Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT is entered into as of May
16, 2001 among BioMarin Pharmaceutical Inc., a Delaware corporation (the
"Company"), and the other Persons listed on Annex A hereto (sometimes referred
to herein individually as "Investor" and sometimes collectively as "Investors").
1. Definitions. Unless the context otherwise requires, the terms defined
in this Section 1 shall have the meanings herein specified for all purposes of
this Agreement, applicable to both the singular and plural forms of any of the
terms herein defined. All accounting terms defined in this Section 1 and those
accounting terms used in this Agreement not defined in this Section 1 shall,
except as otherwise provided for herein, be construed in accordance with those
generally accepted accounting principles consistently applied by the Company. If
and so long as the Company has any Subsidiary, the accounting terms defined in
this Section 1 and those accounting terms appearing in this Agreement but not
defined in this Section 1 shall be determined on a consolidated basis for the
Company and each of its Subsidiaries, and the financial statements and other
financial information to be furnished by the Company pursuant to this Agreement
shall be consolidated.
"2000 Annual Report" shall mean the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2000.
"Action" shall mean any action, suit, arbitration or other legal,
administrative or other proceeding by or before any court, arbitrator or
Governmental Entity.
"Agreement" shall mean this Securities Purchase Agreement.
"Board" shall mean the Board of Directors of the Company.
"Closing" and "Closing Date" shall have the meanings assigned to such terms
in Section 3(b) hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the Company's common stock, par value $0.001 per
share.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Equity Security" shall mean the Common Stock, any security convertible
into the Common Stock, or any security carrying any warrant or right to
subscribe to or purchase the Common Stock, or any such warrant or right.
"Form 10-Q" shall mean the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2001.
"Governmental Entity" shall mean any federal, state, local or foreign
governmental bureau, commission, board, agency or instrumentality.
"Holder" of any security shall mean the record or beneficial owner of such
security. A Holder of a Warrant shall be treated as the Holder of the Warrant
Stock underlying the Warrant.
"Holders of 80% of the outstanding Shares" shall mean, on a given date, the
Person or Persons who are the Holders of greater than 80% of all outstanding
Shares which are also Restricted Stock.
"Investor" shall have the meaning assigned to it in the introductory
paragraph of this Agreement.
"Material Adverse Effect" shall mean a material and adverse effect on the
business, assets, property, or financial condition of the Company and its
Subsidiaries, taken as a whole.
"Person" shall mean any natural person, corporation, trust, association,
company, partnership, joint venture and other entity and any government,
governmental agency, instrumentality or political subdivision.
"Required Payment" shall mean, with respect to each Investor, the number of
shares of Common Stock purchased by such Investor, multiplied by $9.45, as set
forth on Annex A hereto.
"Restricted Stock" means (i) the Common Stock issued and sold to the
Investors pursuant to this Agreement and issued or issuable upon exercise of the
Warrants and (ii) any Common Stock issued or issuable (either directly or upon
the conversion or exercise of any warrant, right, or other security) with
respect to the Common Stock referred to in clause (i) above by way of a stock
dividend or stock split or in connection with a combination of shares,
reclassification, recapitalization, merger or consolidation or reorganization;
provided, however, that such shares of Common Stock shall only be treated as
Restricted Stock if and so long as they have not been (x) sold to or through a
broker or dealer or underwriter in a public distribution or a public securities
transaction, or (y) sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act under Section 4(1)
thereof so that all transfer restrictions and restrictive legends with respect
to such Common Stock are removed upon the consummation of such sale.
"Rule 144" shall mean Rule 144 of the Commission under the Securities Act.
"Securities" shall have the meaning assigned to it in Section 2 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shares" shall have the meaning assigned to it in Section 2 hereof.
"Stock Plans" shall mean the Company's 1997 Stock Plan, 1998 Director
Option Plan, and the 1998 Employee Stock Purchase Plan, collectively.
"Subsequent Closing" and "Subsequent Closing Date" shall have the meanings
assigned to such terms in Section 3(c) hereof.
"Subsidiary" shall mean any Person, greater than 50% of the outstanding
voting stock of which is at the time owned or controlled directly or indirectly
by the Company or by one or more of such subsidiary entities or both, where
"voting stock" means any shares of stock having general voting power in electing
the board of directors.
"Warrants" shall have the meaning assigned to such term in Section 2
hereof.
"Warrant Stock" shall have the meaning assigned to such term in Section 2
hereof.
2. _______ Authorization of Securities. The Company has authorized the issuance
and sale of up to (i) 4,763,712 shares of its Common Stock (the "Shares"), and
(ii) warrants, having terms and conditions in the form of Warrant attached
hereto as Annex B (the "Warrants"), to purchase up to an aggregate of 714,554
shares of Common Stock (the "Warrant Stock") (the Shares, the Warrants and the
Warrant Stock are sometimes referred to herein individually and collectively as
the "Securities").
3._______ Sale and Purchase of Shares and Warrants.
(a) ______ Upon the terms and subject to the conditions herein contained, the
Company agrees to sell to each Investor, and each Investor severally agrees to
purchase from the Company, at the Closing on the Closing Date or any Subsequent
Closing Date, (i) the number of shares of Common Stock, and (ii) the Warrants to
purchase the number of shares of Warrant Stock, in each case as set forth
opposite its name on Annex A hereto, as the same may be amended from time to
time, and each Investor shall pay to the Company the Required Payment.
(b) ______ The initial closing of the sale to and purchase by the Investors of
the Shares and Warrants (the "Closing") shall occur at the offices of Paul,
Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at the hour of 10 o'clock A.M., California time, on May
16, 2001 or at such different time or day as the Investors and the Company shall
agree (the "Closing Date"). At the Closing, the Company will deliver to each
Investor instruments or certificates evidencing the Securities being purchased
by it, each of which shall be registered in such Investor's name as stated on
Annex A hereto, against delivery to the Company of payment by wire transfer, or
such other form acceptable to the Company, in an amount equal to the Required
Payment of such Investor.
(c) ______ After the Closing, additional Shares (which, together with the Shares
issued at the Closing, shall not exceed 4,763,712 shares in the aggregate), and
additional Warrants (which, together with the Warrants issued at the Closing,
shall not represent the right to acquire more than 714,554 shares of Warrant
Stock in the aggregate) may be issued at one or more subsequent closings (each a
"Subsequent Closing") which are held on or before May 20, 2001. Each Subsequent
Closing shall be effective upon the date (a "Subsequent Closing Date") of the
Company's receipt from an Investor of a wire transfer of funds in the amount of
such Investor's Required Payment. Effective upon each such Subsequent Closing,
the applicable Investor shall also enter into and become a party to this
Agreement as if such Investor had executed such agreement at the Closing.
(d) ______ Notwithstanding the foregoing, no shares of Common Stock, and no
Warrants, shall be offered or sold after the Closing to any Investor if, in the
opinion of the Company and its counsel, (i) such offer and sale would not be
exempt from the registration and prospectus delivery requirements of the
Securities Act and exempt from the registration or qualification requirements of
all applicable state securities laws, or (ii) such offers and sales would
detract from or adversely affect the availability and effectiveness of the
exemption from or compliance with such federal and state requirements relied
upon in respect of the offer and sale of Common Stock and Warrants to the
Investors at the Closing.
(e) ______ At the Closing, the Company shall prepare Annex A with respect to the
Investors purchasing Common Stock and Warrants at the Closing. Promptly after
each Subsequent Closing, the Company shall amend Annex A as appropriate.
4. Register of Securities; Restrictions on Transfer of Securities; Removal of
Restrictions on Transfer of Securities.
4.1 Restrictions on Transfer.
(a) ______ Each Investor understands and agrees that the Securities it will be
acquiring have not been registered under the Securities Act, and that
accordingly they may not be transferred except as permitted under various
exemptions contained in the Securities Act, or upon satisfaction of the
registration and prospectus delivery requirements of the Securities Act, as
contemplated by Section 7 of this Agreement. Each Investor acknowledges that it
must bear the economic risk of its investment in the Securities for an
indefinite period of time since they have not been registered under the
Securities Act and therefore cannot be sold unless they are subsequently
registered or an exemption from registration is available.
(b) ______ Each Investor hereby represents and warrants to the Company that:
(i) ______ Such Investor is acquiring the Securities it has agreed to purchase
(and, if applicable, will acquire the Warrant Stock) for investment purposes
only, for its own account, and not as nominee or agent for any other Person, and
not with the view to, or for resale in connection with, any distribution thereof
within the meaning of the Securities Act.
(ii)______ Such Investor knows of no public solicitation or advertisement of an
offer in connection with the Securities.
(iii) ____ Such Investor has carefully reviewed this Agreement. Such Investor
has had, during the course of the transaction and prior to its purchase of the
Shares and Warrants, the opportunity to ask questions of and receive answers
from the Company concerning the terms and conditions of the offering and to
obtain additional information. Such Investor has received all information that
it has requested regarding the Company and believes that such information is
sufficient to make an informed decision with respect to the purchase of the
Shares and Warrants. Without limiting the generality of the foregoing, such
Investor has received a copy of (A) the 2000 Annual Report, (B) the Form 10-Q,
and (C) the Risk Factors attached as Annex C hereto.
(iv) _____ Such Investor is able to bear the economic risk of its investment in
the Securities and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of, and protecting
its interests with respect to, its investment in the Securities. Such Investor
is aware of the risk involved in its investment in the Securities and has
determined that such investment is suitable for it in light of its financial
circumstances and available investment opportunities.
(v) ______ This Agreement constitutes the legal, valid and binding obligation of
such Investor and is enforceable against such Investor in accordance with its
terms, except as such enforcement is limited by bankruptcy, insolvency and other
similar laws effecting the enforcement of creditors' rights generally, and by
general equitable principles.
(vi) _____ Such Investor is an "accredited investor" as that term is defined in
Rule 501 of Regulation D promulgated under the Securities Act.
(vii) ____ Such Investor's jurisdiction of formation or incorporation (if
applicable) and principal place of business or its residency as set forth on the
signature page hereof or the annexes hereto by such Investor are accurate.
(viii) ___ The purchase by such Investor of the Securities hereunder does not
violate or conflict with any law or regulation applicable to such Investor.
(ix) _____ No Person engaged by such Investor has, or will have, any right or
claim against the Company for any commission, fee or other compensation as a
finder or broker, or in any similar capacity.
(c)_____ Each Investor hereby further agrees with the Company as follows:
(i) ______ Subject to Section 4.2 hereof, the instruments or certificates
evidencing the Securities it has agreed to purchase, and each instrument or
certificate issued in transfer thereof, will bear the following legend:
"The securities evidenced by this certificate have not been
registered under the Securities Act of 1933 and have been
taken for investment purposes only and not with a view to the
distribution thereof, and, except as stated in an agreement
between the holder of this certificate, or its predecessor in
interest, and the issuer corporation, such securities may not
be sold or transferred unless there is an effective
registration statement under such Act covering such securities
or the issuer corporation receives an opinion, in form and
content reasonably satisfactory to the issuer corporation, of
counsel reasonably acceptable to the issuer corporation (which
may be counsel for the issuer corporation) stating that such
sale or transfer is exempt from the registration and
prospectus delivery requirements of such Act."
(ii) _____ The instruments or certificates representing such Securities, and
each instrument or certificate issued in transfer thereof, will also bear any
legend required under any applicable state securities law.
(iii) ____ Prior to any proposed sale, assignment, transfer or pledge of any
Securities by an Investor, unless there is in effect a registration statement
under the Securities Act covering the proposed transfer, the Investor shall give
written notice to the Company of such Investor's intention to effect such
transfer, sale, assignment or pledge. Each such notice shall describe the manner
and circumstances of the proposed transfer, sale, assignment or pledge in
sufficient detail and shall be accompanied, at such holder's expense, by either
(A) an unqualified written opinion of legal counsel who shall, and whose legal
opinion shall, be reasonably satisfactory to the Company addressed to the
Company, to the effect that the proposed transfer of the Securities may be
effected without registration under the Securities Act, or (B) a "no action"
letter from the Commission to the effect that the transfer of such Securities
without registration will not result in a recommendation by the staff of the
Commission that action be taken with respect thereto, whereupon the holder of
such Securities shall be entitled to transfer such Securities in accordance with
the terms of the notice delivered by the holder to the Company. The Company will
not require such a legal opinion or "no action" letter in any transaction in
compliance with Rule 144, unless otherwise required by the Company's independent
transfer agent.
(iv) _____ Such Investor consents to the Company's making a notation on its
records or giving instructions to any transfer agent of the Common Stock or
Warrants in order to implement the restrictions on transfer of the Securities
mentioned in this subsection (c).
(d) ______ Each Investor, or each Person executing this Agreement on behalf of
an Investor, further represents and warrants to the Company that such Investor
or other Person, as the case may be, has been duly authorized to, and has, and
as of the Closing, or Subsequent Closing if applicable, will have, full power
and authority (including corporate, if applicable) to, execute and deliver this
Agreement on behalf of such Investor, and to make the representations and
warranties to the Company in this Section 4 on behalf of such Investor, and to
perform the obligations of such Investor, if any, under this Agreement.
4.2 ______ Removal of Transfer Restrictions. Any legend endorsed on a
certificate evidencing a Security pursuant to Section 4.1(c)(i) hereof and the
stop transfer instructions and record notations with respect to such Security
shall be removed and the Company shall issue a certificate without such legend
to the Holder of such Security (a) if such Security is sold pursuant to an
effective registration statement under the Securities Act, as contemplated by
Section 7 of this Agreement, (b) if such Holder provides the Company with an
opinion, in form and content reasonably satisfactory to the Company, of counsel
(which may be counsel for the Company) reasonably acceptable to the Company to
the effect that a public sale or transfer of such Security may be made without
registration under the Securities Act or (c) if such Security is sold pursuant
to Rule 144.
4.3 ______ Activities. Each Investor covenants and agrees that it has not taken
within the thirty (30) days preceding the date of this Agreement and will not
take within the thirty (30) day period following this Agreement, directly or
indirectly, any action designed to or which is constituted or which might
reasonably be expect to cause or result in stabilization or manipulation of the
price of the Common Stock of the Company to facilitate the sale or resale of the
Shares or Warrant Shares, including, without limitation, any short selling of
shares of Common Stock of the Company.
5. _______ Representations and Warranties by and Covenants of the Company. In
order to induce each Investor to enter into this Agreement and to purchase the
Shares and Warrants, the Company hereby represents and warrants to each Investor
that, except as set forth on Annex D hereto:
5.1 ______ Organization, Standing, etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to carry on its
business as presently conducted and as proposed to be conducted, to own and hold
its properties and assets, to enter into this Agreement, to issue the Securities
and to carry out the provisions hereof and the terms of the Securities.
5.2 ______ Certificate and Bylaws. The copies of the Certificate of
Incorporation and Bylaws of the Company which have been delivered to (or made
available for inspection by) the Investors prior to the execution of this
Agreement are true and complete and have not been amended or repealed.
5.3 ______ Subsidiaries. Each of Glyko, Inc. and BioMarin Genetics Inc. is a
Subsidiary of the Company and is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has all
requisite corporate power and authority to carry on its business as presently
conducted and as proposed to be conducted. BioMarin/Genzyme LLC is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware, and has all requisite limited liability
company power and authority to carry on its business as presently conducted and
as proposed to be conducted. Except for Glyko, Inc., BioMarin Genetics Inc. and
BioMarin/Genzyme LLC, the Company has no Subsidiaries or affiliated companies
and does not otherwise own or control, directly or indirectly, any equity
interest in any corporation, association or business entity.
5.4 ______ Qualification. The Company is duly qualified as a foreign corporation
and in good standing in the State of California. The Company is not qualified to
do business as a foreign corporation in any other jurisdiction and the failure
to be so qualified would not have a Material Adverse Effect.
5.5 ______ Capital Stock.
(a) ______ As of the Closing Date, the authorized capital stock of the Company
will consist of (i) 1,000,000 shares of preferred stock, par value $0.001 per
share, none of which are issued and outstanding; and, (ii) 75,000,000 shares of
Common Stock of which 37,156,726 are issued and outstanding prior to giving
effect to the transaction contemplated by this Agreement and prior to giving
effect to the issuance of any shares of Common Stock pursuant to the exercise on
the Closing Date of outstanding options, and the Company will have no authority
to issue any other capital stock. All such outstanding shares of Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable.
(b) ______ As of the Closing Date, the Company has reserved a total of 6,858,544
shares of Common Stock for issuance upon the exercise of stock options or
purchase rights granted under the Stock Plans or under other stock option
agreements. The Company has reserved a total of 714,554 shares of Common Stock
for issuance upon exercise of the Warrants.
(c) ______ Except as contemplated by this Agreement or as expressly provided in
Annex D to this Agreement, the Company has no outstanding subscription, option,
warrant, right of first refusal, preemptive right, call, contract, demand,
commitment, convertible security or other instrument, agreement or arrangement
of any character or nature whatever under which the Company is or may be
obligated to issue Common Stock, preferred stock or other Equity Security of any
kind.
5.6 ______ Corporate Acts and Proceedings. The Company has, and as of the
Closing will have, full corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and the transactions
contemplated hereby. All corporate acts and proceedings required for the
authorization, execution and delivery of this Agreement and the offer, issuance
and delivery of the Securities and the performance of this Agreement have been
lawfully and validly taken or will have been so taken prior to the Closing.
5.7 ______ Compliance with Other Instruments. The execution, delivery and
performance by the Company of this Agreement (a) will not require from the Board
or stockholders of the Company any consent or approval that has not been validly
and lawfully obtained, (b) will not require the Company to obtain or effect any
authorization, consent, approval, license, exemption of or filing or
registration with any Person, except such as shall have been lawfully and
validly obtained prior to the Closing or which may be obtained, effected or made
after Closing without causing a Material Adverse Effect, (c) will not cause the
Company to violate or contravene, (i) any provision of law, (ii) any rule or
regulation of any Governmental Entity, (iii) any order, writ, judgment,
injunction, decree, determination or award binding upon the Company, or (iv) any
provision of the Certificate of Incorporation or Bylaws of the Company, (d) will
not cause the Company to violate or be in conflict with, result in a breach by
the Company of or constitute (with or without notice or lapse of time or both) a
default by the Company under, any material agreement, lease or instrument,
commitment or arrangement to which the Company is a party, except where such
violation, conflict, breach or default would not have a Material Adverse Effect,
and (e) will not result in the creation or imposition of any lien on the assets
of the Company. The Company is not in violation of, or (with or without notice
or lapse of time or both) in default under, any term or provision of its
Certificate of Incorporation or Bylaws or of any indenture, loan or credit
agreement, note agreement, deed of trust, mortgage, security agreement or other
agreement, lease or other instrument, commitment or arrangement to which the
Company is a party or by which any of the Company's properties, assets or rights
are bound or affected, except where such violation or default would not have a
Material Adverse Effect.
5.8 ______ Binding Obligations.
(a) ______ This Agreement constitutes the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with its terms,
except as such enforcement is limited by bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors' rights generally, and by
general equitable principles.
(b) ______ The Warrants are duly authorized and, when executed, delivered and
paid for in accordance with the terms of this Agreement, will be free and clear
of all liens and restrictions, other than liens that may have been created or
suffered by any Investor with respect to its Warrants and restrictions imposed
by the Securities Act, state securities laws or this Agreement.
(c) ______ The Shares are duly authorized and, when issued and paid for in
accordance with the terms of this Agreement, will be duly authorized, validly
issued and outstanding, fully paid and nonassessable and free and clear of all
liens and restrictions, other than liens that might have been created or
suffered by any Investor with respect to its Shares and restrictions imposed by
the Securities Act, state securities laws or this Agreement.
(d) ______ The Warrant Stock has been duly authorized and, when issued in
accordance with the terms of the Warrants, will be duly authorized, validly
issued and outstanding, fully paid and nonassessable and free and clear of all
liens and restrictions, other than liens that might have been created or
suffered by any Investor with respect to its Warrant Stock and restrictions
imposed by the Securities Act, state securities laws or this Agreement.
5.9 ______ Securities Laws. Subject to the accuracy of the representations and
warranties contained in Section 4.1, the offer, issue and sale of the Shares,
Warrants, and (assuming the continued accuracy as of the date the Warrants are
exercised of the representations and warranties continued in Section 4.1 and
assuming no transfers of the Warrants and no change in applicable law between
the date hereof and the date of exercise of the Warrants) the Warrant Stock are
and will be exempt from the registration and prospectus delivery requirements of
the Securities Act, and are and will be exempt from qualification under the
California Securities Law, and are and will be issued in compliance with all
applicable federal and state securities laws.
5.10 _____ Financial Statements. Included in the Form 10-Q are the Company's
unaudited balance sheet (the "Balance Sheet") as of March 31, 2001 (the "Balance
Sheet Date"), and the unaudited statement of operations for the three-month
period then ended. Included in the 2000 Annual Report are the Company's audited
balance sheets as of December 31, 1999 and 2000 and the audited statements of
operations, cash flow and changes of stockholders' equity for the period then
ended, together with the related report of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent
certified public accountants. The foregoing financial statements (i) are
complete and correct in all material respects and are in accordance with the
books and records of the Company, (ii) present fairly the financial condition of
the Company at the Balance Sheet Date and other dates therein specified and the
results of operations and changes in financial position of the Company for the
periods therein specified, and (iii) have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
prior accounting periods, except that the unaudited financial statements are
subject to year-end audit adjustments and do not contain complete footnotes or
statement of stockholders' equity.
5.11 ______ Changes. Since the Balance Sheet Date, except as disclosed in the
Form 10-Q or on Annex D, there has been no event which would have a Material
Adverse Effect. Since the Balance Sheet Date, except as disclosed in the Form
10-Q or on Annex D, the Company has not (a) mortgaged, pledged or subjected to
lien any of its material assets, tangible or intangible, (b) sold, transferred
or leased a material portion of its assets, (c) cancelled or compromised any
material debt or claim, or waived or released any right, of material value, (d)
suffered any physical damage, destruction or loss (whether or not covered by
insurance) having a material effect, (e) declared or paid any dividends on or
made any other distributions with respect to, or purchased or redeemed, any of
its outstanding Equity Securities, or (f) suffered or experienced any material
adverse change or loss in its business other than its continuing losses from
operations.
5.12 _____ Material Agreements of the Company. The Company is not a party to or
otherwise bound by any written or oral agreement, instrument or arrangement that
is material to the Company except for those agreements included as Exhibits to
the 2000 Annual Report or the Form 10-Q or as set forth on Annex D hereto. The
Company has furnished or made available to each Investor true and complete
copies of all such agreements and all other agreements, instruments and other
documents requested by any Investor or its authorized representative.
5.13 _____ Litigation. There is no Action pending and, to the best knowledge of
the Company, there is no material Action threatened against the Company or its
properties or assets. The Company is not in default with respect to any order,
writ, judgment, injunction, decree, determination or award of any court or of
any Governmental Entity.
5.14 _____ Brokers or Finders. Except as set forth on Annex D hereto, the
Company has not incurred, and will not incur, directly or indirectly, as a
result of any action taken by the Company, any liability for brokerage or
finders' fees or agents' commissions or any similar charges in connection with
this Agreement. The Company agrees to indemnify and hold harmless the Investors
from any damages they incur as a result of any claims for such fees, commissions
or charges.
5.15 _____ Disclosure. The representations and warranties of the Company
contained herein, when read together with the annexes hereto, the Form 10-Q and
the 2000 Annual Report do not contain any untrue statement of material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they are made, not misleading.
5.16 _____Intellectual Property.
(a) ______ To the best of the Company's knowledge (after due inquiry of all
officers of the Company), except as set forth on Annex D, the Company has
sufficient title to and ownership of or rights to all patents, patent rights,
patent applications, inventions, trademarks, service marks, trade names,
copyrights and information, proprietary rights and processes necessary for the
conduct of its business, and the use by the Company of the foregoing does not
conflict with or constitute an infringement of the rights of others. The Company
has sufficient licenses, permits and other governmental authorizations required
for the conduct of its business as currently conducted and is not in default
with respect thereto, except as the failure to have any such license, permit or
authorization or any default with respect thereto would not have a Material
Adverse Effect.
(b) ______ The Company has not received any communications alleging that it has
violated, and, except as set forth on Annex D, has no knowledge that the Company
has violated, or by conducting its business, the Company will not, to the best
of its knowledge, violate, any of the patents, patent applications, inventions,
trademarks, service marks, trade names, copyrights or trade secrets,
confidential information, proprietary rights or processes of any other person.
5.17 _____ Retirement Obligations. Except as set forth on Annex D hereto, the
Company does not have any Employee Benefit Plan as defined in the Employee
Retirement Income Security Act of 1974, as amended, other than as disclosed in
the 2000 Annual Report.
5.18 _____ No Governmental Consent or Approval Required. Based in part on the
representations made by the Investors in Section 4 of this Agreement, no
authorization, consent, approval or other order of, declaration to, or
registration, qualification, designation or filing with, any federal, state or
local governmental agency or body is required by or from the Company for the
valid and lawful authorization, execution and delivery by the Company of this
Agreement or any other agreement entered into by the Company in connection with
this Agreement, and consummation of the transactions contemplated hereby or
thereby, or for the valid and lawful authorization, issuance, sale and delivery
of the Shares and the Warrants or for the valid and lawful authorization,
reservation, issuance, sale and delivery of the Warrant Stock, other than the
qualification (or taking of such action as may be necessary to secure an
exemption from qualification, if available) of the offer and sale of the Shares
and Warrants under the California Securities Law and applicable federal
securities laws, which filings and qualifications, if required, will be
accomplished in a timely manner so as to comply with such qualification or
exemption from qualification requirements.
5.19 _____ Nasdaq Listing Compliance. Common shares of the Company's Common
Stock are registered pursuant to Section 12(g) of the Exchange Act and are
listed on the Nasdaq National Market and the Company has taken no action
designed to, or likely to have the effect of, terminating the registration of
the Common Stock under the Exchange Act or de-listing the Common Stock from the
Nasdaq National Market, nor has the Company received any notification that the
Commission or Nasdaq, Inc. is contemplating terminating such registration or
listing.
5.20 _____ Reporting Status. Except as set forth on Annex D hereto, the Company
has filed in a timely manner all documents that the Company was required to file
under the Exchange Act during the 12 months preceding the date of this Agreement
and such documents complied in all material respects with the Commission's
requirements as of their respective filing dates, and the information contained
therein as of the date thereof did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances under
which they were made not misleading.
5.21 _____ Compliance with Nasdaq Requirements. The Company shall use its best
efforts to comply with all requirements of Nasdaq, Inc. with respect to the
issuance of the Securities.
6. _______ Conditions of Parties' Obligations.
6.1 ______ Conditions of Investors' Obligations at the Closing. The obligation
of each Investor to purchase and pay for the Shares and Warrants which it has
agreed to purchase on the Closing Date (or, if applicable, the Subsequent
Closing Date) is subject to the fulfillment prior to or on the Closing Date (or,
if applicable, the Subsequent Closing Date) of the following conditions, any of
which may be waived in whole or in part by such Investor.
(a) ______ No Errors, Etc. The representations and warranties of the Company
under this Agreement shall be deemed to have been made again on the Closing Date
(or, if applicable, the Subsequent Closing Date) and shall then be true and
correct in all material respects.
(b) ______ Compliance with Agreement. The Company shall have performed and
complied with, in all material respects, all agreements and conditions required
by this Agreement to be performed or complied with by it on or before the
Closing Date (or, if applicable, the Subsequent Closing Date).
(c) ______ Certificate of the Company. With respect to the Closing only, the
Company shall have delivered to each Investor a certificate of the Company dated
the Closing Date, executed by its Chief Operating Officer, certifying the
satisfaction of the conditions specified in subsections (a), (b) and (e), of
this Section 6.1.
(d) ______ Opinion of Counsel. Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to
the Company, shall have furnished an opinion to the Investors in the form
attached hereto as Annex E.
(e) ______ Qualification. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state of the United States that are required from the Company in connection with
the lawful issuance and sale of the Shares and Warrants to the Investors
pursuant to this Agreement shall have been duly obtained and shall be effective
on and as of the Closing.
(f)______ Minimum Investment. The Investors shall be committed to purchase not
less than 4,700,000 shares of Common Stock at the Closing.
(g) _____ Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investors and their counsel, and the Investors shall have received all such
counterpart originals and certified or other copies of such documents as they
may reasonably request.
6.2 ______ Conditions of Company's Obligations. The Company's obligation to
issue and sell the Shares and Warrants to the Investors on the Closing Date (or,
if applicable, the Subsequent Closing Date) is subject to the fulfillment prior
to or at such date of (i) the conditions precedent specified in paragraphs (e)
and (f) of Section 6.1 hereof, (ii) the condition described in Section 3(c)
hereof, if applicable, and (iii) the representations and warranties of the
Investors under this Agreement shall be deemed to have been made again on the
Closing Date (or, if applicable, the Subsequent Closing Date) and shall then be
true and correct.
7. _______ Registration of Restricted Stock.
7.1 ______ Required Registration.
(a) ______ On or before May 21, 2001, the Company shall prepare and file a
registration statement on Form S-3 under the Securities Act, covering the
Restricted Stock and shall use its best efforts to cause such registration
statement to become effective as expeditiously as possible and to remain
effective until the earliest to occur of (i) the date the Restricted Stock
covered thereby has been sold, (ii) the date by which all Restricted Stock
covered thereby may be sold under Rule 144 without restriction as to volume, or
(iii) the date which is the twenty-fourth month anniversary of the Closing Date,
except for the Warrant Shares, the date which is the forty-second month
anniversary of the Closing Date.
(b) ______ Following the effectiveness of a registration statement filed
pursuant to this section, the Company may, at any time, suspend the
effectiveness of such registration for up to thirty (30) days, as appropriate (a
"Suspension Period"), by giving notice to the Holders of Restricted Stock, if
the Company shall have determined that the Company may be required to disclose
any material corporate development which disclosure may have a Material Adverse
Effect on the Company. Notwithstanding the foregoing, no more than two
Suspension Periods may occur during any twelve-month period. The Company shall
use its best efforts to limit the duration and number of any Suspension Periods.
The Holders of Restricted Stock agree that, upon receipt of any notice from the
Company of a Suspension Period, the Holders of Restricted Stock shall forthwith
discontinue disposition of Restricted Stock covered by such registration
statement or prospectus until the Holders of Restricted Stock (i) are advised in
writing by the Company that the use of the applicable prospectus may be resumed,
(ii) have received copies of a supplemental or amended prospectus, if
applicable, and (iii) have received copies of any additional or supplemental
filings which are incorporated or deemed to be incorporated by reference into
such prospectus.
(c) ______ If the registration statement required to be filed pursuant to
Section 7.1(a) has not been filed by the Company with the Commission by the
fifth (5th) day following the Closing Date or has not been declared effective by
the Commission within sixty (60) calendar days after the Closing Date (either
event, a "Registration Default"), then following such Registration Default and
until such Registration Default is cured by the Company filing such registration
statement with the Commission and such registration statement being declared
effective by the Commission (a "Registration Cure"), the Company shall pay to
each Investor an amount (the "Default Payment") equal to the product of (x) one
thirtieth of one percent of the Required Payment paid by such Investor on the
Closing Date, multiplied by (y) the number of days which elapse between the date
of the Registration Default and the date of the Registration Cure (the
"Registration Default Period"). The Default Payment may be paid in either cash
or additional Shares, such form of payment to be determined at the election of
the Company each 30 days during the Registration Default Period up to the 150th
day following the date of this Agreement and thereafter to be determined at the
election of the Investors each 30 days during the Registration Default Period,
with the number of additional Shares calculated based upon the closing price of
the Company's Common Stock on the Nasdaq National Market on the trading day
immediately prior to the end of the period with respect to which such Default
Payment relates. The Company and the Investors agree that the damages resulting
from a Registration Default would be difficult or impossible to determine and
that the Default Payment represents a reasonable approximation of the
anticipated damages. Accordingly, the Investors agree that the receipt of the
Default Payment shall be Investors' sole and exclusive remedy under this
Agreement or otherwise for a Registration Default, and in no event shall the
Company be liable for any lost profits, consequential, special, punitive or
similar damages, no matter how identified, resulting from a Registration
Default.
7.2 ______ Registration Procedures. When the Company effects the registration
of the Restricted Stock under the Securities Act pursuant to Section 7.1(a)
hereof, the Company will, at its expense, as expeditiously as possible:
(a) ______ In accordance with the Securities Act and the rules and regulations
of the Commission, prepare and file in accordance with Section 7.1(a), with the
Commission a registration statement with respect to the Restricted Stock and use
its best efforts to cause such registration statement to become and remain
effective for the period described herein, and prepare and file with the
Commission such amendments to such registration statement and supplements to the
prospectus contained therein as may be necessary to keep such registration
statement effective for such period and such registration statement and
prospectus accurate and complete for such period;
(b) ______ Furnish to the Holders of Restricted Stock participating in such
registration such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as such
Holders may reasonably request in order to facilitate the public offering of the
Restricted Stock;
(c) ______ Use its best efforts to register or qualify the Restricted Stock
covered by such registration statement under such state securities or blue sky
laws of such jurisdictions as such participating Holders may reasonably request
within twenty (20) days following the original filing of such registration
statement, except that the Company shall not for any purpose be required to
execute a general consent to service of process or to qualify to do business as
a foreign corporation in any jurisdiction where it is not so qualified;
(d) ______ Notify the Holders participating in such registration, promptly after
it shall receive notice thereof, of the date and time when such registration
statement and each post-effective amendment thereto has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed;
(e) ______ Notify such Holders promptly of any request by the Commission for the
amending or supplementing of such registration statement or prospectus or for
additional information;
(f) ______ Prepare and file with the Commission, promptly upon the request of
any such Holders, any amendments or supplements to such registration statement
or prospectus which, in the opinion of counsel for such Holders, is required
under the Securities Act or the rules and regulations thereunder in connection
with the distribution of the Restricted Stock by such Holders;
(g) ______ Prepare and promptly file with the Commission, and promptly notify
such Holders of the filing of, such amendments or supplements to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event has
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading; and
(h) ______ Advise such Holders, promptly after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued.
7.3 ______ Expenses. With respect to any registration effected pursuant to
Section 7.1 hereof, all fees, costs and expenses of and incidental to such
registration and the public offering in connection therewith shall be borne by
the Company; provided, however, that, except as provided in Section 8.11, the
Holders of Restricted Stock shall bear their own legal fees, if any, and their
pro rata share of any underwriting discounts or commissions, if any.
7.4 ______ Indemnification.
(a) ______ The Company will indemnify and hold harmless each Holder of shares of
Restricted Stock which are included in a registration statement pursuant to the
provisions of Section 7 hereof and any underwriter (as defined in the Securities
Act) for such Holder, and any person who controls such Holder or such
underwriter within the meaning of the Securities Act, and any officer, director,
employee, agent, partner, member or affiliate of such Holder (for purposes of
this Section 7.4(a), the "Indemnified Parties"), from and against, and will
reimburse such Holder and each such Indemnified Party with respect to, any and
all claims, actions, demands, losses, damages, liabilities, costs and expenses
to which such Holder or any such Indemnified Party may become subject under the
Securities Act or otherwise, insofar as such claims, actions, demands, losses,
damages, liabilities, costs or expenses arise out of or are based upon (i) any
untrue statement or alleged untrue statement of any material fact contained in
such registration statement, any prospectus contained therein or any amendment
or supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (ii) any breach of
any representation, warranty, agreement or covenant of the Company contained
herein; provided, however, that the Company will not be liable in any such case
to the extent that any such claim, action, demand, loss, damage, liability, cost
or expense is caused by an untrue statement or alleged untrue statement or
omission or alleged omission so made in strict conformity with information
furnished by such Holder or such Indemnified Party in writing specifically for
use in the preparation thereof.
(b) ______ Each Holder of shares of the Restricted Stock which are included in a
registration pursuant to the provisions of Section 7 hereof will indemnify and
hold harmless the Company, and any Person who controls the Company within the
meaning of the Securities Act, from and against, and will reimburse the Company
and such controlling Persons with respect to, any and all losses, damages,
liabilities, costs or expenses to which the Company or such controlling Person
may become subject under the Securities Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any untrue or
alleged untrue statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment or supplement
thereto, or are caused by the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was so
made solely in reliance upon and in strict conformity with written information
furnished by such Holder specifically for use in the preparation thereof;
provided, however, that the liability of any Holder of Restricted Stock pursuant
to this subsection (b) shall be limited to an amount not to exceed the net
proceeds received by such Holder pursuant to the registration statement which
gives rise to such obligation to indemnify.
(c) ______ Promptly after receipt by a party indemnified pursuant to the
provisions of paragraph (a) or (b) of this Section 7.4 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of paragraph (a)
or (b), notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 7.4 and shall not relieve the indemnifying party from liability under
this Section 7.4 unless such indemnifying party is prejudiced by such omission.
In case such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party pursuant to the provisions of such paragraph
(a) or (b) for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall be liable to an indemnified
party for any settlement of any action or claim without the consent of the
indemnifying party. No indemnifying party will consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation.
(d) ______ If the indemnification provided for in subsection (a) or (b) of this
Section 7.4 is held by a court of competent jurisdiction to be unavailable to a
party to be indemnified with respect to any claims, actions, demands, losses,
damages, liabilities, costs or expenses referred to therein, then each
indemnifying party under any such subsection, in lieu of indemnifying such
indemnified party thereunder, hereby agrees to contribute to the amount paid or
payable by such indemnified party as a result of such claims, actions, demands,
losses, damages, liabilities, costs or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions which resulted in such claims, actions, demands, losses, damages,
liabilities, costs or expenses, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount any Holder of Restricted Stock
shall be obligated to contribute pursuant to this subsection (d) shall be
limited to an amount not to exceed the net proceeds received by such Holder
pursuant to the registration statement which gives rise to such obligation to
contribute. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution
hereunder from any person who was not guilty of such fraudulent
misrepresentation.
7.5 ______ Reporting Requirements Under the Exchange Act. The Company shall
timely file such information, documents and reports as the Commission may
require or prescribe under Section 13 of the Exchange Act. The Company
acknowledges and agrees that the purposes of the requirements contained in this
Section 7.5 are to enable the Holders of Restricted Stock to comply with the
current public information requirement contained in paragraph (c) of Rule 144
should any such Holder ever wish to dispose of any of the Restricted Stock
without registration under the Securities Act in reliance upon Rule 144 (or any
other similar exemptive provision).
7.6 ______ Stockholder Information. The Company may require each Holder of
Restricted Stock to furnish the Company such information with respect to such
Holder and the distribution of its Restricted Stock as the Company may from time
to time reasonably request in writing as shall be required by law or by the
Commission in connection therewith.
8. _______ Miscellaneous.
8.1 ______ Waivers and Amendments.
(a) ______ With the written consent of the Holders of 80% of the outstanding
Shares, the obligations of the Company and the rights of the Holders of the
Securities under this Agreement may be waived (either generally or in a
particular instance, either retroactively or prospectively and either for a
specified period of time or indefinitely), and with the same consent the
Company, when authorized by resolution of its Board, may enter into a
supplementary agreement for the purpose of changing in any manner or eliminating
any of the provisions of this Agreement or of any supplemental agreement or
modifying in any manner the rights hereunder of the Holders of the Securities
and the Company; provided, however, that no such waiver or supplemental
agreement shall reduce the aforesaid proportion of Shares, the Holders of which
are required to consent to any waiver or supplemental agreement, without the
consent of the Holders of all of the Shares.
(b) ______ Upon the effectuation of each such waiver, consent or agreement of
amendment or modification, the Company shall promptly give written notice
thereof to the Holders of the Shares who have not previously consented thereto
in writing.
8.2 ______ Effect of Waiver or Amendment. Each Investor acknowledges that by
operation of Section 8.1 hereof the Holders of 80% of the outstanding Shares
will, subject to the limitations contained in such Section 8.1, have the right
and power to diminish or eliminate certain rights of such Investor under this
Agreement, other than the provisions of Section 7 of this Agreement.
8.3 ______ Rights of Holders Inter Se. Each Holder of Securities shall have the
absolute right to exercise or refrain from exercising any right or rights which
such Holder may have by reason of this Agreement or any Security, including,
without limitation, the right to consent to the waiver of any obligation of the
Company under this Agreement and to enter into an agreement with the Company for
the purpose of modifying this Agreement or any agreement effecting any such
modification, and such Holder shall not incur any liability to any other Holder
or Holders of Securities with respect to exercising or refraining from
exercising any such right or rights.
8.4 ______ Exculpation Among Investors and Holders. Each Investor acknowledges
that it is not relying upon any other Investor, or any officer, director,
employee, agent, partner, member or affiliate of any such other Investor, in
making its investment or decision to invest in the Company or in monitoring such
investment. Each Investor agrees that no Investor nor any controlling person,
officer, director, stockholder, partner, member, agent or employee of any
Investor shall be liable for any action heretofore or hereafter taken or omitted
to be taken by any of them relating to or in connection with the Company or the
Securities, or both. Without limiting the generality of the foregoing, no
Investor (nor any of its affiliates, officers, directors, stockholders,
partners, members, agents or employees) or other Holder of any Security shall
have any obligation, liability or responsibility whatsoever for the accuracy,
completeness or fairness of any or all information about the Company or any
Subsidiary or their respective properties, business or financial and other
affairs, acquired by such Investor or Holder from the Company or the respective
officers, directors, employees, agents, representatives, counsel or auditors of
either, and in turn provided to another Investor or Holder, nor shall any such
Investor (or such other Person) have any obligation or responsibility whatsoever
to provide any such information to any other Investor (or such other Person) or
Holder or to continue to provide any such information if any information is
provided.
8.5 ______ Brokers or Finders. Each Investor represents and warrants to the
Company and each other Investor that, as a result of such Investor's actions, no
Person has, or as a result of the transaction as contemplated herein will have,
any right or valid claim against the Company or any other Investor for any
commission, fee or other compensation as a finder or broker, or in a similar
capacity. Each Investor agrees to indemnify and hold harmless the Company from
any damages it incurs as a result of any claim for any such fees, commissions or
compensation.
8.6 ______ Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be given
personally, by air courier (with signed acknowledgment of receipt) or by
facsimile transmission (with confirmation of transmission):
(a) ______ If to any Holder of any of the Securities, addressed to such Holder
at its address (or to its telecopier number) shown on his or its signature page
hereto, or at such other address (or telecopier number) as such Holder may
specify by written notice to the Company, or
(b) ______ If to the Company, addressed to it at ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or, if by telecopier, to (▇▇▇) ▇▇▇-▇▇▇▇) or
at such other address (or telecopier number) as the Company may specify by
written notice to the Investors, and each such notice, request, consent and
other communication shall for all purposes of the Agreement be treated as being
effective or having been given upon receipt.
8.7 ______ Severability. Should any one or more of the provisions of this
Agreement be determined to be illegal or unenforceable, all other provisions of
this Agreement shall be given effect separately from the provision or provisions
determined to be illegal or unenforceable and shall not be affected thereby.
8.8 ______ Parties in Interest. All the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the respective successors of
the parties hereto. This Agreement shall not run to the benefit of or be
enforceable by any Person other than a party to this Agreement and his or its
successors and permitted assigns.
8.9 ______ Headings. The headings of the Sections and paragraphs of this
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
8.10 _____ Choice of Law. Except where the issue for determination is one of
corporate law, in which case the Delaware General Corporation Law shall govern,
it is the intention of the parties that the internal substantive laws, and not
the laws of conflicts, of the State of California should govern the
enforceability and validity of this Agreement, the construction of its terms and
the interpretation of the rights and duties of the parties.
8.11 _____ Expenses. Each party to this Agreement shall bear its own costs and
expenses incurred with the negotiation and execution of this Agreement and the
performance of the transactions contemplated hereby; provided, however, that the
Company shall pay the reasonable fees and expenses of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & Deutsche
LLP and ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for Orbimed Advisors and Franklin
▇▇▇▇▇▇▇▇▇, respectively, in an amount not to exceed in the aggregate $25,000.
8.12 _____ Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
8.13 _____ Publicity. No Investor shall originate any press release or other
public announcement, written or oral, relating to this Agreement, or to
performance hereunder or the existence of any arrangement among the parties
hereto without the prior approval of the other parties hereto which may be the
subject of such press release or announcement, except to the extent that such
press release or announcement is reasonably concluded by a party to be required
by applicable law. The Investors acknowledge that the Company will be required
to file a copy of this Agreement, and the other agreements and instruments
contemplated hereby, with the Commission and to describe these transactions in
its public filings.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
BIOMARIN PHARMACEUTICAL INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Financial Officer, Chief Operating
Officer, Secretary and Vice President Finance and Administration
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
By:
---------------------------------------
Name:
-----------------------------
Title:
------------------------------------
Address for Notices:
=====================
=====================
Attention: ____________
Telecopy: (___) ___-____
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
BAYSTAR CAPITAL LP
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Telecopy:
--------------------------
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
BAYSTAR INTERNATIONAL LTD.
By:
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Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Telecopy:
--------------------------
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
EQUITYFOURLIFE (BAHAMAS) LTD.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy:
--------------------------
Phone: ▇▇-▇-▇▇▇-▇▇-▇▇
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
PERCEPTIVE LIFE SCIENCES FUND LP
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
Telecopy:
--------------------------
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
MPM BIOEQUITIES MASTER FUND LP
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telecopy:
--------------------------
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
PEQUOT SCOUT FUND LP
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
Telecopy:
--------------------------
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
PEQUOT NAVIGATOR FUND LP
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
Telecopy:
--------------------------
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
CADUCEUS CAPITAL TRUST
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy:
-----------------------------------
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Ext. 6410
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
CADUCEUS CAPITAL II, LP
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy:
-----------------------------------
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Ext. 6410
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
PW EUCALYPTUS FUND, L.L.C.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy:
-----------------------------------
Phone: (▇▇▇) ▇▇▇-▇▇▇▇, Ext. 6410
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
PW EUCALYPTUS FUND, LTD
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy:
-----------------------------------
Phone: (▇▇▇) ▇▇▇-▇▇▇▇, Ext. 6410
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
FRANKLIN CALIFORNIA GROWTH FUND - CLASS A
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy:
--------------------------
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
FRANKLIN BIOTECHNOLOGY DISCOVERY FUND
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy:
--------------------------
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
ORBITEX HEALTH & BIOTECHNOLOGY FUND
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇ or ▇▇▇ ▇▇▇▇▇▇
Telecopy:
--------------------------
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
ORBITEX LIFE SCIENCE & BIOTECHNOLOGY FUND
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇ or ▇▇▇ ▇▇▇▇▇▇
Telecopy:
--------------------------
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
MONUMENT MEDICAL SCIENCE FUND
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇ or ▇▇▇ ▇▇▇▇▇▇
Telecopy:
--------------------------
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
Ursus Capital L.P.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
[COUNTERPART INVESTOR SIGNATURE PAGE TO PURCHASE AGREEMENT]
INVESTOR:
Ursus Offshore Ltd.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
ANNEX A
SCHEDULE OF INVESTORS AND REQUIRED PAYMENT
------------------------------------------------- ---------------------- ----------------------- ---------------------
Number of Shares of
Common Stock Being
Purchased
Name Number of Warrants Purchase Price
------------------------------------------------- ---------------------- ----------------------- ---------------------
BayStar Capital LP 141,094 21,164 1,333,338.30
------------------------------------------------- ---------------------- ----------------------- ---------------------
BayStar International Ltd. 70,547 10,582 666,669.15
------------------------------------------------- ---------------------- ----------------------- ---------------------
equityfourlife (Bahamas) Ltd. 634,921 95,238 6,000,003.45
------------------------------------------------- ---------------------- ----------------------- ---------------------
Perceptive Life Sciences Fund LP 105,821 15,873 1,000,008.45
------------------------------------------------- ---------------------- ----------------------- ---------------------
MPM BioEquities Master Fund LP(1) 423,281 63,492 4,000,005.45
------------------------------------------------- ---------------------- ----------------------- ---------------------
Pequot Scout Fund L.P. 137,567 20,635 1,300,008.15
------------------------------------------------- ---------------------- ----------------------- ---------------------
Pequot Navigator Offshore Fund, Inc. 74,075 11,111 700,008.75
------------------------------------------------- ---------------------- ----------------------- ---------------------
Caduceus Capital Trust 365,000 54,750 3,449,250
------------------------------------------------- ---------------------- ----------------------- ---------------------
Caduceus Capital II, LP 205,000 30,750 1,937,250
------------------------------------------------- ---------------------- ----------------------- ---------------------
PW Eucalyptus Fund, L.L.C. 445,000 66,750 4,205,250
------------------------------------------------- ---------------------- ----------------------- ---------------------
PW Eucalyptus Fund, Ltd 45,000 6,750 425,250
------------------------------------------------- ---------------------- ----------------------- ---------------------
Franklin California Growth Fund- Class A (2) 952,381 142,857 9,000,000.45
------------------------------------------------- ---------------------- ----------------------- ---------------------
Franklin Biotechnology Discovery Fund (3) 634,921 95,238 6,000,003.45
------------------------------------------------- ---------------------- ----------------------- ---------------------
Orbitex Health & Biotechnology Fund (4) 275,133 41,269 2,600,006.85
------------------------------------------------- ---------------------- ----------------------- ---------------------
Orbitex Life Science & Biotechnology Fund (5) 31,747 4,762 300,009.15
------------------------------------------------- ---------------------- ----------------------- ---------------------
Monument Medical Science Fund (6) 116,403 17,460 1,100,008.35
------------------------------------------------- ---------------------- ----------------------- ---------------------
Ursus Capital L.P. 83,175 12476 786,003.75
------------------------------------------------- ---------------------- ----------------------- ---------------------
Ursus Offshore Ltd. 22,646 3,397 214,004.70
------------------------------------------------- ---------------------- ----------------------- ---------------------
(1) Shares to be issued in the name of "▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., FBO MPM BioEquities Master Fund LP"
(2) Shares and Warrants to be issued in the name of "Hare & Co." as nominee and certificates delivered to:The Bank of ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇ Window A, New York, New York 10286, Franklin California Growth Fund - Class A, Franklin Acct # 998180,
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
(3) Shares and Warrants to be issued in the name of "Hare & Co." as nominee and certificates delivered to: he Bank of ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇ Window A, New York, New York 10286, Franklin Biotechnology Discovery Fund, Franklin Acct # 998402, Attn:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
(4) Certificates delivered to: The Bank of New York/Cust., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇ ▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Window A,
Attn: ▇▇▇▇ ▇▇▇▇, (▇▇▇) ▇▇▇-▇▇▇▇, FBO: Circle Trust Company, BONY: Acct # 067116, Ref: The Orbitex Health and Biotechnology Fund.
(5) Certificates delivered to: The Bank of New York/Cust., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇ ▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Window A,
Attn: ▇▇▇▇ ▇▇▇▇, (▇▇▇) ▇▇▇-▇▇▇▇, FBO: Circle Trust Company, BONY: Acct # 067116, Ref:The Orbitex Life Science and Biotechnology Fund
(6) Certificates delivered to: Bankers Trust Company, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇, Window ▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Ref:PNC/
A/C # *037610.
ANNEX B
FORM OF WARRANT
WARRANT
TO PURCHASE SHARES OF COMMON STOCK
OF
BIOMARIN PHARMACEUTICAL INC.
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND NEITHER THESE WARRANTS NOR ANY INTEREST THEREIN MAY
BE TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF WITHOUT REGISTRATION UNDER
THAT ACT OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
No. _______ Warrant to Purchase _______ Shares
May 16, 2001 of Common Stock, $0.001 Per Share
WARRANT TO PURCHASE COMMON STOCK
of
BIOMARIN PHARMACEUTICAL INC.,
a Delaware corporation
Void after the date set forth in the first paragraph hereof
This certifies that, for value received, ______________, or registered assigns
("Holder") is entitled, subject to the terms set forth below, to purchase from
BioMarin Pharmaceutical Inc., a Delaware corporation (the "Company"), ______
shares of Common Stock, $0.001 par value, of the Company (such class of stock
being referred to herein as "Common Stock"), as constituted on May 16, 2001 (the
"Issue Date"), upon surrender of this Warrant, at the principal office of the
Company referred to below, with the subscription form attached hereto duly
executed, and simultaneous payment therefor in the consideration specified in
Section 1 hereof, at the price of $13.10 per share (the "Purchase Price"). This
Warrant must be exercised, if at all, prior to the earlier to occur of (i) the
third anniversary of the Issue Date or (ii) the date of consummation of the
acquisition of the Company (including, without limitation, any reorganization,
merger or consolidation) that results in the stockholders of the Company
immediately prior to such consummation date owning less than 50% of the voting
power of the surviving entity or the date of consummation of the sale of all or
substantially all of the assets of the Company or the date of dissolution or
liquidation of the Company (each a "Change of Control Transaction"). The shares
of Common Stock issued or issuable upon exercise of this Warrant are sometimes
referred to as the "Warrant Shares." The term "Warrants" as used herein shall
include this Warrant and any warrants delivered in substitution or exchange
therefor as provided herein.
9. _______ Exercise. This Warrant may be exercised at any time or from time to
time, on any business day, for all or part of the full number of Warrant Shares
during the period of time described above, by surrendering it at the principal
office of the Company, ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, with the subscription form in the form attached hereto duly executed,
together with payment for the Warrant Shares to be purchased, payable in cash,
cashier's check and/or wire transfer of immediately available funds. No other
form of consideration shall be acceptable for the exercise of this Warrant. A
Warrant shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise together with delivery of
payment therefor as provided above, and the person entitled to receive the
shares of Common Stock issuable upon such exercise shall be treated for all
purposes as the record holder of such shares as of the close of business on such
date. As soon as practicable on or after such date, and in any event within 10
days thereof, the Company shall issue and deliver to the person or persons
entitled to receive the same a certificate or certificates for the number of
shares of Common Stock issuable upon such exercise. Upon any partial exercise,
the Company will issue and deliver to Holder a new Warrant with respect to the
Warrant Shares not previously purchased. No fractional shares of Common Stock
shall be issued upon exercise of a Warrant. In lieu of any fractional share to
which Holder would be entitled upon exercise, the Company shall pay cash equal
to the product of such fraction multiplied by the then current fair market value
of one share of Common Stock, as determined in good faith by the Company.
10. ______ Payment of Taxes. All shares of Common Stock issued upon the exercise
of a Warrant shall be duly authorized, validly issued and outstanding, fully
paid and non-assessable. Holder shall pay all taxes and other governmental
charges that may be imposed in respect of the issue or delivery thereof and any
tax or other charge imposed in connection with any transfer involved in the
issue of any certificate for shares of Common Stock in any name other than that
of the registered Holder of the Warrant surrendered in connection with the
purchase of such shares, and in such case the Company shall not be required to
issue or deliver any stock certificate until such tax or other charge has been
paid or it has been established to the Company's satisfaction that no tax or
other charge is due.
11. ______ Transfer and Exchange. Subject to the restrictions set forth in
Section 8.1(d), this Warrant and all rights hereunder are transferable, in whole
but not in part, only with the prior approval of the Company, which consent
shall not be unreasonably withheld. If such a proposed transfer is so approved,
this Warrant is transferable on the books of the Company maintained for such
purpose at its principal office referred to above by Holder in person or by duly
authorized attorney, upon surrender of this Warrant properly endorsed and upon
payment of any necessary transfer tax or other governmental charge imposed upon
such transfer. 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 when this Warrant shall have been so endorsed, the
Holder hereof may 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 hereby or to the transfer hereof on
the books of the Company, any notice to the contrary notwithstanding; but until
such transfer on such books, the Company may treat the registered Holder hereof
as the owner for all purposes.
12. Certain Adjustments.
12.1 _____ Adjustment for Reorganization, Consolidation, Merger. Other than in
any case a Change of Control Transaction, in case of any reclassification of the
Common Stock, or other securities issuable upon exercise of this Warrant, or in
case of any reorganization of the Company (or, in each case, any other
corporation, the stock or other securities of which are at the time receivable
on the exercise of this Warrant) after the Issue Date, or in case, after such
date, the Company (or any such other corporation) shall consolidate with or
merge into another corporation, then and in each such case Holder, upon the
exercise hereof as provided in Section 1 at any time after the consummation of
such reorganization, consolidation, merger or conveyance, shall be entitled to
receive, in lieu of the stock receivable upon the exercise of this Warrant prior
to such consummation, the stock or other securities or property to which such
Holder would have been entitled upon such consummation if such Holder had
exercised this Warrant immediately prior thereto.
12.2 _____ Adjustments for Dividends in Common Stock. If the Company at any time
or from time to time after the Issue Date makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a dividend payable
in additional shares of Common Stock, then and in each such event the Purchase
Price then in effect shall be decreased as of the time of such issuance or, in
the event such record date is fixed, as of the close of business on such record
date, by multiplying the Purchase Price then in effect by a fraction (1) the
numerator of which is the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of
business on such record date, and (2) the denominator of which shall be the
total number of shares of Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such record date plus
the number of shares of Common Stock issuable in payment of such dividend;
provided, however, that if such record date is fixed and such dividend is not
fully paid on the date fixed therefore, the Purchase Price shall be recomputed
accordingly as of the close of business on such record date and thereafter the
Purchase Price shall be adjusted pursuant to this Section 4.2 as of the time of
actual payment of such dividends.
12.3 _____ Stock Split and Reverse Stock Split. If the Company at any time or
from time to time after the Issue Date effects a subdivision of the outstanding
Common Stock, the Purchase Price then in effect immediately before that
subdivision shall be proportionately decreased and the number of shares of
Common Stock theretofore receivable upon the exercise of this Warrant shall be
proportionately increased. If the Company at any time or from time to time after
the Issue Date combines the outstanding shares of Common Stock into a smaller
number of shares, the Purchase Price then in effect immediately before that
combination shall be proportionately increased and the number of shares of
Common Stock theretofore receivable upon the exercise of this Warrant shall be
proportionately decreased. Each adjustment under this Section 4.3 shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
12.4 _____ Accountants' Certificate as to Adjustment. In each case of an
adjustment in the Purchase Price or shares of Common Stock receivable on the
exercise of the Warrants, the Company at its expense shall cause independent
public accountants of recognized standing selected by the Company (who may be
the independent public accountants then auditing the books of the Company) to
compute such adjustment in accordance with the terms of this Warrant and prepare
a certificate setting forth such adjustment and showing the facts upon which
such adjustment is based. Any such certificate as prepared by the independent
public accountants shall, upon delivery to the Holder, be conclusive evidence of
the accuracy of such adjustment.
13. ______ Loss or Mutilation. Upon receipt by the Company of evidence
satisfactory to it (in the exercise of reasonable discretion) of the ownership
of and the loss, theft, destruction or mutilation of any Warrant and (in the
case of loss, theft or destruction) of indemnity satisfactory to it (in the
exercise of reasonable discretion), and (in the case of mutilation) upon
surrender and cancellation thereof, the Company will execute and deliver in lieu
thereof a new Warrant of like tenor.
14. ______ Reservation of Common Stock. The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock,
solely for the purpose of effecting the exercise of the Warrant, such number of
its shares of Common Stock as shall from time to time be sufficient to effect
exercise of the Warrant; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect such exercise,
the Company will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.
15. ______ Notices of Record Date. In the event of (i) any taking by the Company
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, or (ii) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, any
merger or consolidation of the Company with or into any other corporation (other
than a merger of a wholly owned subsidiary into the Company), or any transfer of
all or substantially all of the assets of the Company to any other person or any
voluntary or involuntary dissolution, liquidation or winding up of the Company,
the Company shall provide to the Holder, at least ten (10) days prior to the
record date specified therein, a notice specifying (1) the date on which any
such record is to be taken for the purpose of such dividend or distribution and
a description of such dividend or distribution, (2) the date on which any such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up is expected to become effective, and (3) the date, if
any, that is to be fixed, as to when the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of Common Stock (or
other securities) for securities or other property deliverable upon such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up.
16. Investment Representation and Restriction on Transfer.
16.1 Securities Law Requirements.
(a) ______ By its acceptance of this Warrant, Holder hereby represents and
warrants to the Company that this Warrant and the Warrant Shares will be
acquired for investment for its own account, not as a nominee or agent, and not
with a view to the sale or distribution of any part thereof, and that it has no
present intention of selling, granting participations in or otherwise
distributing the same. By acceptance of this Warrant, Holder further represents
and warrants that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to any
person, with respect to this Warrant or the Warrant Shares.
(b) ______ By its acceptance of this Warrant, Holder understands that this
Warrant is not, and the Warrant Shares will not be, registered under the
Securities Act of 1933, as amended (the "Act"), on the basis that the issuance
of this Warrant and the Warrant Shares are exempt from registration under the
Act pursuant to Section 4(2) thereof, and that the Company's reliance on such
exemption is predicated on Holder's representations and warranties set forth
herein.
(c) ______ By its acceptance of this Warrant, Holder understands that the
Warrant and the Warrant Shares may not be sold, transferred, or otherwise
disposed of without registration under the Act, or an exemption therefrom, and
that in the absence of an effective registration statement covering the Warrant
and the Warrant Shares or an available exemption from registration under the
Act, the Warrant and the Warrant Shares must be held indefinitely. In
particular, Holder is aware that the Warrant and the Warrant Shares may not be
sold pursuant to Rule 144 promulgated under the Act unless all of the conditions
of Rule 144 are satisfied. Among the conditions for use of Rule 144 are the
availability of current information about the Company to the public, prescribed
holding periods which will commence only upon Holder's payment for the
securities being sold, manner of sale restrictions, volume limitations and
certain other restrictions. By its acceptance of this Warrant, Holder represents
and warrants that, in the absence of an effective registration statement
covering the Warrant or the Warrant Shares, it will sell, transfer or otherwise
dispose of the Warrant and the Warrant Shares only in a manner consistent with
its representations and warranties set forth herein and then only in accordance
with the provisions of Section 8.1(d).
(d) ______ By its acceptance of this Warrant, Holder agrees that in no event
will it transfer or dispose of any of the Warrants or the Warrant Shares other
than pursuant to an effective registration statement under the Act, unless and
until (i) Holder shall have notified the Company of the proposed disposition and
shall have furnished the Company with a statement of the circumstances
surrounding the disposition, and (ii) if requested by the Company, at the
expense of the Holder or transferee, it shall have furnished to the Company an
opinion of counsel, reasonably satisfactory to the Company, to the effect that
(A) such transfer may be made without registration under the Act and (B) such
transfer or disposition will not cause the termination or the non-applicability
of any exemption to the registration and prospectus delivery requirements of the
Act or to the qualification or registration requirements of the securities laws
of any other jurisdiction on which the Company relied in issuing the Warrant or
the Warrant Shares.
16.2 Legends; Stop Transfer.
(a)______ All certificates evidencing the Warrant Shares shall bear a
legend in substantially the following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933. These securities
have been acquired for investment and not with a view to
distribution and may not be offered for sale, sold, pledged or
otherwise transferred in the absence of an effective
registration statement for such securities under the
Securities Act of 1933 or an opinion of counsel reasonably
satisfactory in form and content to the issuer that such
registration is not required under such Act.
(b) ______ The certificates evidencing the Warrant Shares shall also bear any
legend required by any applicable state securities law.
(c) ______ In addition, the Company shall make, or cause its transfer agent to
make, a notation regarding the transfer restrictions of the Warrant and the
Warrant Shares in its stock books, and the Warrant and the Warrant Shares shall
be transferred on the books of the Company only if transferred or sold pursuant
to an effective registration statement under the Act covering the same or
pursuant to and in compliance with the provisions of Section 3 and Section
8.1(d).
17. ______ Notices. All notices and other communications from the Company to the
Holder of this Warrant shall be mailed by first-class registered or certified
mail, postage prepaid, to the address furnished to the Company by Holder and
shall be deemed received five (5) business days after mailing.
18._______ Change; Waiver. Neither this Warrant nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
19._______ Headings. The headings in this Warrant are for purposes of
convenience in reference only, and shall not be deemed to constitute a part
hereof.
[Reminder of Page Intentionally Blank]
20. Governing Law. This Warrant is delivered in California and shall be
construed and enforced in accordance with and governed by the internal laws, and
not the law of conflicts, of such State; provided however, that to the extent
that an issue of determination is one of corporation law, then the Delaware
General Corporation Law shall govern.
BIOMARIN PHARMACEUTICAL INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Operating Officer
SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
The undersigned, registered owner of this Warrant, irrevocably exercises this
Warrant and purchases ____________ of the number of shares of Common Stock,
$0.001 par value, of BioMarin Pharmaceutical Inc., a Delaware corporation,
purchasable with this Warrant, and herewith makes payment therefor, all at the
price and on the terms and conditions specified in this Warrant.
DATED: ______________
-------------------------------------------------------
(Signature of Registered Owner)
-------------------------------------------------------
(Street Address)
-------------------------------------------------------
(City) (State) (Zip)
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned, registered owner of this Warrant, hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of Common Stock, $0.001 par value, set forth below:
Name of Assignee Address No. of Shares
and does hereby irrevocably constitute and appoint _________________________
_________________________________________________ Attorney to make such transfer
on the books of BioMarin Pharmaceutical Inc., a Delaware corporation, maintained
for the purpose, with full power of substitution in the premises.
DATED: ___________________
--------------------------------------------
(Signature)
--------------------------------------------
(Witness)
ANNEX C
RISK FACTORS
An investment in our common stock involves a high degree of
risk. We operate in a dynamic and rapidly changing industry that involves
numerous risks and uncertainties. Before purchasing these securities, you should
carefully consider the following risk factors, as well as other information
contained in this prospectus or incorporated by reference into this prospectus,
in evaluating an investment in the securities offered by this prospectus. The
risks and uncertainties described below are not the only ones we face. Other
risks and uncertainties, including those that we do not currently consider
material, may impair our business. If any of the risks discussed below actually
occur, our business, financial condition, operating results or cash flows could
be materially adversely affected. This could cause the trading price of our
common stock to decline, and you may lose all or part of your investment.
If we continue to incur operating losses for a period longer than anticipated,
we may be unable to continue our operations at planned levels and be forced to
reduce or discontinue operations.
We are in an early stage of development and have operated at a
net loss since we were formed. Since we began operations in March 1997, we have
been engaged primarily in research and development. We have no sales revenues
from any of our drug products. As of March 31, 2001, we had an accumulated
deficit of approximately $90.2 million. We expect to continue to operate at a
net loss at least through 2002. Our future profitability depends on our
receiving regulatory approval of our drug candidates and our ability to
successfully manufacture and market any approved drugs, either by ourselves or
jointly with others. The extent of our future losses and the timing of
profitability are highly uncertain. If we fail to become profitable or are
unable to sustain profitability on a continuing basis, then we may be unable to
continue our operations.
Because of the relative small size and scale of our
wholly-owned subsidiary, Glyko, Inc., profits from its products and services
will be insufficient to offset the expenses associated with our pharmaceutical
business. As a result, we expect that operating losses will continue and
increase for the foreseeable future.
If we fail to obtain the capital necessary to fund our operations, we will be
unable to complete our product development programs.
In the future, we may need to raise substantial additional
capital to fund operations. We cannot be certain that any financing will be
available when needed. If we fail to raise additional financing as we need it,
we will have to delay or terminate some or all of our product development
programs.
We expect to continue to spend substantial amounts of capital
for our operations for the foreseeable future. Activities which will require
additional expenditures include:
o Research and development programs
o Preclinical studies and clinical trials
o Process development, including quality systems for product manufacture
o Regulatory processes in the United States and international
jurisdictions
o Commercial scale manufacturing capabilities
o Expansion of sales and marketing activities
The amount of capital we will need depends on many factors,
including:
o The progress, timing and scope of our research and development programs
o The progress, timing and scope of our preclinical studies and clinical
trials
o The time and cost necessary to obtain regulatory approvals
o The time and cost necessary to develop commercial processes, including
quality systems
o The time and cost necessary to build our manufacturing facilities and
obtain the necessary regulatory approvals for those facilities
o The time and cost necessary to respond to technological and market
developments
o Any changes made or new developments in our existing collaborative,
licensing and other commercial relationships
o Any new collaborative, licensing and other commercial relationships
that we may establish
Moreover, our fixed expenses such as rent, license payments
and other contractual commitments are substantial and will increase in the
future. These fixed expenses will increase because we may enter into:
o Additional leases for new facilities and capital equipment
o Additional licenses and collaborative agreements
o Additional contracts for consulting, maintenance and administrative
services
o Additional contracts for product manufacturing
We believe that the cash, cash equivalents and short-term
investment securities balances at March 31, 2001, together with the proceeds
from our private placement as contemplated by the Agreement, will be sufficient
to meet our operating and capital requirements at least through mid-year 2002.
This estimate is based on assumptions and estimates, which may prove to be
wrong. As a result, we may need or choose to obtain additional financing during
that time.
If we fail to obtain regulatory approval to commercially manufacture or sell any
of our future drug products, or if approval is delayed, we will be unable to
generate revenue from the sale of our products.
We must obtain regulatory approval before marketing or selling
our drug products in the U.S. and in foreign jurisdictions. In the United
States, we must obtain FDA approval for each drug that we intend to
commercialize. The FDA approval process is typically lengthy and expensive, and
approval is never certain. Products distributed abroad are also subject to
foreign government regulation. None of our drug products has received regulatory
approval to be commercially marketed and sold. If we fail to obtain regulatory
approval, we will be unable to market and sell our drug products. Because of the
risks and uncertainties in biopharmaceutical development, our drug candidates
could take a significantly longer time to gain regulatory approval than we
expect or may never gain approval. If regulatory approval is delayed, our
management's credibility, the value of our Company and our operating results
will be adversely affected.
To obtain regulatory approval to market our products, preclinical studies and
costly and lengthy clinical trials may be required and the results of the
studies and trials are highly uncertain.
As part of the regulatory approval process, we must conduct,
at our own expense, preclinical studies in the laboratory on animals, and
clinical trials on humans for each drug candidate. We expect the number of
preclinical studies and clinical trials that the regulatory authorities will
require will vary depending on the drug product, the disease or condition the
drug is being developed to address and regulations applicable to the particular
drug. We may need to perform multiple preclinical studies using various doses
and formulations before we can begin clinical trials, which could result in
delays in our ability to market any of our drug products. Furthermore, even if
we obtain favorable results in preclinical studies on animals, the results in
humans may be significantly different.
After we have conducted preclinical studies in animals, we
must demonstrate that our drug products are safe and efficacious for use on the
target human patients in order to receive regulatory approval for commercial
sale. Adverse or inconclusive clinical results would stop us from filing for
regulatory approval of our products. Additional factors that can cause delay or
termination of our clinical trials include:
o Slow patient enrollment
o Longer treatment time required to demonstrate efficacy
o Lack of sufficient supplies of the drug candidate
o Adverse medical events or side effects in treated patients
o Lack of effectiveness of the drug candidate being tested
o Regulatory requests for additional clinical trials
Typically, if a drug product is intended to treat a chronic
disease, safety and efficacy data must be gathered over an extended period of
time, which can range from six months to three years or more. In addition,
clinical trials on humans are typically conducted in three phases. The FDA
generally requires two pivotal clinical trials that demonstrate substantial
evidence of safety and efficacy and appropriate dosing in a broad patient
population at multiple sites to support an application for regulatory approval.
If a drug is intended for the treatment of a serious or life-threatening
condition and the drug demonstrates the potential to address unmet medical needs
for this condition, fewer clinical trials may be sufficient to prove safety and
efficacy under the FDA's Modernization Act of 1997.
In May 1999, we completed a twelve-month patient evaluation
for the initial clinical trial of our lead drug product, AldurazymeTm, for the
treatment of MPS-I. The results were presented at the American Society for Human
Genetics in October 1999. We continue to collect data from the ongoing treatment
of these original patients. The initial clinical trial treated ten patients with
MPS-I at six medical centers in the United States. Two of the original ten
patients enrolled in the first clinical trial of Aldurazyme died in 2000. Based
on medical data collected from clinical investigative sites, neither case
directly implicated treatment with Aldurazyme as the cause of death. The data
suggest that one patient died due to a combination of systemic viral illness,
residual MPS-I coronary disease, and external factors. This patient had received
103 weeks of Aldurazyme administration. For the other patient, the data suggest
that the patient died due to complications following posterior spinal fusion for
scoliosis. This patient had received 127 weeks of Aldurazyme administration.
The fast track designation for our product candidates may not actually lead to a
faster review process.
Although Aldurazyme and rhASB have obtained fast track designations, we cannot
guarantee a faster review process or faster approval compared to the normal FDA
procedures.
We will not be able to sell our products if we fail to comply with manufacturing
regulations.
Before we can begin commercial manufacture of our products, we
must obtain regulatory approval of our manufacturing facility and process. In
addition, manufacture of our drug products must comply with the FDA's current
Good Manufacturing Practices regulations, commonly known as cGMP. The cGMP
regulations govern quality control and documentation policies and procedures.
Our manufacturing facilities are continuously subject to inspection by the FDA,
the State of California and foreign regulatory authorities, before and after
product approval. Our ▇▇▇▇▇ Drive and our Bel Marin Keys Boulevard manufacturing
facilities have been inspected and licensed by the State of California for
clinical pharmaceutical manufacture. We cannot guarantee that these facilities
will pass federal or international regulatory inspection. We cannot guarantee
that we, or any potential third-party manufacturer of our drug products, will be
able to comply with cGMP regulations.
We must pass Federal, state and European regulatory
inspections, and we must manufacture three process qualification batches (five
process qualification batches for Europe) to final specifications under cGMP
controls for each of our drug products before the marketing applications can be
approved. Although we have completed process qualification batches for
Aldurazyme, these batches may be rejected by the regulatory authorities and we
may be unable to manufacture the process qualification batches for our other
products or pass the inspections in a timely manner, if at all.
If we fail to obtain orphan drug exclusivity for our products, our competitors
may sell products to treat the same conditions and our revenues may be reduced.
As part of our business strategy, we intend to develop drugs
that may be eligible for FDA and European Community orphan drug designation.
Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if
it is a drug intended to treat a rare disease or condition, defined as a patient
population of less than 200,000 in the United States. The company that obtains
the first FDA approval for a designated orphan drug for a given rare disease
receives marketing exclusivity for use of that drug for the stated condition for
a period of seven years. However, different drugs can be approved for the same
condition. Similar regulations are available in the European Community with a
ten-year period of market exclusivity.
Because the extent and scope of patent protection for our drug
products is limited, orphan drug designation is particularly important for our
products that are eligible for orphan drug designation. We plan to rely on the
exclusivity period under the orphan drug designation to maintain a competitive
position. If we do not obtain orphan drug exclusivity for our drug products,
which do not have patent protection, our competitors may then sell the same drug
to treat the same condition.
We received orphan drug designation from the FDA for
Aldurazyme for the treatment of MPS-I in September 1997. In February 1999, we
received orphan drug designation from the FDA for rhASB for the treatment of
MPS-VI. In February 2001 we received orphan drug designation from the European
Community for both products. Even though we have obtained orphan drug
designation for these drugs and even if we obtain orphan drug designation for
other products we develop, we cannot guarantee that we will be the first to
obtain marketing approval for any orphan indication or that exclusivity would
effectively protect the product from competition. Orphan drug designation
neither shortens the development time or regulatory review time of a drug so
designated nor gives the drug any advantage in the regulatory review or approval
process.
Because the target patient populations for our products are small we must
achieve significant market share and obtain high per patient prices for our
products to achieve profitability.
Our initial drug candidates target diseases with small patient
populations. As a result, our per patient prices must be high enough to recover
our development costs and achieve profitability. For example, two of our initial
drug products in genetic diseases, Aldurazyme and rhASB, target patients with
MPS-I and MPS-VI, respectively. We estimate that there are approximately 3,400
patients with MPS-I and 1,100 patients with MPS-VI in the developed world. We
believe that we will need to market worldwide to achieve significant market
share. In addition, we are developing other drug candidates to treat conditions,
such as other genetic diseases and serious burn wounds, with small patient
populations. We cannot be certain that we will be able to obtain sufficient
market share for our drug products at a price high enough to justify our product
development efforts.
If we fail to obtain an adequate level of reimbursement for our drug products by
third-party payers, there would be no commercially viable markets for our
products.
The course of treatment for patients with MPS-I using
Aldurazyme and for patients with MPS-VI using rhASB is expected to be expensive.
We expect patients to need treatment throughout their lifetimes. We expect that
most families of patients will not be capable of paying for this treatment
themselves. There will be no commercially viable market for Aldurazyme or rhASB
without reimbursement from third-party payers.
Third-party payers, such as government or private health care
insurers, carefully review and increasingly challenge the price charged for
drugs. Reimbursement rates from private companies vary depending on the
third-party payer, the insurance plan and other factors. Reimbursement systems
in international markets vary significantly by country and by region, and
reimbursement approvals must be obtained on a country-by-country basis. We
cannot be certain that third-party payers will pay for the costs of our drugs
and the courses of treatment. Even if we are able to obtain reimbursement from
third-party payers, we cannot be certain that reimbursement rates will be enough
to allow us to profit from sales of our drugs or to justify our product
development expenses.
We currently have no expertise obtaining reimbursement. We
expect to rely on the expertise of our joint venture partner Genzyme to obtain
reimbursement for the costs of Aldurazyme. We cannot predict what the
reimbursement rates will be. In addition, we will need to develop our own
reimbursement expertise for future drug candidates unless we enter into
collaborations with other companies with the necessary expertise.
We expect that in the future, reimbursement will be
increasingly restricted both in the United States and internationally. The
escalating cost of health care has led to increased pressure on the health care
industry to reduce costs. Governmental and private third-party payers have
proposed health care reforms and cost reductions. A number of federal and state
proposals to control the cost of health care, including the cost of drug
treatments have been made in the United States. In some foreign markets, the
government controls the pricing which would affect the profitability of drugs.
Current government regulations and possible future legislation regarding health
care may affect our future revenues from sales of our drugs and may adversely
affect our business and prospects.
If we are unable to protect our proprietary technology, we may not be able to
compete as effectively.
Where appropriate, we seek patent protection for certain
aspects of our technology. Meaningful patent protection may not be available for
some of the enzymes we are developing, including Aldurazyme and rhASB. If we
must spend significant time and money protecting our patents, designing around
patents held by others or licensing, for large fees, patents or other
proprietary rights held by others, our business and financial prospects may be
harmed.
The patent positions of biotechnology products are complex and
uncertain. The scope and extent of patent protection for some of our products
are particularly uncertain because key information on some of the enzymes we are
developing has existed in the public domain for many years. Other parties have
published the structure of the enzymes, the methods for purifying or producing
the enzymes or the methods of treatment. The composition and genetic sequences
of animal and/or human versions of many of our enzymes, including those for
Aldurazyme and rhASB, have been published and are believed to be in the public
domain. The composition and genetic sequences of other MPS enzymes which we
intend to develop as products have also been published. Publication of this
information may prevent us from obtaining composition-of-matter patents, which
are generally believed to offer the strongest patent protection. For enzymes
with no prospect of composition-of-matter patents, we will depend on orphan drug
status to provide us a competitive advantage.
In addition, our owned and licensed patents and patent
applications do not ensure the protection of our intellectual property for a
number of other reasons:
o We do not know whether our patent applications will result in
actual patents. For example, we may not have developed a method for
treating a disease before others developed similar methods.
o Competitors may interfere with our patent process in a variety
of ways. Competitors may claim that they invented the claimed invention
prior to us. Competitors may also claim that we are infringing on their
patents and therefore cannot practice our technology as claimed under
our patent. Competitors may also contest our patents by showing the
patent examiner that the invention was not original, was not novel or
was obvious. As a company, we have no meaningful experience with
competitors interfering with our patents or patent applications.
o Enforcing patents is expensive and may absorb significant time
of our management. In litigation, a competitor could claim that our
issued patents are not valid for a number of reasons. If the court
agrees, we would lose that patent.
o Even if we receive a patent, it may not provide much practical
protection. If we receive a patent with a narrow scope, then it will be
easier for competitors to design products that do not infringe on our
patent.
In addition, competitors also seek patent protection for their
technology. There are many patents in our field of technology, and we cannot
guarantee that we do not infringe on those patents or that we will not infringe
on patents granted in the future. If a patent holder believes our product
infringes on their patent, the patent holder may ▇▇▇ us even if we have received
patent protection for our technology. If someone else claims we infringe on
their technology, we would face a number of issues, including:
o Defending a lawsuit takes significant time and can be very expensive.
o If the court decides that our product infringes on the
competitor's patent, we may have to pay substantial damages for past
infringement.
o The court may prohibit us from selling or licensing the
product unless the patent holder licenses the patent to us. The patent
holder is not required to grant us a license. If a license is
available, we may have to pay substantial royalties or grant
cross-licenses to our patents.
o Redesigning our product so it does not infringe may not be possible
or could require substantial funds and time.
It is also unclear whether our trade secrets will provide
useful protection. While we use reasonable efforts to protect our trade secrets,
our employees or consultants may unintentionally or willfully disclose our
information to competitors. Enforcing a claim that someone else illegally
obtained and is using our trade secrets, like patent litigation, is expensive
and time consuming, and the outcome is unpredictable. In addition, courts
outside the United States are sometimes less willing to protect trade secrets.
Our competitors may independently develop equivalent knowledge, methods and
know-how.
We may also support and collaborate in research conducted by
government organizations or by universities. We cannot guarantee that we will be
able to acquire any exclusive rights to technology or products derived from
these collaborations. If we do not obtain required licenses or rights, we could
encounter delays in product development while we attempt to design around other
patents or even be prohibited from developing, manufacturing or selling products
requiring these licenses. There is also a risk that disputes may arise as to the
rights to technology or products developed in collaboration with other parties.
The United States Patent and Trademark Office recently issued a patent that
related to (alpha)-L-iduronidase. If Aldurazyme infringes on this patent and we
are not able to successfully challenge it, we may be prevented from producing
Aldurazyme unless and until we obtain a license.
The United States Patent and Trademark Office recently issued
a patent that includes claims related to (alpha)-L-iduronidase. Our lead drug
product, Aldurazyme, may infringe on this patent. We believe that this patent is
invalid on a number of grounds. A patent making the same claims was filed in
Europe and has been rejected and cannot be refiled. Our challenges to the U.S.
patent may be unsuccessful, but the rejection of the European application
supports our strategy to challenge the validity of the U.S. patent. Even if we
are successful, challenging the patent may be expensive, require our management
to devote significant time to this effort and may delay commercialization of our
product in the United States.
The patent holder has granted an exclusive license for
products relating to this patent to one of our competitors. If we are unable to
successfully challenge the patent, we may be unable to produce Aldurazyme in the
United States unless we can obtain a sub-license from the current licensee. The
current licensee is not required to grant us a license and even if a license is
available, we may have to pay substantial license fees, which could adversely
affect our business and operating results.
If our joint venture with Genzyme were terminated, we could be barred from
commercializing Aldurazyme or our ability to commercialize Aldurazyme would be
delayed or diminished.
We are relying on Genzyme to apply the expertise it has
developed through the launch and sale of Ceredase(R) and Cerezyme(R) enzymes for
Gaucher disease, a rare genetic disease, to the marketing of our initial drug
product, Aldurazyme. Because it is our initial product, our operations are
substantially dependent upon the development of Aldurazyme. We have no
experience selling, marketing or obtaining reimbursement for pharmaceutical
products. In addition, without Genzyme we would be required to pursue foreign
regulatory approvals. We have no experience in seeking foreign regulatory
approvals.
We cannot guarantee that Genzyme will devote the resources
necessary to successfully market Aldurazyme. In addition, either party may
terminate the joint venture for specified reasons, including if the other party
is in material breach of the agreement or has experienced a change of control or
has declared bankruptcy and also is in breach of the agreement. Either party may
also terminate the agreement upon one-year prior written notice for any reason.
Furthermore, we may terminate the joint venture if Genzyme fails to fulfill its
contractual obligation to pay us $12.1 million in cash upon the approval of the
BLA for Aldurazyme.
Upon termination of the joint venture one party must buy out
the other party's interest in the joint venture. The party who buys out the
other will then also obtain, exclusively, all rights to Aldurazyme and any
related intellectual property and regulatory approvals.
If the joint venture is terminated by Genzyme for a breach on
our part, Genzyme would be granted, exclusively, all of the rights to Aldurazyme
and any related intellectual property and regulatory approvals and would be
obligated to buy out our interest in the joint venture. We would then
effectively be unable to develop and commercialize Aldurazyme. If we terminated
the joint venture for a breach by Genzyme, we would be obligated to buy out
Genzyme's interest in the joint venture and, we would then be granted all of
these rights to Aldurazyme exclusively. While we could then continue to develop
Aldurazyme, that development would be slowed because we would have to divert
substantial capital to buy out Genzyme's interest in the joint venture. We would
then either have to search for a new partner to commercialize the product and to
obtain foreign regulatory approvals or have to develop these capabilities
ourselves.
If the joint venture is terminated by us without cause,
Genzyme would have the option, exercisable for one year, to immediately buy out
our interest in the joint venture and obtain all rights to Aldurazyme
exclusively. If the agreement is terminated by Genzyme without cause, we would
have the option, exercisable for one year, to immediately buy out Genzyme's
interest in the joint venture and obtain these exclusive rights. In event of
termination of the buy out option without exercise by the non-terminating party
as described above, all right and title to Aldurazyme is to be sold to the
highest bidder, with the proceeds to be split equally between Genzyme and us.
If the joint venture is terminated by us because Genzyme fails
to make the $12.1 million payment to us upon FDA approval of the BLA for
Aldurazyme, we would be obligated to buy Genzyme's interest in the joint venture
and would obtain all rights to Aldurazyme exclusively. If the joint venture is
terminated by either party because the other declared bankruptcy and is also in
breach of the agreement, the terminating party would be obligated to buy out the
other and would obtain all rights to Aldurazyme exclusively. If the joint
venture is terminated by a party because the other party experienced a change of
control, the terminating party shall notify the other party, the offeree, of its
intent to buy out the offeree's interest in the joint venture for a stated
amount set by the terminating party at its discretion. The offeree must then
either accept this offer or agree to buy the terminating party's interest in the
joint venture on those same terms. The party who buys out the other would then
have exclusive rights to Aldurazyme.
If we were obligated, or given the option, to buy out
Genzyme's interest in the joint venture, and gain exclusive rights to
Aldurazyme, we may not have sufficient funds to do so and we may not be able to
obtain the financing to do so. If we fail to buy out Genzyme's interest we may
be held in breach of the agreement and may lose any claim to the rights to
Aldurazyme and the related intellectual property and regulatory approvals. We
would then effectively be prohibited from developing and commercializing the
product.
Termination of the joint venture in which we retain the rights
to Aldurazyme could cause us significant delays in product launch in the United
States, difficulties in obtaining third-party reimbursement and delays or
failure to obtain foreign regulatory approval, any of which could hurt our
business and results of operations. Since Genzyme funds 50% of the joint
venture's operating expenses, the termination of the joint venture would double
our financial burden and reduce the funds available to us for other product
programs.
If we are unable to manufacture our drug products in sufficient quantities and
at acceptable cost, we may be unable to meet demand for our products and lose
potential revenues or have reduced margins.
With the exception of Aldurazyme, we have no experience
manufacturing drug products in volumes that will be necessary to support
commercial sales. Our manufacturing processes may not meet initial expectations
as to schedule, reproducibility, yields, purity, costs, quality, and other
measurements of performance. Improvements in manufacturing processes typically
are very difficult to achieve and are often very expensive. We cannot know with
certainty how long it might take to make improvements if it became necessary to
do so. If we contract for manufacturing services with an unproven process, our
contractor is subject to the same uncertainties, high standards and regulatory
controls.
If we are unable to establish and maintain commercial scale manufacturing within
our planned time and cost parameters, sales of our products and our financial
performance will be adversely affected.
Although we have successfully manufactured Aldurazyme at
commercial scale within our cost parameters, we cannot guarantee that we will be
able to manufacture rhASB, Vibriolysin or any future product candidates
successfully in a scale large enough to support their respective commercial
markets.
We may encounter problems with any of the following if we
attempt to increase the scale or size of manufacturing:
o Design, construction and qualification of manufacturing facilities that
meet regulatory requirements
o Production yields
o Purity
o Quality control and assurance systems
o Shortages of qualified personnel
o Compliance with regulatory requirements
We have constructed and built-out a total of 41,200 square
feet at our Novato facilities for manufacturing capability for Aldurazyme and
rhASB. We expect to expand the ▇▇▇▇▇ Drive facility in stages over time, which
creates additional operational complexity and challenges. We expect that the
manufacturing process of all of our new products, including rhASB, will require
lengthy significant time and resources before we can begin to manufacture them
(or have them manufactured by third parties) in commercial quantity. Even if we
can establish the necessary capacity, we cannot be certain that manufacturing
costs will be commercially reasonable, especially if third-party reimbursement
is substantially lower than expected.
In order to achieve our product cost targets we must develop
efficient manufacturing processes either by:
o Improving the product yield from our current cell lines, colonies of
cells which have a common genetic make-up,
o Improving the processes licensed from others, or
o Developing more efficient, lower cost recombinant cell lines and
production processes.
A recombinant cell line is a cell line with foreign DNA
inserted which is used to produce a protein that it would not have otherwise
produced. The development of a stable, high production cell line for any given
enzyme is risky, expensive and unpredictable and may not result in adequate
yields. In addition, the development of protein purification processes is
difficult and may not produce the high purity required with acceptable yield and
costs or may not result in adequate shelf-lives of the final products. If we are
not able to develop efficient manufacturing processes, the investment in
manufacturing capacity sufficient to satisfy market demand will be much greater
and will place heavy financial demands upon us. If we do not achieve our
manufacturing cost targets, we will have lower margins and reduced profitability
in commercial production and larger losses in manufacturing start-up phases.
If we are unable to increase our marketing and distribution capabilities or to
enter into agreements with third parties to do so, our ability to generate
revenues will be diminished.
If we cannot increase our marketing capabilities either by
developing our sales and marketing organization or by entering into agreements
with others, we may be unable to successfully sell our products. If we are
unable to effectively sell our drug products, our ability to generate revenues
will be diminished.
To increase our distribution and marketing for both our drug
candidates and our Glyko, Inc. products, we will have to increase our current
sales force and/or enter into third-party marketing and distribution agreements.
We cannot guarantee that we will be able to hire in a timely manner, the
qualified sales and marketing personnel we need, if at all. Nor can we guarantee
that we will be able to enter into any marketing or distribution agreements on
acceptable terms, if at all. If we cannot increase our marketing capabilities as
we intend, either by increasing our sales force or entering into agreements with
third parties, sales of our products may be adversely affected.
Under our joint venture with Genzyme, Genzyme is responsible
for marketing and distributing Aldurazyme. We cannot guarantee that we will be
able to establish sales and distribution capabilities or that the joint venture,
any future collaborators or we will successfully sell any of our drug
candidates.
If we fail to compete successfully, our revenues and operating results will be
adversely affected.
Our competitors may develop, manufacture and market products
that are more effective or less expensive than ours. They may also obtain
regulatory approvals for their products faster than we can obtain them,
including those products with orphan drug designation, or commercialize their
products before we do. If our competitors successfully commercialize a product,
which treats a given rare genetic disease before we do, we will effectively be
precluded from developing a product to treat that disease because the patient
populations of the rare genetic diseases are so small. If our competitor gets
orphan drug exclusivity, we could be precluded from marketing our version for
seven years. However, different drugs can be approved for the same condition.
These companies also compete with us to attract qualified personnel and
organizations for acquisitions, joint ventures or other collaborations. They
also compete with us to attract academic research institutions as partners and
to license these institutions' proprietary technology. If our competitors
successfully enter into partnering arrangements or license agreements with
academic research institutions, we will then be precluded from pursuing those
specific opportunities. Since each of these opportunities is unique, we may not
be able to find a substitute. Several pharmaceutical and biotechnology companies
have already established themselves in the field of enzyme therapeutics,
including Genzyme, our joint venture partner. These companies have already begun
many drug development programs, some of which may target diseases that we are
also targeting, and have already entered into partnering and licensing
arrangements with academic research institutions, reducing the pool of available
opportunities.
Universities and public and private research institutions are
also competitors. While these organizations primarily have educational or basic
research objectives, they may develop proprietary technology and acquire patents
that we may need for the development of our drug products. We will attempt to
license this proprietary technology, if available. These licenses may not be
available to us on acceptable terms, if at all. We also directly compete with a
number of these organizations to recruit personnel, especially scientists and
technicians.
We believe that established technologies provided by other
companies, such as laboratory and testing services firms, compete with Glyko,
Inc.'s products and services. For example, Glyko's FACE(R) Imaging System
competes with alternative carbohydrate analytical technologies, including
capillary electrophoresis, high-pressure liquid chromatography, mass
spectrometry and nuclear magnetic resonance spectrometry. These competitive
technologies have established customer bases and are more widely used and
accepted by scientific and technical personnel because they can be used for
non-carbohydrate applications. Companies competing with Glyko may have greater
financial, manufacturing and marketing resources and experience.
If we fail to manage our growth or fail to recruit and retain personnel, our
product development programs may be delayed.
Our rapid growth has strained our managerial, operational,
financial and other resources. We expect this growth to continue. We have
entered into a joint venture with Genzyme. If we receive FDA approval to market
Aldurazyme, the joint venture will be required to devote additional resources to
support the commercialization of Aldurazyme.
To manage expansion effectively, we need to continue to
develop and improve our research and development capabilities, manufacturing and
quality capacities, sales and marketing capabilities and financial and
administrative systems. We cannot guarantee that our staff, financial resources,
systems, procedures or controls will be adequate to support our operations or
that our management will be able to manage successfully future market
opportunities or our relationships with customers and other third parties.
Our future growth and success depend on our ability to
recruit, retain, manage and motivate our employees. The loss of key scientific,
technical and managerial personnel may delay or otherwise harm our product
development programs. Any harm to our research and development programs would
harm our business and prospects.
Because of the specialized scientific and managerial nature of
our business, we rely heavily on our ability to attract and retain qualified
scientific, technical and managerial personnel. In particular, the loss of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, our Chairman and Chief Executive Officer, or ▇▇▇▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, Ph.D., our Vice President for Research and Development, could be
detrimental to us if we cannot recruit suitable replacements in a timely manner.
While Mr. Price and ▇▇. ▇▇▇▇▇ are parties to employment agreements with us, we
cannot guarantee that they will remain employed with us in the future. In
addition, these agreements do not restrict their ability to compete with us
after their employment is terminated. The competition for qualified personnel in
the biopharmaceutical field is intense. We cannot be certain that we will
continue to attract and retain qualified personnel necessary for the development
of our business.
If product liability lawsuits are successfully brought against us, we may incur
substantial liabilities.
We are exposed to the potential product liability risks
inherent in the testing, manufacturing and marketing of human pharmaceuticals.
The BioMarin/Genzyme LLC maintains product liability insurance for our clinical
trials of Aldurazyme. We have obtained insurance against product liability
lawsuits for the clinical trials for rhASB. We may be subject to claims in
connection with our current clinical trials for Aldurazyme and rhASB for which
the joint venture's or our insurance coverages are not adequate. We cannot be
certain that if Aldurazyme receives FDA approval, the product liability
insurance the joint venture will need to obtain in connection with the
commercial sales of Aldurazyme will be available in meaningful amounts or at a
reasonable cost. In addition, we cannot be certain that we can successfully
defend any product liability lawsuit brought against us. If we are the subject
of a successful product liability claim which exceeds the limits of any
insurance coverage we may obtain, we may incur substantial liabilities which
would adversely affect our earnings and financial condition.
Our stock price may be volatile and an investment in our stock could suffer a
decline in value.
Our valuation and stock price since the beginning of trading
after our initial public offering have had no meaningful relationship to current
or historical earnings, asset values, book value or many other criteria based on
conventional measures of stock value. The market price of our common stock will
fluctuate due to factors including:
o Progress of Aldurazyme and our other lead drug products
through the regulatory process, especially Aldurazyme regulatory
actions in the United States
o Results of clinical trials, announcements of technological innovations
or new products by us or our competitors
o Government regulatory action affecting our drug candidates or
our competitors' drug candidates in both the United States and foreign
countries
o Developments or disputes concerning patent or proprietary rights
o General market conditions for emerging growth and biopharmaceutical
companies
o Economic conditions in the United States or abroad
o Actual or anticipated fluctuations in our operating results
o Broad market fluctuations in the United States or in Europe may cause
the market price of our common stock to fluctuate
o Changes in company assessments or financial estimates by securities
analysts
In addition, the value of our common stock may fluctuate
because it is listed on both the Nasdaq National Market and the Swiss Exchange's
SWX New Market. Listing on both exchanges may increase stock price volatility
due to:
o Trading in different time zones
o Different ability to buy or sell our stock
o Different market conditions in different capital markets
o Different trading volume
In the past, following periods of large price declines in the
public market price of a company's securities, securities class action
litigation has often been initiated against that company. Litigation of this
type could result in substantial costs and diversion of management's attention
and resources, which would hurt our business. Any adverse determination in
litigation could also subject us to significant liabilities.
If all or a substantial portion of the Shares and Warrant Stock to be issued in
the private placement contemplated by this Agreement are sold in a short period
of time, our stock price may be adversely affected. Our stock price may also be
adversely affected by the perception that such sales could occur.
The Shares and Warrant Stock to be issued in the private
placement contemplated by this Agreement represents a significant portion of our
outstanding common stock. Once we have satisfied our registration obligations
with respect to the Shares and the Warrant Stock, the Investors will be able to
sell their Shares and the Warrant Stock at such time as they deem appropriate.
If all or a substantial portion of the Shares and/or Warrant Stock is sold in a
short period of time, the common stock available for sale may exceed the demand
and the stock price may be adversely affected. In addition, the mere perception
that such sales could occur may depress the price of our common stock.
If our officers, directors and largest stockholder elect to act together, they
may be able to control our management and operations, acting in their best
interests and not necessarily those of other stockholders.
Prior to giving effect to the private placement contemplated
by the Agreement, our directors and officers control approximately 48.4% of the
outstanding shares of our common stock. Glyko Biomedical Ltd. owns 30.6% of the
outstanding shares of our capital stock. The president and chief executive
officer of Glyko Biomedical and a significant shareholder of Glyko Biomedical
serve as two of our directors. As a result, due to their concentration of stock
ownership, directors and officers, if they act together, may be able to control
our management and operations, and may be able to prevail on all matters
requiring a stockholder vote including:
o The election of all directors;
o The amendment of charter documents or the approval of a merger, sale of
assets or other major corporate transactions; and
o The defeat of any non-negotiated takeover attempt that might
otherwise benefit the public stockholders.
Anti-takeover provisions in our charter documents and under Delaware law may
make an acquisition of us, which may be beneficial to our stockholders, more
difficult.
We are incorporated in Delaware. Certain anti-takeover
provisions of Delaware law and our charter documents as currently in effect may
make a change in control of our company more difficult, even if a change in
control would be beneficial to the stockholders. Our anti-takeover provisions
include provisions in the certificate of incorporation providing that
stockholders' meetings may only be called by the board of directors and a
provision in the bylaws providing that the stockholders may not take action by
written consent. Additionally, our board of directors has the authority to issue
1,000,000 shares of preferred stock and to determine the terms of those shares
of stock without any further action by the stockholders. The rights of holders
of our common stock are subject to the rights of the holders of any preferred
stock that may be issued. The issuance of preferred stock could make it more
difficult for a third party to acquire a majority of our outstanding voting
stock. Delaware law also prohibits corporations from engaging in a business
combination with any holders of 15% or more of their capital stock until the
holder has held the stock for three years unless, among other possibilities, the
board of directors approves the transaction. Our board of directors may use
these provisions to prevent changes in the management and control of our
company. Also, under applicable Delaware law, our board of directors may adopt
additional anti-takeover measures in the future.
ANNEX D
SCHEDULE OF EXCEPTIONS
AND
DISCLOSURE SCHEDULE
Schedule of Exceptions
ALL SECTION AND SUBSECTION NUMBERS AND LETTERS RELATE AND COINCIDE TO
SUCH NUMBERS AND LETTERS AS SET FORTH IN THE SECURITIES PURCHASE AGREEMENT (THE
"AGREEMENT"). ANY TERMS REQUIRING DEFINITION HEREIN ARE DEFINED IN THE
AGREEMENT.
ALL REPRESENTATIONS AND WARRANTIES MADE BY THE COMPANY AND SET FORTH IN
THE AGREEMENT ARE MODIFIED IN THEIR ENTIRETY BY THESE DISCLOSURE SCHEDULES. THE
DISCLOSURES CONTAINED IN THESE DISCLOSURE SCHEDULES SHALL BE READ IN THEIR
ENTIRETY, AND ALL THE DISCLOSURES SHALL BE READ TOGETHER. ANY DISCLOSURE MADE IN
ANY SCHEDULE SHALL APPLY TO ALL REPRESENTATIONS AND WARRANTIES MADE BY THE
COMPANY IN THE AGREEMENT.
Schedule 5.3
Subsidiaries
The Company has the following Subsidiaries and directly or indirectly owns the
following respective equity interests:
-------------------------------------------- ------------------------------------ ---------------------------
Name Of Entity Jurisdiction of Incorporation or Percent Owned by Company
-------------- --------------------------------- --------------------------
Organization
-------------------------------------------- ------------------------------------ ---------------------------
Glyko, Inc. Delaware 100%
-------------------------------------------- ------------------------------------ ---------------------------
BioMarin Genetics Inc. Delaware 100%
-------------------------------------------- ------------------------------------ ---------------------------
BioMarin/Genzyme LLC Delaware 50% (1)
-------------------------------------------- ------------------------------------ ---------------------------
(1) Includes indirect ownership of 1% interest held by BioMarin Genetics.
Schedule 5.5(c)
Capitalization
As of the date hereof:
- The Company has granted options to purchase 6,454,048 shares of Common
Stock to various employees, directors and consultants of the Company.
- The Company may be obligated to issue 404,496 shares of Common Stock
pursuant to the Company's Employee Stock Purchase Plan.
- The Company is a party to that certain Common Stock Purchase
Agreement with Acqua Wellington North American Equities Fund, Ltd. ("Acqua
Wellington"), dated as of January 26, 2001 (the "Acqua Wellington
Agreement") and, pursuant to the terms of the Acqua Wellington Agreement,
the Company is obligated to offer Acqua Wellington the right to
participate, to a limited extent, in certain financings by the Company.
Based upon these rights, due to the consummation of the transactions
contemplated by this Agreement, the Company may, at Acqua Wellington's
option, be obligated to issue Acqua Wellington Shares and Warrants on the
same terms and conditions as applicable to the Investors under the
Agreement for a Required Payment of up to $500,000. Additionally, and the
Company may elect, with the consent of Acqua Wellington, to increase the
Required Payment by Acqua Wellington to up to $2,000,000. The Company will
not issue a draw down or grant a call option under the Acqua Wellington
Agreement during the period covered by Section 4.3 of the Agreement.
Additionally, to the extent the Company does not issue and sell (or in
certain circumstances offer to sell), Acqua Wellington a total of
$4,500,000 of securities prior to November 26, 2001, the Company may be
obligated to issue Acqua Wellington warrants for the purchase of Common
Stock, pursuant to the terms of Section 9.1 of the Acqua Wellington
Agreement. The shares subject to such warrants, if any, can not be
determined until November 26, 2001.
Schedule 5.7
Compliance with Other Agreements
1. _______ Pursuant to the Rules of the Nasdaq National Market, an issuer is
required to file a "Notification Form: Listing of Additional Shares" with the
Nasdaq Listing Qualifications office at least fifteen (15) days prior to
issuance of Common Stock or securities convertible into Common Stock which, in
the aggregate exceed 10% of the Company's issued and outstanding Common Stock
prior to the transaction. This form requires disclosure of, among other things,
the pricing of the securities sold. As this information is not available as to
the Shares and the Warrants until the Closing Date, the form will not be filed
until promptly after Closing.
2. _______ Certain of our material agreements, including the Grant Terms and
Conditions Agreement dated April 1, 1997, as amended June 7, 1999, April 10,
2000 and January 5, 2001 and the Research Agreement dated February 16, 2000,
each between the Company and Harbor-UCLA Research and Education Institute and
the Standard NNN Lease dated June 25, 1998, as amended April 14, 2000 relating
to the Company's lease of real estate at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
contain provisions which prohibit a change in control or transfer of a
controlling percentage of the capital stock of the tenant. Neither Agreement
defines the threshold for a change of control or a controlling percentage.
Schedule 5.16(a)
Intellectual Property
As more fully disclosed in the 2000 Annual Report, the United States Patent and
Trademark Office recently issued a patent which includes claims related to
alpha-L-iduronidase. The Company's lead product, AldurazymeTm, may infringe on
this patent.
Schedule 5.14
Brokers or Finders
In connection with the transaction contemplated by the Agreement, the Company
will be obligated to pay the following amounts related to brokerage, finder,
agent, or similar services provided to the Company and related to the issuance
of the Securities:
1. _______ Subject to the Company's agreement with UBS Warburg LLC, UBS Warburg
LLC will be entitled to receive a fee of six percent (6%) of the gross proceeds
received by the Company, and reimbursement of all expenses incurred by UBS
Warburg LLC in connection with the transactions contemplated by the Agreement.
2. _______ Subject to the Company's agreement with SCO Securities LLC, SCO
Securities LLC will be entitled to receive a fee of one and one-half percent
(1.5%) of the gross proceeds received by the Company from any fund affiliated
with OrbiMed Advisors LLC, and one percent (1%) of the gross proceeds received
by the Company from any other Investor. In addition, the Company will issue SCO
Securities LLC warrants to purchase 22,000 shares of Common Stock with an
exercise price of $9.45 per share, but otherwise on the same terms and
conditions as the Warrants.
Schedule 5.19
Nasdaq Listing Compliance
Please see disclosure regarding filing of "Notification Form: Listing of
Additional Shares" in Schedule 5.7 to this Annex D.
Schedule 5.21
Compliance with Nasdaq Requirements
Please see disclosure regarding filing of "Notification Form: Listing of
Additional Shares" in Schedule 5.7 to this Annex D.
ANNEX E
FORM OF LEGAL OPINION
32348.00001
May 16, 2001
THE INVESTORS NAMED IN THE SECURITIES
PURCHASE AGREEMENT DESCRIBED BELOW
Re: BioMarin Pharmaceutical Inc.
Ladies and Gentlemen:
We have acted as counsel for BioMarin Pharmaceutical Inc., a Delaware
corporation (the "Company"), in connection with that certain Securities Purchase
Agreement (the "Purchase Agreement") dated May 16, 2001 by and among the Company
and those Investors listed on Annex A to the Purchase Agreement (the
"Investors"). This opinion is being furnished to you pursuant to Section 6.1(d)
of the Purchase Agreement. The Purchase Agreement provides for the sale and
issuance by the Company to the Investors of 4,763,712 shares (the "Shares") of
the Company's common stock, par value $0.001 per share (the "Common Stock"), and
warrants (the "Warrants") for the purchase of 714,554 shares of Common Stock
(the "Warrant Stock"). All capitalized terms used herein and not defined herein
shall have the meanings ascribed to them in the Purchase Agreement.
For purposes of our opinions set forth below, we have made such legal and
factual examinations and inquiries as we have deemed advisable or necessary. As
to matters of fact relevant to this opinion, we have relied upon (i)
certificates of officers of the Company delivered on the Closing Date, (ii) the
representations and warranties of the Company set forth in the Purchase
Agreement, and (iii) statements made by public officials in certificates
delivered to us on or before the Closing Date.
In addition, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Company and such
agreements, instruments and certificates of public officials, certificates of
officers or other representatives of the Company and others, and such other
documents, certificates and records as we deemed necessary or appropriate for
the purpose of rendering this opinion. In such examination, we have assumed the
genuineness of all signatures on original documents, the authenticity of all
documents submitted to us as originals, and the conformity to original documents
of all copies submitted to us as copies thereof. For purposes of this opinion,
we have assumed: (i) the legal capacity of natural persons, and (ii) the due
execution and delivery of all documents by all parties thereto.
For purposes of this opinion, we have assumed the following: (i) the valid
existence of all parties to the Purchase Agreement other than the Company; (ii)
the corporate or other entity power and authority of each non-natural party to
the Purchase Agreement (other than the Company) to execute, deliver and perform
the Purchase Agreement and to do each other act done or to be done by such
person under the Purchase Agreement; (iii) that the Purchase Agreement has been
duly authorized by, and is legal, valid and binding upon, and enforceable in
accordance with its terms against, each party thereto (other than the Company);
(iv) the payment of all required taxes and fees imposed in connection with the
execution, filing or recording of documents; (v) that routine procedural matters
such as service of process or qualification to do business in the relevant
jurisdictions will be satisfied by the parties seeking to enforce the Purchase
Agreement; (vi) that there has been no undisclosed modification of any provision
of any document reviewed by us; (vii) that there is no other document, agreement
or understanding between or among any of the parties to the Purchase Agreement
which would expand, waive or otherwise modify the respective rights and
obligations of such parties as set forth in the Purchase Agreement and the
documents required or contemplated thereby; (viii) that the certificates of
public officials dated earlier than the date of this opinion remain accurate
from such earlier date through and including the date of this opinion; and (ix)
that the offer, issuance or sale of securities under the Purchase Agreement will
not be integrated for purposes of applicable securities laws and Rule 4350 of
the Nasdaq listing requirements with the offer, issuance or sale of any
securities to Acqua Wellington North American Equities Fund, Ltd. under that
certain Common Stock Purchase Agreement between the Company and Acqua Wellington
North American Equities Fund, Ltd., dated as of January 26, 2001.
With respect to our opinions in paragraph 1 below as to the due incorporation,
valid existence, good standing and qualification to do business of the Company,
we have relied exclusively on written certificates of the Secretary of State of
the State of California and the Secretary of State of the State of Delaware.
On the basis of the foregoing examinations and assumptions herein contained and
in reliance thereon and on all matters of fact that we deem relevant under the
circumstances, and upon consideration of the applicable law, subject to the
qualifications and limitations herein stated, we are of the opinion that:
1. _______ The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware. The Company has the
requisite corporate power to own and operate its properties and assets, and to
carry on its business as presently conducted. The Company is duly qualified to
do business as a foreign corporation and is in good standing in the State of
California.
2. _______ The Company has the requisite corporate power and authority to enter
into and perform its obligations under the Purchase Agreement and the
transactions contemplated thereby. The execution, delivery and performance of
the Purchase Agreement by the Company and the consummation by it of the
transactions contemplated thereby have been duly and validly authorized by all
necessary corporate action on the part of the Company and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required therefor.
3. _______ The Purchase Agreement constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
4. _______ The Shares have been duly authorized and, when delivered against
payment in full as provided in the Purchase Agreement, will be validly issued,
fully paid and nonassessable and free and clear of all liens and restrictions,
other than liens that might have been created or suffered by the Investors and
restrictions imposed by the Securities Act, applicable state securities laws or
the Purchase Agreement.
5. _______ The Warrants have been duly authorized by the Company and, when
executed, delivered and paid for in accordance with the terms of the Agreement,
will be free and clear of all liens and restrictions, other than liens that may
have been created or suffered by the Investors and restrictions imposed by the
Securities Act, applicable state securities laws, the Warrants or the Purchase
Agreement.
6. _______ The Warrant Stock relating to the Warrants to be issued upon exercise
of the Warrants are duly authorized and, when delivered against payment in full
of the applicable exercise price and in accordance with the terms of the
Warrants, will be validly issued, fully paid and nonassessable and free and
clear of all liens and restrictions, other than liens that might have been
created or suffered by the Investors and restrictions imposed by the Securities
Act, applicable state securities laws, the Warrants or the Purchase Agreement.
7. _______ Subject to the accuracy of the representations and warranties
contained in Section 4.1 of the Purchase Agreement, the offer, issue and sale of
the Shares and the Warrants are exempt from the registration and prospectus
delivery requirements of the Securities Act, and are exempt from qualification
under the California Securities Law, and the offer, issue and sale of the
Warrant Stock to the Investors, upon exercise of the Warrants, would be exempt
from the registration and prospectus delivery requirements of the Securities Act
and from qualification under the California Securities Law were the Warrant
Stock to be issued as of the date hereof.
The foregoing opinions are subject to the following qualifications, assumptions
and limitations:
(i) _____ We express no opinion on the following: (i) except as
specifically provided in paragraph 7 above with respect to federal and
California State securities laws, federal and state securities laws,
rules and regulations, including, without limitation, the "blue sky"
laws of any state; (ii) federal and state pension and employee benefit
laws and regulations; (iii) federal and state antitrust and unfair
competition laws and regulations; (iv) federal and state laws and
regulations concerning filing requirements; (v) compliance with
fiduciary duty requirements; (vi) fraudulent transfer laws;
(vii) federal and state banking or environmental laws and regulations;
(vii) the effectiveness or enforceability of waivers; and (ix) the
effect of non-compliance by any Investor with any state or federal laws
or regulations that are applicable to the transactions contemplated by
the Purchase Agreement because of the nature of its businesses or the
manner in which they are conducted;
(ii) _____ We have assumed there is no misrepresentation, omission or deceit
by any person in connection with the execution, delivery or performance
of the Purchase Agreement or any of the transactions contemplated
thereby;
(iii) ____ We express no opinion as to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance,
fraudulent transfer, reorganization, arrangement, moratorium or other
similar federal or state laws relating to or affecting the rights of
creditors;
(iv) _____ We express no opinion as to the effect of general equitable
principles (regardless of whether any such remedy is considered in a
proceeding at law or in equity), including the availability of specific
performance, injunctive relief or other equitable remedies and
principles of materiality, good faith and reasonableness;
(v) ______ We express no opinion as to the effect of state or federal
securities laws, or policies underlying such laws, on the
indemnification and contribution portions of the Purchase Agreement;
(vi) _____ We express no opinion as to the effect of any provision of the
Purchase Agreement which relates to waiving defenses or releasing or
indemnifying a party against liability for its own wrongful or
negligent acts, or where waivers or indemnifications are limited by
applicable law or public policy;
(vii) ____ We express no opinion on the enforceability of any provision
contained in the Purchase Agreement that (a) purports to excuse a party
for liability for its own acts, (b) purports to make void any act done
in contravention thereof, or (c) purports to authorize a party to act
in its sole discretion;
(viii) ___ We express no opinion as to the effect of any provision of the
Purchase Agreement purporting to require a party thereto to pay or
reimburse attorneys' fees incurred by another party, or to indemnify
another party therefor, which provisions may be limited by applicable
statutes and decisions relating to the collection and award of
attorneys' fees;
(ix) _____ We express no opinion with respect to any provision of the
Purchase Agreement which could be construed as a penalty or forfeiture
or which imposes a payment obligation in connection with a failure to
consummate the transactions contemplated by the Purchase Agreement;
(x) ______ We express no opinion with respect to the enforceability of any
provision in the Purchase Agreement to the effect that terms may not be
waived or modified except in writing and advise you that such
provisions may be limited under certain circumstances;
(xi) _____ We express no opinion as to the validity, effect or
enforceability of any provision of the Purchase Agreement concerning
choice of law, choice of forum or consent to the jurisdiction of
courts, venue of actions or means of service of process;
(xii) _____ We express no opinion as to compliance with applicable anti-fraud
provisions of any federal or state securities laws;
(xiii) ___ We are members of the State Bar of California and the opinions set
forth above are limited in all respects to the laws of the State of
California, the General Corporation Law of the State of Delaware and
the federal laws of the United States of America, and we express no
opinion as to the applicability or effect of the laws of any other
jurisdiction or any other laws of the State of Delaware. Our opinion on
California statutes, rules or regulations does not extend to municipal
ordinances or laws of counties or other political subdivisions of such
state; and
(xiv) ____ This opinion letter deals only with the specified legal issues it
explicitly addresses, and no opinion that is not explicitly addressed
should be inferred from any matter stated in this letter.
This opinion is furnished to the above named Investors by us as counsel for the
Company in connection with the matters described in the first paragraph of this
letter, and is solely for your benefit. This opinion may not be delivered to or
relied upon by any other person or for any other purpose, and may not be
referred to or quoted from, without our express prior written consent. This
opinion is rendered to you as of the date hereof, and we assume no obligation to
advise you hereafter with regard to any change in the circumstances or the law
that may bear on the matters set forth herein even though the change may affect
the legal analysis or a legal conclusion or other matters in this opinion
letter.
Very truly yours,
PAUL, HASTINGS, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
BIOMARIN PHARMACEUTICAL INC.
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SECURITIES PURCHASE AGREEMENT
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Dated as of May 16, 2001
Table of Contents
Page
1. Definitions...........................................................1
2. Authorization of Securities...........................................3
3. Sale and Purchase of Shares and Warrants..............................3
4. Register of Securities; Restrictions on
Transfer of Securities; Removal of Restrictions
on Transfer of Securities.............................................5
4.1 Restrictions on Transfer..............................................5
4.2 Removal of Transfer Restrictions......................................7
4.3 Activities............................................................8
5. Representations and Warranties by and Covenants of the Company........8
5.1 Organization, Standing, etc...........................................8
5.2 Certificate and Bylaws................................................8
5.3 Subsidiaries..........................................................8
5.4 Qualification.........................................................8
5.5 Capital Stock.........................................................8
5.6 Corporate Acts and Proceedings........................................9
5.7 Compliance with Other Instruments.....................................9
5.8 Binding Obligations..................................................10
5.9 Securities Laws......................................................10
5.10 Financial Statements.................................................10
5.11 Changes.............................................................11
5.12 Material Agreements of the Company...................................11
5.13 Litigation...........................................................11
5.14 Brokers or Finders...................................................11
5.15 Disclosure...........................................................11
5.16 Intellectual Property................................................12
5.17 Retirement Obligations...............................................12
5.18 No Governmental Consent or Approval Required.........................12
5.19 Nasdaq Listing Compliance............................................12
5.20 Reporting Status.....................................................13
5.21 Compliance with Nasdaq Requirements..................................13
6. Conditions of Parties' Obligations...................................13
6.1 Conditions of Investors' Obligations at the Closing..................13
6.2 Conditions of Company's Obligations..................................14
7. Registration of Restricted Stock.....................................14
7.1 Required Registration................................................14
7.2 Registration Procedures..............................................15
7.3 Expenses.............................................................16
7.4 Indemnification......................................................17
7.5 Reporting Requirements Under the Exchange Act........................19
7.6 Stockholder Information..............................................19
8. Miscellaneous........................................................19
8.1 Waivers and Amendments...............................................19
8.2 Effect of Waiver or Amendment........................................20
8.3 Rights of Holders Inter Se...........................................20
8.4 Exculpation Among Investors and Holders..............................20
8.5 Brokers or Finders...................................................20
8.6 Notices..............................................................21
8.7 Severability.........................................................21
8.8 Parties in Interest..................................................21
8.9 Headings.............................................................21
8.10 Choice of Law........................................................21
8.11 Expenses.............................................................21
8.12 Counterparts.........................................................22
8.13 Publicity............................................................22
ANNEXES
A........- Schedule of Investors and Required Payment
B........- Form of Warrant
C........- Risk Factors
D........- Schedule of Exceptions and Disclosure Schedule
E........- Form of Legal Opinion