued and are fully paid
and non-assessable; the Conversion Shares initially issuable upon
conversion of the New Notes have been duly authorized and reserved
for issuance and, when issued and delivered in accordance with the
provisions of the New Notes, will be validly issued, fully paid and
non-assessable; the issuance of Conversion Shares upon conversion
of the New Notes will not be subject to any preemptive or similar
rights; and all of the outstanding securities of the Company were
issued in compliance with all applicable federal and state
securities laws.
(d) The designations, powers, preferences, rights,
qualifications, limitations and restrictions in respect of each
class and series of authorized capital stock of the Company are as
set forth in the Company’s Charter, and all such
designations, powers, preferences, rights, qualifications,
limitations and restrictions are valid, binding and enforceable and
in accordance with all applicable laws. Except as set forth in
Schedule ●, (x) no Person owns of record or is known to the
Company to own beneficially any share of Common Stock, (y) no
subscription, warrant, option, convertible security, or other right
(contingent or other) to purchase or otherwise acquire equity
securities of the Company or any of its Subsidiaries is authorized
or outstanding and (z) there is no commitment by the Company or any
of its Subsidiaries to issue shares, subscriptions, warrants,
options, convertible securities, or other such rights or to
distribute to holders of any of its equity securities any evidence
of indebtedness or asset. Except as provided for in the Company
‘s Charter or as set forth in the attached
Schedule ●, neither the Company nor any of its
Subsidiaries has any obligation (contingent or other) to purchase,
redeem or otherwise acquire any of its equity securities or any
interest therein or to pay any dividend or make any other
distribution in respect thereof. Except as set forth in the
attached Schedule ●, to the best of the Company ‘s
knowledge there are no voting trusts or agreements,
stockholders’ agreements, pledge agreements, buy-sell
agreements, rights of first refusal, preemptive rights or proxies
relating to any securities of the Company or any of its
Subsidiaries (whether or not the Company or such Subsidiaries is a
party thereto). All of the outstanding securities of the Company
were issued in compliance with all applicable Federal and state
securities laws.
(e) The outstanding shares of Common Stock are
listed on the American Stock Exchange and the Conversion Shares
into which the New Notes are convertible will have been approved
for listing on the American Stock Exchange, subject to notice of
issuance, on or before the Closing Date.
ARTICLE
3
REPRESENTATIONS AND
WARRANTIES OF THE HOLDERS
Each Holder,
severally and not jointly, represents and warrants to the Company,
Old PharmAthene and PharmaAthene Canada that, the statements
contained in this Article III are true and correct as of the
Closing Date as though made as of the Closing Date, except to the
extent such representations and warranties are specifically made as
of a particular date (in which case such representations and
warranties are true and correct as of such date).
3.1 Holder is an “accredited investor”
as defined by Rule 501 of Regulation D (“Regulation D”)
promulgated under the Securities Act of 1933, as amended (the
“Act”), and Holder is capable of evaluating the merits
and risks of Holder’s investment in the New Notes and has the
ability and capacity to protect Holder’s interests. If the
Holder is a resident of Canada or otherwise subject to the
provincial securities laws of Canada, such Holder is an
“accredited investor” (as that term is defined in
National Instrument 45-106), was not formed for the specific
purpose of and is not being used primarily for the purpose of
purchasing and holding a New Note on the underlying Common Stock,
and is neither a “Limited States Person” (as that term
is defined in Rule 902 of Regulation S under the Act) nor
purchasing the New Note for the account of a Limited States Person
or for resale to a United States person or to a person in the
United States.
3.2 Holder understands that, except as provided in
the Registration Rights Agreement the New Notes and the underlying
shares of Common Stock, have not been registered under the Act on
the ground that the issuance thereof is exempt under Section 4(2)
of the Act and/or Regulation D promulgated thereunder as a
transaction by an issuer not involving any public offering and
that, in the view of the United States Securities and Exchange
Commission (the “ Commission ”), the statutory
basis for the exception claimed would not be present if any of the
representations and warranties of Holder contained in this
Agreement are untrue or, notwithstanding the Holder’s
representations and warranties, the Holder currently has in mind
acquiring any of the New Notes for resale upon the occurrence or
non-occurrence of some predetermined event.
3.3 Holder is purchasing the New Notes and, in the
event that the Holder should acquire any underlying Common Stock,
will be acquiring such Common Stock, as principal for its own
account, and not for the benefit of any other person, for
investment purposes and not with a view to distribution or resale,
nor with the intention of selling, transferring or otherwise
disposing of all or any part thereof for any particular price, or
at any particular time, or upon the happening of any particular
event or circumstance, except selling, transferring, or disposing
the New Notes and the underlying Common Stock as applicable, in
full compliance with all applicable provisions of the Act, the
rules and regulations promulgated by the Commission thereunder, and
applicable state securities laws; and that an investment in the New
Notes (and underlying shares of Common Stock) is not a liquid
investment.
3.4 Holder confirms that Holder has had the
opportunity to ask questions of, and receive answers from, the
Company or any authorized person acting on its behalf concerning
the Company and its business and to obtain any additional
information, to the extent possessed by the Company (or to the
extent it could have been acquired by the Company without
unreasonable effort or expense) necessary to verify the accuracy of
the information received by Holder. In connection therewith, Holder
acknowledges that Holder has had the opportunity to discuss the
Company’s business, management and financial affairs with the
Company’s management or any authorized person acting on its
behalf. Holder has received and reviewed the Company’s Proxy
Statement as filed with the Commission and all the information
concerning the Company and the New Notes, both written and oral,
that Holder desires. Without limiting the generality of the
foregoing, Holder has been furnished with or has had the
opportunity to acquire, and to review: all information, both
written and oral, that Holder desires with respect to the
Company’s business, management, financial affairs and
prospects. In determining whether to make this investment, Holder
has relied solely on Holder’s own knowledge and understanding
of the Company and its business based upon Holder’s own due
diligence investigations and the Company’s filings with the
Commission.
3.5 If the Holder is a resident of Canada or
otherwise subject to the provincial securities laws of Canada, such
Holder understands and acknowledges that (i) the New Notes have not
been, and that the underlying Common Stock will not be, qualified
for distribution under provincial securities laws, (ii) the New
Note will be distributed to such Holder pursuant to exemptions from
the registration and prospectus filing requirements of applicable
provincial securities laws, and (iii) the New Note and if acquired,
the underlying Common Stock, must be held by such Holder
indefinitely unless a subsequent distribution thereof is qualified
for distribution under the applicable provincial securities laws,
or is exempt from the prospectus registration requirements
thereof.
3.6 Holder has all requisite legal and other power
and authority to execute and deliver this Agreement and to carry
out and perform Holder’s obligations under the terms of this
Agreement. This Agreement constitutes a valid and legally binding
obligation of Holder enforceable in accordance with its terms,
subject as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to
or affecting creditors’ rights and to general equity
principles.
3.7 Holder has carefully considered and has
discussed with the Holder’s legal, tax, accounting and
financial advisors, to the extent the Holder has deemed necessary,
the suitability of this investment and the transactions
contemplated by this Agreement for the Holder’s particular
federal, state, provincial, local and foreign tax and financial
situation and has independently determined that this investment and
the transactions contemplated by this Agreement are a suitable
investment for the Holder. Holder understands that Holder (and not
the Company) shall be responsible for Holder’s own tax
liability that may arise as a result of the investment in the New
Notes or the transactions contemplated by this Agreement, except as
provided in Section 6.1(b).
3.8 Holder acknowledges that an investment in the
New Notes is speculative and involves a high degree of risk and
that Holder can bear the economic risk of the acceptance of the New
Notes, including a total loss of his/her/its investment. Holder
recognizes and understands that no federal, state, provinical or
foreign agency has recommended or endorsed the purchase of the New
Notes. Holder acknowledges that Holder has such knowledge and
experience in financial and business matters that Holder is capable
of evaluating the merits and risks of an investment in the New
Notes and of making an informed investment decision with respect
thereto.
3.9 Because of the legal restrictions imposed on
resale or transfer of the New Notes, Holder understands that the
Company shall have the right to note stop-transfer instructions in
its records, and Holder has been informed of the Company’s
intention to do so. Any sales, transfers, or other dispositions of
the New Notes by Holder, if any, will be made in compliance with
the Act and any other applicable securities laws, and all
applicable rules and regulations promulgated thereunder and the
terms of this Agreement.
ARTICLE
4
CONDITIONS RELATING TO THE
CLOSING
4.1 Conditions to the Obligations of the Holders at
the Closing .
The several obligations of each Holder to
consummate the transactions to be performed by it in connection
with the Closing Date are, unless otherwise indicated, subject to
the satisfaction of the following conditions as of the Closing
Date, unless such conditions are waived by such Holder with respect
to the Closing Date:
(a) Consents, Permits, and Waivers
. The Company shall have obtained
any and all approvals, consents, permits and waivers necessary or
appropriate for consummation of the transactions contemplated by
this Agreement and the other Transaction Documents.
(b) Authorizations . All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body that are
required in connection with the lawful issuance and sale of the New
Notes pursuant to this Agreement shall have been duly obtained and
shall be effective on and as of the Closing Date.
(c) Representations, Warranties and
Covenants . The
representations and warranties made by the Company, Old PharmAthene
and Pharmathene Canada in Article II hereof and in the other
Transaction Documents shall be true and correct when made, and
shall be true and correct as of such Closing Date with the same
fo
