Exhibit 10.2
COMMON STOCK PURCHASE AGREEMENT
Dated as of January 26, 2001
by and between
BIOMARIN PHARMACEUTICAL INC.
and
ACQUA WELLINGTON
NORTH AMERICAN EQUITIES FUND, LTD.
TABLE OF CONTENTS
ARTICLE I Definitions.......................................................1
Section 1.1 Definitions...............................................1
ARTICLE II Purchase and Sale of Common Stock.................................3
Section 2.1 Purchase and Sale of Stock................................3
Section 2.2 The Shares................................................3
Section 2.3 Closing...................................................3
ARTICLE III Representations and Warranties....................................4
Section 3.1 Representations and Warranties of the Company.............4
Section 3.2 Representations and Warranties of the Purchaser..........10
ARTICLE IV Covenants........................................................12
Section 4.1 Securities Compliance....................................12
Section 4.2 Registration and Listing.................................12
Section 4.3 Registration Statement...................................12
Section 4.4 Compliance with Laws.....................................12
Section 4.5 Keeping of Records and Books of Account..................13
Section 4.6 Reporting Requirements...................................13
Section 4.7 Non-public Information...................................13
Section 4.8 Effective Registration Statement.........................13
Section 4.9 No Stop Orders...........................................13
Section 4.10 Amendments to the Registration Statement.................14
Section 4.11 Prospectus Delivery......................................14
Section 4.12 Other Financing..........................................14
Section 4.13 Notice...................................................15
ARTICLE V Conditions to Closing, Draw Downs and Call Options...............15
Section 5.1 Conditions Precedent to the Obligation of
the Company to Issue a Draw Down Notice or
Grant a Call Option and Sell the Shares................15
Section 5.2 Conditions Precedent to the Obligation of
the Purchaser to Close.................................16
Section 5.3 Conditions Precedent to the Obligation of the
Purchaser to Accept a Draw Down or Call
Option Grant and Purchase the Shares...................17
ARTICLE VI Draw Down Terms; Call Option.....................................18
Section 6.1 Draw Down Terms..........................................18
Section 6.2 Purchaser's Call Option..................................22
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ARTICLE VII Termination......................................................22
Section 7.1 Termination by Mutual Consent............................22
Section 7.2 Other Termination........................................23
Section 7.3 Termination by Company...................................23
Section 7.4 Effect of Termination....................................23
ARTICLE VIII Indemnification..................................................23
Section 8.1 General Indemnity........................................23
Section 8.2 Indemnification Procedures...............................25
ARTICLE IX Miscellaneous........................................26
Section 9.1 Fees and Expenses........................................26
Section 9.2 Specific Enforcement, Consent to Jurisdiction............26
Section 9.3 Entire Agreement; Amendment..............................27
Section 9.4 Notices..................................................27
Section 9.5 Waivers..................................................28
Section 9.6 Headings.................................................28
Section 9.7 Successors and Assigns...................................28
Section 9.8 Governing Law............................................28
Section 9.9 Survival.................................................29
Section 9.10 Counterparts.............................................29
Section 9.11 Publicity................................................29
Section 9.12 Severability.............................................29
Section 9.13 Further Assurances.......................................29
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COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of
January 26, 2001 by and between BioMarin Pharmaceutical Inc., a Delaware
corporation (the "Company"), and Acqua Wellington North American Equities Fund,
Ltd., a limited liability company organized under the laws of the Commonwealth
of The Bahamas (the "Purchaser").
The parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.1 Definitions.
-----------
(a) "Alternate Market" shall mean the Nasdaq Small Cap Market, the American
Stock Exchange, the New York Stock Exchange or the OTC Bulletin Board,
whichever is at the time the principal trading exchange or market for the
Common Stock.
(b) "Call Option" shall have the meaning assigned to such term in Section
6.2(a) hereof.
(c) "Commission" shall mean the Securities and Exchange Commission.
(d) "Commission Documents" shall have the meaning assigned to such term in
Section 3.1(f) hereof.
(e) "Commission Filings" means the Company's Form 10-K for the fiscal year
ended December 31, 1999, Forms 10-Q for the periods ended March 31, 2000,
June 30, 2000 and September 30, 2000, Registration Statement on Form S-3,
No. 333-48800, Form 8-K as filed on November 7, 2000 and all other filings
made by the Company after the date hereof pursuant to the Securities
Exchange Act of 1934.
(f) "Common Stock" shall have the meaning assigned to such term in Section 2.1
hereof.
(g) "Draw Down" means the exercise by the Company of its right to request the
purchase of shares of Common Stock by the Purchaser.
(h) "Draw Down Amount" means the actual amount of a Draw Down up to $4,000,000
or such other amount mutually agreed upon by the Purchaser and the Company.
(i) "Draw Down Discount Percentage" means 94% if the Threshold Price is equal
to or greater than $7.00 but less than $12.00; provided, however, that for
every $5.00 increase in the Threshold Price from $7.00, the draw down
discount percentage shall be increased 0.5%, incrementally, up to a maximum
draw down discount percentage of 96%.
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(j) "Draw Down Exercise Date" shall mean the date on which the Company issues a
Draw Down Notice.
(k) "Draw Down Notice" shall have the meaning assigned to such term in Section
6.1(i) hereof.
(l) "Draw Down Pricing Period" shall mean a period of twenty (20) consecutive
Trading Days following a Draw Down Notice, or such other period mutually
agreed upon by the Purchaser and the Company.
(m) "Effective Date" shall mean January 16, 2001, the date the Registration
Statement of the Company covering the Shares was declared effective.
(n) "Investment Period " shall have the meaning assigned to such term in
Section 7.1 hereof.
(o) "Material Adverse Effect" shall mean any effect on the business, results of
operations, prospects, assets or financial condition of the Company that is
material and adverse to the Company and its subsidiaries, taken as a whole
and/or any condition, circumstance, or situation that would prohibit the
Company from entering into and performing any of its obligations under this
Agreement in any material respect.
(p) "Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement, as supplemented by any prospectus
supplement filed with the Commission pursuant to Rule 424(b).
(q) "Prospectus Supplement" shall mean any prospectus supplement to the
Registration Statement filed with the Commission pursuant to Rule 424(b).
(r) "Registration Statement" shall mean the registration statement on Form S-3,
Commission File Number 333-48800 under the Securities Act, filed with the
Commission for the registration of the Shares, as such Registration
Statement may be amended from time to time.
(s) "Section 6.1(m) Notice" shall have the meaning assigned to such term in
Section 6.1(m) hereof.
(t) "Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
(u) "Settlement Date" shall have the meaning assigned to such term in Section
6.1(d) hereof.
(v) "Shares" shall mean the shares of Common Stock of the Company that may be
purchased hereunder.
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(w) "Threshold Price" is the lowest price at which the Company is willing to
sell Shares during a Draw Down Pricing Period (not taking into account the
Draw Down Discount Percentage during such Draw Down Pricing Period) as set
forth by the Company in each Draw Down Notice.
(x) "Trading Day" shall mean a day on which the Common Stock is traded on the
Nasdaq National Market or an Alternate Market.
(y) "Trading Day Number" shall have the meaning assigned to such term in
Section 6.1(m) hereof.
(z) "Truncated Pricing Period" shall have the meaning assigned to such term in
Section 6.1(m) hereof.
(aa) "VWAP" shall mean the daily volume weighted average price (based on a
Trading Day from 9:30 a.m. to 4:00 p.m., eastern time) of the Common Stock
of the Company on the NASDAQ National Market or an Alternate Market as
reported by Bloomberg Financial LP using the AQR function.
ARTICLE II
Purchase and Sale of Common Stock
Section 2.1 Purchase and Sale of Stock. Subject to the terms and conditions
of this Agreement, the Company shall issue and sell to the Purchaser and the
Purchaser shall purchase from the Company up to $50,000,000 of the Company's
common stock, $0.001 par value per share (the "Common Stock"), based on Draw
Downs, subject to Section 6.1 hereof, of up to $4,000,000 per Draw Down and Call
Options, subject to Section 6.2 hereof, of an additional amount up to the Draw
Down Amount for each applicable Draw Down Pricing Period that the Company may
grant to the Purchaser in the Company's sole discretion.
Section 2.2 The Shares. The Company has authorized and has reserved and
covenants to continue to reserve, subject to Section 4.4(b) hereof, free of
preemptive rights and other similar contractual rights of stockholders, a
sufficient number of its authorized but unissued shares of its Common Stock to
cover the Shares to be issued in connection with all Draw Downs and Call
Options.
Section 2.3 Closing. The closing of the execution and delivery of this
Agreement shall occur upon delivery by facsimile of executed signature pages to
this Agreement and all other documents, instruments and writings required to be
delivered pursuant to this Agreement to the offices of Jenkens & ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, The Chrysler Building, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇ (the "Closing") at 10:00 a.m., eastern time, on (i) January 26, 2001, or
(ii) such other time and place or on such date as the Purchaser and the Company
may agree upon (the "Closing Date"). Each party shall deliver all documents,
instruments and writings required to be delivered by such party pursuant to this
Agreement at or prior to the Closing.
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ARTICLE III
Representations and Warranties
Section 3.1 Representations and Warranties of the Company. The Company hereby
makes the following representations and warranties to the Purchaser:
(a) Organization, Good Standing and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of Delaware and has the requisite corporate power to own, lease
and operate its properties and assets and to conduct its business as it is
now being conducted. As of the date hereof, the Company does not have any
subsidiaries (as defined in Section 3.1(g)) except as set forth in the
Registration Statement and in the Company's most recent Form 10-K,
including the accompanying financial statements (the "Form 10-K"), or in
the Company's most recent Form 10-Q (the "Form 10-Q"), or on Schedule
3.1(g) attached hereto. The Company and each such 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 will not have a
Material Adverse Effect.
(b) 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. The
execution, delivery and performance of this Agreement by the Company and
the consummation by it of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action, and, except
as contemplated by Sections 4.4(b) and 4.4(c), 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. This Agreement constitutes, or shall constitute when executed and
delivered, a valid and binding obligation of the Company enforceable
against the Company 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.
(c) Capitalization. The authorized capital stock of the Company and
the shares thereof issued and outstanding as of the date hereof are set
forth on Schedule 3.1(c) attached hereto. All of the outstanding shares of
the Company's Common Stock have been duly and validly authorized, and are
fully paid and non-assessable. Except as set forth in this Agreement
including Schedule 3.1(c), as of the date hereof no shares of Common Stock
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are entitled to preemptive rights or registration rights and there are no
outstanding options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or
rights convertible into, any shares of capital stock of the Company.
Furthermore, except as set forth in this Agreement including Schedule
3.1(c), as of the date hereof there are 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 shares of capital stock of the
Company. Except for customary transfer restrictions contained in agreements
entered into by the Company in order to sell restricted securities or as
set forth in Schedule 3.1(c), as of the date hereof, the Company is not a
party to any agreement granting registration rights to any person with
respect to any of its equity or debt securities and the Company is not a
party to, and it has no knowledge of, any agreement restricting the voting
or transfer of any shares of the capital stock of the Company. The offer
and sale of all capital stock, convertible securities, rights, warrants, or
options of the Company issued prior to the Closing complied with all
applicable federal and state securities laws, and no stockholder has a
right of rescission or damages with respect thereto which would have a
Material Adverse Effect. The Company has furnished or made available to the
Purchaser true and correct copies of the Company's Certificate of
Incorporation as in effect on the date hereof (the "Charter"), and the
Company's Bylaws as in effect on the date hereof (the "Bylaws").
(d) Issuance of Shares. The Shares to be issued under this Agreement
have been duly authorized by all necessary corporate action and, when paid
for and issued in accordance with the terms hereof, the Shares shall be
validly issued and outstanding, fully paid and non-assessable, and the
Purchaser shall be entitled to all rights accorded to a holder of Common
Stock.
(e) No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated herein do not (i) violate any provision of the
Company's Charter or Bylaws, (ii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, or give to others 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 Company is a party, (iii) create or impose a lien,
charge or encumbrance on any property of the Company under any agreement or
any commitment to which the Company is a party or by which the Company is
bound or by which any of its 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 (including federal and state
securities laws and regulations) 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 all cases (other than
violations pursuant to clauses (i) and (iv) (to the extent of federal
securities law)), for such conflicts, defaults, terminations, amendments,
acceleration, cancellations and violations as would not, individually or in
the aggregate, have a Material Adverse Effect. The Company is not required
under federal, state or local 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 issue and sell
the Shares 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
Nasdaq National Market subsequent to the Closing, and, any registration
statement which may be filed pursuant hereto); provided that, for purpose
of the representation made in this sentence, the Company is assuming and
relying upon the accuracy of the relevant representations and agreements of
the Purchaser herein.
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(f) Commission Documents, Financial Statements. The Common Stock of
the Company is registered pursuant to Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and since
December 31, 1999 the Company has timely filed all reports, schedules,
forms, statements and other documents required to be filed by it with the
Commission pursuant to the reporting requirements of the Exchange Act,
including material filed pursuant to Section 13(a) or 15(d) of the Exchange
Act (all of the foregoing including filings incorporated by reference
therein being referred to herein as the "Commission Documents"). The
Company has delivered or made available to the Purchaser true and complete
copies of the Commission Documents filed with the Commission since December
31, 1999 and prior to the Closing Date. The Company has not provided to the
Purchaser any information which, according to applicable law, rule or
regulation, should 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. The Form 10-K for the year ended December
31, 1999 complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder and other federal, state and local laws, rules and regulations
applicable to such documents, and the said Form 10-K 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. The financial statements of the Company included in the
Commission Documents comply in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission or other applicable rules and regulations with respect thereto.
Such financial statements have been prepared in accordance with generally
accepted accounting principles ("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 position of the Company and its
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).
(g) Subsidiaries. The Commission Documents or Schedule 3.1(g) attached
hereto set forth each subsidiary of the Company as of the date hereof,
showing the jurisdiction of its incorporation or organization and showing
the percentage of each person's ownership of the outstanding stock or other
interests of such subsidiary. For the purposes of this Agreement,
"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. Except
as set forth in the Commission Documents or the Commission Filings, none of
such subsidiaries is a "significant subsidiary" as defined in Regulation
S-X.
(h) No Material Adverse Effect. Except as disclosed in the
Registration Statement or the Commission Documents, since September 30,
2000, the Company has not experienced or suffered any Material Adverse
Effect.
(i) No Undisclosed Liabilities. The Company has no liabilities,
obligations, claims or losses (whether liquidated or unliquidated, secured
or unsecured, absolute, accrued, contingent or otherwise) that would be
required to be disclosed on a balance sheet of the Company or any
subsidiary (including the notes thereto) in conformity with GAAP not
disclosed in the Commission Documents, other than those incurred in the
ordinary course of the Company's or its subsidiaries respective businesses
since September 30, 2000 and which, individually or in the aggregate, do
not or would not have a Material Adverse Effect.
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(j) No Undisclosed Events or Circumstances. No event or circumstance
has occurred or exists with respect to the Company or its subsidiaries or
their respective businesses, properties, operations or financial condition,
which, under applicable law, rule or regulation, requires public disclosure
or announcement by the Company but which has not been so publicly announced
or disclosed and which, individually or in the aggregate, do not or would
not have a Material Adverse Effect.
(k) Indebtedness. Schedule 3.1(k) sets forth as of September 30, 2000
all outstanding secured and unsecured Indebtedness of the Company, or for
which the Company or any subsidiary has commitments. For the purposes of
this Agreement, "Indebtedness" shall mean (a) any liabilities for borrowed
money or amounts owed in excess of $100,000 (other than trade accounts
payable incurred in the ordinary course of business), (b) all guaranties,
endorsements and other contingent obligations in respect of Indebtedness of
others, 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 $100,000 due under leases required to be capitalized
in accordance with GAAP. Neither the Company or any subsidiary is in
default with respect to any Indebtedness, except to the extent that any
such default would not individually or in the aggregate be expected to
cause a Material Adverse Effect.
(l) Title to Assets. Each of the Company and its subsidiaries has good
and marketable title to all of its real and personal property reflected in
the Commission Documents, free of any mortgages, pledges, charges, liens,
security interests or other encumbrances, except for those indicated in the
Commission Documents or the Commission Filings or such that could not
reasonably be expected to cause a Material Adverse Effect. All said leases
of the Company and each of its subsidiaries are valid and subsisting and in
full force and effect in all material respects.
(m) Actions Pending. There is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened against
the Company which questions the validity of this Agreement or the
transactions contemplated hereby or any action taken or to be taken
pursuant hereto or thereto. There is no action, suit, claim, investigation
or proceeding pending or, to the knowledge of the Company, threatened,
against or involving the Company or any subsidiary, or any of their
respective properties or assets which, if adversely determined, is
reasonably likely to result in a Material Adverse Effect.
(n) Compliance with Law. The business of the Company has been and is
presently being conducted in accordance with all applicable federal, state
and local governmental laws, rules, regulations and ordinances, except as
such that do not cause a Material Adverse Effect. Each of the Company and
its subsidiaries has all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of its business as now being conducted unless the failure to
possess such franchises, permits, licenses, consents and other governmental
or regulatory authorizations and approvals, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.
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(o) Certain Fees. No brokers, finders or financial advisory fees or
commissions will be payable by the Company with respect to the transactions
contemplated by this Agreement.
(p) Disclosure. To the Company's knowledge, neither this Agreement or
the Schedules hereto nor any other documents, certificates or instruments
furnished to the Purchaser by or on behalf of the Company in connection
with the transactions contemplated by this Agreement contain any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements made herein or therein, in the light of the
circumstances under which they were made herein or therein, not misleading.
(q) Operation of Business. To the Company's knowledge, the Company or
its subsidiary owns or has a valid right to use all patents, trademarks,
service marks, trade names, copyrights, licenses and authorizations as set
forth in the Commission Documents or the Commission Filings and all rights
with respect to the foregoing, which are necessary for the conduct of its
business as now conducted without any conflict with the rights of others,
except to the extent set forth in the Commission Documents or the
Commission Filings or to the extent that a Material Adverse Effect could
not reasonably be expected to result from such conflict.
(r) Environmental Compliance. Except as disclosed in the Commission
Filings, the Company has obtained all approvals, 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 where the failure to
do so would not reasonably be expected to 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 that
violate or could reasonably be expected to violate any Environmental Law
after the Closing 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.
(s) Material Agreements. Except as set forth in the Commission
Documents and this Agreement, the Company is not 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 a registration statement on Form S-3 or
8
applicable form (collectively, "Material Agreements") if the Company was
registering securities under the Securities Act. The Company has in all
material respects performed all the obligations required to be performed by
it to date under the foregoing agreements, has received no notice of
default and, to the best of the Company's knowledge is not in default under
any Material Agreement now in effect, the result of which could reasonably
be expected to cause a Material Adverse Effect.
(t) Transactions with Affiliates. Except as disclosed in the
Registration Statement or the Commission Documents, there are no loans,
leases, agreements, contracts, royalty agreements, management contracts or
arrangements or other continuing transactions exceeding $100,000 between
(a) the Company, or any of its customers (excluding agreements related to
the purchase or lease of the Company's products) or suppliers on the one
hand, and (b) on the other hand, any officer, employee, consultant or
director of the Company, or any person who would be covered by Item 404(a)
of Regulation S-K or any corporation or other entity controlled by such
officer, employee, consultant, director or person.
(u) Securities Act of 1933. The Company has complied in all material
respects with all applicable federal and state securities laws in
connection with the offer, issuance and sale of the Shares hereunder.
(i) Each Prospectus included as part of the Registration
Statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Securities
Act, complied when so filed in all material respects with the
provisions of the Securities Act. The Commission has not issued any
order preventing or suspending the use of any Prospectus.
(ii) The Company meets the requirements for the use of Form S-3
under the Securities Act. The Registration Statement in the form in
which it became effective and also in such form as it may be when any
post-effective amendment thereto became effective and the Prospectus
and any supplement or amendment thereto when filed with the Commission
under Rule 424(b) under the Securities Act, complied in all material
respects with the provisions of the Securities Act and did not at any
such times 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 case of the Prospectus, in the
light of the circumstances under which they made) not misleading,
except that this representation and warranty does not apply to
statements in or omissions from the Registration Statement or the
Prospectus made in reliance upon and in conformity with information
relating to the Purchaser furnished to the Company in writing by or on
behalf of the Purchaser expressly for use therein.
(iii) The Company has not distributed and, prior to the
completion of the sale of the Shares to the Purchaser, will not
distribute any offering material in connection with the offering and
sale of the Shares other than the Registration Statement, the
Prospectus or other materials, if any, permitted by the Securities
Act.
(v) Employees. As of the date hereof, the Company has no collective
bargaining arrangements or agreements covering any of its employees. Except
as disclosed in the Commission Documents or as set forth on Schedule 3.1(v)
attached hereto, as of the date hereof the Company has no employment
contract or any other similar contract or restrictive covenant, relating to
9
the right of any officer, employee or consultant to be employed or engaged
by the Company. Each of the Company and its subsidiaries requires its
officers, technical employees and certain consultants to enter into
agreements regarding proprietary information and assignment of inventions,
or other similar agreements containing restrictive covenants. Except as
disclosed in the Registration Statement or the Commission Documents, as of
the date hereof, since December 31, 1999, no officer, consultant or key
employee of the Company whose termination, either individually or in the
aggregate, could 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.
(w) Use of Proceeds. The proceeds from the sale of the Shares will be
used by the Company and its subsidiaries for the purposes set forth in the
Registration Statement or Prospectus.
(x) 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 and
immediately upon Closing will 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.
(y) ERISA. No liability to the Pension Benefit Guaranty Corporation
has been incurred with respect to any Plan (as defined below) by the
Company which is or would have a Material Adverse Effect. The execution and
delivery of this Agreement and the issue and sale of the Shares will not
involve any transaction which would violate the prohibitions of Section 406
of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended
("IRC") or in connection with which a penalty could be imposed pursuant to
Section 502 of ERISA or Section 4975 of the IRC, provided that, if the
Purchaser, or any person or entity that owns a beneficial interest in the
Purchaser, is an "employee pension benefit plan" (within the meaning of
Section 3(2) of ERISA) with respect to which the Company is a "party in
interest" (within the meaning of Section 3(14) of ERISA), the requirements
of Sections 407 and 408(e) of ERISA (or their IRC counterparts), if
applicable, are met. As used in this Section 3.1(y), the term "Plan" shall
mean an "employee benefit plan" (as defined in Section 3(2) of ERISA) which
is or has been established or maintained, or to which contributions are or
have been made, by the Company or by any trade or business, whether or not
incorporated, which, together with the Company, is under common control, as
described in Section 414(b) or (c) of the Code.
(z) Acknowledgment Regarding Purchaser's Purchase of Shares. The
Company acknowledges and agrees that the Purchaser is acting solely in the
capacity of arm's length purchaser with respect to this Agreement and the
transactions contemplated hereunder. The Company further acknowledges that
the Purchaser 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 Purchaser
or any of its representatives or agents in connection with this Agreement
and the transactions contemplated hereunder is merely incidental to the
Purchaser's purchase of the Shares.
Section 3.2 Representations and Warranties of the Purchaser. The Purchaser
hereby makes the following representations and warranties to the Company:
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(a) Organization and Standing of the Purchaser. The Purchaser is a
limited liability company duly organized, validly existing and in good
standing under the laws of the Commonwealth of the Bahamas.
(b) Authorization and Power. The Purchaser has the requisite corporate
power and authority to enter into and perform this Agreement and to
purchase the Shares in accordance with the terms hereof. The execution,
delivery and performance of this Agreement by Purchaser 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 Purchaser, its Board of Directors or stockholders is
required. This Agreement constitutes, or shall constitute when executed and
delivered, a valid and binding obligation of the Purchaser enforceable
against the Purchaser 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.
(c) No Conflicts. The execution, delivery and performance of this
Agreement and the consummation by the Purchaser of the transactions
contemplated hereby and thereby or relating hereto do not and will not (i)
result in a violation of such Purchaser's charter documents or bylaws or
(ii) conflict with, or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others
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 Purchaser
is a party, (iii) create or impose or lien, charge or encumbrance on any
property of the Purchaser under any agreement or any commitment to which
the Purchaser is party or by which the Purchaser is on or by which any of
its respective properties or assets are bound or (iv) result in a violation
of any law, rule, or regulation, or any order, judgment or decree of any
court or governmental agency applicable to the Purchaser or its properties,
except for such conflicts, defaults and violations as would not,
individually or in the aggregate, prohibit or otherwise interfere with the
ability of the Purchaser to enter into and perform its obligations under
this Agreement in any material respect. The Purchaser is not required 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, provided that
for purposes of the representation made in this sentence, the Purchaser is
assuming and relying upon the accuracy of the relevant representations and
agreements of the Company herein.
(d) Information. The Purchaser and its advisors, if any, have been
furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of
the Shares which have been requested by the Purchaser. The Purchaser and
its advisors, if any, have been afforded the opportunity to ask questions
of the Company. The Purchaser 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. Purchaser
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.
11
(e) Selling Restriction. The Purchaser has the right to sell shares of
the Company's Common Stock during the Investment Period. The Purchaser
covenants, however, that prior to and during the Investment Period, neither
the Purchaser nor any of its affiliates nor any entity managed by the
Purchaser will ever sell shares of Common Stock of the Company other than
what the Purchaser has accumulated under the terms of this Agreement or in
any accounts directly or indirectly managed by the Purchaser or any
affiliate of the Purchaser or any entity managed by the Purchaser.
ARTICLE IV
Covenants
The Company covenants with the Purchaser as follows, which covenants
are for the benefit of the Purchaser and its permitted assignees, that during
the term of this Agreement:
Section 4.1 Securities Compliance. The Company shall notify the Commission
and the Nasdaq National Market or an Alternate Market, if applicable, in
accordance with their rules and regulations, of the transactions contemplated by
this Agreement, and shall take all other necessary action and proceedings as may
be required and permitted by applicable law, rule and regulation, for the legal
and valid issuance of the Shares to the Purchaser.
Section 4.2 Registration and Listing. The Company will (i) take all action
necessary to cause its Common Stock to continue to be registered under Sections
12(b) or 12(g) of the Exchange Act, (ii) comply in all respects with its
reporting and filing obligations under the Exchange Act, and (iii) not take any
action or file any document (whether or not permitted by the Securities Act or
the rules promulgated thereunder) 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 will use its best
efforts to take all action necessary to continue the listing or trading of its
Common Stock and the listing of the Shares purchased by Purchaser hereunder on
the Nasdaq National Market or an Alternate Market and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the Nasdaq National Market or an Alternate Market.
Section 4.3 Registration Statement. Before the Company shall issue a Draw
Down Notice, the Company shall have caused a sufficient number of shares of
Common Stock to be authorized and registered to cover the Shares to be issued in
connection with this Agreement.
Section 4.4 Compliance with Laws.
(a) The Company shall comply with all applicable laws, rules,
regulations and orders, noncompliance with which could have a Material
Adverse Effect.
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(b) The Company will not be obligated to issue and the Purchaser will
not be obligated to purchase any shares of the Company's Common Stock which
would result in the issuance under this Agreement of more than nineteen and
nine-tenths percent (19.9%) of the issued and outstanding shares of the
Company's Common Stock.
(c) Prior to issuing each Draw Down Notice, the Company shall take all
necessary corporate action to authorize the issuance of the Shares issuable
pursuant to such Draw Down Notice by reason of the Draw Down or upon
Purchaser exercising a Call Option.
Section 4.5 Keeping of Records and Books of Account. The Company shall keep
adequate records and books of account, in which complete entries will 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.
Section 4.6 Reporting Requirements. Upon request, the Company shall furnish
or make available the following to the Purchaser so long as such Purchaser shall
be obligated hereunder to purchase Shares:
(a) Quarterly reports filed with the Commission on Form 10-Q as soon
as filed, and in any event within forty-five (45) days after the end of
each of the first three fiscal quarters of the Company; and
(b) Annual reports filed with the Commission on Form 10-K as soon as
filed, and in any event within ninety (90) days after the end of each
fiscal year of the Company.
Section 4.7 Non-public Information. Notwithstanding any other provision of
this Agreement to the contrary, neither the Company nor any of its officers or
agents shall disclose any material non-public information about the Company to
the Purchaser and neither the Purchaser nor any of its affiliates, officers or
agents will solicit any material non-public information from the Company.
Section 4.8 Effective Registration Statement. If it is necessary for the
Registration Statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, the Company will
endeavor to cause the Registration Statement or such post-effective amendment to
become effective as soon as reasonably practicable and will advise the Purchaser
promptly and, if requested by the Purchaser, will confirm such advice in
writing, when it receives notice that the Registration Statement or such
post-effective amendment has become effective.
Section 4.9 No Stop Orders. The Company will advise the Purchaser promptly
and, if requested by the Purchaser, will confirm such advice in writing: (i) of
its receipt of notice of any request by the Commission for amendment of or a
supplement to the Registration Statement, any Prospectus or for additional
information; (ii) of its receipt of notice of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement or of
13
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
its becoming aware of the happening of any event which makes any statement of a
material fact made in the Registration Statement or the Prospectus (as then
amended or supplemented) untrue or which requires the making of any additions to
or changes in the Registration Statement or the Prospectus (as then amended or
supplemented) in order to state a material fact required by the Securities Act
or the regulations thereunder to be stated therein or necessary in order to make
the statements therein not misleading, or of the necessity to amend or
supplement the Prospectus (as then amended or supplemented) 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 will make all reasonable efforts to obtain the withdrawal of such order
at the earliest possible time.
Section 4.10 Amendments to the Registration Statement. The Company will not
(i) file any amendment to the Registration Statement or make any amendment or
supplement to the Prospectus which amends or supplements any information
regarding the Purchaser of which the Purchaser shall not previously have been
advised or to which the Purchaser shall reasonably object after being so
advised; provided, that, if there is any delay in the filing of any amendment to
the Registration Statement or any amendment or supplement to the Prospectus in
accordance with this clause (i), such delay shall not constitute a breach of
this Agreement, or (ii) so long as, in the reasonable opinion of counsel for the
Purchaser, a Prospectus is required to be delivered in connection with sales by
any Purchaser or dealer, file any information, documents or reports pursuant to
the Exchange Act without delivering a copy of such information, documents or
reports to the Purchaser, promptly following such filing.
Section 4.11 Prospectus Delivery. The Company shall file a prospectus
supplement to its Registration Statement on the first business day immediately
following the end of each Draw Down Pricing Period, and will deliver to the
Purchaser, without charge, in such quantities as reasonably requested by the
Purchaser, copies of each form of Prospectus and prospectus supplement on each
Settlement Date. The Company consents to the use of the Prospectus (and of any
amendment or 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 Purchaser, in connection with the offering
and sale of the Shares and for such period of time thereafter as the Prospectus
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 or in the opinion of counsel for the Purchaser is
required to be set forth in the Prospectus (as then amended or supplemented) or
should be set forth therein in order to make the statements 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 to comply with the Securities
Act or any other law, the Company will forthwith prepare and, subject to the
provisions of Section 4.10 above, file with the Commission an appropriate
supplement or amendment thereto, and will expeditiously furnish to the Purchaser
a reasonable number of copies thereof.
Section 4.12 Other Financing. If the Company enters into any other
financing agreement, the primary purpose of which would be to obtain equity
financing for the Company (an "Other Financing"), during a Draw Down Pricing
Period, the Company shall promptly notify the Purchaser of such Other Financing
and the Purchaser shall have the options set forth in Section 6.1(k) hereof. If
14
the Company enters into the Other Financing between Draw Down Pricing Periods,
the Company shall promptly notify the Purchaser of such Other Financing and the
Purchaser shall have the option, which option shall be exercised no later than
five (5) Trading Days after receipt by the Purchaser of the notice of the Other
Financing, to purchase up to the maximum Draw Down Amount that would be
applicable under this Agreement if the Threshold Price were equal to the price
per share to be paid for the Common Stock in the Other Financing on the same,
absolute terms and conditions contemplated in the Other Financing. If the
Purchaser does not exercise its purchase option in writing before 8:00 p.m.
(eastern time), the Company shall have the right to close the Other Financing on
the scheduled closing date with a third party, provided that all of the terms
and conditions of such closing are similar in all material respects to those
offered to the Purchaser. As used herein, "Other Financing" shall not include
the Company (i) entering into a loan, credit or lease facility with a bank or
financing institution (including any equity component thereof), (ii)
establishing an employee stock option plan or agreement or finance the
acquisition of other companies, equipment, technologies or lines of business,
(iii) issuing shares of Common Stock in connection with the Company's current
option plans (as the same may be amended from time to time), stock purchase
plans, rights plans, currently outstanding warrants or options, or increase the
number of shares available under any such plans (the primary purpose of which is
not to raise equity), and (iv) issuing shares of Common Stock and/or preferred
stock in connection with the formation and maintenance of strategic
partnerships, alliances or joint ventures and the acquisition of products,
licenses or other assets (each a "Permitted Transaction"). The Company shall not
be required to obtain the Purchaser's consent to an Other Financing. If the
Company does not obtain the Purchaser's consent in accordance with Section 7.2
hereof, the provisions of Article VII shall apply.
Section 4.13 Notices. The Company shall immediately notify the Purchaser
that (i) a Material Adverse Effect has occurred or (ii) the Company has entered
into an Other Financing (as defined in Section 4.12 hereof).
ARTICLE V
Conditions to Closing, Draw Downs and Call Options
Section 5.1 Conditions Precedent to the Obligation of the Company to Issue
a Draw Down Notice or Grant a Call Option and Sell the Shares. The obligation
hereunder of the Company to issue a Draw Down Notice or grant a Call Option and
sell the Shares to the Purchaser is subject to the satisfaction or waiver, at or
before each Draw Down Exercise Date and each Settlement Date, as applicable, of
each of the conditions set forth below. These conditions are for the Company's
sole benefit and may be waived by the Company at any time in its sole
discretion.
(a) Accuracy of the Purchaser's Representations and Warranties. The
representations and warranties of the Purchaser in this Agreement shall be
true and correct in all material respects as of the date when made and as
of each Draw Down Exercise Date and each Settlement Date, as applicable, as
though made at that time, except for representations and warranties that
are expressly made as of a particular date.
15
(b) Registration Statement. The Company shall have Shares registered
under the Registration Statement equal to or in excess of the number of
Shares issuable pursuant to such Draw Down Notice. The Registration
Statement registering the offer and sale of the Shares shall have been
declared effective by the Commission and shall have been amended or
supplemented, as required, to disclose the sale of the Shares prior to each
Draw Down Exercise Date and Settlement Date, as applicable, and there shall
be no stop order suspending the effectiveness of the Registration
Statement.
(c) Performance by the Purchaser. The Purchaser 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 Purchaser at or prior to each Draw Down
Exercise Date and Settlement Date, as applicable.
(d) No Injunction. No statute, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction
which prohibits the consummation of any of the transactions contemplated by
this Agreement.
(e) No Suspension, Etc. Trading in the Company's Common Stock shall
not have been suspended by the Commission or the Nasdaq National Market or
an Alternate Market (except for any suspension of trading of limited
duration agreed to by the Company, which suspension shall be terminated
prior to such Draw Down Exercise Date or Settlement Date, as applicable).
(f) No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened,
against the Company, or any of the officers, directors or affiliates of the
Company seeking to restrain, prevent or change the transactions
contemplated by this Agreement, or seeking damages in connection with such
transactions.
Section 5.2 Conditions Precedent to the Obligation of the Purchaser to
Close. The obligation hereunder of the Purchaser to enter this Agreement is
subject to the satisfaction or waiver, at or before the Closing, of each of the
conditions set forth below. These conditions are for the Purchaser's sole
benefit and may be waived by the Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations and Warranties. Each of
the representations and warranties of the Company shall be true and correct
in all material respects as of the date when made and as of the Closing
Date, as though made at that time, except for representations and
warranties that speak as of a particular date.
(b) Performance by 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 Closing.
16
(c) Effective Registration Statement. The Registration Statement
registering the offer and sale of the Shares shall have been declared
effective by the Commission and there shall be no stop order suspending the
effectiveness of the Registration Statement.
(d) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
(e) No Proceedings or Litigation. No action, suit or proceeding before
any arbitrator or any governmental authority shall have been commenced, and
no investigation by any governmental authority shall have been threatened,
against the Company, or any of the officers, directors or affiliates of the
Company seeking to restrain, prevent or change the transactions
contemplated by this Agreement, or seeking damages in connection with such
transactions.
(f) Opinion of Counsel, Etc. At the Closing, the Purchaser shall have
received an opinion of counsel to the Company, dated the date of Closing,
in the form of Exhibit A hereto, a secretary's certificate, dated the date
of Closing, substantially in the form of Exhibit B hereto, and such other
certificates and documents as the Purchaser or its counsel shall reasonably
require incident to the Closing.
Section 5.3 Conditions Precedent to the Obligation of the Purchaser to
Accept a Draw Down or Call Option Grant and Purchase the Shares. The obligation
hereunder of the Purchaser to accept a Draw Down or Call Option grant and to
acquire and pay for the Shares on the Settlement Date is subject to the
satisfaction or waiver, at or before each Draw Down Exercise Date and each
Settlement Date, as applicable, of each of the conditions set forth below. The
conditions are for the Purchaser's sole benefit and may be waived by the
Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations and Warranties. Each of
the representations and warranties of the Company shall be true and correct
in all material respects as of the date when made and as of the Draw Down
Exercise Date and Settlement Date, as applicable, as though made at that
time, except for representations and warranties that speak as of a
particular date.
(b) Registration Statement. The Company shall have Shares registered
under the Registration Statement equal to or in excess of the number of
Shares issuable pursuant to such Draw Down Notice or Call Option. The
Registration Statement registering the offer and sale of the Shares shall
have been declared effective by the Commission and shall have been amended
or supplemented, as required, to disclose the sale of the Shares prior to
each Draw Down Exercise Date or each Settlement Date, as applicable, and
there shall be no stop order suspending the effectiveness of the
Registration Statement.
(c) No Suspension, Etc. Trading in the Company's Common Stock shall
not have been suspended by the Commission or the Nasdaq National Market or
an Alternate Market (except for any suspension of trading of limited
17
duration agreed to by the Company, which suspension shall be terminated
prior to each Draw Down Exercise Date), and, at any time prior to such Draw
Down Exercise Date or applicable Settlement Date, trading in securities
generally as reported by the Nasdaq National Market or an Alternate Market
shall not have been suspended or limited, or minimum prices shall not have
been established on securities whose trades are reported by the Nasdaq
National Market or an Alternate Market, 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 judgment of the Purchaser, makes it
impracticable or inadvisable to purchase the Shares. The Common Stock shall
be listed on Nasdaq or an Alternate Market.
(d) Performance by 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 Draw Down
Exercise Date and the Settlement Date and shall have delivered the
Compliance Certificate substantially in the form attached hereto as Exhibit
C.
(e) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
(f) No Proceedings or Litigation. No action, suit or proceeding before
any arbitrator or any governmental authority shall have been commenced, and
no investigation by any governmental authority shall have been threatened,
against the Company, or any of the officers, directors or affiliates of the
Company seeking to restrain, prevent or change the transactions
contemplated by this Agreement, or seeking damages in connection with such
transactions.
(g) No Material Adverse Effect. No Material Adverse Effect shall have
occurred.
(h) Board Authorization. The Company shall have taken all necessary
corporate action to authorize the issuance of the Shares issuable pursuant
to each Draw Down Notice.
ARTICLE VI
Draw Down Terms; Call Option
Section 6.1 Draw Down Terms. Subject to the satisfaction of the conditions
set forth in this Agreement, the parties agree as follows:
(a) The Company, may, from time to time during the term of this
Agreement and in its sole discretion, issue a Draw Down Notice with respect
to a Draw Down during each Draw Down Pricing Period of up to (i) $500,000
18
if the Threshold Price is equal to or greater than $7.00 but less than
$12.00 and (ii) up to an additional $500,000 for every $5.00 increase in
the Threshold Price from $7.00 up to and including $42.00, for a maximum
Draw Down Amount during each Draw Down Pricing Period of $4,000,000;
provided, that the Company may, in its sole discretion, issue a Draw Down
Notice with respect to any Draw Down Amount at any Threshold Price or any
Draw Down Discount Percentage pursuant to terms mutually agreed upon by the
Purchaser and the Company, which Draw Down the Purchaser will be obligated
to accept. Prior to issuing any Draw Down Notice, the Company shall have
Shares registered under the Registration Statement which are equal to or in
excess of the number of Shares issuable pursuant to the Draw Down Notice.
(b) The number of Shares to be issued in connection with each Draw
Down shall be equal to the sum of the quotients (for each Trading Day of
the Draw Down Pricing Period for which the VWAP equals or exceeds the
Threshold Price) of (x) 1/20th (or such other fraction the denominator of
which equals the number of Trading Days during the Draw Down Pricing
Period) of the Draw Down Amount divided by (y) the applicable Draw Down
Discount Percentage multiplied by the VWAP of the Common Stock for such
Trading Day.
(c) Only one Draw Down shall be allowed in each Draw Down Pricing
Period.
(d) The number of Shares purchased by the Purchaser with respect to
each Draw Down shall be determined on a daily basis during each Draw Down
Pricing Period and settled on the second business day following the end of
such Draw Down Pricing Period (the "Settlement Date").
(e) There shall be a minimum of five (5) Trading Days between Draw
Downs, unless otherwise mutually agreed upon between the Purchaser and the
Company.
(f) There shall be a maximum of eighteen (18) Draw Downs during the
term of this Agreement.
(g) Each Draw Down will commence on the first Trading Day of the Draw
Down Pricing Period and will expire on the end of the last Trading Day of
each Draw Down Pricing Period.
(h) If the VWAP on a given Trading Day is less than the Threshold
Price, then the total amount of the Draw Down for the relevant Draw Down
Pricing Period will be reduced by 1/20th (or such other fraction based on
the denominator of which equals the number of Trading Days during the Draw
Down Pricing Period). At no time shall the Threshold Price be set below
$7.00, unless mutually agreed upon by the Company and the Purchaser. If
trading in the Company's Common Stock is suspended for any reason for more
than three (3) hours in any Trading Day, at the Purchaser's option, the
VWAP shall be deemed to be below the Threshold Price for that Trading Day
and the Draw Down for the relevant Draw Down Pricing Period shall be
19
reduced by 1/20th (or such other fraction the denominator of which equals
the number of Trading Days during the Draw Down Pricing Period).
Notwithstanding anything in the foregoing to the contrary, for each Trading
Day during the Draw Down Pricing Period that the VWAP is less than the
Threshold Price or is deemed to be below the Threshold Price pursuant to
the immediately preceding sentence, the Purchaser may elect in its sole
discretion to purchase Shares at a price equal to the Threshold Price
multiplied by the Draw Down Discount Percentage at the end of such Draw
Down Pricing Period. The Purchaser will inform the Company via facsimile
transmission no later than 8:00 p.m. (eastern time) on the last Trading Day
of such Draw Down Pricing Period as to the number of Shares, if any, the
Purchaser chooses to purchase under such circumstances set forth in this
Section 6.1(h).
(i) The Company must inform the Purchaser via facsimile transmission
as to the Draw Down Amount the Company wishes to exercise before
commencement of trading on the first Trading Day of the Draw Down Pricing
Period (the "Draw Down Notice"), substantially in the form attached hereto
as Exhibit D. In addition to the Draw Down Amount, the Company shall set
the Threshold Price with each Draw Down Notice and shall designate the
first Trading Day of the Draw Down Pricing Period. Notwithstanding anything
in the foregoing to the contrary, if the Company wishes the date of the
Draw Down Notice to be the first day of the Draw Down Pricing Period, the
Draw Down Notice must be delivered to the Purchaser and receipt of such
Draw Down Notice confirmed by the Purchaser prior to the commencement of
trading on the date of such Draw Down Notice.
(j) On each Settlement Date, the Company shall deliver the Shares
purchased by the Purchaser to the Purchaser or to The Depositary Trust
Company ("DTC") on the Purchaser's behalf via the Deposit Withdrawal Agent
Commission system ("DWAC"), and upon receipt of the Shares, the Purchaser
shall cause payment therefor to be made to the account designated by the
Company by wire transfer of immediately available funds provided that the
Shares are received no later than 1:00 p.m., eastern time, or next day
available funds if the Shares are received thereafter.
(k) If during any Draw Down Pricing Period the Company shall enter
into an Other Financing (other than shares of Common Stock issued under
this Agreement or pursuant to a Permitted Transaction), the Purchaser may
in its sole discretion (i) purchase the Draw Down Amount of shares of
Common Stock and/or exercise Call Options granted during such Draw Down
Pricing Period on the terms at which the Company issued shares of Common
Stock in the Other Financing during such Draw Down Pricing Period, net of
any third party's discount and fees, (ii) purchase the Draw Down Amount of
shares of Common Stock and/or exercise Call Options granted during such
Draw Down Pricing Period at the applicable Draw Down Discount Percentage
times the VWAP for such Draw Down Pricing Period, or (iii) elect not to
purchase any Shares during such Draw Down Pricing Period. The Purchaser
shall notify the Company of its election on the business day preceding the
Settlement Date.
(l) If on the Settlement Date, the Company fails to deliver the Shares
to be purchased by the Purchaser as required hereunder, and such failure
continues for ten (10) Trading Days, the Company shall pay, in cash or
restricted shares of Common Stock, at the option of the Purchaser, as
liquidated damages and not as a penalty to the Purchaser an amount equal to
two percent (2%) of the Draw Down Amount for the initial thirty (30) days
and each additional thirty (30) day period thereafter until such failure
has been cured, which shall be pro rated for such periods less than thirty
(30) days (the "Periodic Amount"). Cash payments to be made pursuant to
this clause (1) shall be due and payable immediately upon demand in
20
immediately available cash funds. Certificates evidencing the restricted
shares of Common Stock shall be delivered immediately upon demand. The
parties agree that the Periodic Amount represents a reasonable estimate on
the part of the parties, as of the date of this Agreement, of the amount of
damages that may be incurred by the Purchaser if the Company fails to
deliver the Shares on the Settlement Date. If the Purchaser elects to
receive shares of Common Stock instead of cash, the Purchaser shall have
the right to demand registration once within twelve (12) months of the date
of issuance of such shares of Common Stock and piggyback registration
rights if the Company files a separate registration statement.
(m) If during any Draw Down Pricing Period the Company reasonably
believes an event may occur which would result in or require the suspension
of the effectiveness of the Registration Statement, the Company shall
notify the Purchaser before 9:30 a.m. (eastern time) on any Trading Day (a
"Section 6.1(m) Notice") and reduce the number of Trading Days in such Draw
Down Pricing Period (a "Truncated Pricing Period"). If the Company delivers
the Section 6.1(m) Notice (i) before 9:30 a.m. (eastern time) on a Trading
Day, the last Trading Day of such Truncated Pricing Period shall be the
Trading Day preceding the receipt of the Section 6.1(m) Notice or (ii)
between 9:30 a.m. and 4:00 p.m. (eastern time) on a Trading Day, then the
last Trading Day of such Truncated Pricing Period shall be the Trading Day
on which the Section 6.1(m) Notice was received by the Purchaser.
The Purchaser will purchase Shares in an aggregate dollar amount (the
"Truncated Draw Down Allocation Amount") equal to the product of the Draw
Down Amount times a fraction the numerator of which equals the number of
Trading Days in the Truncated Pricing Period and the denominator of which
equals twenty (20) or such other number of Trading Days in such Draw Down
Pricing Period as the parties may have mutually agreed upon with respect to
such Draw Down Pricing Period (such number of days referred to herein as
the "Trading Day Number") in an amount and price for each of the Trading
Days in a Truncated Pricing Period as determined in accordance with Section
6.1(b) and Section 6.1(h).
In addition, the Purchaser may, at its option, elect to purchase
Shares in an additional dollar amount equal to the product of the Draw Down
Amount requested in the applicable Draw Down Notice, first multiplied by
(x) a fraction, the numerator of which equals one (1) and the denominator
of which equals the Trading Day Number and next multiplied by (y) that
number that is equal to the Trading Day Number minus the number of Trading
Days in the Truncated Pricing Period. The price per share for such
additional dollar amount shall equal (i) the aggregate total of Truncated
Draw Down Allocation Amounts during the Truncated Pricing Period divided by
(ii) the number of Shares to be purchased during such Truncated Pricing
Period.
Upon receipt of the Section 6.1(m) Notice, the Purchaser may (x) elect
to purchase Common Stock at the Threshold Price for any Trading Day that
the VWAP was below the Threshold Price during the Truncated Pricing Period
in accordance with Section 6.1(i) hereof, (y) elect to purchase Common
Stock in the additional amount as set forth in the preceding paragraph of
this Section 6.1(m), and (z) elect to exercise any unexercised Call Options
(for a Call Option Amount not to exceed $1,000,000) by issuing a Call
Option Notice to the Company, in each such case, no later than 10:00 a.m.
21
(eastern time) on the first Trading Day after the end of the Truncated
Pricing Period. The exercise price of the Call Option shall be based on the
VWAP on the last Trading Day of the Truncated Pricing Period (in lieu of
the VWAP as specified in clause (A) of Section 6.2(b) hereof) and otherwise
determined in accordance with Section 6.2(b) hereof.
(n) The Settlement Date for any Truncated Pricing Period shall be the
second Trading Day after receipt of the Section 6.1(m) Notice.
Section 6.2 Purchaser's Call Option.
(a) During each Draw Down Pricing Period, the Company at its sole
discretion may grant to the Purchaser the right to exercise multiple call
options of up to the applicable Draw Down Amount (a "Call Option"). The
amount of the Call Option shall be set forth in the Draw Down Notice. For
each Trading Day during a Draw Down Pricing Period, the Purchaser may
exercise all or any part of a Call Option by providing notice to the
Company of such exercise (the "Call Option Notice"), substantially in the
form attached hereto as Exhibit E.
(b) The number of shares of Common Stock to be issued in connection
with each Call Option Notice shall equal (i) the dollar amount of the Call
Option exercised divided by (ii) the product of the applicable Draw Down
Discount Percentage and the greater of (A) the VWAP for the Common Stock on
the day the Purchaser issues its Call Option Notice or (B) the Threshold
Price.
(c) Each Call Option exercised shall be settled on the applicable
Settlement Date.
(d) The Threshold Price designated by the Company in its Draw Down
Notice shall apply to each respective Call Option.
(e) For each Trading Day on which the Purchaser wishes to exercise all
or any portion of a Call Option pursuant to this Section 6.2, the Purchaser
must issue via facsimile a Call Option Notice to the Company no later than
8:00 p.m. (eastern time) on the day of such exercise. To the extent the
Purchaser does not exercise any portion of a Call Option by 8:00 p.m.
(eastern time) on the last day of the applicable Draw Down Pricing Period,
the Purchaser's Call Option with respect to that Draw Down Pricing Period
shall terminate.
ARTICLE VII
Termination
Section 7.1 Termination by Mutual Consent. The term of this Agreement shall
be the earlier of (i) twenty (20) consecutive months from the date of execution
of this Agreement (the "Investment Period"), (ii) the date that all of the
shares of Common Stock registered under the Registration Statement have been
issued and sold and (iii) the date that the Purchaser has purchased in the
aggregate $50,000,000 of Shares pursuant to all Draw Downs issued and Call
Options granted and exercised. This Agreement may be terminated at any time by
mutual consent of the parties.
22
Section 7.2 Other Termination. The Company shall inform the Purchaser, and
the Purchaser shall have the right to terminate this Agreement within the
subsequent thirty (30) days (the "Event Period"), if (x) the Company enters into
an Other Financing without the prior consent of the Purchaser, which consent
will not be unreasonably delayed, conditioned or withheld, which provides for
(i) the issuance of Common Stock or securities convertible, exercisable or
exchangeable into Common Stock at a discount to the then current market price of
the Common Stock, including equity lines of credit, (ii) a mechanism for the
reset of the purchase price of the Common Stock to below the then current market
price of the Common Stock, or (iii) the issuance of Common Stock with warrants,
which have an exercise price such that together with the price of the Common
Stock would result in the issuance of shares of Common Stock at a per share
price below the then current market price of the Common Stock, or (y) an event
resulting in a Material Adverse Effect has occurred. The Purchaser may terminate
this Agreement upon one (1) day's notice during the Event Period.
Section 7.3 Termination by Company. The Company may terminate this
Agreement at any time upon thirty (30) days notice to the Purchaser; provided,
that, (i) such termination shall not occur during a Draw Down Pricing Period and
the applicable Settlement Date, (ii) receipt by Purchaser of such notice shall
trigger an Event Period for purposes of Section 7.2 hereof and (iii) the Company
shall have paid the Purchaser the fee provided in Section 9.1(b) unless the
Company shall have requested Draw Downs and granted Call Options in an aggregate
amount of $4,500,000.
Section 7.4 Effect of Termination. In the event of termination by the
Company or the Purchaser, written notice thereof shall forthwith be given to the
other party 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, 7.2 or 7.3 herein, this Agreement shall
be of no further force and effect, except as provided in Section 9.9 hereof.
Nothing in this Section 7.4 shall be deemed to release the Company or the
Purchaser from any liability for any breach under this Agreement, or to impair
the rights of the Company and the Purchaser to compel specific performance by
the other party of its obligations under this Agreement.
ARTICLE VIII
Indemnification
Section 8.1 General Indemnity.
(a) Indemnification by the Company. The Company will indemnify and
hold harmless the Purchaser, each of its directors, fund managers and
officers, and each person, if any, who controls the Purchaser within the
meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act from and against any losses, claims, damages, liabilities and
expenses (including reasonable costs of defense and investigation and all
reasonable attorneys' fees) to which the Purchaser, each of its directors,
fund managers and officers, and each person, if any, who controls the
23
Purchaser 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 untrue
statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in the Registration Statement relating to Common
Stock being sold to the Purchaser (including the Prospectus Supplement
filed in connection with the transactions contemplated hereunder which are
a part of it), or any amendment or supplement to it, or (ii) the omission
or alleged omission to state in that Registration Statement or any document
incorporated by reference in the Registration Statement, a material fact
required to be stated therein or necessary to make the statements therein
not misleading, provided that the Company shall not be liable under this
Section 8.1(a) to the extent that a court of competent jurisdiction shall
have determined by a final judgment (with no appeals available) that such
loss, claim, damage, liability or action resulted directly from any such
acts or failures to act, undertaken or omitted to be taken by the Purchaser
or such person through its bad faith or willful misconduct; provided,
however, that 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 Purchaser expressly for
use in the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and provided, further,
that with respect to the Prospectus, the foregoing indemnity shall not
inure to the benefit of the Purchaser or any such person from whom the
person asserting any loss, claim, damage, liability or expense purchased
Common Stock, if copies of the Prospectus were timely delivered to the
Purchaser pursuant hereto and a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of the Purchaser
or any such person to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the
Common Stock to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or expense.
The Company will reimburse the Purchaser and each such controlling
person promptly upon demand for any legal or other costs or expenses
reasonably incurred by the Purchaser or any controlling person in
investigating, defending against, or preparing to defend against any such
claim, action, suit or proceeding, except that the Company will not be
liable to the extent a claim or action which results in a loss, claim,
damage, liability or expense arises out of, or is based upon, an untrue
statement, alleged untrue statement, omission or alleged omission, included
in any Registration Statement, Prospectus or Prospectus Supplement or any
amendment or supplement to the thereto in reliance upon, and in conformity
with, written information furnished by the Purchaser to the Company for
inclusion in the Registration Statement, Prospectus or Prospectus
Supplement.
(b) Indemnification by the Purchaser. The Purchaser will 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
any expenses (including reasonable costs of defense and investigation and
24
all attorneys' fees) to which the Company and each director, officer and
person, if any, who controls the Company 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 untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any Prospectus or
Prospectus Supplement or any amendment or supplement to it or (ii) the
omission or alleged omission to state in the Registration Statement or any
Prospectus or Prospectus Supplement or any amendment or supplement to it a
material fact required to be stated therein or necessary to make the
statements therein not misleading, 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 Purchaser to the Company for inclusion in the
Registration Statement, the Prospectus or Prospectus Supplement or an
amendment or supplement thereto, and the Purchaser will reimburse the
Company and each such director, officer or controlling person promptly upon
demand for any legal or other costs or expenses reasonably incurred by the
Company or the other person in investigating, defending against, or
preparing to defend against any such claim, action, suit or proceeding.
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 paragraph (a) or (b) of Section 8.1, the person
will notify the indemnifying party in writing of the claim or commencement of
the action, suit or proceeding, but failure to notify the indemnifying party
will not relieve the indemnifying party from liability under paragraph (a) or
(b) of 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 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 Paragraph (a) or (b) or 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. 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 paragraph (a) or (b) of Section
8.1, each indemnifying party will, in lieu of indemnifying the indemnified
party, contribute to the amount paid or payable by the indemnified party as a
25
result of the 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 from the sale of stock which is the
subject of the claim, action, suit or proceeding which resulted in the loss or
liability or (ii) if that allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits of the
sale of stock, but also the relative fault of the indemnifying party and the
indemnified party 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.
To the extent that either party reimburses the other as required by Section
8.1 and it is later determined by a court of competent jurisdiction that such
party was not entitled to indemnification, such party shall promptly return all
such funds.
ARTICLE IX
Miscellaneous
Section 9.1 Fees and Expenses.
(a) The Company shall pay all reasonable fees and expenses related to
the transactions contemplated by this Agreement; provided, that the Company
shall pay, at the Closing, all reasonable attorneys fees and expenses
(exclusive of disbursements and out-of-pocket expenses) incurred by the
Purchaser of up to $50,000 in connection with the preparation, negotiation,
execution and delivery of this Agreement. In addition, the Company shall
pay all reasonable fees and expenses incurred by the Purchaser in
connection with any amendments, modifications or waivers of this Agreement
or incurred in connection with the successful enforcement of this
Agreement, including, without limitation, all reasonable attorneys' fees
and expenses.
(b) If on the ten (10) month anniversary of this Agreement, the
Company has not requested Draw Downs and granted Call Options in an
aggregate amount of $4,500,000, provided that such amount shall be reduced
by the dollar value of any securities purchased by Purchaser in an Other
Financing, and further provided that such amount shall also be reduced by
$500,000 for each calendar month in which the VWAP is less than $7.00 for
more than 10 Trading Days, the Company shall pay the Purchaser, at the
option of the Purchaser, a fee in (i) cash equal to (x) 4,500,000 less the
aggregate amount of all Draw Downs purchased by the Purchaser, Call Options
accepted by the Purchaser and the value of securities purchased by
Purchaser in any Other Financings divided by (y) 15 (the "Fee Amount"), or
(ii) warrants to purchase shares of Common Stock equal to the Fee Amount at
an exercise price per share of 110% of the VWAP of the Common Stock on the
date of execution of this Agreement and exercisable at any time from the
date of issuance until one year thereafter. The Purchaser shall have the
right to demand registration once within twelve (12) months of the date of
issuance of such warrants and piggyback registration rights if the Company
files a separate registration statement.
Section 9.2 Specific Enforcement, Consent to Jurisdiction.
(a) The Company and the Purchaser 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
26
or were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent or cure breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions hereof or thereof, this being in addition to any other remedy to
which any of them may be entitled by law or equity.
(b) Each of the Company and the Purchaser (i) 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 (ii) 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 Purchaser 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
shall affect or limit any right to serve process in any other manner
permitted by law.
Section 9.3 Entire Agreement; Amendment. This Agreement contains the entire
understanding of the parties with respect to the matters covered hereby and,
except as specifically set forth herein, neither the Company nor the Purchaser
makes any representations, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be waived or amended other than
by a written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought.
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, by telecopy or facsimile 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 addresses for such communications shall be:
If to the Company: BioMarin Pharmaceutical Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇ / ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
With copies to: Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
27
If to the Purchaser: Acqua Wellington North American
Equities Fund, Ltd.
c/o Fortis Fund Services (Bahamas) Ltd.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Centre
East Bay Street, P. O. Box SS-6238
Nassau, Bahamas
Tel. No: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇
With copies to: Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
The Chrysler Building
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel. No: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Any party hereto may from time to time change its address for notices
by giving at least ten (10) days 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.
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 Purchaser may not assign this
Agreement to any person without the prior consent of the Company, provided,
however, that the Purchaser may assign this Agreement to any of its affiliated
funds, which consent shall not be unreasonably withheld. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
assigns. The parties hereto may not amend this Agreement or any rights or
obligations hereunder without the prior written consent of the Company and each
Purchaser to be affected by the amendment. After Closing, 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 laws of the State of New York, without
28
giving effect to the choice of law provisions.
Section 9.9 Survival. The representations and warranties of the Company and
the Purchaser contained in Article III and the covenants contained in Article IV
shall survive the execution and delivery hereof and the Closing 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
and the termination of this Agreement hereunder.
Section 9.10 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being understood that all
parties 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. The Company shall not issue any press release or
otherwise make any public statement or announcement with respect to this
Agreement or the transactions contemplated hereby or the existence of this
Agreement without the prior written consent of the Purchaser, which shall not be
unreasonably withheld. Notwithstanding the foregoing, in the event the Company
is required by law or regulation to issue a press release or otherwise make a
public statement or announcement with respect to this Agreement or the
transaction contemplated hereby prior to or after the Closing, the Company shall
consult with the Purchaser 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 Purchaser or the Company, each of the Company and the
Purchaser 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.
[END OF PAGE]
29
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.
BIOMARIN PHARMACEUTICAL INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer and
Chairman
ACQUA WELLINGTON NORTH
AMERICAN EQUITIES FUND, LTD.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Partner and Chief
Investment Officer
EXHIBIT A TO THE
COMMON STOCK PURCHASE AGREEMENT
OPINION OF COUNSEL
[LETTERHEAD OF _______________________]
[FORM OF COMPANY'S COUNSEL OPINION]
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware. The
Company has the requisite corporate power to own and operate its properties and
assets, and to carry on its business as presently conducted. Each of the Company
and each Subsidiary is duly qualified to do business as a foreign corporation
and is in good standing in the State of California.
2. The Company has the requisite corporate power and authority
to enter into and perform its obligations under the Purchase Agreement and to
issue and sell the Shares. Except as contemplated in Sections 4.4(b) and 4.4(c)
of the Purchase Agreement, the execution, delivery and performance of the
Purchase Agreement by the Company and the consummation by it of the transactions
contemplated thereby have been duly and validly authorized by all necessary
corporate action on the part of the Company and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required. The Purchase Agreement constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms. The Common Stock is not subject to preemptive rights under the Company's
Certificate of Incorporation as filed with the Delaware Secretary of State or
the Company's By-Laws as each is in effect as of the date hereof (the "Charter"
and "By-Laws" respectively).
3. The Shares have been duly authorized and, when delivered
against payment in full as provided in the Purchase Agreement, will be validly
issued, fully paid and nonassessable.
4. The execution, delivery and performance of and compliance
with the terms of the Purchase Agreement and the consummation by the Company of
the transactions contemplated thereby (i) do not violate any provision of the
Company's Charter or By-Laws, (ii) do not cause the Company to violate, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others 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 Company is a party and which is listed on Exhibit A
hereto, (iii) do not create or impose a lien, charge or encumbrance on any
property of the Company under any agreement or any commitment to which the
Company is a party and which is listed on Exhibit A hereto, and (iv) do not
cause the Company to violate any New York state, California state or federal
statute, rule or regulation or order, judgment or decree known to us (excluding
federal and state securities laws, rules and regulations except as specifically
provided in paragraph 7 below) that is specifically applicable to the Company or
any of the Subsidiaries, except for such violations, defaults, terminations,
amendments, acceleration, cancellations, liens, charges, encumbrances and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect.
5. To our knowledge, there is no action, suit, claim,
investigation or proceeding pending or threatened against the Company or any
Subsidiary which questions the validity of the Purchase Agreement or the
transactions contemplated hereby. To our knowledge, there is no action, suit,
claim, investigation or proceeding pending or threatened against or by the
Company or any Subsidiary which, if adversely determined, is reasonably likely
to result in a Material Adverse Effect.
6. No consent, approval or authorization of or designation,
declaration or filing with any federal governmental authority on the part of the
Company is required in connection with the valid execution and delivery of the
Purchase Agreement, or the offer, sale or issuance of the Shares (other than any
filings which may be required to be made by the Company with the Commission, or
the Nasdaq Stock Market subsequent to the Closing, and any registration
statement which may be filed under the Securities Act pursuant to the Purchase
Agreement).
7. The Registration Statement has been declared effective
under the Securities Act, and, to our knowledge, no stop order suspending its
effectiveness has been issued and, to our knowledge, no proceedings for that
purpose have been instituted or are pending before or contemplated by the
Commission.
EXHIBIT B
TO THE COMMON STOCK PURCHASE AGREEMENT
SECRETARY'S CERTIFICATE
___________, 2001
The undersigned, ______________________, Secretary of BioMarin
Pharmaceutical Inc., a Delaware corporation (the "Company"), delivers this
certificate in connection with the issuance and sale of shares of common stock
of the Company in an aggregate amount of $__________ to Acqua Wellington North
American Equities Fund, Ltd. (the "Purchaser") pursuant to the Common Stock
Purchase Agreement, dated January 26, 2001 (the "Agreement"), by and among the
Company and the Purchaser, 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 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 ______ __,
2001, 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
By-laws 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 By-laws of the Company has taken or is currently
pending before the Board of Directors or stockholders of the Company.
3. Attached hereto as Exhibit C is a true and correct copy of all
written actions and resolutions of the Board of Directors (including any
committees thereof) of the Company relating to the transactions contemplated by
the Agreement; said actions and resolutions have not been amended, rescinded or
modified since their adoption and remain in full force and effect as of the date
hereof; said actions and resolutions are the only resolutions adopted by the
Board of Directors of the Company, or any committee thereof, pertaining to (A)
the offering of the Common Stock to be sold by the Company pursuant to the
Agreement, (B) the execution and delivery of the Agreement and (C) all other
transactions in connection with the foregoing.
4. Each person who, as an officer of the Company, or as
attorney-in-fact of an officer of the Company, signed (A) the Agreement, (B) the
Registration Statement and (C) 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.
5. The Agreement as executed and delivered on behalf of the Company has
been approved by the Company.
6. The actions, resolutions and other records of the Company relating
to all of the proceedings of the Stockholders of the Company, the Board of
Directors of the Company and any committees thereof made available to the
Purchasers and their counsel are the true, correct and complete copies thereof,
with respect to all proceedings of said Stockholders, Board of Directors and
committees thereof. Such records and other documents of the Company made
available to the Purchasers and their counsel were true and complete in all
respects. There have been no material changes, additions or alterations in said
records and other documents that have not been disclosed to the Purchasers.
IN WITNESS WHEREOF, I have signed my name as of the date first above
written.
By:
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Name:
Title: Secretary
I, __________________, Chief Executive Officer of
___________________., do hereby certify that ______________________ is the duly
elected, qualified and acting Secretary of the above mentioned company, and that
the signature set forth above is her true and genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name as of the date first
above written.
By:
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Name:
Title: Chief Executive Officer
EXHIBIT C
TO THE COMMON STOCK PURCHASE AGREEMENT
COMPLIANCE CERTIFICATE
In connection with the issuance of shares of common stock of
BioMarin Pharmaceutical Inc. (the "Company") pursuant to the Draw Down Notice,
dated ___________ delivered by the Company to Acqua Wellington North American
Equities Fund, Ltd. (the "Purchaser") pursuant to Article VI of the Common Stock
Purchase Agreement dated January 26, 2001, by and between the Company and Acqua
Wellington North American Equities Fund, Ltd. (the "Agreement"), the undersigned
hereby certifies as follows:
1. The undersigned is the duly elected Chief [Executive/Financial]
Officer of the Company.
2. Except as set forth on Schedule A attached hereto, the
representations and warranties of the Company set forth in Section 3.1 of the
Agreement are true and correct in all material respects as though made on and as
of the date hereof, except for representations and warranties that speak as of a
particular date.
3. The Company has performed in all material respects all covenants and
agreements to be performed by the Company on or prior to the Draw Down Exercise
Date and the Settlement Date related to the Draw Down Notice and has complied in
all material respects with all obligations and conditions contained in Section
5.3 of the Agreement.
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 _________, 20__.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
EXHIBIT D
TO THE COMMON STOCK PURCHASE AGREEMENT
FORM OF DRAW DOWN NOTICE
Reference is made to the Common Stock Purchase Agreement dated as of
January 26, 2001 (the "Purchase Agreement") between BioMarin Pharmaceutical
Inc., a Delaware corporation (the "Company"), and Acqua Wellington North
American Equities Fund, Ltd. Capitalized terms used and not otherwise defined
herein shall have the meanings given such terms in the Purchase Agreement.
The Company has taken all necessary corporate action to authorize the
issuance of the Shares pursuant to this Draw Down Notice.
In accordance with and pursuant to Section 6.1 of the Purchase
Agreement, the Company hereby issues this Draw Down Notice to exercise a Draw
Down request for the Draw Down Amount indicated below.
Draw Down Amount:
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Call Option Amount:
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Draw Down Pricing Period start date:
--------------------------
Draw Down Pricing Period end date:
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Settlement Dates:
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Threshold Price:
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Minimum Threshold Price: $7.00
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Number of Shares
of Common Stock Currently Unissued
under the Registration Statement:
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Dated:
-----------------------------
--------------------------------
By:______________________________
Name:
Title:
Address:
Facsimile No.:
Wire Instructions:_________________
Contact Name:______________________
Receipt Acknowledged:
Acqua Wellington North American Equities Fund, Ltd.
By:
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Name:
Title:
EXHIBIT E
TO THE COMMON STOCK PURCHASE AGREEMENT
FORM OF CALL OPTION NOTICE
To: ______________
Fax #:
Reference is made to the Common Stock Purchase Agreement dated as of
January 26, 2001 (the "Purchase Agreement") between BioMarin Pharmaceutical
Inc., a Delaware corporation (the "Company"), and Acqua Wellington North
American Equities Fund, Ltd. 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 6.2 of the Purchase
Agreement, the Purchaser hereby issues this Call Option Notice to exercise a
Call Option for the Call Option Amount indicated below.
Call Option Amount Exercised:
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Number of Shares to be purchased:
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VWAP on the date hereof:
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Draw Down Discount Percentage:
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Settlement Date:
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Threshold Price:
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Minimum Threshold Price: $7.00
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Dated:
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Acqua Wellington North American Equities Fund, Ltd.
By:
---------------------------------
Name:
Title:
DISCLOSURE SCHEDULES
RELATING TO THE COMMON STOCK
PURCHASE AGREEMENT, DATED AS OF JANUARY 26, 2001
BETWEEN BIOMARIN PHARMACEUTICAL INC. AND
ACQUA WELLINGTON NORTH AMERICAN EQUITIES FUND, LTD.
ALL SECTION AND SUBSECTION NUMBERS AND LETTERS RELATE AND COINCIDE TO
SUCH NUMBERS AND LETTERS AS SET FORTH IN THE COMMON STOCK PURCHASE AGREEMENT
(THE "AGREEMENT"). ANY TERMS REQUIRING DEFINITION HEREIN ARE DEFINED IN THE
AGREEMENT.
ALL REPRESENTATIONS AND WARRANTIES SET FORTH IN THE AGREEMENT ARE
MODIFIED IN THEIR ENTIRETY BY THESE DISCLOSURE SCHEDULES. THE DISCLOSURES
CONTAINED IN THESE DISCLOSURE SCHEDULES SHALL BE READ IN THEIR ENTIRETY, AND ALL
THE DISCLOSURES SHALL BE READ TOGETHER.
Schedule 3.1(c)
Capitalization
As of the date hereof:
- The authorized capital stock of the Company consists of 75,000,000 shares of
common stock, $0.001 par value per share, of which not more than 37,000,000
shares are issued and outstanding, and 1,000,000 shares of preferred stock,
$0.001 par value per share, none of which is issued or outstanding.
- The Company has granted options to purchase not more than 6,700,000 shares of
Common Stock to various employees, directors and consultants of the Company.
- The Company may be obligated to issue not more than 450,000 shares of Common
Stock pursuant to the Company's Employee Stock Purchase Plan.
- BB Bio Ventures Ltd., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Genzyme Corporation and Glyko
Biomedical Ltd. each have the right to require the Company to register certain
shares of Common Stock held by such entities pursuant to that certain Amended
and Restated Registration Rights Agreement filed as exhibit 4.1 to the Company's
Registration Statement on Form S-1.
Schedule 3.1(g)
Subsidiaries
The Company has the following Subsidiaries, as defined in the
Agreement
Name Of Entity Jurisdiction of Incorporation Percent Owned by Company
Glyko, Inc. Delaware 100%
BioMarin Genetics Delaware 100%
Schedule 3.1(k)
Indebtedness
None.
Schedule 3.1(c)
List of Additional Employment/Consulting Contracts
Name Term of Contract Type of Engagement
Integrated Marketa nd Tech. March 26, 1999 to July 31, 1999, Consultant
automatically renews for three
month periods - cancel with two
months notice
Dr. ▇▇▇▇▇ ▇▇▇▇▇ April 5, 1999 to termination by Consultant
14-day written notice
▇▇▇▇▇▇ ▇. ▇▇▇▇ Consulting, July 18, 2000 to May 31, 2001 Consultant
Inc.
▇▇▇▇▇ CytoConsulting February 7, 2000 to termination Consultant
by 60-day written notice
Investor Awareness, Inc. January 3, 2001 to July 3, 2001 Consultant
▇▇▇▇ ▇▇▇▇, Ph.D. September 20, 2000 to September 20, Consultant
2001
Clinical Research Consulting, November 17, 2000 to June 17, 2001 Consultant
Inc.
WinPharm Associates, LLC August 24, 2000 to August 23, 2002 Consultant
▇▇▇▇ Breed, RN July 6, 2000 to April 6, 2001 Consultant
ProTrials Research Inc. January 18, 2001 to December 31, 2001 Consultant
▇▇▇ ▇▇▇▇ January 19, 2001 to December 31, 2001 Consultant
▇▇▇▇▇▇▇ ▇▇▇▇▇ July 17, 2000 to March 30, 2001 Consultant
▇▇▇▇ ▇▇▇▇▇▇ January 11, 2001 to December 31, 2001 Consultant
▇▇▇▇▇▇ ▇▇▇ January 18, 2001 to December 31, 2001 Consultant
Bulrush Basket January 18, 2001 to July 18, 2001 Consultant
Schedule 3.1(c)
List of Additional Employment/Consulting Contracts
Name Term of Contract Type of Engagement
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ January 3, 2001 to July 3, 2001 Consultant
SmallCaps OnLine Group LLC January 17, 2001 to July 17, 2001 Consultant
Statistics Collaborative, Inc. January 17, 2001 to December 31, 2001 Consultant
San Diego Burn Research January 1, 2001 to December 31, 2002 Consultant
Foundation
▇▇▇▇▇▇ ▇▇▇▇▇ Terminable on 6 months notice Employee