EXHIBIT 10.1
COMMON STOCK PURCHASE AGREEMENT
DATED FEBRUARY 14, 2007
BY AND BETWEEN
ARIAD PHARMACEUTICALS, INC.
AND
AZIMUTH OPPORTUNITY LTD.
TABLE OF CONTENTS
PAGE
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Article I PURCHASE AND SALE OF COMMON STOCK.............................. 1
Section 1.1 Purchase and Sale of Stock............................. 1
Section 1.2 Effective Date; Settlement Dates....................... 1
Section 1.3 The Shares............................................. 2
Section 1.4 Current Report; Prospectus Supplement.................. 2
Article II FIXED REQUEST TERMS; OPTIONAL AMOUNT.......................... 2
Section 2.1 Fixed Request Notice................................... 2
Section 2.2 Fixed Requests......................................... 3
Section 2.3 Share Calculation...................................... 4
Section 2.4 Limitation of Fixed Requests........................... 4
Section 2.5 Reduction of Commitment................................ 4
Section 2.6 Below Threshold Price.................................. 4
Section 2.7 Settlement............................................. 5
Section 2.8 Reduction of Pricing Period............................ 5
Section 2.9 Optional Amount........................................ 6
Section 2.10 Calculation of Optional Amount Shares.................. 6
Section 2.11 Exercise of Optional Amount............................ 7
Section 2.12 Aggregate Limit........................................ 7
Article III REPRESENTATIONS AND WARRANTIES OF THE INVESTOR............... 8
Section 3.1 Organization and Standing of the Investor.............. 8
Section 3.2 Authorization and Power................................ 8
Section 3.3 No Conflicts........................................... 8
Section 3.4 Information............................................ 9
Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY................. 9
Section 4.1 Organization, Good Standing and Power.................. 9
Section 4.2 Authorization, Enforcement............................. 9
Section 4.3 Capitalization......................................... 10
Section 4.4 Issuance of Shares..................................... 10
Section 4.5 No Conflicts........................................... 10
Section 4.6 Commission Documents, Financial Statements............. 11
Section 4.7 Subsidiaries........................................... 12
Section 4.8 No Material Adverse Effect............................. 13
Section 4.9 Indebtedness........................................... 13
Section 4.10 Title To Assets........................................ 13
Section 4.11 Actions Pending........................................ 13
Section 4.12 Compliance With Law.................................... 13
Section 4.13 Certain Fees........................................... 14
Section 4.14 Operation of Business.................................. 14
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Section 4.15 Environmental Compliance............................... 15
Section 4.16 Material Agreements.................................... 16
Section 4.17 Transactions With Affiliates........................... 16
Section 4.18 Securities Act; NASD Conduct Rules..................... 17
Section 4.19 Employees.............................................. 18
Section 4.20 Use of Proceeds........................................ 19
Section 4.21 Public Utility Holding Company Act and Investment
Company Act Status..................................... 19
Section 4.22 ERISA.................................................. 19
Section 4.23 Taxes.................................................. 19
Section 4.24 Insurance.............................................. 20
Section 4.25 Acknowledgement Regarding Investor's Purchase of
Shares................................................. 20
Article V COVENANTS...................................................... 20
Section 5.1 Securities Compliance.................................. 20
Section 5.2 Registration and Listing............................... 20
Section 5.3 Compliance with Laws................................... 20
Section 5.4 Keeping of Records and Books of Account; Foreign
Corrupt Practices Act.................................. 21
Section 5.5 Limitations on Holdings and Issuances.................. 21
Section 5.6 Other Agreements and Other Financings.................. 22
Section 5.7 Stop Orders............................................ 23
Section 5.8 Amendments to the Registration Statement; Prospectus
Supplements; Free Writing Prospectuses................. 24
Section 5.9 Prospectus Delivery.................................... 24
Section 5.10 Selling Restrictions................................... 25
Section 5.11 Effective Registration Statement....................... 26
Section 5.12 Non-Public Information................................. 26
Section 5.13 Broker/Dealer.......................................... 26
Section 5.14 Update of Disclosure Schedule.......................... 26
Article VI OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND
PURCHASE OF THE SHARES................................................ 26
Section 6.1 Opinion of Counsel and Certificate..................... 26
Section 6.2 Conditions Precedent to the Obligation of the Company.. 27
Section 6.3 Conditions Precedent to the Obligation of the
Investor............................................... 28
Article VII TERMINATION.................................................. 30
Section 7.1 Term, Termination by Mutual Consent.................... 30
Section 7.2 Other Termination...................................... 31
Section 7.3 Effect of Termination.................................. 31
Article VIII INDEMNIFICATION............................................. 32
Section 8.1 General Indemnity...................................... 32
Section 8.2 Indemnification Procedures............................. 33
Article IX MISCELLANEOUS................................................. 35
Section 9.1 Fees and Expenses...................................... 35
Section 9.2 Specific Enforcement, Consent to Jurisdiction, Waiver
of Jury Trial.......................................... 35
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Section 9.3 Entire Agreement; Amendment............................ 36
Section 9.4 Notices................................................ 36
Section 9.5 Waivers................................................ 37
Section 9.6 Headings............................................... 37
Section 9.7 Successors and Assigns................................. 37
Section 9.8 Governing Law.......................................... 38
Section 9.9 Survival............................................... 38
Section 9.10 Counterparts........................................... 38
Section 9.11 Publicity.............................................. 38
Section 9.12 Severability........................................... 38
Section 9.13 Further Assurances..................................... 38
Annex A. Definitions
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COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT, made and entered into on this 14th
day of February 2007 (this "Agreement"), by and between Azimuth Opportunity
Ltd., an international business company incorporated under the laws of the
British Virgin Islands (the "Investor"), and ARIAD Pharmaceuticals, Inc., a
corporation organized and existing under the laws of the State of Delaware (the
"Company").
RECITALS
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company may issue and sell to the Investor and
the Investor shall thereupon purchase from the Company up to $50,000,000 worth
of newly issued shares of the Company's common stock, $0.001 par value ("Common
Stock"), subject, in all cases, to the Trading Market Limit; and
WHEREAS, the offer and sale of the shares of Common Stock hereunder have
been registered by the Company in the Registration Statement, which has been
declared effective by order of the Commission under the Securities Act;
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF COMMON STOCK
SECTION 1.1 PURCHASE AND SALE OF STOCK. Upon the terms and subject to the
conditions of this Agreement, during the Investment Period the Company in its
discretion may issue and sell to the Investor up to $50,000,000 (the "Total
Commitment") worth of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock (subject in all cases to the Trading
Market Limit, the "Aggregate Limit"), by (i) the delivery to the Investor of not
more than 24 separate Fixed Request Notices (unless the Investor and the Company
mutually agree that a different number of Fixed Request Notices may be
delivered) as provided in Article II hereof and (ii) the exercise by the
Investor of Optional Amounts, which the Company may in its discretion grant to
the Investor and which may be exercised by the Investor, in whole or in part, as
provided in Article II hereof. The aggregate of all Fixed Request Amounts and
Optional Amount Dollar Amounts shall not exceed the Aggregate Limit.
SECTION 1.2 EFFECTIVE DATE; SETTLEMENT DATES. This Agreement shall become
effective and binding upon delivery of counterpart signature pages of this
Agreement executed by each of the parties hereto, and by delivery of an opinion
of counsel and a certificate of the Company as provided in Section 6.1 hereof,
to the offices of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, at l0:00 a.m., New York time, on the Effective Date. In consideration of
and in express reliance upon the representations, warranties and covenants, and
otherwise upon the terms and subject to the conditions, of this Agreement, from
and after the Effective Date and during the Investment Period (i) the Company
shall issue and sell to the Investor, and the Investor agrees to purchase from
the Company, the Shares in respect of each Fixed Request and (ii) the Investor
may in its discretion elect to purchase Shares in respect of
each Optional Amount. The issuance and sale of Shares to the Investor pursuant
to any Fixed Request or Optional Amount shall occur on the applicable Settlement
Date in accordance with Sections 2.7 and 2.9 (or on such Trading Day in
accordance with Section 2.8, as applicable), provided in each case that all of
the conditions precedent thereto set forth in Article VI theretofore shall have
been fulfilled or (to the extent permitted by applicable law) waived.
SECTION 1.3 THE SHARES. The Company has duly authorized and reserved for
issuance, and covenants to continue to reserve for issuance, free of all
preemptive and other similar rights, at all times during the Investment Period,
the requisite aggregate number of authorized but unissued shares of its Common
Stock to timely effect the issuance, sale and delivery in full to the Investor
of all Shares to be issued in respect of all Fixed Requests and Optional Amounts
under this Agreement.
SECTION 1.4 CURRENT REPORT; PROSPECTUS SUPPLEMENT. As soon as practicable,
but in any event not later than 5:30 p.m. (New York time) on the first Trading
Day immediately following the Effective Date, the Company shall file with the
Commission a report on Form 8-K relating to the transactions contemplated by,
and describing the material terms and conditions of, this Agreement and
disclosing all information relating to the transactions contemplated hereby
required to be disclosed in the Registration Statement and the Base Prospectus
(but which permissibly has been omitted therefrom in accordance with the
Securities Act), including, without limitation, information required to be
disclosed in the section captioned "Plan of Distribution" in the Base Prospectus
(the "Current Report"). The Current Report shall include a copy of this
Agreement as an exhibit. To the extent applicable, the Current Report shall be
incorporated by reference in the Registration Statement in accordance with the
provisions of Rule 430B under the Securities Act. The Company heretofore has
provided (or will provide prior to filing) the Investor a reasonable opportunity
to comment on a draft of such Current Report and has given (or will give) due
consideration to such comments. The Company shall file a final Base Prospectus
pursuant to Rule 424(b) under the Securities Act on or prior to the second
Trading Day immediately following the Effective Date. Pursuant to Section 5.9
and subject to the provisions of Section 5.8, on the first Trading Day
immediately following the last Trading Day of each Pricing Period, the Company
shall file with the Commission a Prospectus Supplement pursuant to Rule 424(b)
under the Securities Act disclosing the number of Shares to be issued and sold
to the Investor thereunder, the total purchase price therefor and the net
proceeds to be received by the Company therefrom and, to the extent required by
the Securities Act, identifying the Current Report.
ARTICLE II
FIXED REQUEST TERMS; OPTIONAL AMOUNT
Subject to the satisfaction of the conditions set forth in this Agreement,
the parties agree (unless otherwise mutually agreed upon by the parties in
writing) as follows:
SECTION 2.1 FIXED REQUEST NOTICE. Upon one Trading Day's prior written
notice to the Investor, the Company may, from time to time in its sole
discretion, provide a notice to the Investor of a Fixed Request before 9:30 a.m.
(New York time) on the first Trading Day of the Pricing Period (the "Fixed
Request Notice"), substantially in the form attached hereto as Exhibit A. The
Fixed Request Notice shall specify the Fixed Amount Requested, establish the
Threshold
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Price for such Fixed Request, designate the first Trading Day of the Pricing
Period and specify the Optional Amount, if any, that the Company elects to grant
to the Investor during the Pricing Period and the applicable Threshold Price for
such Optional Amount (the "Optional Amount Threshold Price"). The Threshold
Price and the Optional Amount Threshold Price established by the Company in a
Fixed Request Notice may be the same or different, in the Company's sole
discretion. Upon the terms and subject to the conditions of this Agreement, the
Investor is obligated to accept each Fixed Request Notice prepared and delivered
in accordance with the provisions of this Agreement.
SECTION 2.2 FIXED REQUESTS. From time to time during the Investment Period,
the Company may in its sole discretion deliver to the Investor a Fixed Request
Notice for a specified Fixed Amount Requested, and the applicable discount price
(the "Discount Price") shall be determined, in accordance with the price and
share amount parameters as set forth below or such other parameters mutually
agreed upon by the Investor and the Company, and upon the terms and subject to
the conditions of this Agreement, the Investor shall purchase from the Company
the Shares subject to such Fixed Request Notice; provided, however, that the
Company may not deliver any single Fixed Request Notice for a Fixed Amount
Requested in excess of the lesser of: (i) the amount in the applicable Fixed
Amount Requested column below and (ii) 2.5% of the Market Capitalization:
Threshold Price Fixed Amount Requested Discount Price
--------------- ---------------------- --------------
Equal to or greater than $12.00 Not to exceed $12,000,000 96.50% of the VWAP
Equal to or greater than $11.00 and less than $12.00 Not to exceed $11,000,000 96.40% of the VWAP
Equal to or greater than $10.00 and less than $11.00 Not to exceed $10,000,000 96.30% of the VWAP
Equal to or greater than $9.00 and less than $10.00 Not to exceed $9,000,000 96.20% of the VWAP
Equal to or greater than $8.00 and less than $9.00 Not to exceed $8,000,000 96.00% of the VWAP
Equal to or greater than $7.00 and less than $8.00 Not to exceed $7,000,000 95.75% of the VWAP
Equal to or greater than $6.00 and less than $7.00 Not to exceed $6,000,000 95.50% of the VWAP
Equal to or greater than $5.00 and less than $6.00 Not to exceed $5,000,000 95.00% of the VWAP
Equal to or greater than $4.00 and less than $5.00 Not to exceed $4,000,000 94.75% of the VWAP
Equal to or greater than $3.00 and less than $4.00 Not to exceed $3,000,000 94.50% of the VWAP
Anything to the contrary in this Agreement notwithstanding, at no time
shall the Investor be required to purchase more than $12,000,000 worth of Common
Stock in respect of any Pricing Period (not including Common Stock subject to
any Optional Amount). The date on which the Company delivers any Fixed Request
Notice in accordance with this Section 2.2 hereinafter shall be referred to as a
"Fixed Request Exercise Date".
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SECTION 2.3 SHARE CALCULATION. Subject to Section 2.6, the number of Shares
to be issued by the Company to the Investor pursuant to a Fixed Request shall
equal the aggregate sum of each quotient (calculated for each Trading Day during
the applicable Pricing Period for which the VWAP equals or exceeds the Threshold
Price) determined pursuant to the following equation (rounded to the nearest
whole Share):
N = (A x B)/C, where:
N = the number of Shares to be issued by the Company to the Investor in respect
of a Trading Day during the applicable Pricing Period for which the VWAP
equals or exceeds the Threshold Price,
A = 0.10 (the "Multiplier"); provided, however, that if the number of Trading
Days constituting a Pricing Period is decreased as set forth in Section 2.8
hereof, then the Multiplier correspondingly shall be increased to equal the
decimal equivalent (in 10-millionths) of a fraction, the numerator of which
is one and the denominator of which equals the number of Trading Days in the
Pricing Period as so decreased,
B = the Fixed Amount Requested, and
C = the applicable Discount Price.
SECTION 2.4 LIMITATION OF FIXED REQUESTS. The Company shall not make more
than one Fixed Request in each Pricing Period. Unless otherwise mutually agreed
upon by the Company and the Investor, not less than three Trading Days shall
elapse between the end of one Pricing Period and the commencement of any other
Pricing Period during the Investment Period. There shall be permitted a maximum
of 24 Fixed Requests during the Investment Period. Each Fixed Request
automatically shall expire immediately following the last Trading Day of each
Pricing Period.
SECTION 2.5 REDUCTION OF COMMITMENT. On the last Trading Day of each
Pricing Period, the Investor's Total Commitment under this Agreement
automatically (and without the need for any amendment to this Agreement) shall
be reduced, on a dollar-for-dollar basis, by the total amount of the Fixed
Request Amount and the Optional Amount Dollar Amount, if any, for such Pricing
Period actually paid to the Company at the Settlement Date.
SECTION 2.6 BELOW THRESHOLD PRICE. If the VWAP on any Trading Day in a
Pricing Period is lower than the Threshold Price, then for each such Trading Day
the total amount of the Fixed Amount Requested shall be reduced, on a
dollar-for-dollar basis, by an amount equal to the product of (x) the Multiplier
and (y) the original Fixed Amount Requested, and no Shares shall be purchased or
sold with respect to such Trading Day, except as provided below. If trading in
the Common Stock on NASDAQ (or any national securities exchange on which the
Common Stock is then listed) is suspended for any reason for more than three
hours on any Trading Day, the Investor may at its option deem the price of the
Common Stock to be lower than the Threshold Price for such Trading Day and, for
each such Trading Day, the total amount of the Fixed Amount Requested shall be
reduced as provided in the immediately preceding sentence, and no Shares shall
be purchased or sold with respect to such Trading Day, except as provided below.
For each Trading Day during a Pricing Period on which the VWAP is (or is
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deemed to be) lower than the Threshold Price, the Investor may in its sole
discretion elect to purchase such U.S. dollar amount of Shares equal to the
amount by which the Fixed Amount Requested has been reduced in accordance with
this Section 2.6, at the Threshold Price multiplied by the applicable percentage
determined in accordance with the price and share amount parameters set forth in
Section 2.2. The Investor shall inform the Company via facsimile transmission
not later than 8:00 p.m. (New York time) on the last Trading Day of such Pricing
Period as to the number of Shares, if any, the Investor elects to purchase as
provided in this Section 2.6.
SECTION 2.7 SETTLEMENT. The payment for, against simultaneous delivery of,
Shares in respect of each Fixed Request shall be settled on the second Trading
Day next following the last Trading Day of each Pricing Period, or on such other
earlier date as the parties may mutually agree (the "Settlement Date"). On each
Settlement Date, the Company shall deliver the Shares purchased by the Investor
to the Investor or its designees via DTC's Deposit Withdrawal Agent Commission
(DWAC) system, against simultaneous payment therefor to the Company's designated
account by wire transfer of immediately available funds, provided that if the
Shares are received by the Investor later than 1:00 p.m. (New York time),
payment therefor shall be made with next day funds. As set forth in Section
9.1(ii), a failure by the Company to deliver such Shares shall result in the
payment of liquidated damages by the Company to the Investor.
SECTION 2.8 REDUCTION OF PRICING PERIOD. If during a Pricing Period the
Company elects to reduce the number of Trading Days in such Pricing Period (and
thereby amend its previously delivered Fixed Request Notice), the Company shall
so notify the Investor before 9:00 a.m. (New York time) on any Trading Day
during a Pricing Period (a "Reduction Notice") and the last Trading Day of such
Pricing Period shall be the Trading Day immediately preceding the Trading Day on
which the Investor received such Reduction Notice; provided, however, that if
the Company delivers the Reduction Notice later than 9:00 a.m. (New York time)
on a Trading Day during a Pricing Period, then the last Trading Day of such
Pricing Period instead shall be the Trading Day on which the Investor received
such Reduction Notice.
Upon receipt of a Reduction Notice, the Investor (i) shall purchase the
Shares in respect of each Trading Day in such reduced Pricing Period for which
the VWAP equals or exceeds the Threshold Price in accordance with Section 2.3
hereof; (ii) may elect to purchase the Shares in respect of any Trading Day in
such reduced Pricing Period for which the VWAP is (or is deemed to be) lower
than the Threshold Price in accordance with Section 2.6 hereof; and (iii) may
elect to exercise all or any portion of an Optional Amount on any Trading Day
during such reduced Pricing Period in accordance with Sections 2.10 and 2.11
hereof.
In addition, upon receipt of a Reduction Notice, the Investor may elect to
purchase such U.S. dollar amount of additional Shares equal to the quotient
determined pursuant to the following equation:
D = A x 1/B x (B - C), where:
D = the U.S. dollar amount of additional Shares to be purchased,
A = the Fixed Amount Requested,
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B = 10 or, for purposes of this Section 2.8, such lesser number of Trading Days
as the parties may mutually agree to, and
C = the number of Trading Days in the reduced Pricing Period,
at a per Share price equal to (x) the Fixed Amount Requested attributable to the
reduced Pricing Period divided by (y) the number of Shares to be purchased
during such reduced Pricing Period pursuant to clause (i) of the immediately
preceding paragraph.
The Investor may also elect to exercise any portion of the applicable
Optional Amount which was unexercised during the reduced Pricing Period by
issuing an Optional Amount Notice to the Company not later than 10:00 a.m. (New
York time) on the first Trading Day next following the last Trading Day of the
reduced Pricing Period. The number of Shares to be issued upon exercise of such
Optional Amount shall be calculated pursuant to the equation set forth in
Section 2.10 hereof, except that "C" shall equal the greater of (i) the VWAP for
the Common Stock on the last Trading Day of the reduced Pricing Period or (ii)
the Optional Amount Threshold Price.
The payment for, against simultaneous delivery of, Shares to be purchased
and sold in accordance with this Section 2.8 shall be settled on the second
Trading Day next following the Trading Day on which the Investor receives a
Reduction Notice.
SECTION 2.9 OPTIONAL AMOUNT. With respect to any Pricing Period, the
Company may in its sole discretion grant to the Investor the right to exercise,
from time to time during the Pricing Period (but not more than once on any
Trading Day), all or any portion of an Optional Amount. The maximum Optional
Amount Dollar Amount and the Optional Amount Threshold Price shall be set forth
in the Fixed Request Notice. Each daily Optional Amount exercise shall be
aggregated during the Pricing Period and settled on the next Settlement Date.
The Optional Amount Threshold Price designated by the Company in its Fixed
Request Notice shall apply to each Optional Amount during the applicable Pricing
Period.
SECTION 2.10 CALCULATION OF OPTIONAL AMOUNT SHARES. The number of shares of
Common Stock to be issued in connection with the exercise of an Optional Amount
shall be the quotient determined pursuant to the following equation (rounded to
the nearest whole Share):
O = A/(B x C), where:
O = the number of shares of Common Stock to be issued in connection with such
Optional Amount exercise,
A = the Optional Amount Dollar Amount with respect to which the Investor has
delivered an Optional Amount Notice,
B = the applicable percentage determined in accordance with the price and
shares amount parameters set forth in Section 2.2 (with the Optional Amount
Threshold Price serving as the Threshold Price for such purposes), and
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C = the greater of (i) the VWAP for the Common Stock on the day the Investor
delivers the Optional Amount Notice or (ii) the Optional Amount Threshold
Price.
SECTION 2.11 EXERCISE OF OPTIONAL AMOUNT. If granted by the Company to the
Investor with respect to a Pricing Period, all or any portion of the Optional
Amount may be exercised by the Investor on any Trading Day during the Pricing
Period, subject to the limitations set forth in Section 2.9. As a condition to
each exercise of an Optional Amount pursuant to this Section 2.11, the Investor
shall issue an Optional Amount Notice to the Company no later than 8:00 p.m.
(New York time) on the day of such Optional Amount exercise. If the Investor
does not exercise an Optional Amount in full by 8:00 p.m. (New York time) on the
last Trading Day of the applicable Pricing Period, such unexercised portion of
the Investor's Optional Amount with respect to that Pricing Period automatically
shall lapse and terminate.
SECTION 2.12 AGGREGATE LIMIT. Notwithstanding anything to the contrary
contained in this Agreement, in no event may the Company issue a Fixed Request
Notice or grant an Optional Amount to the extent that the sale of Shares
pursuant thereto and pursuant to all prior Fixed Request Notices or Optional
Amounts issued hereunder, and as liquidated damages pursuant to Section 9.1(ii),
would cause the Company to sell or the Investor to purchase Shares which in the
aggregate are in excess of the Aggregate Limit. If the Company issues a Fixed
Request Notice or Optional Amount that otherwise would permit the Investor to
purchase shares of Common Stock which would cause the aggregate purchases by
Investor hereunder to exceed the Aggregate Limit, such Fixed Request Notice or
Optional Amount shall be void ab initio to the extent of the amount by which the
dollar value of shares or number of shares, as the case may be, of Common Stock
otherwise issuable pursuant to such Fixed Request Notice or Optional Amount
together with the dollar value of shares or number of shares, as the case may
be, of all other Common Stock purchased by the Investor pursuant hereto would
exceed the Aggregate Limit. The Company hereby represents, warrants and
covenants that neither it nor any of its Subsidiaries (i) has effected any
transaction or series of transactions, (ii) is a party to any pending
transaction or series of transactions or (iii) shall enter into any contract,
agreement, agreement-in-principle, arrangement or understanding with respect to,
or shall effect, any Other Financing which, in any of such cases, may be
integrated with the transactions contemplated by this Agreement for purposes of
determining whether approval of the Company's stockholders is required under any
bylaw, listed securities maintenance standards or other rules of the Trading
Market; provided, however, that the Company shall be permitted to take any
action referred to in clause (iii) above if the Company has timely provided the
Investor with an Integration Notice as provided in Section 5.6(ii) hereof.
At the Company's sole discretion, and effective automatically upon receipt
by the Investor of notice thereof from the Company, this Agreement may be
amended by the Company from time to time to reduce the Aggregate Limit by a
specified dollar amount of Common Stock which shall be no greater than is
required to enable the Company to utilize the Registration Statement to
consummate an underwritten public offering of Common Stock or a registered
direct public offering of Common Stock during the Investment Period); provided,
however, that any such amendment of this Agreement (and any such purported
amendment) shall be void and of no force and effect if the effect thereof would
restrict, materially delay, conflict with or impair the ability or right of the
Company to perform its obligations under this Agreement, including, without
limitation, the obligation of the Company to deliver Shares to the Investor in
respect of a
7
Fixed Request or Optional Amount on the applicable Settlement Date. In the event
the Company shall have elected to reduce the Aggregate Limit as provided in the
immediately preceding sentence, at the Company's sole discretion, and effective
automatically upon receipt by the Investor of notice thereof from the Company,
the Company may subsequently amend this Agreement to increase the Aggregate
Limit; provided, however, that in no event shall the Aggregate Limit thereby be
increased to an amount greater than the amount obtained by subtracting (x) the
aggregate of all Fixed Request Amounts and Optional Amount Dollar Amounts
(including any amounts paid as liquidated damages pursuant to Section 9.1(ii)
hereunder) covered by all Fixed Requests and Optional Amounts theretofore issued
or granted by the Company in respect of which a settlement has occurred pursuant
to Section 2.7 from (y) $50,000,000, subject in all cases to the Trading Market
Limit.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor hereby makes the following representations and warranties to
the Company:
SECTION 3.1 ORGANIZATION AND STANDING OF THE INVESTOR. The Investor is an
international business company duly organized, validly existing and in good
standing under the laws of the British Virgin Islands.
SECTION 3.2 AUTHORIZATION AND POWER. The Investor has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement and to purchase the Shares in accordance with the terms hereof.
The execution, delivery and performance of this Agreement by the Investor and
the consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action, and no further consent or
authorization of the Investor, its Board of Directors or stockholders is
required. This Agreement has been duly executed and delivered by the Investor.
This Agreement constitutes a valid and binding obligation of the Investor
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership, or
similar laws relating to, or affecting generally the enforcement of, creditor's
rights and remedies or by other equitable principles of general application.
SECTION 3.3 NO CONFLICTS. The execution, delivery and performance by the
Investor of this Agreement and the consummation by the Investor of the
transactions contemplated herein do not and shall not (i) result in a violation
of such Investor's charter documents, bylaws or other applicable organizational
instruments, (ii) conflict with, constitute a default (or an event which, with
notice or lapse of time or both, would become a default) under, or give rise to
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Investor is a party or is
bound, (iii) create or impose any lien, charge or encumbrance on any property of
the Investor under any agreement or any commitment to which the Investor is
party or under which the Investor is bound or under which any of its properties
or assets are bound, or (iv) result in a violation of any federal, state, local
or foreign statute, rule, or regulation, or any order, judgment or decree of any
court or governmental agency applicable to the Investor or by which any of its
properties or assets are bound or affected, except, in the case of clauses (ii),
(iii)
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and (iv), for such conflicts, defaults, terminations, amendments, acceleration,
cancellations, liens, charges, encumbrances and violations as would not,
individually or in the aggregate, prohibit or otherwise interfere with the
ability of the Investor to enter into and perform its obligations under this
Agreement in any material respect. The Investor is not required under federal,
state, local or foreign law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or to purchase the Shares in accordance with
the terms hereof.
SECTION 3.4 INFORMATION. The Investor and its advisors have been furnished
with all materials relating to the business, financial condition, management and
operations of the Company and materials relating to the offer and sale of the
Shares which have been requested by the Investor. The Investor and its advisors
have been afforded the opportunity to ask questions of representatives of the
Company. The Investor has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Shares. The Investor understands that it (and not the
Company) shall be responsible for its own tax liabilities that may arise as a
result of this investment or the transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered by the Company to
the Investor (which is hereby incorporated by reference in, and constitutes an
integral part of, this Agreement) (the "Disclosure Schedule"), the Company
hereby makes the following representations and warranties to the Investor:
SECTION 4.1 ORGANIZATION, GOOD STANDING AND POWER. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
own, lease and operate its properties and assets and to conduct its business as
it is now being conducted. The Company and each Subsidiary is duly qualified as
a foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, except for any jurisdiction in which the
failure to be so qualified would not have a Material Adverse Effect.
SECTION 4.2 AUTHORIZATION, ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and perform this Agreement and to
issue and sell the Shares in accordance with the terms hereof. Except for
approvals of the Company's Board of Directors or a committee thereof as may be
required in connection with any issuance and sale of Shares to the Investor
hereunder (which approvals shall be obtained prior to the delivery of any Fixed
Request Notice), the execution, delivery and performance by the Company of this
Agreement and the consummation by it of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action and no
further consent or authorization of the Company or its Board of Directors or
stockholders is required This Agreement has been duly executed and delivered by
the Company and constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
9
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor's
rights and remedies or by other equitable principles of general application.
SECTION 4.3 CAPITALIZATION. The authorized capital stock of the Company and
the shares thereof issued and outstanding as of the dates set forth in the
Commission Documents are as set forth in the Commission Documents. All of the
outstanding shares of Common Stock have been duly authorized and validly issued,
and are fully paid and nonassessable. Except as set forth in the Commission
Documents, as of the Effective Date, no shares of Common Stock were entitled to
preemptive rights or registration rights and there were no outstanding options,
warrants, scrip, rights to subscribe to, call or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, any shares of capital stock of the Company. Except as set forth in the
Commission Documents, there were no contracts, commitments, understandings, or
arrangements by which the Company is or may become bound to issue additional
shares of the capital stock of the Company or options, securities or rights
convertible into or exchangeable for any shares of capital stock of the Company.
Except for customary transfer restrictions contained in agreements entered into
by the Company to sell restricted securities or as set forth in the Commission
Documents, as of the Effective Date, the Company was not a party to, and it had
no knowledge of, any agreement restricting the voting or transfer of any shares
of the capital stock of the Company. Except as set forth in the Commission
Documents, the offer and sale of all capital stock, convertible or exchangeable
securities, rights, warrants or options of the Company issued prior to the
Effective Date complied with all applicable federal and state securities laws,
and no stockholder has any right of rescission or damages or any "put" or
similar right with respect thereto which would have a Material Adverse Effect.
The Company has furnished or made available to the Investor via the Commission's
Electronic Data Gathering, Analysis and Retrieval System ("▇▇▇▇▇") true and
correct copies of the Company's Certificate of Incorporation as in effect on the
Effective Date (the "Charter"), and the Company's Bylaws as in effect on the
Effective Date (the "Bylaws"), and true and correct copies (redacted as
appropriate) of all executed resolutions of the Company's Board of Directors
(and committees thereof) relating to the capital stock of the Company (and
transactions in respect thereof) since December 31, 2004 (except with respect to
issuances of shares of capital stock of the Company to directors or employees of
the Company as fees or compensation that were duly approved by the Company's
Board of Directors or a committee thereof).
SECTION 4.4 ISSUANCE OF SHARES. The Shares to be issued under this
Agreement have been or will be duly authorized by all necessary corporate action
and, when paid for or issued in accordance with the terms hereof, the Shares
shall be validly issued and outstanding, fully paid and nonassessable, and the
Investor shall be entitled to all rights accorded to a holder and beneficial
owner of Common Stock.
SECTION 4.5 NO CONFLICTS. The execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated herein do not and shall not (i) result in a violation
of any provision of the Company's Charter or Bylaws, (ii) conflict with,
constitute a default (or an event which, with notice or lapse of time or both,
would become a default) under, or give rise to any rights of termination,
amendment,
10
acceleration or cancellation of, any material agreement, mortgage, deed of
trust, indenture, note, bond, license, lease agreement, instrument or obligation
to which the Company or any of its Significant Subsidiaries is a party or is
bound (including, without limitation, any listing agreement with the Trading
Market), (iii) create or impose a lien, charge or encumbrance on any property of
the Company or any of its Significant Subsidiaries under any agreement or any
commitment to which the Company or any of its Significant Subsidiaries is a
party or under which the Company or any of its Significant Subsidiaries is bound
or under which any of their respective properties or assets are bound, or (iv)
result in a violation of any federal, state, local or foreign statute, rule,
regulation, order, judgment or decree applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries are bound or affected, except, in the case of clauses (ii), (iii)
and (iv), for such conflicts, defaults, terminations, amendments, acceleration,
cancellations, liens, charges, encumbrances and violations as would not,
individually or in the aggregate, have a Material Adverse Effect. The Company is
not required under federal, state, local or foreign law, rule or regulation to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement, or to issue and
sell the Shares to the Investor in accordance with the terms hereof (other than
any filings which may be required to be made by the Company with the Commission
or the Trading Market subsequent to the Effective Date, including but not
limited to a Prospectus Supplement under Sections 1.4 and 5.9 of this Agreement,
and any registration statement, prospectus or prospectus supplement which has
been or may be filed pursuant to this Agreement).
SECTION 4.6 COMMISSION DOCUMENTS, FINANCIAL STATEMENTS. (a) The Common
Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act and,
except as disclosed in the Commission Documents, as of the Effective Date the
Company had timely filed (giving effect to permissible extensions in accordance
with Rule 12b-25 under the Exchange Act) all Commission Documents. The Company
has delivered or made available to the Investor via ▇▇▇▇▇ or otherwise true and
complete copies of the Commission Documents filed with the Commission prior to
the Effective Date (including, without limitation, the 2005 Form 10-K) and has
delivered or made available to the Investor via ▇▇▇▇▇ or otherwise true and
complete copies of all of the Commission Documents heretofore incorporated by
reference in the Registration Statement and the Prospectus. The Company has not
provided to the Investor any information which, according to applicable law,
rule or regulation, was required to have been disclosed publicly by the Company
but which has not been so disclosed, other than with respect to the transactions
contemplated by this Agreement. As of its filing date, each Commission Document
filed with the Commission and incorporated by reference in the Registration
Statement and the Prospectus (including, without limitation, the 2005 Form 10-K)
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as applicable, and other federal, state and local laws, rules
and regulations applicable to it, and, as of its filing date, such Commission
Document did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Each Commission Document to be filed with the Commission
after the Effective Date and incorporated by reference in the Registration
Statement, the Prospectus and any Prospectus Supplement required to be filed
pursuant to Sections 1.4 and 5.9 hereof during the Investment Period (including,
without limitation, the Current Report), when such document becomes
11
effective or is filed with the Commission, as the case may be, shall comply in
all material respects with the requirements of the Securities Act or the
Exchange Act, as applicable, and other federal, state and local laws, rules and
regulations applicable to it, and shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(b) The financial statements, together with the related notes and
schedules, of the Company included in the Commission Documents comply as to form
in all material respects with all applicable accounting requirements and the
published rules and regulations of the Commission and all other applicable rules
and regulations with respect thereto. Such financial statements, together with
the related notes and schedules, have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements), and fairly present in all
material respects the financial condition of the Company and its consolidated
Subsidiaries as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).
(c) The Company has timely filed with the Commission and made
available to the Investor via ▇▇▇▇▇ or otherwise all certifications and
statements required by (x) Rule 13a-14 or Rule 15d-14 under the Exchange Act or
(y) 18 U.S.C. Section 1350 (Section 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002
("SOXA")) with respect to all relevant Commission Documents. The Company is in
compliance in all material respects with the provisions of SOXA applicable to it
as of the date hereof. The Company maintains disclosure controls and procedures
required by Rule 13a-15 or Rule 15d-15 under the Exchange Act; such controls and
procedures are effective to ensure that all material information concerning the
Company and its Subsidiaries is made known on a timely basis to the individuals
responsible for the timely and accurate preparation of the Company's Commission
filings and other public disclosure documents. As used in this Section 4.6(c),
the term "file" shall be broadly construed to include any manner in which a
document or information is furnished, supplied or otherwise made available to
the Commission.
(d) Deloitte & Touche LLP, who have expressed their opinions on the
audited financial statements and related schedules included or incorporated by
reference in the Registration Statement and the Base Prospectus is, with respect
to the Company, an independent registered public accounting firm as required by
the rules of the Public Company Accounting Oversight Board.
SECTION 4.7 SUBSIDIARIES. The 2005 Form 10-K sets forth each Subsidiary of
the Company as of the Effective Date, showing its jurisdiction of incorporation
or organization and the percentage of the Company's ownership of the outstanding
capital stock or other ownership interests of such Subsidiary, and the Company
does not have any other Subsidiaries as of the Effective Date.
12
SECTION 4.8 NO MATERIAL ADVERSE EFFECT. Since September 30, 2006, the
Company has not experienced or suffered any Material Adverse Effect, and there
exists no current state of facts, condition or event which would have a Material
Adverse Effect, except (i) as disclosed in any Commission Documents filed since
September 30, 2006 or (ii) continued losses from operations.
SECTION 4.9 INDEBTEDNESS. The Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 2006 sets forth, as of September 30,
2006, all outstanding secured and unsecured Indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has commitments through
such date. For the purposes of this Agreement, "Indebtedness" shall mean (a) any
liabilities for borrowed money or amounts owed in excess of $10,000,000 (other
than trade accounts payable incurred in the ordinary course of business), (b)
all guaranties, endorsements, indemnities and other contingent obligations in
respect of Indebtedness of others in excess of $10,000,000, whether or not the
same are or should be reflected in the Company's balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(c) the present value of any lease payments in excess of $10,000,000 due under
leases required to be capitalized in accordance with GAAP. There is no existing
or continuing default or event of default in respect of any Indebtedness of the
Company or any of its Subsidiaries.
SECTION 4.10 TITLE TO ASSETS. Each of the Company and its Subsidiaries has
good and marketable title to all of their respective real and personal property
reflected in the Commission Documents, free of mortgages, pledges, charges,
liens, security interests or other encumbrances, except for those indicated in
the Commission Documents or those that would not have a Material Adverse Effect.
All real property leases of the Company are valid and subsisting and in full
force and effect in all material respects.
SECTION 4.11 ACTIONS PENDING. There is no action, suit, claim,
investigation or proceeding pending, or to the knowledge of the Company
threatened in writing, against the Company or any Subsidiary which questions the
validity of this Agreement or the transactions contemplated hereby or any action
taken or to be taken pursuant hereto or thereto. Except as set forth in the
Commission Documents, there is no action, suit, claim, investigation or
proceeding pending, or to the knowledge of the Company threatened in writing,
against or involving the Company, any Subsidiary or any of their respective
properties or assets, or involving any officers or directors of the Company or
any of its Subsidiaries, including, without limitation, any securities class
action lawsuit or stockholder derivative lawsuit, in each case which, if
determined adversely to the Company, its Subsidiary or any officer or director
of the Company or its Subsidiaries, would have a Material Adverse Effect. With
respect to each of those certain actions under the caption "Item 1. Legal
Proceedings" in the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 2006, there has been no event or change required to
be disclosed in a filing under the Exchange Act that has not been so disclosed.
SECTION 4.12 COMPLIANCE WITH LAW. The business of the Company and the
Subsidiaries has been and is presently being conducted in compliance with all
applicable federal, state, local and foreign governmental laws, rules,
regulations and ordinances, except as set forth
13
in the Commission Documents and except for such non-compliance which,
individually or in the aggregate, would not have a Material Adverse Effect.
SECTION 4.13 CERTAIN FEES. Except for the placement fee payable by the
Company to Reedland Capital Partners, an Institutional Division of the Financial
West Group, Member NASD/SIPC ("Reedland"), which shall be set forth in a
separate placement agency agreement between the Company and Reedland (a true and
complete fully executed copy of which has heretofore been provided to the
Investor), no brokers, finders or financial advisory fees or commissions shall
be payable by the Company or any Subsidiary (or any of their respective
affiliates) with respect to the transactions contemplated by this Agreement.
SECTION 4.14 OPERATION OF BUSINESS. (a) The Company or one or more of its
Subsidiaries possesses such permits, licenses, approvals, consents and other
authorizations (including licenses, accreditation and other similar
documentation or approvals of any local health departments) (collectively,
"Governmental Licenses") issued by the appropriate federal, state, local or
foreign regulatory agencies or bodies, including, without limitation, the United
States Food and Drug Administration ("FDA"), necessary to conduct the business
now operated by it, except where the failure to possess such Governmental
Licenses, individually or in the aggregate, would not have a Material Adverse
Effect. The Company and its Subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses and all applicable FDA rules and
regulations, guidelines and policies, and all applicable rules and regulations,
guidelines and policies of any governmental authority exercising authority
comparable to that of the FDA (including any non-governmental authority whose
approval or authorization is required under foreign law comparable to that
administered by the FDA), except where the failure to so comply, individually or
in the aggregate, would not have a Material Adverse Effect. All of the
Governmental Licenses are valid and in full force and effect, except where the
invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect, individually or in the aggregate, would
not have a Material Adverse Effect. As to each product that is subject to FDA
regulation or similar legal provisions in any foreign jurisdiction that is
developed, manufactured, tested, packaged, labeled, marketed, sold, distributed
and/or commercialized by the Company or any of its Subsidiaries, each such
product is being developed, manufactured, tested, packaged, labeled, marketed,
sold, distributed and/or commercialized in compliance with all applicable
requirements of the FDA (and any non-governmental authority whose approval or
authorization is required under foreign law comparable to that administered by
the FDA), including, but not limited to, those relating to investigational use,
investigational device exemption, premarket notification, premarket approval,
good clinical practices, good manufacturing practices, record keeping, filing of
reports, and patient privacy and medical record security, except where such
non-compliance, individually or in the aggregate, would not have a Material
Adverse Effect. As to each product or product candidate of the Company or any of
its Subsidiaries subject to FDA regulation or similar legal provision in any
foreign jurisdiction, all manufacturing facilities, if any, of the Company and
its Subsidiaries are operated in compliance with the FDA's Quality System
Regulation requirements at 21 C.F.R. Part 820, as applicable, except where such
non-compliance, individually or in the aggregate, would not have a Material
Adverse Effect. Except as set forth in the Commission Documents or the
Registration Statement, neither the Company nor any of its Subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses or relating to a potential violation of, failure
to comply with, or request
14
to produce additional information under, any FDA rules and regulations,
guidelines or policies which, if the subject of any unfavorable decision, ruling
or finding, individually or in the aggregate, would have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries has received any
correspondence, notice or request from the FDA that is of the nature that would
be required to be set forth in the Commission Documents or the Registration
Statement (including, without limitation, in any "Risk Factors" disclosure
therein) and has not been so set forth or incorporated by reference therein,
including, without limitation, notice that any one or more products or product
candidates of the Company or any of its Subsidiaries failed to receive approval
from the FDA for use for any one or more indications, and neither the Company
nor any of its Subsidiaries knows of any basis therefor. This Section 4.14 does
not relate to environmental matters, such items being the subject of Section
4.15.
(b) To the Company's knowledge, except as set forth in the Commission
Documents, the Company or one or more of its Subsidiaries owns or possesses
adequate patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names, trade dress, logos, copyrights and other intellectual property,
including, without limitation, all of the intellectual property described in the
Commission Documents as being owned or licensed by the Company (collectively,
"Intellectual Property"), necessary to carry on the business now operated by it.
Except as set forth in the Commission Documents, there are no actions, suits or
judicial proceedings pending, or to the Company's knowledge threatened in
writing, relating to patents or proprietary information to which the Company or
any of its Subsidiaries is a party or of which any property of the Company or
any of its Subsidiaries is subject, and neither the Company nor any of its
Subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which could render any Intellectual
Property invalid or inadequate to protect the interest of the Company and its
Subsidiaries therein, and which infringement or conflict (if the subject of any
unfavorable decision, ruling or finding) or invalidity or inadequacy,
individually or in the aggregate, would have a Material Adverse Effect.
(c) All pre-clinical and clinical trials conducted, supervised or
monitored by, or on behalf of, the Company or any of its Subsidiaries have been
conducted in compliance with all applicable federal, state, local and foreign
laws, and the regulations and requirements of any applicable governmental
entity, including, but not limited to, FDA good clinical practice and good
laboratory practice requirements, except where such failure would not have a
Material Adverse Effect. Except as set forth in the Registration Statement or
the Commission Documents, neither the Company nor any of its Subsidiaries has
received any notices or correspondence from the FDA or any other governmental
agency requiring the termination, suspension, delay or modification of any
pre-clinical or clinical trials conducted by, or on behalf of, the Company or
any of its Subsidiaries or in which the Company or any of its Subsidiaries has
participated that are described in the Registration Statement or the Commission
Documents, if any, or the results of which are referred to in the Registration
Statement or the Commission Documents, in each case except as would not have a
Material Adverse Effect.
SECTION 4.15 ENVIRONMENTAL COMPLIANCE. Except as disclosed in the
Commission Documents, the Company and each of its Subsidiaries have obtained all
material approvals,
15
authorization, certificates, consents, licenses, orders and permits or other
similar authorizations of all governmental authorities, or from any other
person, that are required under any Environmental Laws, except for any
approvals, authorization, certificates, consents, licenses, orders and permits
or other similar authorizations the failure of which to obtain does not or would
not have a Material Adverse Effect. "Environmental Laws" shall mean all
applicable laws relating to the protection of the environment including, without
limitation, all requirements pertaining to reporting, licensing, permitting,
controlling, investigating or remediating emissions, discharges, releases or
threatened releases of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, materials or wastes, whether solid, liquid or
gaseous in nature, into the air, surface water, groundwater or land, or relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, material or wastes, whether solid, liquid or
gaseous in nature. Except for such instances as would not, individually or in
the aggregate, have a Material Adverse Effect, to the best of the Company's
knowledge, there are no past or present events, conditions, circumstances,
incidents, actions or omissions relating to or in any way affecting the Company
or its Subsidiaries that violate or could reasonably be expected to violate any
Environmental Law after the Effective Date or that could reasonably be expected
to give rise to any environmental liability, or otherwise form the basis of any
claim, action, demand, suit, proceeding, hearing, study or investigation (i)
under any Environmental Law, or (ii) based on or related to the manufacture,
processing, distribution, use, treatment, storage (including without limitation
underground storage tanks), disposal, transport or handling, or the emission,
discharge, release or threatened release of any hazardous substance.
SECTION 4.16 MATERIAL AGREEMENTS. Except as set forth in the Commission
Documents, neither the Company nor any Subsidiary of the Company is a party to
any written or oral contract, instrument, agreement commitment, obligation, plan
or arrangement, a copy of which would be required to be filed with the
Commission as an exhibit to an annual report on Form 10-K (collectively,
"Material Agreements"). Except as set forth in the Commission Documents, the
Company and each of its Subsidiaries have performed in all material respects all
the obligations required to be performed by them under the Material Agreements,
have received no notice of default or an event of default by the Company or any
of its Subsidiaries thereunder and are not aware of any basis for the assertion
thereof, and neither the Company or any of its Subsidiaries nor, to the best
knowledge of the Company, any other contracting party thereto are in default
under any Material Agreement now in effect, the result of which would have a
Material Adverse Effect. Except as set forth in the Commission Documents, each
of the Material Agreements is in full force and effect, and constitutes a legal,
valid and binding obligation enforceable in accordance with its terms against
the Company and/or any of its Subsidiaries and, to the best knowledge of the
Company, each other contracting party thereto, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor's rights and remedies or by
other equitable principles of general application.
SECTION 4.17 TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Commission Documents, there are no loans, leases, agreements, contracts, royalty
agreements, management contracts, service arrangements or other continuing
transactions exceeding $120,000 between (a) the Company or any Subsidiary, on
the one hand, and (b) any person or entity who would be
16
covered by Item 404(a) of Regulation S-K, on the other hand. Except as disclosed
in the Commission Documents, there are no outstanding amounts payable to or
receivable from, or advances by the Company or any of its Subsidiaries to, and
neither the Company nor any of its Subsidiaries is otherwise a creditor of or
debtor to, any beneficial owner of more than 5% of the outstanding shares of
Common Stock, or any director, employee or affiliate of the Company or any of
its Subsidiaries, other than (i) reimbursement for reasonable expenses incurred
on behalf of the Company or any of its Subsidiaries or (ii) as part of the
normal and customary terms of such persons' employment or service as a director
with the Company or any of its Subsidiaries.
SECTION 4.18 SECURITIES ACT; NASD CONDUCT RULES. The Company has complied
with all applicable federal and state securities laws in connection with the
offer, issuance and sale of the Shares hereunder.
(i) The Company has prepared and filed with the Commission in
accordance with the provisions of the Securities Act the Registration Statement,
including a base prospectus relating to the Shares. The Registration Statement
was declared effective by order of the Commission on February 6, 2007. As of the
date hereof, no stop order suspending the effectiveness of the Registration
Statement has been issued by the Commission or is continuing in effect under the
Securities Act and no proceedings therefor are pending before or, to the
Company's knowledge, threatened by the Commission. No order preventing or
suspending the use of the Prospectus or any Permitted Free Writing Prospectus
has been issued by the Commission.
(ii) The Company meets the requirements for the use of Form S-3 under
the Securities Act. The Commission has not notified the Company of any objection
to the use of the form of the Registration Statement. The Registration Statement
complied in all material respects on the date on which it was declared effective
by the Commission and on the Effective Date of this Agreement, and will comply
in all material respects on each applicable Fixed Request Exercise Date and on
each applicable Settlement Date, with the requirements of the Securities Act and
the Registration Statement (including the documents incorporated by reference
therein) did not on the date it was declared effective by the Commission and on
the Effective Date of this Agreement and shall not on each applicable Fixed
Request Exercise Date and on each applicable Settlement Date contain an 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 not misleading;
provided that this representation and warranty does not apply to statements in
or omissions from the Registration Statement made in reliance upon and in
conformity with information relating to the Investor furnished to the Company in
writing by or on behalf of the Investor expressly for use therein. The
Registration Statement, as of the Effective Date, meets the requirements set
forth in Rule 415(a)(1)(x) under the Securities Act. The Base Prospectus
complied in all material respects on its date and on the Effective Date, and
will comply in all material respects on each applicable Fixed Request Exercise
Date and on each applicable Settlement Date, with the requirements of the
Securities Act and did not on its date and on the Effective Date and shall not
on each applicable Fixed Request Exercise Date and on each applicable Settlement
Date contain an 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 the light of the circumstances under which they were made, not misleading;
provided that this representation and warranty does not apply to statements in
or omissions from the Base Prospectus made in reliance upon and in conformity
17
with information relating to the Investor furnished to the Company in writing
by or on behalf of the Investor expressly for use therein.
(iii) In accordance with Rule 2710(b)(7)(C)(i) of the Conduct Rules of
the National Association of Securities Dealers, Inc., the offering of the Shares
pursuant to this Agreement has been registered with the Commission on Form S-3
under the Securities Act pursuant to the standards for Form S-3 in effect prior
to October 21, 1992, and the Shares are being offered pursuant to Rule 415
promulgated under the Securities Act.
(iv) Each Prospectus Supplement required to be filed pursuant to
Sections 1.4 and 5.9 hereof, on its date and on the applicable Settlement Date,
shall comply in all material respects with the provisions of the Securities Act
and shall not on its date and on the applicable Settlement Date contain an
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 the light of
the circumstances under which they are made, not misleading, except that this
representation and warranty does not apply to statements in or omissions from
any Prospectus Supplement made in reliance upon and in conformity with
information relating to the Investor furnished to the Company in writing by or
on behalf of the Investor expressly for use therein.
(v) At the earliest time after the filing of the Registration
Statement that the Company or another offering participant made a bona fide
offer (within the meaning of Rule 164(h)(2) under the Securities Act) relating
to the Shares, the Company was not and is not an Ineligible Issuer (as defined
in Rule 405 under the Securities Act), without taking account of any
determination by the Commission pursuant to Rule 405 that it is not necessary
that the Company be considered an Ineligible Issuer. Each Permitted Free Writing
Prospectus (a) shall conform in all material respects to the requirements of the
Securities Act on the date of its first use, (b) when considered together with
the Prospectus on each applicable Fixed Request Exercise Date and on each
applicable Settlement Date, shall not contain an 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 the light of the circumstances under which
they are made, not misleading, and (c) shall not include any information that
conflicts with the information contained in the Registration Statement,
including any document incorporated by reference therein and any Prospectus
Supplement deemed to be a part thereof that has not been superseded or modified.
The immediately preceding sentence does not apply to statements in or omissions
from any Permitted Free Writing Prospectus made in reliance upon and in
conformity with information relating to the Investor furnished to the Company in
writing by or on behalf of the Investor expressly for use therein.
(vi) Prior to the Effective Date, the Company has not distributed any
offering material in connection with the offering and sale of the Shares. From
and after the Effective Date and prior to the completion of the distribution of
the Shares, the Company shall not distribute any offering material in connection
with the offering and sale of the Shares, other than the Registration Statement,
the Base Prospectus as supplemented by any Prospectus Supplement or a Permitted
Free Writing Prospectus.
SECTION 4.19 EMPLOYEES. As of the Effective Date, neither the Company nor
any Subsidiary of the Company has any collective bargaining arrangements or
agreements covering
18
any of its employees, except as set forth in or not required to be set forth in
the Commission Documents. As of the Effective Date, except as disclosed in the
Registration Statement or the Commission Documents, no officer, consultant or
key employee of the Company or any Subsidiary whose termination, either
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect, has terminated or, to the knowledge of the Company, has
any present intention of terminating his or her employment or engagement with
the Company or any Subsidiary.
SECTION 4.20 USE OF PROCEEDS. The proceeds from the sale of the Shares
shall be used by the Company and its Subsidiaries as set forth in the Base
Prospectus and any Prospectus Supplement filed pursuant to Sections 1.4 and 5.9.
SECTION 4.21 PUBLIC UTILITY HOLDING COMPANY ACT AND INVESTMENT COMPANY ACT
STATUS. The Company is not a "holding company" or a "public utility company" as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended. The Company is not, and as a result of the consummation of the
transactions contemplated by this Agreement and the application of the proceeds
from the sale of the Shares as set forth in the Base Prospectus and any
Prospectus Supplement shall not be, an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
SECTION 4.22 ERISA. No liability to the Pension Benefit Guaranty
Corporation has been incurred with respect to any Plan by the Company or any of
its Subsidiaries which has had or would have a Material Adverse Effect. No
"prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) or "accumulated funding deficiency" (as defined in Section 203 of
ERISA) or any of the events set forth in Section 4043(b) of ERISA has occurred
with respect to any Plan which has had or would have a Material Adverse Effect,
and the execution and delivery of this Agreement and the issuance and sale of
the Shares hereunder shall not result in any of the foregoing events. Each Plan
is in compliance in all material respects with applicable law, including ERISA
and the Code; the Company has not incurred and does not expect to incur
liability under Title IV of ERISA with respect to the termination of, or
withdrawal from, any Plan; and each Plan for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred, whether by
action or failure to act, which would cause the loss of such qualifications. As
used in this Section 4.22, the term "Plan" shall mean an "employee pension
benefit plan" (as defined in Section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have been made, by
the Company or any Subsidiary or by any trade or business, whether or not
incorporated, which, together with the Company or any Subsidiary, is under
common control, as described in Section 414(b) or (c) of the Code.
SECTION 4.23 TAXES. The Company (i) has filed all necessary federal, state
and foreign income and franchise tax returns or has duly requested extensions
thereof, except for those the failure of which to file would not have a Material
Adverse Effect, (ii) has paid all federal, state, local and foreign taxes due
and payable for which it is liable, except to the extent that any such taxes are
being contested in good faith and by appropriate proceedings, except for such
taxes the failure of which to pay would not have a Material Adverse Effect, and
(iii) does not have any tax
19
deficiency or claims outstanding or assessed or, to the best of the Company's
knowledge, proposed against it which would have a Material Adverse Effect.
SECTION 4.24 INSURANCE. The Company carries, or is covered by, insurance in
such amounts and covering such risks as the Company deems adequate for the
conduct of its and its Subsidiaries' businesses and the value of their
respective properties and as is customary for companies engaged in similar
businesses in similar industries.
SECTION 4.25 ACKNOWLEDGEMENT REGARDING INVESTOR'S PURCHASE OF SHARES. The
Company acknowledges and agrees that the Investor is acting solely in the
capacity of an arm's length purchaser with respect to this Agreement and the
transactions contemplated hereunder. The Company further acknowledges that the
Investor is not acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement and the transactions
contemplated hereunder, and any advice given by the Investor or any of its
representatives or agents in connection with this Agreement and the transactions
contemplated hereunder is merely incidental to the Investor's purchase of the
Shares.
ARTICLE V
COVENANTS
The Company covenants with the Investor, and the Investor covenants with
the Company, as follows, which covenants of one party are for the benefit of the
other party, during the Investment Period:
SECTION 5.1 SECURITIES COMPLIANCE. The Company shall notify the Commission
and the Trading Market, as applicable, in accordance with their respective rules
and regulations, of the transactions contemplated by this Agreement, and shall
take all necessary action, undertake all proceedings and obtain all
registrations, permits, consents and approvals for the legal and valid issuance
of the Shares to the Investor in accordance with the terms of this Agreement.
SECTION 5.2 REGISTRATION AND LISTING. The Company shall take all action
necessary to cause the Common Stock to continue to be registered as a class of
securities under Sections 12(b) or 12(g) of the Exchange Act, shall comply with
its reporting and filing obligations under the Exchange Act, and shall not take
any action or file any document (whether or not permitted by the Securities Act)
to terminate or suspend such registration or to terminate or suspend its
reporting and filing obligations under the Exchange Act or Securities Act,
except as permitted herein. The Company shall take all action necessary to
continue the listing and trading of its Common Stock and the listing of the
Shares purchased by Investor hereunder on the Trading Market, and shall comply
with the Company's reporting, filing and other obligations under the bylaws,
listed securities maintenance standards and other rules of the Trading Market.
SECTION 5.3 COMPLIANCE WITH LAWS.
(i) The Company shall comply, and cause each Subsidiary to comply, (a)
with all laws, rules, regulations and orders applicable to the business and
operations of the Company and its Subsidiaries except as would not have a
Material Adverse Effect and (b) with all applicable provisions of the Securities
Act, the Exchange Act and the listing standards of the Trading Market. Without
limiting the generality of the foregoing, neither the Company nor any
20
of its officers, directors or affiliates has taken or will take, directly or
indirectly, any action designed or intended to stabilize or manipulate the price
of any security of the Company, or which caused or resulted in, or which would
in the future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company.
(ii) The Investor shall comply with all laws, rules, regulations and
orders applicable to the performance by it of its obligations under this
Agreement and its investment in the Shares, except as would not, individually or
in the aggregate, prohibit or otherwise interfere with the ability of the
Investor to enter into and perform its obligations under this Agreement in any
material respect. Without limiting the foregoing, the Investor shall comply with
all applicable provisions of the Securities Act and the Exchange Act.
SECTION 5.4 KEEPING OF RECORDS AND BOOKS OF ACCOUNT; FOREIGN CORRUPT
PRACTICES ACT.
(i) The Company shall keep and cause each Subsidiary to keep adequate
records and books of account, in which complete entries shall be made in
accordance with GAAP consistently applied, reflecting all financial transactions
of the Company and its Subsidiaries, and in which, for each fiscal year, all
proper reserves for depreciation, depletion, obsolescence, amortization, taxes,
bad debts and other purposes in connection with its business shall be made. The
Company shall maintain a system of internal accounting controls which are
sufficient to provide reasonable assurance that (a) transactions are executed
with management's authorization; (b) transactions are recorded as necessary to
permit preparation of the consolidated financial statements of the Company and
to maintain accountability for the Company's consolidated assets; (c) access to
the Company's assets is permitted only in accordance with management's
authorization; and (d) the reporting of the Company's assets is compared with
existing assets at regular intervals.
(ii) Neither the Company, nor any of its Subsidiaries, nor to the
knowledge of the Company, any of their respective directors, officers, agents,
employees or any other persons acting on their behalf shall, in connection with
the operation of the Company's and its Subsidiaries' respective businesses, (a)
use any corporate funds for unlawful contributions, payments, gifts or
entertainment or to make any unlawful expenditures relating to political
activity to government officials, candidates or members of political parties or
organizations, (b) pay, accept or receive any unlawful contributions, payments,
expenditures or gifts, or (c) violate or operate in noncompliance with any
export restrictions, anti-boycott regulations, embargo regulations or other
applicable domestic or foreign laws and regulations.
(iii) Subject to the requirements of Section 5.12 hereof, from time to
time from and after the period beginning with the third Trading Day immediately
preceding each Fixed Request Exercise Date through and including the applicable
Settlement Date, the Company shall make available for inspection and review by
the Investor, customary documentation allowing the Investor and/or its appointed
counsel or advisors to conduct due diligence.
SECTION 5.5 LIMITATIONS ON HOLDINGS AND ISSUANCES. At no time during the
term of this Agreement shall the Investor directly or indirectly own more than
9.9% of the then issued and outstanding shares of Common Stock. The Company
shall not be obligated to issue and the
21
Investor shall not be obligated to purchase any shares of Common Stock which
would result in the issuance under this Agreement to the Investor at any time of
Shares which, when aggregated with all other shares of Common Stock then owned
beneficially by the Investor, would result in the beneficial ownership by the
Investor of more than 9.9% of the then issued and outstanding shares of the
Common Stock.
SECTION 5.6 OTHER AGREEMENTS AND OTHER FINANCINGS.
(i) The Company shall not enter into, announce or recommend to its
stockholders any agreement, plan, arrangement or transaction in or of which the
terms thereof would restrict, materially delay, conflict with or impair the
ability or right of the Company or any Subsidiary to perform its obligations
under this Agreement, including, without limitation, the obligation of the
Company to deliver Shares to the Investor in respect of a Fixed Request or
Optional Amount on the applicable Settlement Date.
(ii) The Company shall notify the Investor, within 48 hours, if it
enters into any agreement, plan, arrangement or transaction with a third party,
the principal purpose of which is to obtain during a Pricing Period an Other
Financing not constituting an Acceptable Financing (an "Other Financing
Notice"); provided, however, that the Company shall notify the Investor as
promptly as practicable but in no event later than 24 hours after (an
"Integration Notice"), if it enters into any agreement, plan, arrangement or
transaction with a third party, the principal purpose of which is to obtain an
Other Financing which may be integrated with the transactions contemplated by
this Agreement (under the written rules, regulations and policies of the
National Association of Securities Dealers, Inc.) for purposes of determining
whether approval of the Company's stockholders is required under any bylaw,
listed securities maintenance standards or other rules of the Trading Market
and, if required under applicable law, including, without limitation, Regulation
FD promulgated by the Commission, or under the applicable rules and regulations
of the Trading Market, the Company shall publicly disclose such information in
accordance with Regulation FD and the applicable rules and regulations of the
Trading Market. For purposes of this Section 5.6(ii), any press release issued
by, or Commission Document filed by, the Company shall constitute sufficient
notice, provided that it is issued or filed, as the case may be, within the time
requirements set forth in the first sentence of this Section 5.6(ii) for an
Other Financing Notice or an Integration Notice, as applicable. For greater
certainty, the entry by the Company into any agreement, plan, arrangement or
transaction with a third party to obtain an Other Financing outside of a Pricing
Period shall not trigger any requirement of the Company to deliver an Other
Financing Notice (provided that if the entry into such agreement, plan,
arrangement or transaction outside of a Pricing Period requires delivery of an
Integration Notice as provided in this Section 5.6(ii), the Company shall
deliver such Integration Notice as provided in this Section 5.6(ii)). During any
Pricing Period in which the Company is required to provide notice pursuant to
the first sentence of this Section 5.6(ii), the Investor shall (i) have the
option to purchase the Shares subject to the Fixed Request at (x) the price
therefor in accordance with the terms of this Agreement or (y) the third party's
per share purchase price in connection with the Other Financing, net of such
third party's discounts, Warrant Value and fees, or (ii) the Investor may elect
to not purchase any Shares subject to the Fixed Request for that Pricing Period.
An "Other Financing" shall mean (x) the issuance of Common Stock for a purchase
price less than, or the issuance of securities convertible into or exchangeable
for Common Stock at an exercise or conversion price (as the case may be) less
22
than, the then Current Market Price of the Common Stock (in each case, after all
fees, discounts, Warrant Value and commissions associated with the transaction)
(a "Below Market Offering"); (y) the implementation by the Company of any
mechanism in respect of any securities convertible into or exchangeable for
Common Stock for the reset of the purchase price of the Common Stock to below
the then Current Market Price of the Common Stock (including, without
limitation, any antidilution or similar adjustment provisions in respect of any
Company securities, but specifically excluding customary adjustments for stock
splits, stock dividends, stock combinations and similar events); or (z) the
issuance of options, warrants or similar rights of subscription in each case not
constituting an Acceptable Financing. "Acceptable Financing" shall mean the
issuance by the Company of: (1) shares of Common Stock or securities convertible
into or exchangeable for Common Stock other than in connection with a Below
Market Offering; (2) shares of Common Stock or securities convertible into or
exchangeable for Common Stock in connection with awards under the Company's
benefit and equity plans and arrangements or shareholder rights plan and the
issuance of shares of Common Stock upon the conversion, exercise or exchange
thereof; (3) shares of Common Stock issuable upon the conversion or exchange of
equity awards or convertible or exchangeable securities outstanding as of the
Effective Date; (4) shares of Common Stock or securities convertible into or
exchangeable for Common Stock or similar rights to subscribe for the purchase of
shares of Common Stock in connection with technology sharing, licensing,
research and joint development agreements (or amendments thereto) with third
parties, and the issuance of shares of Common Stock upon the conversion,
exercise or exchange thereof; (5) shares of Common Stock and/or warrants or
similar rights to subscribe for the purchase of shares of Common Stock issued in
connection with equipment financings and/or real property leases (or amendments
thereto) and the issuance of shares of Common Stock upon the exercise thereof;
or (6) shares of Common Stock or securities convertible into or exchangeable for
Common Stock issued in connection with any transaction or series of transactions
by which the Company acquires, licenses or otherwise receives rights to the 20%
minority interests of its Subsidiary, ARIAD Gene Therapeutics, Inc., which the
Company does not currently own, and the issuance of shares of Common Stock upon
the conversion, exercise or exchange thereof.
SECTION 5.7 STOP ORDERS. The Company shall advise the Investor as promptly
as practicable, but in no event later than the close of business on the date
thereof, and shall confirm such advice in writing: (i) of the Company's receipt
of notice of any request by the Commission for amendment of or a supplement to
the Registration Statement, the Prospectus, any Permitted Free Writing
Prospectus or for any additional information; (ii) of the Company's receipt of
notice of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the suspension of
qualification of the Shares for offering or sale in any jurisdiction or the
initiation of any proceeding for such purpose; and (iii) of the Company becoming
aware of the happening of any event, which makes any statement of a material
fact made in the Prospectus or any Permitted Free Writing Prospectus untrue or
which requires the making of any additions to or changes to the statements then
made in the Prospectus or any Permitted Free Writing Prospectus in order to
state a material fact required by the Securities Act to be stated therein or
necessary in order to make the statements then made therein, in light of the
circumstances under which they were made, not misleading, or of the necessity to
amend the Registration Statement or supplement the Prospectus or any Permitted
Free Writing Prospectus to comply with the Securities Act or any other law. If
at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the Company shall use
23
commercially reasonable efforts to obtain the withdrawal of such order at the
earliest possible time.
SECTION 5.8 AMENDMENTS TO THE REGISTRATION STATEMENT; PROSPECTUS
SUPPLEMENTS; FREE WRITING PROSPECTUSES.
(i) Except as provided in this Agreement and other than periodic
reports required to be filed pursuant to the Exchange Act, the Company shall not
file with the Commission any amendment to the Registration Statement that
relates to the Investor, the Agreement or the transactions contemplated hereby
or file with the Commission any Prospectus Supplement that relates to the
Investor, this Agreement or the transactions contemplated hereby with respect to
which (a) the Investor shall not previously have been advised, (b) the Company
shall not have given due consideration to any comments thereon received from the
Investor or its counsel, or (c) the Investor shall reasonably object after being
so advised, unless it is necessary to amend the Registration Statement or make
any supplement to the Prospectus to comply with the Securities Act or any other
applicable law or regulation, in which case the Company shall immediately so
inform the Investor, the Investor shall be provided with a reasonable
opportunity to review and comment upon any disclosure relating to the Investor
and the Company shall expeditiously furnish to the Investor an electronic copy
thereof. In addition, for so long as, in the reasonable opinion of counsel for
the Investor, the Prospectus (or in lieu thereof, the notice referred to in Rule
173(a) under the Securities Act) is required to be delivered in connection with
any purchase of Shares by the Investor, the Company shall not file any
Prospectus Supplement with respect to the Shares without delivering or making
available a copy of such Prospectus Supplement, together with the Base
Prospectus, to the Investor promptly.
(ii) The Company agrees that, unless it obtains the prior written
consent of the Investor, it has not made and will not make an offer relating to
the Shares that would constitute an Issuer Free Writing Prospectus or that would
otherwise constitute a Free Writing Prospectus required to be filed by the
Company or the Investor with the Commission or retained by the Company or the
Investor under Rule 433 under the Securities Act. The Investor agrees that,
unless it obtains the prior written consent of the Company, it has not made and
will not make an offer relating to the Shares that would constitute a Free
Writing Prospectus required to be filed by the Company with the Commission or
retained by the Company under Rule 433 under the Securities Act. Any such Issuer
Free Writing Prospectus or other Free Writing Prospectus consented to by the
Investor or the Company is referred to in this Agreement as a "Permitted Free
Writing Prospectus." The Company agrees that (x) it has treated and will treat,
as the case may be, each Permitted Free Writing Prospectus as an Issuer Free
Writing Prospectus and (y) it has complied and will comply, as the case may be,
with the requirements of Rules 164 and 433 under the Securities Act applicable
to any Permitted Free Writing Prospectus, including in respect of timely filing
with the Commission, legending and record keeping.
SECTION 5.9 PROSPECTUS DELIVERY. The Company shall file with the Commission
a Prospectus Supplement pursuant to Rule 424(b) under the Securities Act on the
first Trading Day immediately following the last Trading Day of each Pricing
Period. The Company shall provide the Investor a reasonable opportunity to
comment on a draft of each such Prospectus Supplement and any Issuer Free
Writing Prospectus, shall give due consideration to all such comments and,
subject to the provisions of Section 5.8 hereof, shall deliver or make available
to the Investor,
24
without charge, an electronic copy of each form of Prospectus Supplement,
together with the Base Prospectus, and any Permitted Free Writing Prospectus on
each applicable Settlement Date. The Company consents to the use of the
Prospectus (and of any Prospectus Supplement thereto) in accordance with the
provisions of the Securities Act and with the securities or "blue sky" laws of
the jurisdictions in which the Shares may be sold by the Investor, in connection
with the offering and sale of the Shares and for such period of time thereafter
as the Prospectus (or in lieu thereof, the notice referred to in Rule 173(a)
under the Securities Act) is required by the Securities Act to be delivered in
connection with sales of the Shares. If during such period of time any event
shall occur that in the judgment of the Company and its counsel is required to
be set forth in the Prospectus or any Permitted Free Writing Prospectus or
should be set forth therein in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, or if it
is necessary to supplement or amend the Prospectus or any Permitted Free Writing
Prospectus to comply with the Securities Act or any other applicable law or
regulation, the Company shall forthwith prepare and, subject to Section 5.8
above, file with the Commission an appropriate Prospectus Supplement to the
Prospectus (or supplement to the Permitted Free Writing Prospectus) and shall
expeditiously furnish or make available to the Investor an electronic copy
thereof.
SECTION 5.10 SELLING RESTRICTIONS.
(i) The Investor covenants that from and after the date hereof through
and including the 90th day next following the termination of this Agreement (the
"Restricted Period"), neither the Investor nor any of its affiliates (within the
meaning of the Exchange Act) nor any entity managed or controlled by the
Investor shall, directly or indirectly, sell any securities of the Company,
except the Shares that it owns or has the right to purchase as provided in a
Fixed Request Notice. During the Restricted Period, neither the Investor or any
of its affiliates nor any entity managed or controlled by the Investor shall
sell any shares of Common Stock of the Company it does not "own" or have the
unconditional right to receive under the terms of this Agreement (within the
meaning of Rule 200 of Regulation SHO promulgated by the Commission under the
Exchange Act), including Shares in any account of the Investor or in any account
directly or indirectly managed or controlled by the Investor or any of its
affiliates or any entity managed or controlled by the Investor. Without limiting
the generality of the foregoing, prior to and during the Restricted Period,
neither the Investor nor any of its affiliates nor any entity managed or
controlled by the Investor or any of its affiliates shall enter into a short
position with respect to shares of Common Stock of the Company, including in any
account of the Investor's or in any account directly or indirectly managed or
controlled by the Investor or any of its Affiliates or any entity managed or
controlled by the Investor, except that the Investor may sell Shares that it is
obligated to purchase under a pending Fixed Request Notice but has not yet taken
possession of so long as the Investor (or the Broker-Dealer, as applicable)
covers any such sales with the Shares purchased pursuant to such Fixed Request
Notice; provided, however, that the Investor (or the Broker-Dealer, as
applicable) shall not be required to cover any such sales with the Shares
purchased pursuant to such Fixed Request Notice if (a) the Fixed Request is
terminated by mutual agreement of the Company and the Investor and, as a result
of such termination, no Shares are delivered to the Investor under this
Agreement or (b) the Company otherwise fails to deliver such Shares to the
Investor on the applicable Settlement Date upon the terms and subject to the
provisions of this Agreement. Prior to and during the Restricted Period, the
Investor shall not grant any option to purchase or acquire any right to dispose
or otherwise
25
dispose for value of any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for, or warrants to purchase, any shares of
Common Stock, or enter into any swap, hedge or other agreement that transfers,
in whole or in part, the economic risk of ownership of the Common Stock, except
for such sales expressly permitted by this Section 5.10(i).
(ii) In addition to the foregoing, in connection with any sale of the
Company's securities (including any sale permitted by paragraph (i) above), the
Investor shall comply in all respects with all applicable laws, rules,
regulations and orders, including, without limitation, the requirements of the
Securities Act and the Exchange Act.
SECTION 5.11 EFFECTIVE REGISTRATION STATEMENT. During the Investment
Period, the Company shall use its best efforts to maintain the continuous
effectiveness of the Registration Statement under the Securities Act.
SECTION 5.12 NON-PUBLIC INFORMATION. Neither the Company nor any of its
directors, officers or agents shall disclose any material non-public information
about the Company to the Investor, unless a public announcement thereof is made
by the Company in the manner contemplated by Regulation FD.
SECTION 5.13 BROKER/DEALER. The Investor shall use one or more
broker-dealers to effectuate all sales, if any, of the Shares that it may
purchase from the Company pursuant to this Agreement which (or whom) shall be
unaffiliated with the Investor and not then currently engaged or used by the
Company (collectively, the "Broker-Dealer"). The Investor shall provide the
Company with all information regarding the Broker-Dealer reasonably requested by
the Company. The Investor shall be solely responsible for all fees and
commissions of the Broker-Dealer.
SECTION 5.14 UPDATE OF DISCLOSURE SCHEDULE. During the Investment Period,
the Company shall from time to time update the Disclosure Schedule as may be
required to satisfy the condition set forth in Section 6.3(i). For purposes of
this Section 5.14, any disclosure made in a schedule to the Compliance
Certificate in substantially the form attached hereto as Exhibit D shall be
deemed to be an update of the Disclosure Schedule. Notwithstanding anything in
this Agreement to the contrary, no update to the Disclosure Schedule pursuant to
this Section 5.14 shall cure any breach of a representation or warranty of the
Company contained in this Agreement and shall not affect any of the Investor's
rights or remedies with respect thereto.
ARTICLE VI
OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND
PURCHASE OF THE SHARES
SECTION 6.1 OPINION OF COUNSEL AND CERTIFICATE. Simultaneously with the
execution and delivery of this Agreement, the Investor has received and relied
upon (i) an opinion of outside counsel to the Company, dated the Effective Date,
in the form mutually agreed to by the parties hereto, and (ii) a certificate
from the Company, dated the Effective Date, in the form of Exhibit C hereto.
26
SECTION 6.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY. The
obligation hereunder of the Company to issue and sell the Shares to the Investor
under any Fixed Request or Optional Amount is subject to the satisfaction or (to
the extent permitted by applicable law) waiver of each of the conditions set
forth below. These conditions are for the Company's sole benefit and (to the
extent permitted by applicable law) may be waived by the Company at any time in
its sole discretion.
(i) ACCURACY OF THE INVESTOR'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Investor contained in this Agreement (i)
that are not qualified by "materiality" shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects as of the applicable Fixed Request Exercise Date and the applicable
Settlement Date with the same force and effect as if made on such dates, except
to the extent such representations and warranties are as of another date, in
which case, such representations and warranties shall be true and correct in all
material respects as of such other date and (ii) that are qualified by
"materiality" shall have been true and correct when made and shall be true and
correct as of the applicable Fixed Request Exercise Date and the applicable
Settlement Date with the same force and effect as if made on such dates, except
to the extent such representations and warranties are as of another date, in
which case, such representations and warranties shall be true and correct as of
such other date.
(ii) REGISTRATION STATEMENT. The Registration Statement is effective
and neither the Company nor the Investor shall have received notice that the
Commission has issued or intends to issue a stop order with respect to the
Registration Statement. The Company shall have a maximum dollar amount certain
of Shares registered under the Registration Statement which are in an amount (A)
as of the Effective Date, not less than the Total Commitment and (B) as of the
applicable Fixed Request Exercise Date, not less than the maximum dollar amount
worth of Shares issuable pursuant to the applicable Fixed Request Notice and
applicable Optional Amount, if any. The Current Report shall have been filed
with the Commission, as required pursuant to Section 1.4, and all Prospectus
Supplements shall have been filed with the Commission, as required pursuant to
Sections 1.4 and 5.9 hereof, to disclose the sale of the Shares prior to each
Settlement Date, as applicable. Any other material required to be filed by the
Company or any other offering participant pursuant to Rule 433(d) under the
Securities Act shall have been filed with the Commission within the applicable
time periods prescribed for such filings by Rule 433 under the Securities Act.
(iii) PERFORMANCE BY THE INVESTOR. The Investor shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Investor at or prior to the applicable Fixed Request Exercise Date
and the applicable Settlement Date.
(iv) NO INJUNCTION. No statute, regulation, order, decree, writ,
ruling or injunction shall have been enacted, entered, promulgated, threatened
or endorsed by any court or governmental authority of competent jurisdiction
which prohibits the consummation of or which would materially modify or delay
any of the transactions contemplated by this Agreement.
(v) NO SUSPENSION, ETC. Trading in the Common Stock shall not have
been suspended by the Commission or the Trading Market (except for any
suspension of trading of
27
limited duration agreed to by the Company, which suspension shall be terminated
prior to the applicable Fixed Request Exercise Date and applicable Settlement
Date), and, at any time prior to the applicable Fixed Request Exercise Date and
applicable Settlement Date, none of the events described in clauses (i), (ii)
and (iii) of Section 5.7 shall have occurred, trading in securities generally as
reported on the Trading Market shall not have been suspended or limited, nor
shall a banking moratorium have been declared either by the United States or New
York State authorities, nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international calamity or crisis
of such magnitude in its effect on, or any material adverse change in, any
financial market which, in each case, in the reasonable judgment of the Company,
makes it impracticable or inadvisable to issue the Shares.
(vi) NO PROCEEDINGS OR LITIGATION. No action, suit or proceeding
before any arbitrator or any court or governmental authority shall have been
commenced or threatened, and no inquiry or investigation by any governmental
authority shall have been commenced or threatened, against the Company or any
Subsidiary, or any of the officers, directors or affiliates of the Company or
any Subsidiary, seeking to restrain, prevent or change the transactions
contemplated by this Agreement, or seeking damages in connection with such
transactions.
(vii) AGGREGATE LIMIT. The issuance and sale of the Shares issuable
pursuant to such Fixed Request Notice or Optional Amount shall not violate
Sections 2.2, 2.12 and 5.5 hereof.
SECTION 6.3 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE INVESTOR. The
obligation hereunder of the Investor to accept a Fixed Request Notice or
Optional Amount grant and to acquire and pay for the Shares is subject to the
satisfaction or (to the extent permitted by applicable law) waiver, at or before
each Fixed Request Exercise Date and each Settlement Date, of each of the
conditions set forth below. These conditions are for the Investor's sole benefit
and (to the extent permitted by applicable law) may be waived by the Investor at
any time in its sole discretion.
(i) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company contained in this Agreement (i)
that are not qualified by "materiality" or "Material Adverse Effect" shall have
been true and correct in all material respects when made and shall be true and
correct in all material respects as of the applicable Fixed Request Exercise
Date and the applicable Settlement Date with the same force and effect as if
made on such dates, except to the extent such representations and warranties are
as of another date, in which case, such representations and warranties shall be
true and correct in all material respects as of such other date and (ii) that
are qualified by "materiality" or "Material Adverse Effect" shall have been true
and correct when made and shall be true and correct as of the applicable Fixed
Request Exercise Date and the applicable Settlement Date with the same force and
effect as if made on such dates, except to the extent such representations and
warranties are as of another date, in which case, such representations and
warranties shall be true and correct as of such other date.
(ii) REGISTRATION STATEMENT. The Registration Statement is effective
and neither the Company nor the Investor shall have received notice that the
Commission has issued or intends to issue a stop order with respect to the
Registration Statement. The Company shall
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have a maximum dollar amount certain of Shares registered under the Registration
Statement which are in an amount (A) as of the Effective Date, not less than the
Total Commitment and (B) as of the applicable Fixed Request Exercise Date, not
less than the maximum dollar amount worth of Shares issuable pursuant to the
applicable Fixed Request Notice and applicable Optional Amount, if any. The
Current Report shall have been filed with the Commission, as required pursuant
to Section 1.4, and all Prospectus Supplements shall have been filed with the
Commission, as required pursuant to Sections 1.4 and 5.9 hereof, to disclose the
sale of the Shares prior to each Settlement Date, as applicable, and an
electronic copy of each such Prospectus Supplement together with the Base
Prospectus shall have been delivered or made available to the Investor in
accordance with Section 5.9 hereof. Any other material required to be filed by
the Company or any other offering participant pursuant to Rule 433(d) under the
Securities Act shall have been filed with the Commission within the applicable
time periods prescribed for such filings by Rule 433 under the Securities Act.
(iii) NO SUSPENSION. Trading in the Common Stock shall not have been
suspended by the Commission or the Trading Market (except for any suspension of
trading of limited duration agreed to by the Company, which suspension shall be
terminated prior to the applicable Fixed Request Exercise Date and applicable
Settlement Date), and, at any time prior to the applicable Fixed Request
Exercise Date and applicable Settlement Date, none of the events described in
clauses (i), (ii) and (iii) of Section 5.7 shall have occurred, trading in
securities generally as reported on the Trading Market shall not have been
suspended or limited, nor shall a banking moratorium have been declared either
by the United States or New York State authorities, nor shall there have
occurred any material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in the
reasonable judgment of the Investor, makes it impracticable or inadvisable to
purchase the Shares.
(iv) PERFORMANCE OF THE COMPANY. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the applicable Fixed Request Exercise Date
and the applicable Settlement Date and shall have delivered to the Investor on
the applicable Settlement Date the Compliance Certificate substantially in the
form attached hereto as Exhibit D.
(v) NO INJUNCTION. No statute, rule, regulation, order, decree, writ,
ruling or injunction shall have been enacted, entered, promulgated, threatened
or endorsed by any court or governmental authority of competent jurisdiction
which prohibits the consummation of or which would materially modify or delay
any of the transactions contemplated by this Agreement.
(vi) NO PROCEEDINGS OR LITIGATION. No action, suit or proceeding
before any arbitrator or any court or governmental authority shall have been
commenced or threatened, and no inquiry or investigation by any governmental
authority shall have been commenced or threatened, against the Company or any
Subsidiary, or any of the officers, directors or affiliates of the Company or
any Subsidiary, seeking to restrain, prevent or change the transactions
contemplated by this Agreement, or seeking damages in connection with such
transactions.
29
(vii) AGGREGATE LIMIT. The issuance and sale of the Shares issuable
pursuant to such Fixed Request Notice or Optional Amount shall not violate
Sections 2.2, 2.12 and 5.5 hereof.
(viii) SHARES AUTHORIZED. The Shares issuable pursuant to such Fixed
Request Notice or Optional Amount shall have been duly authorized by all
necessary corporate action of the Company.
(ix) NOTIFICATION OF LISTING OF SHARES. If required, the Company shall
have submitted to the Trading Market a notification form of listing of
additional shares related to the Shares issuable pursuant to such Fixed Request
or Optional Amount in accordance with the bylaws, listed securities maintenance
standards and other rules of the Trading Market.
(x) OPINIONS OF COUNSEL; BRING-DOWN. Subsequent to the filing of the
Current Report pursuant to Section 1.4 and prior to the first Fixed Request
Exercise Date, the Investor shall have received an opinion from outside counsel
to the Company in the form mutually agreed to by the parties hereto and an
opinion from in-house counsel to the Company in the form mutually agreed to by
the parties hereto. On each Settlement Date, the Investor shall have received an
opinion "bring down" from outside counsel to the Company in the form mutually
agreed to by the parties hereto and an opinion "bring down" from in-house
counsel to the Company in the form mutually agreed to by the parties hereto.
(xi) PAYMENT OF INVESTOR'S COUNSEL FEES; DUE DILIGENCE EXPENSES. On
the Effective Date, the Company shall have paid by wire transfer of immediately
available funds to an account designated by the Investor's counsel, the fees and
expenses of the Investor's counsel in accordance with the proviso to the first
sentence of Section 9.1(i) of this Agreement. On the 30th day of the third month
in each calendar quarter during the Investment Period, the Company shall have
paid by wire transfer of immediately available funds (a) to an account
designated by the Investor, the due diligence expenses incurred by the Investor
and (b) to an account designated by the Investor's counsel, the fees and
expenses of the Investor's counsel, in each case, in accordance with the
provisions of the second sentence of Section 9.1(i) of this Agreement.
ARTICLE VII
TERMINATION
SECTION 7.1 TERM, TERMINATION BY MUTUAL CONSENT. Unless earlier terminated
as provided hereunder, this Agreement shall terminate automatically on the
earliest of (i) the first day of the month next following the 18-month
anniversary of the Effective Date (the "Investment Period"), (ii) the date that
the entire dollar amount of Shares registered under the Registration Statement,
together with any additional amount which is registered under Rule 462(b) under
the Securities Act, have been issued and sold and (iii) the date the Investor
shall have purchased the Total Commitment of shares of Common Stock (subject in
all cases to the Trading Market Limit). The Company may terminate this Agreement
effective upon three Trading Days' prior written notice to the Investor under
Section 9.4; provided, however, that such termination shall not occur during a
Pricing Period or prior to a Settlement Date. This Agreement may be terminated
at any time by the mutual written consent of the parties, effective as of the
date of such mutual written consent unless otherwise provided in such written
consent, it being hereby
30
acknowledged and agreed that the Investor may not consent to such termination
during a Pricing Period or prior to a Settlement Date in the event the Investor
has instructed the Broker-Dealer to effect an open-market sale of Shares which
are subject to a pending Fixed Request Notice but which have not yet been
physically delivered by the Company (and/or credited by book-entry) to the
Investor in accordance with the terms and subject to the conditions of this
Agreement.
SECTION 7.2 OTHER TERMINATION. If the Company provides the Investor with an
Other Financing Notice (other than in respect of an underwritten public offering
of equity securities of the Company or a registered direct public offering of
equity securities of the Company or an Acceptable Financing) or an Integration
Notice, the Investor shall have the right to terminate this Agreement within the
subsequent 30-day period (the "Event Period"), effective upon one Trading Day's
prior written notice delivered to the Company in accordance with Section 9.4 at
any time during the Event Period. For greater certainty, the entry by the
Company into any agreement, plan, arrangement, or transaction with a third party
to obtain an Other Financing outside of a Pricing Period shall not trigger any
requirement for the Company to deliver an Other Financing Notice (provided that
if the entry into such agreement, plan, arrangement or transaction outside of a
Pricing Period requires delivery of an Integration Notice as provided in Section
5.6(ii) of this Agreement, the Company shall deliver such Integration Notice as
provided in Section 5.6(ii) of this Agreement), and unless entry into such
agreement, plan, arrangement or transaction outside of a Pricing Period requires
delivery of an Integration Notice, such Other Financing Notice outside of a
Pricing Period shall not lead to a right of termination in favor of the Investor
hereunder. The Company shall notify the Investor as promptly as practicable, but
in no event later than the close of business on the date thereof (and, if
required under applicable law, including, without limitation, Regulation FD
promulgated by the Commission, or under the applicable rules and regulations of
the Trading Market, the Company shall publicly disclose such information in
accordance with Regulation FD and the applicable rules and regulations of the
Trading Market), and the Investor shall have the right to terminate this
Agreement at any time after receipt of such notification, if: (i) any condition,
occurrence, state of facts or event constituting a Material Adverse Effect has
occurred; (ii) a Material Change in Ownership has occurred or the Company has
entered into a definitive agreement which would result in a Material Change in
Ownership; or (iii) a default or event of default has occurred and is continuing
under the terms of any agreement, contract, note or other instrument to which
the Company or any of its Subsidiaries is a party with respect to any
indebtedness for borrowed money representing more than 10% of the Company's
consolidated assets, in any such case, upon one Trading Day's prior written
notice delivered to the Company in accordance with Section 9.4 hereof.
SECTION 7.3 EFFECT OF TERMINATION. In the event of termination by the
Company or the Investor, written notice thereof shall forthwith be given to the
other party as provided in Section 9.4 and the transactions contemplated by this
Agreement shall be terminated without further action by either party. If this
Agreement is terminated as provided in Section 7.1 or 7.2 herein, this Agreement
shall become void and of no further force and effect, except as provided in
Section 9.9 hereof. Nothing in this Section 7.3 shall be deemed to release the
Company or the Investor from any liability for any breach under this Agreement,
or to impair the rights of the Company and the Investor to compel specific
performance by the other party of its obligations under this Agreement.
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ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 GENERAL INDEMNITY.
(i) INDEMNIFICATION BY THE COMPANY. The Company shall indemnify and
hold harmless the Investor, the Broker-Dealer, each affiliate, employee,
representative and advisor of and to the Investor and the Broker-Dealer, and
each person, if any, who controls the Investor or the Broker-Dealer within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
from and against all losses, claims, damages, liabilities and expenses
(including reasonable costs of defense and investigation and all reasonable
attorneys' fees) to which the Investor, the Broker-Dealer and each such other
person may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages, liabilities and expenses (or actions in respect
thereof) arise out of or are based upon (i) any violation of law (including
United States federal securities laws but excluding British Virgin Islands law)
in connection with the transactions contemplated by this Agreement by the
Company or any of its Subsidiaries, affiliates, officers, directors or
employees, (ii) any untrue statement or alleged untrue statement of a material
fact contained, or incorporated by reference, in the Registration Statement or
any amendment thereto or any omission or alleged omission to state therein, or
in any document incorporated by reference therein, a material fact required to
be stated therein or necessary to make the statements therein not misleading, or
(iii) any untrue statement or alleged untrue statement of a material fact
contained, or incorporated by reference, in the Prospectus, any Issuer Free
Writing Prospectus, or in any amendment thereof or supplement thereto, or in any
"issuer information" (as defined in Rule 433 under the Securities Act) of the
Company, which "issuer information" is required to be, or is, filed with the
Commission or otherwise contained in any Free Writing Prospectus, or any
amendment or supplement thereto, or any omission or alleged omission to state
therein, or in any document incorporated by reference therein, 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; provided,
however, that (A) the Company shall not be liable under this Section 8.1(i) to
the extent that a court of competent jurisdiction shall have determined by a
final judgment (from which no further appeals are available) that such loss,
claim, damage, liability or expense resulting directly and solely from any such
acts or failures to act, undertaken or omitted to be taken by the Investor or
such person through its bad faith or willful misconduct, (B) the foregoing
indemnity shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by the Investor expressly for use in the Current Report or any
Prospectus Supplement or Permitted Free Writing Prospectus, or any amendment
thereof or supplement thereto, and (C) with respect to the Prospectus, the
foregoing indemnity shall not inure to the benefit of the Investor or any such
person from whom the person asserting any loss, claim, damage, liability or
expense purchased Common Stock, if copies of all Prospectus Supplements required
to be filed pursuant to Section 1.4 and 5.9, together with the Base Prospectus,
were timely delivered or made available to the Investor pursuant hereto and a
copy of the Base Prospectus, together with a Prospectus Supplement (as
applicable), was not sent or given by or on behalf of the Investor or any such
person to such person, if required by law to have been delivered, at or prior to
the written confirmation of the sale of the Common Stock to such person, and if
delivery of the Base
32
Prospectus, together with a Prospectus Supplement (as applicable), would have
cured the defect giving rise to such loss, claim, damage, liability or expense.
The Company shall reimburse the Investor, the Broker-Dealer and each such
controlling person promptly upon demand (with accompanying presentation of
documentary evidence) for all legal and other costs and expenses reasonably
incurred by the Investor, the Broker-Dealer or such indemnified persons in
investigating, defending against, or preparing to defend against any such claim,
action, suit or proceeding with respect to which it is entitled to
indemnification in accordance with the procedures set forth in Section 8.2
hereof.
(ii) INDEMNIFICATION BY THE INVESTOR. The Investor shall indemnify and
hold harmless the Company, each of its directors and officers, and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act from and against all losses,
claims, damages, liabilities and expenses (including reasonable costs of defense
and investigation and all reasonable attorneys' fees) to which the Company and
each such other person may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities and expenses (or
actions in respect thereof) arise out of or are based upon (i) any violation of
law (including United States federal securities laws) in connection with the
transactions contemplated by this Agreement by the Investor or any of its
affiliates, officers, directors or employees, or (ii) any untrue statement or
alleged untrue statement of a material fact contained in the Current Report or
any Prospectus Supplement or Permitted Free Writing Prospectus, or in any
amendment thereof or supplement thereto, or any omission or 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 under which they were
made, not misleading, in each case, to the extent, but only to the extent, the
untrue statement, alleged untrue statement, omission or alleged omission was
made in reliance upon, and in conformity with, written information furnished by
the Investor to the Company expressly for inclusion in the Current Report or
such Prospectus Supplement or Permitted Free Writing Prospectus, or any
amendment thereof or supplement thereto.
The Investor shall reimburse the Company and each such director, officer or
controlling person promptly upon demand for all legal and other costs and
expenses reasonably incurred by the Company or such indemnified persons in
investigating, defending against, or preparing to defend against any such claim,
action, suit or proceeding with respect to which it is entitled to
indemnification in accordance with the procedures set forth in Section 8.2
hereof.
SECTION 8.2 INDEMNIFICATION PROCEDURES. Promptly after a person receives
notice of a claim or the commencement of an action for which the person intends
to seek indemnification under Section 8.1, the person will notify the
indemnifying party in writing of the claim or commencement of the action, suit
or proceeding; provided, however, that failure to notify the indemnifying party
will not relieve the indemnifying party from liability under Section 8.1, except
to the extent it has been materially prejudiced by the failure to give notice.
The indemnifying party will be entitled to participate in the defense of any
claim, action, suit or proceeding as to which indemnification is being sought,
and if the indemnifying party acknowledges in writing the obligation to
indemnify the party against whom the claim or action is brought, the
indemnifying party may (but will not be required to) assume the defense against
the claim, action, suit or proceeding with counsel satisfactory to it. After an
indemnifying party
33
notifies an indemnified party that the indemnifying party wishes to assume the
defense of a claim, action, suit or proceeding, the indemnifying party will not
be liable for any legal or other expenses incurred by the indemnified party in
connection with the defense against the claim, action, suit or proceeding except
that if, in the opinion of counsel to the indemnifying party, one or more of the
indemnified parties should be separately represented in connection with a claim,
action, suit or proceeding, the indemnifying party will pay the reasonable fees
and expenses of one separate counsel for the indemnified parties. Each
indemnified party, as a condition to receiving indemnification as provided in
Section 8.1, will cooperate in all reasonable respects with the indemnifying
party in the defense of any action or claim as to which indemnification is
sought. No indemnifying party will be liable for any settlement of any action
effected without its prior written consent. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested (by written
notice provided in accordance with Section 9.4) an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated hereby effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall have received
written notice of the terms of such settlement at least 30 days prior to such
settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party will, without the prior written
consent of the indemnified party, effect any settlement of a pending or
threatened action with respect to which an indemnified party is, or is informed
that it may be, made a party and for which it would be entitled to
indemnification, unless the settlement includes an unconditional release of the
indemnified party from all liability and claims which are the subject matter of
the pending or threatened action.
If for any reason the indemnification provided for in this Agreement is not
available to, or is not sufficient to hold harmless, an indemnified party in
respect of any loss or liability referred to in Section 8.1 as to which such
indemnified party is entitled to indemnification thereunder, each indemnifying
party shall, in lieu of indemnifying the indemnified party, contribute to the
amount paid or payable by the indemnified party as a result of such loss or
liability, (i) in the proportion which is appropriate to reflect the relative
benefits received by the indemnifying party, on the one hand, and by the
indemnified party, on the other hand, from the sale of Shares which is the
subject of the claim, action, suit or proceeding which resulted in the loss or
liability or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above, but also the relative fault
of the indemnifying party, on the one hand, and the indemnified party, on the
other hand, with respect to the statements or omissions which are the subject of
the claim, action, suit or proceeding that resulted in the loss or liability, as
well as any other relevant equitable considerations.
The remedies provided for in Section 8.1 and this Section 8.2 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any Indemnified Person at law or in equity.
34
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 FEES AND EXPENSES.
(i) Each party shall bear its own fees and expenses related to the
transactions contemplated by this Agreement; provided, however, that the Company
shall pay, on the Effective Date, by wire transfer of immediately available
funds to an account designated by the Investor's counsel, promptly following the
receipt of an invoice therefor, all reasonable attorneys' fees and expenses
(exclusive of disbursements and out-of-pocket expenses) incurred by the
Investor, up to $35,000, in connection with the preparation, negotiation,
execution and delivery of this Agreement, legal due diligence of the Company and
review of the Registration Statement, the Base Prospectus, the Current Report,
any Permitted Free Writing Prospectus and all other related transaction
documentation. In addition, the Company shall pay, on the 30th day of the third
month in each calendar quarter during the Investment Period, promptly following
the receipt of an invoice therefor, up to $12,500, representing (x) the due
diligence expenses incurred by the Investor during the Investment Period and (y)
the attorneys' fees and expenses incurred by the Investor in connection with
ongoing legal due diligence of the Company, any amendments, modifications or
waivers of this Agreement and review of Prospectus Supplements, Permitted Free
Writing Prospectuses, opinion "bring downs" and all other related documents to
be delivered by the Company and its counsel in connection with a Fixed Request
Exercise Date and the applicable Settlement Date; provided, however, that the
Company shall not be required to pay any such fee in any calendar quarter in
which the Investor has purchased Shares under this Agreement. The Company shall
pay all U.S. federal, state and local stamp and other similar transfer and other
taxes and duties levied in connection with issuance of the Shares pursuant
hereto.
(ii) If the Company issues a Fixed Request Notice and fails to deliver
the Shares to the Investor on the applicable Settlement Date and such failure
continues for 10 Trading Days, the Company shall pay the Investor, in cash (or,
at the option of the Investor, in shares of Common Stock which have not been
registered under the Securities Act), as liquidated damages for such failure and
not as a penalty, an amount equal to 2.0% of the payment required to be paid by
the Investor on such Settlement Date (i.e., the sum of the Fixed Amount
Requested and the Optional Amount Dollar Amount) for the initial 30 days
following such Settlement Date until the Shares have been delivered, and an
additional 2.0% for each additional 30-day period thereafter until the Shares
have been delivered, which amount shall be prorated for such periods less than
thirty 30 days (subject in all cases to the Trading Market Limit).
SECTION 9.2 SPECIFIC ENFORCEMENT, CONSENT TO JURISDICTION, WAIVER OF JURY
TRIAL.
(i) The Company and the Investor acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that either party shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement by the other party and to enforce specifically the terms and
provisions hereof this being in addition to any other remedy to which either
party may be entitled by law or equity.
35
(ii) Each of the Company and the Investor (a) hereby irrevocably
submits to the jurisdiction of the United States District Court and other courts
of the United States sitting in the State of New York for the purposes of any
suit, action or proceeding arising out of or relating to this Agreement, and (b)
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or that
the venue of the suit, action or proceeding is improper. Each of the Company and
the Investor consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing in this
Section 9.2 shall affect or limit any right to serve process in any other manner
permitted by law.
(iii) Each of the Company and the Investor hereby waives to the
fullest extent permitted by applicable law, any right it may have to a trial by
jury in respect to any litigation directly or indirectly arising out of, under
or in connection with this Agreement or the transactions contemplated hereby or
disputes relating hereto. Each of the Company and the Investor (a) certifies
that no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (b) acknowledges that it
and the other parties hereto have been induced to enter into this Agreement by,
among other things, the mutual waivers and certifications in this Section 9.2.
SECTION 9.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with the
exhibits referred to herein and the Disclosure Schedule, represents the entire
agreement of the parties with respect to the subject matter hereof, and there
are no promises, undertakings, representations or warranties by either party
relative to subject matter hereof not expressly set forth herein. No provision
of this Agreement may be amended other than by a written instrument signed by
both parties hereto. The Disclosure Schedule and all exhibits to this Agreement
are hereby incorporated by reference in, and made a part of, this Agreement as
if set forth in full herein.
SECTION 9.4 NOTICES. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery or facsimile (with facsimile
machine confirmation of delivery received) at the address or number designated
below (if delivered on a business day during normal business hours where such
notice is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The address
for such communications shall be:
If to the Company: ARIAD Pharmaceuticals, Inc.
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
and Chief Legal Officer
36
With copies to: Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to the Investor: Azimuth Opportunity Ltd.
c/o Fortis Prime Fund Solutions (BVI) Limited
▇.▇. ▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ Building
Road Town, Tortola
British Virgin Islands
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
With copies to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP
The MetLife Building
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Either party hereto may from time to time change its address for notices by
giving at least 10 days advance written notice of such changed address to the
other party hereto.
SECTION 9.5 WAIVERS. No waiver by either party of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any other provisions,
condition or requirement hereof nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter. No provision of this Agreement may be waived other
than in a written instrument signed by the party against whom enforcement of
such waiver is sought.
SECTION 9.6 HEADINGS. The article, section and subsection headings in this
Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.
SECTION 9.7 SUCCESSORS AND ASSIGNS. The Investor may not assign this
Agreement to any person without the prior consent of the Company, in the
Company's sole discretion. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and
37
assigns. The assignment by a party to this Agreement of any rights hereunder
shall not affect the obligations of such party under this Agreement.
SECTION 9.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal procedural and substantive laws of the
State of New York, without giving effect to the choice of law provisions of such
state.
SECTION 9.9 SURVIVAL. The representations and warranties of the Company and
the Investor contained in Articles III and IV and the covenants contained in
Article V shall survive the execution and delivery hereof until the termination
of this Agreement, and the agreements and covenants set forth in Article VIII of
this Agreement shall survive the execution and delivery hereof.
SECTION 9.10 COUNTERPARTS. This Agreement may be executed in counterparts,
all of which taken together shall constitute one and the same original and
binding instrument and shall become effective when all counterparts have been
signed by each party and delivered to the other parties hereto, it being
understood that all parties hereto need not sign the same counterpart. In the
event any signature is delivered by facsimile transmission, the party using such
means of delivery shall cause four additional executed signature pages to be
physically delivered to the other parties within five days of the execution and
delivery hereof.
SECTION 9.11 PUBLICITY. On or after the Effective Date, the Company may
issue a press release or otherwise make a public statement or announcement with
respect to this Agreement or the transactions contemplated hereby or the
existence of this Agreement (including, without limitation, by filing a copy of
this Agreement with the Commission); provided, however, that prior to issuing
any such press release, or making any such public statement or announcement, the
Company shall consult with the Investor on the form and substance of such press
release or other disclosure.
SECTION 9.12 SEVERABILITY. The provisions of this Agreement are severable
and, in the event that any court of competent jurisdiction shall determine that
any one or more of the provisions or part of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement, and this Agreement
shall be reformed and construed as if such invalid or illegal or unenforceable
provision, or part of such provision, had never been contained herein, so that
such provisions would be valid, legal and enforceable to the maximum extent
possible.
SECTION 9.13 FURTHER ASSURANCES. From and after the date of this Agreement,
upon the request of the Investor or the Company, each of the Company and the
Investor shall execute and deliver such instrument, documents and other writings
as may be reasonably necessary or desirable to confirm and carry out and to
effectuate fully the intent and purposes of this Agreement.
[Signature Page Follows]
38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.
ARIAD PHARMACEUTICALS, INC.:
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President, Finance
and Corporate Operations, Chief
Financial Officer
AZIMUTH OPPORTUNITY LTD.:
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Corporate Secretary
39
ANNEX A TO THE
COMMON STOCK PURCHASE AGREEMENT
DEFINITIONS
(a) "Acceptable Financing" shall have the meaning assigned to such term in
Section 5.6(ii) hereof.
(b) "Aggregate Limit" shall have the meaning assigned to such term in
Section 1.1 hereof.
(c) "Base Prospectus" shall mean the Company's prospectus, dated February
14, 2007, a preliminary form of which is included in the Registration Statement,
including the documents incorporated by reference therein.
(d) "Below Market Offering" shall have the meaning assigned to such term in
Section 5.6(ii) hereof.
(e) "Broker-Dealer" shall have the meaning assigned to such term in Section
5.13 hereof.
(f) "Bylaws" shall have the meaning assigned to such term in Section 4.3
hereof.
(g) "Charter" shall have the meaning assigned to such term in Section 4.3
hereof.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(i) "Commission" shall mean the Securities and Exchange Commission or any
successor entity.
(j) "Commission Documents" shall mean (1) all reports, schedules,
registrations, forms, statements, information and other documents filed by the
Company with the Commission pursuant to the reporting requirements of the
Exchange Act, including all material filed pursuant to Section 13(a) or 15(d) of
the Exchange Act, which have been filed by the Company since January 1, 2006 and
which hereafter shall be filed by the Company during the Investment Period,
including, without limitation, the Current Report, the Form 10-K filed by the
Company for its fiscal year ended December 31, 2005 and the Form 10-Q filed by
the Company for its fiscal quarter ended September 30, 2006, (2) the
Registration Statement, as the same may be amended from time to time, the
Prospectus and each Prospectus Supplement, and each Permitted Free Writing
Prospectus and (3) all information contained in such filings and all documents
and disclosures that have been and heretofore shall be incorporated by reference
therein.
(k) "Common Stock" shall have the meaning assigned to such term in the
Recitals.
(l) "Current Market Price" means, with respect to any particular
measurement date, the closing price of a share of Common Stock as reported on
the Trading Market for the Trading Day immediately preceding such measurement
date.
(m) "Current Report" shall have the meaning assigned to such term in
Section 1.4 hereof.
(n) "Discount Price" shall have the meaning assigned to such term in
Section 2.2 hereof.
(o) "▇▇▇▇▇" shall have the meaning assigned to such term in Section 4.3
hereof.
(p) "Effective Date" shall mean the date of this Agreement.
(q) "Environmental Laws" shall have the meaning assigned to such term in
Section 4.15 hereof.
(r) "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
(s) "Event Period" shall have the meaning assigned to such term in Section
7.2 hereof.
(t) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
(u) "FDA" shall have the meaning assigned to such term in Section 4.14(a)
hereof.
(v) "Fixed Amount Requested" shall mean the amount of a Fixed Request
requested by the Company in a Fixed Request Notice delivered pursuant to Section
2.1 hereof.
(w) "Fixed Request" means the transactions contemplated under Sections 2.1
through 2.8 of this Agreement.
(x) "Fixed Request Amount" means the actual amount of proceeds received by
the Company pursuant to a Fixed Request under this Agreement.
(y) "Fixed Request Exercise Date" shall have the meaning assigned to such
term in Section 2.2 hereof.
(z) "Fixed Request Notice" shall have the meaning assigned to such term in
Section 2.1 hereof.
(aa) "Free Writing Prospectus" shall mean a "free writing prospectus" as
defined in Rule 405 promulgated under the Securities Act.
(bb) "GAAP" shall mean generally accepted accounting principles in the
United States of America as applied by the Company.
(cc) "Governmental Licenses" shall have the meaning assigned to such term
in Section 4.14(a) hereof.
(dd) "Indebtedness" shall have the meaning assigned to such term in Section
4.9 hereof.
(ee) "Integration Notice" shall have the meaning assigned to such term in
Section 5.6(ii) hereof.
(ff) "Intellectual Property" shall have the meaning assigned to such term
in Section 4.14(b) hereof.
(gg) "Investment Period" shall have the meaning assigned to such term in
Section 7.1 hereof.
(hh) "Issuer Free Writing Prospectus" shall mean an "issuer free writing
prospectus" as defined in Rule 433 promulgated under the Securities Act.
(ii) "Market Capitalization" shall be calculated on the Trading Day
preceding the applicable Pricing Period and shall be the product of (x) the
number of shares of Common Stock outstanding and (y) the closing bid price of
the Common Stock, both as determined by Bloomberg Financial LP using the DES and
HP functions.
(jj) "Material Adverse Effect" shall mean any condition, occurrence, state
of facts or event having, or insofar as reasonably can be foreseen would likely
have, any effect on the business, operations, properties or condition (financial
or otherwise) of the Company that is material and adverse to the Company and its
Subsidiaries, taken as a whole, and/or any condition, occurrence, state of facts
or event that would prohibit or otherwise materially interfere with or delay the
ability of the Company to perform any of its obligations under this Agreement.
(kk) "Material Agreements" shall have the meaning assigned to such term in
Section 4.16 hereof.
(ll) "Material Change in Ownership" shall mean the occurrence of any one or
more of the following: (i) the acquisition by any person, including any
syndicate or group deemed to be a "person" under Section 13(d)(3) of the
Exchange Act, of beneficial ownership, directly or indirectly, through a
purchase, merger or other acquisition transaction or series of transactions, of
shares of capital stock or other securities of the Company entitling such person
to exercise, upon an event of default or default or otherwise, 50% or more of
the total voting power of all series and classes of capital stock and other
securities of the Company entitled to vote generally in the election of
directors, other than any such acquisition by the Company, any Subsidiary of the
Company or any employee benefit plan of the Company; (ii) any consolidation or
merger of the Company with or into any other person, any merger of another
person into the Company, or any conveyance, transfer, sale, lease or other
disposition of all or substantially all of the properties and assets of the
Company to another person, other than (a) any such transaction (x) that does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of capital stock of the Company and (y) pursuant to which
holders of capital stock of the Company immediately prior to such transaction
have the entitlement to exercise, directly or indirectly, 50% or more of the
total voting power of all shares of capital stock of the Company entitled to
vote generally in the election of directors of the continuing or surviving
person immediately after such transaction or (b) any merger which is effected
solely to change the jurisdiction of incorporation
of the Company and results in a reclassification, conversion or exchange of
outstanding shares of Common Stock solely into shares of common stock of the
surviving entity; (iii) during any consecutive two-year period, individuals who
at the beginning of that two-year period constituted the Board of Directors
(together with any new directors whose election to the Board of Directors, or
whose nomination for election by the stockholders of the Company, was approved
by a vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose elections or nominations for
election were previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office; or (iv) the Company is
liquidated or dissolved or a resolution is passed by the Company's stockholders
approving a plan of liquidation or dissolution of the Company. Beneficial
ownership shall be determined in accordance with Rule 13d-3 promulgated by the
SEC under the Exchange Act. The term "person" shall include any syndicate or
group which would be deemed to be a "person" under Section 13(d)(3) of the
Exchange Act.
(mm) "Multiplier" shall have the meaning assigned to such term in Section
2.3 hereof.
(nn) "NASDAQ" means the NASDAQ Global Market or any successor thereto.
(oo) "Optional Amount" means the transactions contemplated under Sections
2.9 through 2.11 of this Agreement.
(pp) "Optional Amount Dollar Amount" shall mean the actual amount of
proceeds received by the Company pursuant to the exercise of an Optional Amount
under this Agreement.
(qq) "Optional Amount Notice" shall mean a notice sent to the Company with
regard to the Investor's election to exercise all or any portion of an Optional
Amount, as provided in Section 2.11 hereof and substantially in the form
attached hereto as Exhibit B.
(rr) "Optional Amount Threshold Price" shall have the meaning assigned to
such term in Section 2.1 hereof.
(ss) "Other Financing" shall have the meaning assigned to such term in
Section 5.6(ii) hereof.
(tt) "Other Financing Notice" shall have the meaning assigned to such term
in Section 5.6(ii) hereof.
(uu) "Permitted Free Writing Prospectus" shall have the meaning assigned to
such term in Section 5.8(ii) hereof.
(vv) "Plan" shall have the meaning assigned to such term in Section 4.22
hereof.
(ww) "Pricing Period shall mean a period of 10 consecutive Trading Days
commencing on the day of delivery of a Fixed Request Notice (or, if the Fixed
Request Notice is delivered after 9:30 a.m. (New York time), on the next Trading
Day), or such other period mutually agreed upon by the Investor and the Company.
(xx) "Prospectus" shall mean the Base Prospectus, together with any final
prospectus filed with the Commission pursuant to Rule 424(b), as supplemented by
any Prospectus Supplement, including the documents incorporated by reference
therein.
(yy) "Prospectus Supplement" shall mean any prospectus supplement to the
Base Prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act, including the documents incorporated by reference therein.
(zz) "Reduction Notice" shall have the meaning assigned to such term in
Section 2.8 hereof.
(aaa) "Registration Statement" shall mean the registration statement on
Form S-3, Commission File Number 333-140333, filed by the Company with the
Commission under the Securities Act for the registration of the Shares, as such
Registration Statement may be amended and supplemented from time to time,
including the documents incorporated by reference therein and the information
deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A
or Rule 430B under the Securities Act.
(bbb) "Restricted Period" shall have the meaning assigned to such term in
Section 5.10 hereof.
(ccc) "Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
(ddd) "Settlement Date" shall have the meaning assigned to such term in
Section 2.7 hereof.
(eee) "Shares" shall mean shares of Common Stock issuable to the Investor
upon exercise of a Fixed Request and shares of Common Stock issuable to the
Investor upon exercise of an Optional Amount.
(fff) "Significant Subsidiary" means any Subsidiary of the Company that
would constitute a Significant Subsidiary of the Company within the meaning of
Rule 1-02 of Regulation S-X of the Commission.
(ggg) "SOXA" shall have the meaning assigned to such term in Section 4.6(c)
hereof.
(hhh) "Subsidiary" shall mean any corporation or other entity of which at
least a majority of the securities or other ownership interest having ordinary
voting power (absolutely or contingently) for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by the Company and/or any of its other Subsidiaries.
(iii) "Threshold Price" is the lowest price (except to the extent otherwise
provided in Section 2.6) at which the Company may sell Shares during the
applicable Pricing Period as set forth in a Fixed Request Notice (not taking
into account the applicable percentage discount during such Pricing Period
determined in accordance with Section 2.2); provided, however, that at no time
shall the Threshold Price be lower than $3.00 per share unless the Company and
the Investor mutually shall agree.
(jjj) "Total Commitment" shall have the meaning assigned to such term in
Section 1.1 hereof.
(kkk) "Trading Day" shall mean a full trading day (beginning at 9:30 a.m.,
New York City time, and ending at 4:00 p.m., New York City time) on the NASDAQ.
(lll) "Trading Market" means the following markets or exchanges on which
the Common Stock is listed or quoted for trading on the date in question: the
American Stock Exchange, the New York Stock Exchange or the NASDAQ.
(mmm) "Trading Market Limit" means that number of shares which is one less
than 20.0% of the issued and outstanding shares of the Company's Common Stock as
of the Effective Date.
(nnn) "VWAP" shall mean the daily volume weighted average price (based on a
Trading Day from 9:30 p.m. to 4:00 p.m. (New York time)) of the Company on the
NASDAQ as reported by Bloomberg Financial L.P. using the AQR function.
(ooo) "Warrant Value" shall mean the fair value of all warrants, options
and other similar rights issued to a third party in connection with an Other
Financing, determined by using a standard Black-Scholes option-pricing model
using an expected volatility percentage as shall be mutually agreed by the
Investor and the Company. In the case of a dispute relating to such expected
volatility assumption, the Investor shall obtain applicable volatility data from
three investment banking firms of nationally recognized reputation, and the
parties hereto shall use the average thereof for purposes of determining the
expected volatility percentage in connection with the Black-Scholes calculation
referred to in the immediately preceding sentence.
EXHIBIT A TO THE
COMMON STOCK PURCHASE AGREEMENT
FORM OF FIXED REQUEST NOTICE
Reference is made to the Common Stock Purchase Agreement dated as of
February 14, 2007, (the "Purchase Agreement") between ARIAD Pharmaceuticals,
Inc., a corporation organized and existing under the laws of the State of
Delaware (the "Company"), and Azimuth Opportunity Ltd., an international
business company incorporated under the laws of the British Virgin Islands.
Capitalized terms used and not otherwise defined herein shall have the meanings
given such terms in the Purchase Agreement.
In accordance with and pursuant to Section 2.1 of the Purchase Agreement,
the Company hereby issues this Fixed Request Notice to exercise a Fixed Request
for the Fixed Request Amount indicated below.
Fixed Amount Requested: ______________________________
Optional Amount Dollar Amount: ______________________________
Pricing Period start date: ______________________________
Pricing Period end date: ______________________________
Settlement Date: ______________________________
Fixed Request Threshold Price: ______________________________
Optional Amount Threshold Price: ______________________________
Dollar Amount and Number of Shares of
Common Stock Currently Unissued under the
Registration Statement; ______________________________
Dollar Amount and Number of Shares of
Common Stock Currently Available under the
Aggregate Limit: ______________________________
Dated: By:
------------------------------ ------------------------------------
Name
-----------------------------------
Title:
---------------------------------
Address:
-------------------------------
----------------------------------------
----------------------------------------
Facsimile No.
--------------------------
AGREED AND ACCEPTED
By:
---------------------------------
Name
--------------------------------
Title:
------------------------------
EXHIBIT B TO TILE
COMMON STOCK PURCHASE AGREEMENT
FORM OF OPTIONAL AMOUNT NOTICE
To: ______________________________
Fax#: ____________________________
Reference is made to the Common Stock Purchase Agreement dated as of
February 14, 2007 (the "Purchase Agreement") between ARIAD Pharmaceuticals,
Inc., a corporation organized and existing under the laws of the State of
Delaware (the "Company"), and Azimuth Opportunity Ltd., an international
business company incorporated under the laws of the British Virgin Islands (the
"Investor"). Capitalized terms used and not otherwise defined herein shall have
the meanings given such terms in the Purchase Agreement.
In accordance with and pursuant to Section 2.1 of the Purchase Agreement,
the Investor hereby issues this Optional Amount Notice to exercise an Optional
Amount for the Optional Amount Dollar Amount indicated below.
Optional Amount Dollar Amount Exercised ______________________________
Number of Shares to be purchased ______________________________
VWAP on the date hereof: ______________________________
Discount Price: ______________________________
Settlement Date: ______________________________
Threshold Price: ______________________________
Dated: By:
------------------------------ ------------------------------------
Name
-----------------------------------
Title:
---------------------------------
Address:
-------------------------------
----------------------------------------
----------------------------------------
Facsimile No.
--------------------------
EXHIBIT C TO THE
COMMON STOCK PURCHASE AGREEMENT
CERTIFICATE OF THE COMPANY
CLOSING CERTIFICATE
February 14, 2007
The undersigned, the Senior Vice President, Legal and Business Development,
Chief Legal Officer and Secretary of ARIAD Pharmaceuticals, Inc., a corporation
organized and existing under the laws of the State of Delaware (the "Company"),
delivers this certificate in connection with the Common Stock Purchase
Agreement, dated as of February 14, 2007 (the "Agreement"), by and between the
Company and Azimuth Opportunity Ltd., an international business company
incorporated under the laws of the British Virgin Islands (the "Investor"), and
hereby certifies on the date hereof that (capitalized terms used herein without
definition have the meanings assigned to them in the Agreement):
1. Attached hereto as EXHIBIT A is a true, complete and correct copy of the
Certificate of Incorporation, as amended, of the Company as filed with the
Secretary of State of the State of Delaware. The Certificate of Incorporation of
the Company has not been further amended or restated, and no document with
respect to any amendment to the Certificate of Incorporation of the Company has
been filed in the office of the Secretary of State of the State of Delaware
since the date shown on the face of the state certification relating to the
Company's Certificate of Incorporation, which is in full force and effect on the
date hereof, and no action has been taken by the Company in contemplation of any
such amendment or the dissolution, merger or consolidation of the Company.
2. Attached hereto as EXHIBIT B is a true and complete copy of the Bylaws
of the Company, as amended and restated through, and as in full force and effect
on, the date hereof, and no proposal for any amendment, repeal or other
modification to the Bylaws of the Company has been taken or is currently pending
before the Board of Directors or stockholders of the Company.
3. The Board of Directors of the Company has approved the transactions
contemplated by the Agreement; said approval has not been amended, rescinded or
modified and remains in full force and effect as of the date hereof.
4. Each person who, as an officer of the Company, or as attorney-in-fact of
an officer of the Company, signed (i) the Agreement and (ii) any other document
delivered prior hereto or on the date hereof in connection with the transactions
contemplated by the Agreement, was duly elected, qualified and acting as such
officer or duly appointed and acting as such attorney-in-fact, and the signature
of each such person appearing on any such document is his genuine signature.
IN WITNESS WHEREOF, I have signed my name as of the date first above
written.
------------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President, Legal and
Business Development, Chief Legal
Officer and Secretary
EXHIBIT D TO THE
COMMON STOCK PURCHASE AGREEMENT
COMPLIANCE CERTIFICATE
In connection with the issuance of shares of common stock of ARIAD
Pharmaceuticals, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Company"), pursuant to the Fixed Request Notice,
dated [_____________], delivered by the Company to Azimuth Opportunity Ltd. (the
"Investor") pursuant to Article II of the Common Stock Purchase Agreement, dated
February 14, 2007, by and between the Company and the Investor (the
"Agreement"), the undersigned hereby certifies as follows:
1. The undersigned is the duly elected Senior Vice President, Finance and
Corporate Operations, Chief Financial Officer of the Company.
2. Except as set forth in the attached Disclosure Schedule, the
representations and warranties of the Company set forth in Article IV of the
Agreement (i) that are not qualified by "materiality" or "Material Adverse
Effect" are true and correct in all material respects as of [insert Fixed
Request Exercise Date] and as of the date hereof with the same force and effect
as if made on such dates, except to the extent such representations and
warranties are as of another date, in which case, such representations and
warranties are true and correct in all material respects as of such other date
and (ii) that are qualified by "materiality" or "Material Adverse Effect" are
true and correct as of [insert Fixed Request Exercise Date] and as of the date
hereof with the same force and effect as if made on such dates, except to the
extent such representations and warranties are as of another date, in which
case, such representations and warranties are true and correct as of such other
date.
3. The Company has performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by the Agreement
to be performed, satisfied or complied with by the Company at or prior to
[insert Fixed Request Exercise Date] and the date hereof.
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to them in the Agreement.
The undersigned has executed this Certificate this [___] day of
[___________], 200[__].
By:
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President, Finance
and Corporate Operations, Chief
Financial Officer
DISCLOSURE SCHEDULE
RELATING TO THE COMMON STOCK
PURCHASE AGREEMENT, DATED AS OF FEBRUARY 14, 2007
BETWEEN ARIAD PHARMACEUTICALS, INC.
AND AZIMUTH OPPORTUNITY LTD.
This disclosure schedule is made and given pursuant to Article IV of the
Common Stock Purchase Agreement, dated as of February 14, 2007 (the
"Agreement"), by and between ARIAD Pharmaceuticals, Inc., a Delaware corporation
(the "Company"), and Azimuth Opportunity Ltd., an international business company
incorporated under the laws of the British Virgin Islands. Unless the context
otherwise requires, all capitalized terms are used herein as defined in the
Agreement. The numbers below correspond to the section numbers of
representations and warranties in the Agreement most directly modified by the
below exceptions.