UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

September 30, 2015

Date of Report (Date of earliest event reported)

 

PARATEK PHARMACEUTICALS, INC.

(Exact name of Registrant as specified in its charter)

 

 

 

 

 

Delaware

001-36066

33-0960223

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

 

 

 

75 Park Plaza

Boston, MA

02116

(Address of principal executive offices)

(Zip Code)

(617) 807-6600

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


 


 

Item 1.01.

Entry into a Material Definitive Agreement

On September 30, 2015, Paratek Pharmaceuticals, Inc. (the “Company”) and Paratek Pharma, LLC entered into a Loan and Security Agreement (the “Loan Agreement”) with Hercules Technology II, L.P., Hercules Technology III, L.P., certain other lenders (together, the “Lenders”) and Hercules Technology Growth Capital, Inc. (as agent), under which the Company may borrow up to $40.0 million in multiple tranches (each, a “Term Loan Advance”). The loans are represented by secured convertible term promissory notes (collectively, the “Notes”).

The Company borrowed the first tranche of $20.0 million upon closing of the transaction on September 30, 2015. The Company plans to use the proceeds of the Term Loan Advances for general corporate purposes including support of late-stage clinical development opportunities for omadacycline.  Additional Term Loan Advances of up to $20.0 million can be drawn, at the Company’s option, any time prior to June 30, 2016 (which can be extended to December 31, 2016, upon certain events set forth in the Loan Agreement). The interest rate for each advance will be calculated at a rate equal to the greater of either (i) 8.5% plus the prime rate as reported from time to time in The Wall Street Journal minus 5.75%, and (ii) 8.5%. Payments under the Loan Agreement are interest only until April 1, 2018, followed by equal monthly payments of principal and interest through the scheduled maturity date on September 1, 2020 (the “Loan Maturity Date”). In addition, a final payment equal to 4.5% of the greater of (x) $20,000,000 or (y) the aggregate original principal amount of all Term Loan Advances extended by the Lenders will be due on the Loan Maturity Date, or such earlier date specified in the Loan Agreement. The Company’s obligations under the Loan Agreement are secured by a security interest in substantially all of its assets, other than its intellectual property.

If the Company prepays the loan prior to maturity, it will pay the Lenders a prepayment charge, based on a percentage of the then outstanding principal balance, equal to 2% if the prepayment occurs prior to April 1, 2018, or equal to 0% if the prepayment occurs on or after April 1, 2018.

The Loan Agreement includes customary affirmative and restrictive covenants, including a liquidity covenant and a covenant against suffering a “change of control,” and also includes customary events of default, including payment defaults, breaches of covenants following any applicable cure period, a material impairment in the perfection or priority of Lenders’ security interest or in the value of the collateral, cross acceleration to the debt and certain events relating to bankruptcy or insolvency. Upon the occurrence of an event of default, a default interest rate of an additional 5% may be applied to the outstanding loan balances, and the Lenders may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the Loan Agreement.

In connection with the Loan Agreement, the Company issued a warrant to each of Hercules Technology II, L.P. and Hercules Technology III, L.P. which together are exercisable for an aggregate of 32,692 shares of Common Stock and each carry an exercise price of $24.47 per share (the “Warrants”). Each Warrant may be exercised on a cashless basis. The Warrants are exercisable for a term beginning on the date of issuance and ending on the earlier to occur of five years from the date of issuance or the consummation of certain acquisitions of the Company as set forth in the Warrants. The number of shares for which the Warrants are exercisable and the associated exercise price are subject to certain proportional adjustments as set forth in the Warrants.

On October 1, 2015, the Company entered into a Stock Purchase Agreement with Hercules Technology Growth Capital, Inc. (the “Stock Purchase Agreement”), under which the Company issued and sold 44,782 shares of Common Stock (the “Shares”) at $22.33 per share for an aggregate cash consideration of approximately $1.0 million. The Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws. The Company relied on the exemption from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof and the rules and regulations promulgated thereunder. The purchaser represented that it was acquiring the Shares for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof.

The descriptions of the Loan Agreement, the Warrants and the Stock Purchase Agreement contained herein do not purport to be complete and are qualified in their entirety by reference to the complete text of the Loan Agreement, the Form of Warrant and the Stock Purchase Agreement.  The Loan Agreement will be filed as an exhibit to the

 


 

Company ’s Form 10-Q to be filed in November 2015 , and the form of Warrant and Stock Purchase Agreement are attached hereto as Exhibits 4.1 and 10. 1 , respectively .

Item 2.03.

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information in Item 1.01 above relating to the Loan Agreement and the Notes is incorporated by reference into this Item 2.03.

Item 3.02.

Unregistered Sales of Equity Securities

The information in Item 1.01 above relating to the issuance of the Warrants, the Notes and the Shares is incorporated by reference into this Item 3.02.

Neither the Company nor the Lenders engaged any investment advisors with respect to the issuance of the Warrants, the Notes or the Shares, and no finders’ fees were paid to any party in connection therewith. The issuance of the Warrants, the Notes and the Shares was made in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act.

Item 9.01.

Financial Statements and Exhibits.

(d)  Exhibits .  

 

 

 

 

Number

 

Description

 

 

 

4.1

Form of Warrant

10.1

Stock Purchase Agreement dated October 1, 2015, by and between Paratek Pharmaceuticals, Inc. and Hercules Technology Growth Capital, Inc.

 

 


 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

 

 

 

Date: October 2, 2015

 

PARATEK PHARMACEUTICALS, INC.

 

 

 

 

 

 

By:

/s/ Douglas W. Pagán 

 

 

Name:

Douglas W. Pagán

 

 

Title:

Chief Financial Officer

 

 


 


 

EXHIBIT INDEX

 

 

 

 

 

Number

 

Description

 

 

 

4.1

Form of Warrant

10.1

Stock Purchase Agreement dated October 1, 2015, by and between Paratek Pharmaceuticals, Inc. and Hercules Technology Growth Capital, Inc.

 

 

 

 

 

Exhibit 4.1

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.

WARRANT AGREEMENT

To Purchase Shares of the Common Stock of

PARATEK PHARMACEUTICALS, INC.

Dated as of _______________ (the “ Effective Date ”)

WHEREAS, Paratek Pharmaceuticals, Inc., a Delaware corporation (the “ Company ”), has entered into a Loan and Security Agreement of even date herewith (as may be amended and in effect from time to time, the “ Loan Agreement ”) with __________________ (the “ Warrantholder ”) and the other affiliates of Warrantholder named therein;

WHEREAS, the Company desires to grant to Warrantholder, in consideration for, among other things, the financial accommodations provided for in the Loan Agreement, the right to purchase shares of its Common Stock (as defined below) pursuant to this Warrant Agreement (the “ Warrant ”);

NOW, THEREFORE, in consideration of the Warrantholder executing and delivering the Loan Agreement and providing the financial accommodations contemplated therein, and in consideration of the mutual covenants and agreements contained herein, the Company and Warrantholder agree as follows:

SECTION 1. GRANT OF THE RIGHT TO PURCHASE COMMON STOCK.

For value received, the Company hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject to the conditions hereinafter set forth, to subscribe for and purchase, from the Company, up to _______________ (_______) fully paid and non-assessable shares of the Common Stock at the Exercise Price (as defined below). The Exercise Price of such shares is subject to adjustment as provided in Section 8 . As used herein, the following terms shall have the following meanings:

1934 Act ” means the Securities Exchange Act of 1934, as amended.

Acknowledgment of Exercise ” has the meaning given to it in Section 3(a) .

Act ” means the Securities Act of 1933, as amended, and as the same may be in effect from time to time.

Charter ” means the Company’s Certificate of Incorporation or other constitutional document, as the same may be amended from time to time.

Claims ” has the meaning given to it in Section 12(p) .

Common Stock ” means the Company’s common stock, $0.001 par value per share.

Company ” has the meaning given to it in the preamble to this Warrant.

Company SEC Reports ” means, collectively (a) the Company’s most recent Annual Report on Form 10-K (the “Annual Report”), (b) the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 and (c) any other statement, report (including without limitation, Current Reports on Form 8-K) or registration statement filed by the Company with the SEC during the period commencing subsequent to the period covered by such Annual Report (including, in each case, all exhibits thereto and documents incorporated by reference therein).

Effective Date ” has the meaning given to it in the preamble to this Warrant.

Exercise Price ” means $24.47.

Lender ” has the meaning given to it in the Loan Agreement.

Loan Agreement ” has the meaning given to it in the preamble to this Warrant.

Merger Event ” means (a) a merger or consolidation involving the Company in which (i) the Company is not the surviving entity, or (ii) the outstanding shares of the Company’s capital stock are otherwise converted into or exchanged for shares of capital of another entity; or (b) the sale of all or substantially all of the assets of the Company.

Net Issuance ” has the meaning given to it in Section 3(a) .

Notice of Exercise ” has the meaning given to it in Section 3(a) .

Public Acquisition ” means any Merger Event which is effected such that (i) the holders of Common Stock shall be entitled to receive (A) cash and/or (B) shares of stock that are of a publicly traded company listed on a national market or exchange which may be resold without restrictions (other than restrictions to which Warrantholder may separately agree in writing) after the consummation of such Merger Event, and (ii) the Company’s stockholders own less than 50% of the voting securities of the


surviving entity (or, if such Company stockholders beneficially own 50% or more of the outstanding voting power of the surviving or successor entity as of immediately after the consummation of such Merger Event , such surviving or successor entity is not the Company) .

Purchase Price ” means, with respect to any exercise of this Warrant, an amount equal to the Exercise Price as of the relevant time multiplied by the number of shares of Common Stock requested to be exercised under this Warrant pursuant to such exercise.

Rules ” has the meaning given to it in Section 12(q) .

Transfer Notice ” has the meaning given to it in Section 11 .

Warrant ” has the meaning given to it in the preamble to this Warrant.

Warrant Term ” has the meaning given to it in Section 2 .

Warrantholder ” has the meaning given to it in the preamble to this Warrant.

SECTION 2. TERM OF THE AGREEMENT.

Except as otherwise provided for herein, the term of this Warrant (the “ Warrant Term ”) and the right to purchase Common Stock as granted herein shall commence on the Effective Date and shall be exercisable for a period ending upon the earlier to occur of (A) five (5) years from the Effective Date or (B) the consummation of a Public Acquisition, with the Warrant expiring and terminating in its entirety upon the consummation of either of the foregoing events (the “ Termination Date ”).

SECTION 3. EXERCISE OF THE PURCHASE RIGHTS.

(a) Exercise; Exercisability . The Warrantholder’s right to purchase 50.0% of the shares of Common Stock issuable pursuant to this Warrant (rounded down to the nearest whole share) shall be vested and exercisable anytime from the Effective Date until the Termination Date, with the remaining 50.0% of the shares of Common Stock issuable pursuant to this Warrant to vest and become exercisable during the Warrant Term to the extent the aggregate original principal amount of all Term Loan Advances requested by the Company exceeds Twenty Million Dollars ($20,000,000). Subject to the foregoing and the other terms and conditions hereof, the purchase rights set forth in this Warrant that become exercisable by the Warrantholder may be exercised, in whole or in part, at any time, or from time to time, during the Warrant Term, by tendering to the Company at its principal office a notice of exercise in the form attached hereto as Exhibit A (the “ Notice of Exercise ”), duly completed and executed. Promptly upon receipt of the Notice of Exercise and the payment of the Purchase Price in accordance with the terms set forth below, and in no event later than three (3) business days thereafter, the Company shall issue to the Warrantholder a certificate for the number of shares of Common Stock purchased and shall execute the acknowledgment of exercise in the form attached hereto as Exhibit B (the “ Acknowledgment of Exercise ”) indicating the number of shares which remain subject to future purchases, if any.

The Purchase Price may be paid at the Warrantholder’s election either (i) by cash or check, or (ii) by surrender of all or a portion of the Warrant for shares of Common Stock exercisable under this Warrant and, if applicable, an amended Warrant representing the remaining number of shares purchasable hereunder, as determined below (“ Net Issuance ”). If the Warrantholder elects the Net Issuance method, the Company will issue Common Stock in accordance with the following formula:

 

 

 

 

 

 

 

 

 

X = Y(A-B)

 

 

 

 

A

 

 

 

     Where:

 

 

 

 

 

 

 

 

 

X =

 

the number of shares of Common Stock to be issued to the Warrantholder.

 

 

 

 

 

 

 

Y = the number of shares of Common Stock requested to be exercised under this Warrant.

 

 

 

 

 

 

 

A = the fair market value of one (1) share of Common Stock at the time of issuance of such shares of Common Stock.

 

 

 

 

 

B =

 

the Exercise Price.

For purposes of the above calculation, the fair market value of one (1) share of Common Stock shall mean:

(i) if the Common Stock is traded on any exchange operated by the NASDAQ Stock Market, LLC or any other national securities exchange, the fair market value of one (1) share of Common Stock shall be deemed to be the volume-weighted average of the closing prices over the thirty (30) consecutive trading days ending two (2) trading days before the day the fair market value of one (1) share of Common Stock is being determined; or

(ii) if at any time the Common Stock is not listed on any securities exchange, the fair market value of one (1) share of Common Stock shall be the highest price per share which the Company could obtain from a willing buyer (not a current employee or director) for shares of Common Stock sold by the Company (based upon the valuation by the Board of Directors of all shares of Common

2.

 


Stock), from authorized but unissued shares, as determined in good faith by its Board of Directors, unless this Warrant is being exercised in connection with a Merger Event, in which case the fair market value of one (1) share of Common Stock shall be deemed to be the per share value received by the holders of the Common Stock on a Common Stock equivalent basis pursuant to such Merger Event.

Upon partial exercise by either cash or Net Issuance, the Company shall promptly issue an agreement substantially in the form of the Warrant representing the remaining number of shares purchasable hereunder. All other terms and conditions of such agreement shall be identical to those contained herein, including, but not limited to the Effective Date hereof.

(b) Exercise Prior to Expiration . To the extent that the Warrantholder has not exercised its purchase rights under this Warrant to all Common Stock subject hereto, and if the fair market value of one share of the Common Stock is greater than the Exercise Price then in effect, this Warrant shall be deemed automatically exercised pursuant to Section 3(a) (even if not surrendered) immediately before the expiration of the Warrant Term. For purposes of such automatic exercise, the fair market value of one share of the Common Stock upon such expiration shall be determined pursuant to Section 3(a) . To the extent this Warrant or any portion thereof is deemed automatically exercised pursuant to this Section 3(b) , the Company agrees to promptly notify the Warrantholder of the number of shares of Common Stock, if any, the Warrantholder is to receive by reason of such automatic exercise.

(c) Legend . Each certificate for the shares of Common Stock purchased upon exercise of this Warrant shall bear the restrictive legend set forth on the first page of this Warrant. Such legend shall be removed and the Company shall, or shall instruct its transfer agent to, issue a certificate without such legend or any other legend to the holder of such shares (i) if such shares are sold or transferred pursuant to an effective registration statement under the Act covering the resale of such shares by the holder thereof, (ii) if such shares are sold or transferred pursuant to Rule 144 under the Act, (iii) if, upon advice of counsel to the Company, such shares are eligible for resale without any restrictions under Rule 144 under the Act, or (iv) upon the request of such holder if such request is accompanied (at such holder’s expense) by a written opinion of counsel reasonably satisfactory to the Company that registration is not required under the Act or any applicable state securities laws for the resale of the shares of Common Stock purchased upon exercise of this Warrant. The removal of such restrictive legend from any certificates representing the shares of Common Stock purchased upon exercise of this Warrant is predicated upon the Company’s reliance that the holder of such shares would sell, transfer, assign, pledge, hypothecate or otherwise dispose of such shares pursuant to either the registration requirements of the Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if such shares are sold pursuant to a registration statement, they will be sold in compliance with the plan of distribution set forth therein.

SECTION 4. RESERVATION OF SHARES.

During the Warrant Term, the Company will at all times have authorized and reserved a sufficient number of shares of its Common Stock to provide for the exercise of the rights to purchase Common Stock as provided for herein.

SECTION 5. NO FRACTIONAL SHARES OR SCRIP.

No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant, but in lieu of such fractional shares the Company shall make a cash payment therefor upon the basis of the Exercise Price then in effect.

SECTION 6. NO RIGHTS AS STOCKHOLDER.

This Warrant does not entitle the Warrantholder to any voting rights or other rights as a stockholder of the Company prior to the exercise of this Warrant.

SECTION 7. WARRANTHOLDER REGISTRY.

The Company shall maintain a registry showing the name and address of the registered holder of this Warrant. Warrantholder’s initial address, for purposes of such registry, is set forth in Section 12(g) . Warrantholder may change such address by giving written notice of such changed address to the Company.

 

SECTION 8. ADJUSTMENT RIGHTS.

The Exercise Price and the number of shares of Common Stock purchasable hereunder are subject to adjustment, as follows:

(a) Merger Event . If at any time there shall be a Merger Event that is not a Public Acquisition, then, as a part of such Merger Event, lawful provision shall be made so that the Warrantholder shall thereafter be entitled to receive, upon exercise of this Warrant, the kind, amount and value of shares of Common Stock or other securities or property of the successor, surviving or purchasing corporation resulting from, or participating in, such Merger Event that would have been issuable if Warrantholder had exercised this Warrant immediately prior to such Merger Event. In any such case, appropriate adjustment (as determined in good faith by the Company’s Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Warrantholder after such Merger Event to the end that the provisions of this Warrant (including adjustments of the Exercise Price) shall be applicable in their entirety, and to the greatest extent possible. Without limiting the foregoing, in connection with any Merger Event other than a Public Acquisition, upon the closing thereof, the successor, surviving or purchasing entity shall assume the obligations of this Warrant. The provisions of this Section 8(a) shall similarly apply to successive Merger Events. In connection with a Merger Event and upon Warrantholder’s written election to the Company, the Company shall cause this Warrant to

3.

 


be exchanged for the consideration that Warrantholder would have received if Warrantholder chose to exercise its right to have shares issued pursuant to the Net Issuance provisions of this Warrant prior to the Merger Event without actually exercising such right, acquiring such shares and exchanging such shares for such consideration.

(b) Reclassification of Shares . Except as set forth in Section 8(a) , if the Company at any time shall, by combination, reclassification, exchange or subdivision of securities or otherwise, change any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities which were subject to the purchase rights under this Warrant immediately prior to such combination, reclassification, exchange, subdivision or other change.

(c) Subdivision or Combination of Shares . If the Company at any time shall combine or subdivide its Common Stock, (i) in the case of a subdivision, the Exercise Price shall be proportionately decreased, and the number of shares of Common Stock issuable upon exercise of this Warrant shall be proportionately increased, or (ii) in the case of a combination, the Exercise Price shall be proportionately increased, and the number of shares of Common Stock issuable upon the exercise of this Warrant shall be proportionately decreased.

(d) Stock Dividends . If the Company at any time while this Warrant is outstanding and unexpired shall:

(i) pay a dividend with respect to the Common Stock payable in Common Stock, then the Exercise Price shall be adjusted, from and after the date of determination of stockholders entitled to receive such dividend or distribution, to that price determined by multiplying the Exercise Price in effect immediately prior to such date of determination by a fraction (A) the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution, and (B) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution; or

 

(ii) make any other distribution with respect to the Common Stock, except any distribution specifically provided for in any other clause of this Section 8 , then, in each such case, provision shall be made by the Company such that the Warrantholder shall receive upon exercise of this Warrant a proportionate share of any such distribution as though it were the holder of the Common Stock as of the record date fixed for the determination of the stockholders of the Company entitled to receive such distribution.

(e) Antidilution Rights . To the extent that any antidilution rights applicable to the Common Stock purchasable hereunder may be set forth in the Charter, the Company shall promptly provide the Warrantholder with a copy of any restatement, amendment, modification or waiver of the Charter that impairs or reduces such antidilution rights; provided, that no such amendment, modification or waiver shall impair or reduce the antidilution rights, if any, set forth in the Charter with respect to the Common Stock unless such amendment, modification or waiver affects the rights of Warrantholder with respect to the Common Stock issuable hereunder generally in the same manner as it affects all other holders of Common Stock. The Company shall, within ten (10) business days of the end of each fiscal quarter following the Effective Date, provide Warrantholder with written notice of any issuance of its stock or other equity security during such fiscal quarter that triggered an antidilution adjustment under the antidilution rights applicable to the Common Stock purchasable hereunder, if any, as may be set forth in the Charter, which notice shall include (a) the price at which such stock or security was sold, (b) the number of shares issued, and (c) such other information as reasonably necessary for Warrantholder to verify that such antidilution adjustment occurred and the amount of any such adjustment. For the avoidance of doubt, there shall be no duplicate antidilution adjustment pursuant to this subsection (e), the forgoing subsection (d) and the Charter.

(f) Notice of Adjustments . If: (i) the Company shall declare any dividend or distribution upon its Common Stock, whether in stock, cash, property or other securities (assuming Lender consents to a dividend involving cash, property or other securities under the Loan Agreement, if the consent of Lender is then required by the terms of the Loan Agreement); (ii) the Company shall offer for subscription prorata to the holders of Common Stock any additional shares of stock of any class or other rights; (iii) there shall be any Merger Event; (iv) the Company shall sell, lease, license or otherwise transfer all or substantially all of its assets; or (v) there shall be any voluntary dissolution, liquidation or winding up of the Company; then, in connection with each such event, the Company shall send to the Warrantholder: (A) at least ten (10) business days’ prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution, subscription rights (specifying the date on which the holders of Common Stock shall be entitled thereto) or for determining rights to vote in respect of such Merger Event, sale, lease, license or other transfer of all or substantially all assets, dissolution, liquidation or winding up; and (B) in the case of any such Merger Event, dissolution, liquidation or winding up, at least ten (10) business days’ prior written notice of the date when the same shall take place (and specifying the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such Merger Event, dissolution, liquidation or winding up).

Each such written notice shall set forth, in reasonable detail, (i) the event requiring the notice, and (ii) if any adjustment is required to be made, (A) the amount of such adjustment, (B) the method by which such adjustment was calculated, (C) the adjusted Exercise Price (if the Exercise Price has been adjusted), and (D) the number of shares subject to purchase hereunder after giving effect to such adjustment, and shall be given by first class mail, postage prepaid, or by reputable overnight courier with all charges prepaid, addressed to the Warrantholder at the address for Warrantholder set forth in the registry referred to in Section 7 .

 

(g) Timely Notice . Failure to timely provide such notice required by subsection (f) above shall entitle Warrantholder to retain the benefit of the applicable notice period notwithstanding anything to the contrary contained in any insufficient notice received by

4.

 


Warrantholder ; provided, that, notwithstanding anything herein to the contrary, the failure to timely provide such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice.

SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.

(a) Reservation of Common Stock . The Common Stock issuable upon exercise of the Warrantholder’s rights has been duly and validly reserved and, when issued in accordance with the provisions of this Warrant, will be validly issued, fully paid and non-assessable, and will be free of any taxes, liens, charges or encumbrances of any nature whatsoever; provided , that the Common Stock issuable pursuant to this Warrant may be subject to restrictions on transfer under state and/or federal securities laws. The Company has made available to the Warrantholder true, correct and complete copies of its Charter and current bylaws. The issuance of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Warrantholder for any issuance tax in respect thereof, or other cost incurred by the Company in connection with such exercise and the related issuance of shares of Common Stock; provided , that the Company shall not be required to pay any tax which may be payable in respect of any transfer and the issuance and delivery of any certificate in a name other than that of the Warrantholder.

(b) Due Authority . The execution and delivery by the Company of this Warrant and the performance of all obligations of the Company hereunder, including the issuance to Warrantholder of the right to acquire the shares of Common Stock, have been duly authorized by all necessary corporate action on the part of the Company. This Warrant: (1) does not violate the Company’s Charter or current bylaws; (2) does not contravene any law or governmental rule, regulation or order applicable to it; and (3) does not and will not contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument to which it is a party or by which it is bound. This Warrant constitutes a legal, valid and binding agreement of the Company, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other laws affecting the enforcement of creditors’ rights in general, and except that the enforceability of this Warrant is subject to general principles of equity.

(c) Consents and Approvals . No consent or approval of, giving of notice to, registration with, or taking of any other action in respect of any state, federal or other governmental authority or agency is required on the part of the Company with respect to the execution, delivery and performance by the Company of its obligations under this Warrant, except for the filing of notices pursuant to Regulation D under the Act and any filing required by applicable state securities law, which filings will be effective by the time required thereby.

(d) Issued Securities . All issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and nonassessable. All outstanding shares of Common Stock and any other Company securities were issued in compliance with all applicable federal and state securities laws in all material respects. In addition, as of the date immediately preceding the Effective Date:

(i) The authorized capital of the Company consists of (A) 100,000,000 shares of Common Stock, $0.001 par value per share, of which 17,561,327 shares are issued and outstanding as of June 30, 2015, and (B) 5,000,000 shares of Preferred Stock, $0.001 par value per share, of which no shares are issued and outstanding.

(ii) No stockholder of the Company has preemptive rights to purchase new issuances of the Company’s capital stock pursuant to the Charter or the Company’s bylaws.

(e) Exempt Transaction . Subject to the accuracy of the Warrantholder’s representations in Section 10 , the issuance of the Common Stock upon exercise of this Warrant will each constitute a transaction exempt from (i) the registration requirements of Section 5 of the Act, in reliance upon Section 4(2) thereof, and (ii) the qualification requirements of the applicable state securities laws.

(f) Compliance with Rule 144 . If the Warrantholder proposes to sell Common Stock issuable upon the exercise of this Warrant in compliance with Rule 144 promulgated by the SEC, then, upon Warrantholder’s written request to the Company, the Company shall furnish to the Warrantholder, within five days after receipt of such request, a written statement confirming the Company’s compliance with the filing requirements of the SEC as set forth in such Rule, as such Rule may be amended from time to time, and shall, subject to such sale being in compliance with all of the conditions of Rule 144, issue appropriate instructions to its transfer agent to remove the restrictive legend from any certificates evidencing the Common Stock issuable upon the exercise of this Warrant.

(g) Information Rights . During the Warrant Term, Warrantholder shall be entitled to the information rights contained in Sections 7.1(b) and 7.1(c) of the Loan Agreement, and Sections 7.1(b) and 7.1(c) of the Loan Agreement are hereby incorporated into this Warrant by this reference as though fully set forth herein, provided, however, that the Company shall not, once all Indebtedness (as defined in the Loan Agreement) owed by the Company to Lender has been repaid, be required to deliver any information required by Section 7.1 of the Loan Agreement so long as the Company is subject to SEC reporting obligations under Section 13(a) or Section 15(d) of the 1934 Act. Notwithstanding anything to the contrary in this Section 9(g) or elsewhere herein, to the extent that this Warrant is transferred to a third party that is not then a party to the Loan Agreement as Lender or is not an affiliate of Lender, then this Section 9(g) shall automatically terminate and shall have no further force or effect.

(h) Listing of Shares . The Common Stock is listed for trading on the NASDAQ Global Market as of the Effective Date.

SECTION 10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.

5.

 


This Warrant has been entered into by the Company in reliance upon the following representations and covenants of the Warrantholder:

 

(a) Investment Purpose . The right to acquire Common Stock or the Common Stock issuable upon exercise of the Warrantholder’s rights contained herein has been, and such shares will be, acquired for investment and not with a view to the sale or distribution of any part thereof, and the Warrantholder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration under the Act or an exemption from the registration requirements of the Act. Warrantholder is not a registered broker-dealer under Section 15 of the 1934 Act or an entity engaged in a business that would require it to be so registered as a broker-dealer.

(b) Private Issue . The Warrantholder understands (i) that the Common Stock issuable upon exercise of this Warrant is not registered under the Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant will be exempt from the registration and qualifications requirements thereof, and (ii) that the Company’s reliance on such exemption is predicated on the representations set forth in this Section 10 .

(c) Financial Risk . The Warrantholder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.

(d) Risk of No Registration . Without in any way limiting the Company’s obligations under this Warrant, the Warrantholder understands that if the Common Stock is not registered with the SEC pursuant to Section 12 of the 1934 Act or the Company is not required to file reports pursuant to Section 13(a) or Section 15(d) of the 1934 Act, or if a registration statement is not effective under the Act covering the resale of the shares of Common Stock issuable upon exercise of the Warrant when it desires to sell (i) the rights to purchase Common Stock pursuant to this Warrant or (ii) the Common Stock issuable upon exercise of the right to purchase, as applicable, it may be required to hold such securities for an indefinite period. The Warrantholder also understands that any sale of (A) its rights hereunder to purchase Common Stock or (B) Common Stock issued or issuable hereunder which might be made by it in reliance upon Rule 144 under the Act may be made only in accordance with the terms and conditions of that Rule.

(e) Accredited Investor . Warrantholder is, and on each date on which it exercises any portion of this Warrant, it will be, an “accredited investor” within the meaning of the Securities and Exchange Rule 501 of Regulation D, as presently in effect.

(f) No Short Sales . Warrantholder has not engaged, and will not engage, in “short sales” of the Common Stock of the Company at any time prior to the Effective Date and until the Termination Date. The term “short sale” shall mean any sale of a security which the seller does not own or any sale which is consummated by the delivery of a security borrowed by, or for the account of, the seller.

SECTION 11. TRANSFERS.

Subject to compliance with applicable federal and state securities laws, this Warrant and all rights hereunder are transferable, in whole or in part, without charge to the holder hereof (except for transfer taxes) upon surrender of this Warrant properly endorsed. Each taker and holder of this Warrant, by taking or holding the same, consents and agrees that this Warrant, when endorsed in blank, shall be deemed negotiable, and that the holder hereof, when this Warrant shall have been so endorsed and its transfer recorded on the Company’s books, shall be treated by the Company and all other persons dealing with this Warrant as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented by this Warrant. The transfer of this Warrant shall be recorded on the books of the Company upon receipt by the Company of a notice of transfer in the form attached hereto as Exhibit C (the “ Transfer Notice ”), at its principal offices and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer. Until the Company receives such Transfer Notice, the Company may treat the registered owner hereof as the owner for all purposes.

SECTION 12. MISCELLANEOUS.

(a) Effective Date . The provisions of this Warrant shall be construed and shall be given effect in all respects as if it had been executed and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company and the Warrantholder.

(b) Remedies . In the event of any default hereunder, the non-defaulting party may proceed to protect and enforce its rights either by suit in equity and/or by action at law, including but not limited to an action for damages as a result of any such default, and/or an action for specific performance for any default where Warrantholder will not have an adequate remedy at law and where damages will not be readily ascertainable. The Company expressly agrees that it shall not oppose an application by the Warrantholder or any other person entitled to the benefit of this Warrant requiring specific performance of any or all provisions hereof or enjoining the Company from continuing to commit any such breach of this Warrant.

(c) No Impairment of Rights . The Company will not, by amendment of its Charter or through any other means, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be reasonably necessary or appropriate in order to protect the rights of the Warrantholder against impairment. Notwithstanding the foregoing, nothing in this Section 12(c) shall negate or otherwise restrict or impair the Company’s right to effect any changes to the rights, preferences, privileges or restrictions associated with the Common Stock so long as such changes do not adversely affect the rights, preferences, privileges or restrictions associated with the shares of Common Stock issuable upon exercise of this Warrant in a manner different from the effect that such changes have generally on the

6.

 


rights, preferences, privileges or restrictions associated with all other shares of Common Stock.

(d) Additional Documents . The Company, upon execution of this Warrant, shall provide the Warrantholder with certified resolutions with respect to the representations and warranties set forth in the first sentence of Section 9(b) .

(e) Attorney’s Fees . In any litigation, arbitration or court proceeding between the Company and the Warrantholder relating hereto, the prevailing party shall be entitled to reasonable attorneys’ fees and expenses and all reasonable costs of proceedings incurred in enforcing this Warrant. For the purposes of this Section 12(e) , attorneys’ fees shall include without limitation reasonable fees incurred in connection with the following: (i) contempt proceedings; (ii) discovery; (iii) any motion, proceeding or other activity of any kind in connection with an insolvency proceeding; (iv) garnishment, levy, and debtor and third party examinations; and (v) post-judgment motions and proceedings of any kind, including without limitation any activity taken to collect or enforce any judgment.

(f) Severability . In the event any one or more of the provisions of this Warrant shall for any reason be held invalid, illegal or unenforceable, the remaining provisions of this Warrant shall be unimpaired, and the invalid, illegal or unenforceable provision shall be replaced by a mutually acceptable valid, legal and enforceable provision, which comes closest to the intention of the parties underlying the invalid, illegal or unenforceable provision.

(g) Notices . Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process or other communication that is required, contemplated, or permitted under this Warrant or with respect to the subject matter hereof shall be in writing, and shall be deemed to have been validly served, given, delivered, and received upon the earlier of: (i) the day of transmission by facsimile or hand delivery if transmission or delivery occurs on a business day at or before 5:00 pm in the time zone of the recipient, or, if transmission or delivery occurs on a non-business day or after such time, the first business day thereafter, or the first business day after deposit with an overnight express service or overnight mail delivery service; or (ii) the third calendar day after deposit in the United States mails, with proper first class postage prepaid ( provided , that any Advance Request shall not be deemed received until Lender’s actual receipt thereof), and shall be addressed to the party to be notified as follows:

If to Warrantholder:

_____________________

Attention: _____________

_____________________

_____________________

Facsimile: ____________

Telephone: ____________

If to the Company:

PARATEK PHARMACEUTICALS, INC.

Attention: Chief Financial Officer (with a copy to General Counsel)

75 Park Plaza, 4 th Floor

Boston, MA 02116

Facsimile: 617-275-0039

Telephone: 617-807-6600

With a copy to (which shall not constitute notice hereunder):

 

Cooley LLP

Attention: Mehdi Khodadad

3175 Hanover Street

Palo Alto, CA 94304-1130

Facsimile: (650) 849-7400

Telephone: (650) 843-5000

or to such other address as each party may designate for itself by like notice.

(h) Entire Agreement; Amendments . This Warrant constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof, and supersede and replace in their entirety any prior proposals, term sheets, letters, negotiations or other documents or agreements, whether written or oral, with respect to the subject matter hereof (including Lender’s proposal letter dated August 14, 2015). None of the terms of this Warrant may be amended except by an instrument executed by each of the parties hereto.

(i) Headings . The various headings in this Warrant are inserted for convenience only and shall not affect the meaning or interpretation of this Warrant or any provisions hereof.

(j) Advice of Counsel . Each of the parties represents to each other party hereto that it has discussed (or had an opportunity to discuss) with its counsel this Warrant and, specifically, the provisions of Sections 12(n) , 12(o) and 12(p) .

 

(k) No Strict Construction . The parties hereto have participated jointly in the negotiation and drafting of this Warrant. In the event an ambiguity or question of intent or interpretation arises, this Warrant shall be construed as if drafted jointly by the parties

7.

 


hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Warrant.

(l) No Waiver . Except for the requirement that this Warrant be exercised (or be deemed exercised), if at all, during the Warrant Term, no omission or delay by either party hereto at any time to enforce any right or remedy reserved to it, or to require performance of any of the terms, covenants or provisions hereof by the other party hereto at any time designated, shall be a waiver of any such right or remedy to which such party is entitled, nor shall it in any way affect the right of such party to enforce such provisions thereafter.

(m) Survival . All agreements, representations and warranties contained in this Warrant or in any document delivered pursuant hereto shall be for the benefit of Warrantholder and the Company, as the case may be, and shall survive the execution and delivery of this Warrant and the expiration or other termination of this Warrant.

(n) Governing Law . This Warrant has been negotiated and delivered to Warrantholder in the State of California, and shall have been accepted by Warrantholder in the State of California. Delivery of Common Stock to Warrantholder by the Company under this Warrant is due in the State of California. This Warrant shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.

(o) Consent to Jurisdiction and Venue . All judicial proceedings arising in or under or related to this Warrant may be brought in any state or federal court of competent jurisdiction located in the State of California. By execution and delivery of this Warrant, each party hereto generally and unconditionally: (a) consents to personal jurisdiction in Santa Clara County, State of California; (b) waives any objection as to jurisdiction or venue in Santa Clara County, State of California; (c) agrees not to assert any defense based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees to be bound by any judgment rendered thereby in connection with this Warrant. Service of process on any party hereto in any action arising out of or relating to this Warrant shall be effective if given in accordance with the requirements for notice set forth in Section 12(g) , and shall be deemed effective and received as set forth in Section 12(g) . Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of either party to bring proceedings in the courts of any other jurisdiction.

(p) Mutual Waiver of Jury Trial . Because disputes arising in connection with complex financial transactions are most quickly and economically resolved by an experienced and expert person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties desire that their disputes arising out of this Warrant be resolved by a judge applying such applicable laws. EACH OF THE COMPANY AND WARRANTHOLDER SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “ CLAIMS ”) ASSERTED BY THE COMPANY AGAINST WARRANTHOLDER OR ITS ASSIGNEE OR BY WARRANTHOLDER OR ITS ASSIGNEE AGAINST THE COMPANY RELATING TO THIS WARRANT. This waiver extends to all such Claims arising out of this Warrant, including Claims that involve persons other than the Company and Warrantholder, and any Claims for damages, breach of contract, specific performance, or any equitable or legal relief of any kind, arising out of this Warrant.

(q) Arbitration .  If the Mutual Waiver of Jury Trial set forth in Section 12(p) is ineffective or unenforceable, the parties agree that all Claims shall be submitted to binding arbitration in accordance with the commercial arbitration rules of JAMS (the “Rules”), such arbitration to occur before one arbitrator, which arbitrator shall be a retired California state judge or a retired Federal court judge.  Such proceeding shall be conducted in Santa Clara County, State of California, with California rules of evidence and discovery applicable to such arbitration.  The decision of the arbitrator shall be binding on the parties, and shall be final and nonappealable to the maximum extent permitted by law.  Any judgment rendered by the arbitrator may be entered in a court of competent jurisdiction and enforced by the prevailing party as a final judgment of such court.

(r) Pre-arbitration Relief.  In the event Claims are to be resolved by arbitration, either party may seek from a court of competent jurisdiction identified in Section 12(o), any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief enforced to the fullest extent permitted by law notwithstanding that all Claims are otherwise subject to resolution by binding arbitration

(s) Counterparts . This Warrant and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which counterparts shall constitute but one and the same instrument.

(t) Specific Performance . The parties hereto hereby declare that it is impossible to measure in money the damages which will accrue to a party hereto by reason of the other party’s failure to perform any of the obligations under this Warrant and agree that the terms of this Warrant shall be specifically enforceable by either party hereto. If a party hereto institutes any action or proceeding to specifically enforce the provisions hereof, any person against whom such action or proceeding is brought hereby waives the claim or defense therein that such party has an adequate remedy at law, and such person shall not offer in any such action or proceeding the claim or defense that such remedy at law exists.

[Signature Page Follows]

 

 


8.

 


IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be executed by its officers thereunto duly authorized as of the Effective Date.

 

COMPANY: PARATEK PHARMACEUTICALS, INC.

 

 

By: __ __

Name:  Douglas W. Pagán

Title:  Chief Financial Officer

 

 

 

 

WARRANTHOLDER:

 

By:

Signature: _______________________

Print Name: _______________________

Title: _______________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Warrant – Paratek/_______________]


9.

 


EXHIBIT A

 

To: [ ]

(1)

The undersigned Warrantholder hereby elects to purchase [ ] shares of the Common Stock of [ ], pursuant to the terms of the Agreement dated the [ ] day of [ ] (the “Agreement”) between [ ] and the Warrantholder, and [CASH PAYMENT: tenders herewith payment of the Purchase Price in full, together with all applicable transfer taxes, if any.] [NET ISSUANCE: elects pursuant to Section 3(a) of the Agreement to effect a Net Issuance.]

(2)

Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below.

 

(Name)

 

 

(Address)

 

WARRANTHOLDER:

 

By:

 

 

By:

Name:
Title:

 


10.

 


EXHIBIT B

ACKNOWLEDGMENT OF EXERCISE

The undersigned, as representative of ) Paratek Pharmaceuticals, Inc. (the “ Company ”), hereby acknowledges receipt of the “Notice of Exercise” from [●] (the “ Warrantholder ”), to purchase [●] shares of the Common Stock of the Company, pursuant to the terms of that certain Warrant Agreement, dated as of [●] between the Company and the Warrantholder (the “ Warrant ”), and further acknowledges that [●] shares remain subject to purchase under the terms of the Warrant.

 

 

 

 

 

 

 

 

 

 

COMPANY:

 

 

 

PARATEK PHARMACEUTICALS, INC.

 

 

 

 

 

 

 

 

 

 

 

By:

  

  

 

 

 

 

 

 

Title:

  

  

 

 

 

 

 

 

Date:

  

  


11.

 


EXHIBIT C

TRANSFER NOTICE

FOR VALUE RECEIVED, that certain Warrant Agreement, dated as of [●], between Paratek Pharmaceuticals, Inc., as the Company, and [●], as the Warrantholder (the “ Warrant ”), and all rights evidenced thereby are hereby transferred and assigned to

 

 

 

(Please Print)

 

 

 

 

whose address is

  

  

 

 

 

 

 

 

 

 

 

 

Dated:

  

  

 

 

 

 

 

 

 

 

 

 

Holder’s Signature:

  

  

 

 

 

 

 

 

 

 

 

 

Holder’s Address:

  

  

 

 

 

  

 

 

 

 

 

Signature Guaranteed:

  

  

NOTE: The signature to this Transfer Notice must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

12.

 

Exhibit 10.1

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this “ Agreement ”) is dated as of October 1, 2015, by and between Paratek Pharmaceuticals, Inc., a Delaware corporation (the “ Company ”), and Hercules Technology Growth Capital, Inc., a Maryland corporation (the “ Purchaser ”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “ Securities Act ”), the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, shares of Common Stock of the Company as more fully described in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:

ARTICLE I
DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

Business Day ” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the Commonwealth of Massachusetts are authorized or required by law or other governmental action to close.

Closing ” shall have the meaning ascribed to such term in Section 2.1.

Commission ” means the Securities and Exchange Commission.

Common Stock ” means the common stock of the Company, par value $0.001 per share.

Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

GAAP ” shall have the meaning ascribed to such term in Section 3.1(g).

Liens ” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

Material Adverse Effect ” means a material adverse effect on (i) the results of operations, assets, business or financial condition of the Company and its Subsidiary, taken as a whole, or (ii) Company’s ability to perform in any material respect on a timely basis its obligations under this Agreement.

Person ” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 


 

Purchase Price shall have the meaning ascribed to such term in Section 3.1(g).

Rule 144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time.

SEC Reports ” shall have the meaning ascribed to such term in Section 3.1(f).

Securities Act ” shall have the meaning ascribed to such term in the “Whereas” clause at the beginning of this Agreement.

Shares ” shall have the meaning ascribed to such term in Section 2.1.

Short Sales ” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

Subsidiary ” shall mean Paratek Pharma, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company.

 

Transfer Agent ” means American Stock Transfer and Trust Company, the current transfer agent of the Company, and any successor transfer agent of the Company.

ARTICLE II
PURCHASE AND SALE

2.1 Closing .  On the terms and subject to the conditions set forth herein, at the Closing, the Company shall sell, and the Purchaser shall purchase, 44,782 shares of Common Stock (the “ Shares ”) at a purchase price of $22.33 per Share, for an aggregate purchase price of $999,982.06 (the “ Purchase Price ”). The purchase and sale of Shares (the “ Closing ”) shall take place simultaneously with the execution of this Agreement at the principal offices of the Company, 75 Park Plaza Boston, Massachusetts 02116, or such other location as the parties shall mutually agree.  

2.2 Deliveries . At the Closing:

(a) the Company shall deliver, or cause to be delivered, a copy of irrevocable instructions to the Transfer Agent instructing the Transfer Agent to issue the Shares in certificated form, registered to “Hercules Technology Growth Capital, Inc.”; and

(b) the Purchaser shall deliver, or cause to be delivered, the Purchase Price by wire transfer of immediately available funds to the order of the Company at the account specified in writing by the Company.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company .  Except as set forth in the the SEC Reports, which disclosure in the SEC Reports shall qualify any representation or warranty

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made herein, the Company hereby makes the following representations and warranties to the Purchaser:  

(a) Organization and Qualification .  Each of the Company and its Subsidiary is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), and has the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor its Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. The Company is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not reasonably be expected to result in a Material Adverse Effect.

(b) Authorization; Enforcement .  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly authorized by all requisite action on the part of the Company and no further corporate action is required by the Company, its Board of Directors or its stockholders in connection herewith. This Agreement has been duly executed by the Company and constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except (i) as such enforceability may be limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as such enforceability may be limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(c) No Conflicts .  The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby (including, without limitation, the issuance and sale of the Shares) will not (i) conflict with or violate any provision of the Company’s or its Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a material default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or its Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement, or (iii) conflict with or result in a violation of any material law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or its Subsidiary is subject (including federal and state securities laws and regulations, assuming the correctness of the representations and warranties made by the Purchaser herein).

(d) Filings, Consents and Approvals .  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other

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Person in connection with the execution, delivery and performance by the Company of this Agreement , other than post-sale filings pursuant to applicable federal and state securities laws .  

(e) Issuance of the Shares .  The Shares have been duly authorized and, when issued and paid for in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company other than restrictions on transfer imposed by applicable securities laws.

(f) SEC Reports; Financial Statements .  The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “ SEC Reports ”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(g) Financial Statements .  The financial statements of the Company included in the SEC Reports complied in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements were prepared in accordance with United States generally accepted accounting principles (“ GAAP ”) applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its subsidiaries, on a consolidated basis, as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal year-end audit adjustments.

(h) Sarbanes-Oxley; Disclosure Controls .  The Company is in compliance in all material respects with all of the provisions of the Sarbanes-Oxley Act of 2002, as amended, which are applicable to the Company as of the date of this Agreement.

(i) Material Changes; Undisclosed Events, Liabilities or Developments .  Since August 11, 2015, except as specifically disclosed in the SEC Reports, (i) there has been no Material Adverse Effect, (ii) the Company has not incurred any material liabilities (contingent or otherwise) other than (a) trade payables and accrued expenses incurred in the ordinary course of business consistent and (b) liabilities not required to be reflected in the Company’s financial statements in accordance with GAAP and not required to be disclosed in the SEC Reports, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or paid any dividend or made any distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v)

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the Company has not issued any equity securities to any officer, director or Affiliate, except equity grants under Company stock option plans .  

(j) Litigation .  Since August 11, 2015, except as disclosed in the SEC Reports, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against the Company, its subsidiaries or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “ Action ”) which (i) adversely affects or challenges the legality, validity or enforceability of this Agreement or the issuance of the Shares by the Company or (ii) would reasonably be expected to result in a Material Adverse Effect.

3.2 Representations and Warranties of the Purchaser .  The Purchaser hereby represents and warrants as of the date hereof to the Company as follows:

(a) Organization; Authority .  The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of Maryland and has full right, corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement and performance by the Purchaser of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Purchaser. This Agreement has been duly executed by the Purchaser and constitutes the valid and legally binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, except (i) as such enforceability may be limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as such enforceability may be limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(b) Own Account .  The Purchaser understands that the Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and that the Company’s reliance on exemption from such registration is predicated on the representations of the Purchaser set forth in this Agreement.  The Purchaser is acquiring the Shares for investment for its own account and not with a view to or for distributing or reselling such Shares or any part thereof.  The Purchaser has no present intention of distributing any of such Shares and has no direct or indirect arrangement or understandings with any other Persons to distribute or regarding the distribution of such Shares.

(c) Purchaser Status .  The Purchaser is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act.

(d) Investment Experience of Such Purchaser .  The Purchaser has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment.

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(e) Short Sales . The Purchaser has not at any time on or prior to the date hereof engaged, directly or indirectly , in any Short Sales or equivalent transactions in the Common S t ock.    

(f) No Representations .  The Purchaser acknowledges that, in connection with its purchase of the Shares, it is not relying on any representation or warranty made by the Company other than those set forth in Section 3.1 hereof.

ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES

4.1 T ransfer Restrictions .

(a) The Shares may only be disposed of in compliance with state and federal securities laws. The Purchaser agrees that the Shares may not be sold or transferred, other than pursuant to an effective registration statement, unless the Company is furnished with an opinion of counsel reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, stating that such sale or transfer is exempt from the registration requirements of the Securities Act.

(b) The Purchaser understands that any certificates representing the Shares shall bear a legend substantially in the following form:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD, PLEDGED OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

(c) The foregoing legend shall be removed from the certificate evidencing the Shares and the Company shall, or shall cause the Transfer Agent to, issue, no later than five Business Days after receipt of a request from the Purchaser, a certificate or certificates evidencing all or a portion of the Shares, as requested by the Purchaser, without such legend if:  (i) such Shares have been resold under an effective registration statement under the Securities Act, (ii) such Shares have been transferred in compliance with Rule 144, (iii) all of such Shares are eligible for resale pursuant to Rule 144 under the Securities Act without restriction, or (iv) the Purchaser shall have provided the Company with an opinion of counsel reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, stating that such Shares may lawfully be transferred without registration under the Securities Act and that the foregoing legend may be removed following such transfer.  The restrictions on transfer and sale of Shares contained in this Section 4.1 shall terminate with respect to any Shares for which a certificate has been issued without such legend.

4.2 Rule 144 Compliance .  The Company shall, at all times prior to the date of sale or other disposition by the Purchaser of the Shares, use all commercially reasonable efforts (i) to timely file all reports required under the Exchange Act necessary to make Rule 144 available for

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the resale of the Shares, and (ii) otherwise timely take all actions necessary to permit the Purchaser to sell or otherwise dispose of the Shares pursuant to Rule 144.    

4.3 Publicity .  None of the parties hereto nor any of their respective affiliates shall, without the other party’s prior written consent (which shall not be unreasonably withheld, conditioned, or delayed), publicize or use (a) the other party's name (including a brief description of the relationship among the parties hereto), logo or hyperlink to such other parties’ web site, separately or together, in written and oral presentations, advertising, promotional and marketing materials, client lists, public relations materials or on its web site (together, the “ Publicity Materials ”); (b) the names of officers of such other parties in the Publicity Materials; and (c) such other party’s name, trademarks, servicemarks in any news or press release concerning such party; provided however, notwithstanding anything to the contrary herein, no such consent shall be required to the extent necessary disclosure is required to comply with the requests of any regulators, legal requirements or laws applicable to such party (including requirements of the Commission, any stock exchange or NASDAQ) so long as such party provides prior notice to the other party to the extent reasonably practicable.

4.4 Delivery of Shares After Closing .  The Company shall deliver, or cause to be delivered, the stock certificate evidencing the Shares to the Purchaser within five (5) Business Days of the Closing.

4.5 Blue Sky Filings .  The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Shares for, sale to the Purchaser at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of the Purchaser.

4.6 Short Sales .  The Purchaser agrees that all times from and after the date hereof, it shall not engage in any Short Sales or equivalent transactions in the Common Stock.

4.7 Listing .  At all times commencing on the date hereof and until the Purchaser shall no longer hold any Shares, the Company shall at its sole expense take all actions necessary for the Shares to be listed or qualified for trading on each securities exchange or over-the-counter market on which shares of Common Stock are then listed or qualified.

ARTICLE V
MISCELLANEOUS

5.1 Fees and Expenses .  Except as otherwise expressly set forth in this Agreement, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of the Shares to the Purchaser.

5.2 Entire Agreement .  This Agreement, together with the exhibits and schedules hereto, contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such

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matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.  

5.3 Notices .  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via email to the email address, or facsimile at the facsimile number, set forth on the signature pages attached hereto prior to 5:00 p.m. (Boston, Massachusetts time) on a Business Day, (b) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Business Day or later than 5:00 p.m. (Boston, Massachusetts time) on any Business Day, (c) the second Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

5.4 Amendments; Waivers .  No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchaser or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

5.5 Headings .  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

5.6 Successors and Assigns .  Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of law or otherwise by either party, without the prior written consent of the other party; provided, however, such restriction shall not apply to the Company in the case of an assignment or delegation in connection with a change of control, merger, consolidation, reorganization, recapitalization or other similar transaction.  Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.  Any assignment in contravention of this provision shall be void.

5.7 No Third-Party Beneficiaries .  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

5.8 Governing Law .  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers,

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shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in Middlesex County or Suffolk County, Commonwealth of Massachusetts . Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Middlesex County or Suffolk County, Commonwealth of Massachusetts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action or proceeding to enforce any provisions of this Agreement , then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.  

5.9 Survival . The representations and warranties contained herein shall survive the Closing for a period of one (1) year.

5.10 Execution .  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

5.11 Severability .  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

5.12 Replacement of Shares .  If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose, issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate

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or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Shares.  

5.13 Remedies .  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agrees to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

5.14 Saturdays, Sundays, Holidays, etc .  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

5.15 Waiver of Jury Trial .  In any action, suit or proceeding in any jurisdiction brought by any party against any other party, the parties each knowingly and intentionally, to the greatest extent permitted by applicable law, hereby absolutely, unconditionally, irrevocably and expressly waives forever trial by jury.

 

[ Signature page follows ]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

COMPANY:

 

 

 

PARATEK PHARMACEUTICALS, INC.

Address for Notice:

 

Paratek Pharmaceuticals, Inc.

By:   /s/ Douglas W. Pagán ___________

75 Park Plaza

Name: Douglas W. Pagán

Boston, MA 02116

Title: Chief Financial Officer

Attn: General Counsel

 

Facsimile: (617) 275-0039

Telephone: (617) 805-6605

Email: bhaskel@paratekpharm.com

With a copy to (which shall not constitute notice):

 

Cooley LLP

3175 Hanover Street

Palo Alto, CA 94304-1130

Attn:  Mehdi Khodadad, Esq.

Fax: (650) 849-7400

Email: mkhodadad@cooley.com

 

 

 

 

PURCHASER:

 

 

 

HERCULES TECHNOLOGY GROWTH
CAPITAL, INC.

Address for Notice:

 

Legal Department            

By:  _ /s/ Ben Bang ______________

Attention: Ben Bang and R. Bryan Jadot

Name: Ben Bang

400 Hamilton Avenue, Suite 310

Title: Associate General Counsel

Palo Alto, CA  94301

 

Facsimile: 650-473-9194

 

Telephone:  650-289-3088

 

Email: legal@herculestech.com

 

 

With a copy to (which shall not constitute notice):

 

 

 

Riemer & Braunstein LLP

 

Three Center Plaza, 6 th Floor

 

Boston, Massachusetts  02108

 

Attn:  Q. Ellis Telford, Esq.

 

Fax:  (617) 692-3468

Email: etelford@riemerlaw.com

 

 

[ Signature page to Stock Purchase Agreement ]