Exhibit 10.36
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as
of February 13, 2003, by and among NEOSE TECHNOLOGIES, INC., a Delaware
corporation (the "Company"), and the purchasers listed on Schedule I hereto
(individually a "Purchaser" and, collectively, the "Purchasers").
Background
A. The Company desires to issue and sell, and the Purchasers desire to
purchase, shares of common stock, par value $.01 per share, of the Company
("Common Stock"), for the consideration and upon the terms and conditions
hereinafter set forth.
B. The Company and the Purchasers wish to set forth herein certain
agreements regarding their future relationships and their rights and obligations
with respect to the Common Stock.
Terms
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
1. Sale and Purchase of Common Shares.
(a) Sale and Purchase. Subject to the terms and conditions hereof,
the Company hereby agrees to sell, and the Purchasers, severally and not
jointly, hereby agree to purchase, on the date hereof (the "Closing Date")
shares of Common Stock (the "Common Shares") at a price per Common Share (the
"Share Price") of $6.00. The total purchase price to be paid by each Purchaser
is set forth opposite each Purchaser's name as that Purchaser's "Purchase
Commitment" on Schedule I hereto. The number of Common Shares to be purchased by
a Purchaser shall be equal to the dollar amount of the "Purchase Commitment" set
forth opposite the Purchaser's name on Schedule I hereto divided by the Share
Price. The total aggregate purchase price to be paid by all of the Purchasers
(the "Purchase Price") shall not exceed $17,200,596.
(b) Closing. The closing shall take place at the offices of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, 3000 Two ▇▇▇▇▇ Square, Eighteenth and Arch Streets, Philadelphia,
PA 19103-2799.
(c) Payment of Purchase Price. On the Closing Date, each Purchaser
shall pay and deliver to the Company that portion of the Purchase Price set
forth opposite such Purchaser's name as that Purchaser's "Purchase Commitment"
on Schedule I hereto by wire transfer of immediately available funds.
(d) Delivery of Common Shares. On the Closing Date, against delivery
by the applicable Purchaser of that portion of the Purchase Price to be paid by
it, the Company shall issue and, within three (3) business days following the
Closing Date, deliver to such Purchaser a certificate representing that number
of Common Shares to be purchased by each Purchaser on the Closing Date pursuant
to Section 1(a), registered in the name of such Purchaser or the designated
nominee(s) of such Purchaser.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants as follows:
(a) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware, has full
corporate power and corporate authority to own or lease its properties and
conduct its business as described in the Company's statements, reports,
schedules, forms and other documents filed by the Company with the Securities
and Exchange Commission (the "SEC") since January 1, 2002 (the "SEC Documents")
and as now being conducted, and is duly qualified as a foreign corporation and
in good standing in all jurisdictions in which the character of the property
owned or leased or the nature of the business transacted by it makes
qualification necessary, except where failure to be so qualified would not have
a material adverse effect on the business, properties, financial condition or
results of operations of the Company (a "Material Adverse Effect"). The Company
has no subsidiaries and has never had any operating subsidiaries.
(b) The authorized capital of the Company consists of 35,000,000
shares of capital stock, (i) of which 30,000,000 shares are designated Common
Stock, of which 14,324,279 shares of Common Stock were outstanding and were duly
authorized, validly issued, fully paid and nonassessable on December 31, 2002,
and (ii) of which 5,000,000 shares are designated preferred stock, par value
$.01 per share, none of which were outstanding on December 31, 2002 or are
outstanding on the date hereof. The Company has no other classes of stock
authorized or outstanding. As of December 31, 2002, options to purchase
3,827,683 shares of Common Stock were outstanding, and when such options are
exercised and the prescribed exercise price paid, the shares of Common Stock
issued with respect to such options will be duly authorized, validly issued,
fully paid and nonassessable. Except as set forth above and other than (i)
496,542 shares of Common Stock reserved for issuance under the Company's Amended
and Restated 1995 Stock Option/Stock Issuance Plan, (ii) 35,163 shares of Common
Stock reserved for issuance under the Company's Employee Stock Purchase Plan,
and (iii) 499,186 shares of Common Stock reserved for issuance under option
grants outside of the Company's Amended and Restated 1995 Stock Option/Stock
Issuance Plan, there are as of December 31, 2002, no existing options, warrants,
calls, commitments or rights of any character to purchase or otherwise acquire
from the Company shares of capital stock of any class, no outstanding securities
of the Company that are convertible into shares of capital stock of the Company
of any class, and no options, warrants or rights to purchase from the Company
any such convertible securities. The Company has no outstanding contractual or
other obligation to repurchase, redeem or otherwise acquire any outstanding
shares of its capital stock. The issued and outstanding shares of Common Stock
have not been issued in violation of any preemptive or other rights of any
person, whether arising by statute, under the Second Amended and Restated
Certificate of Incorporation (the "Certificate of Incorporation"), the
Certificate of Designation establishing and designating the Series A Junior
Participating Preferred Stock (the "Certificate of Designation")
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or the Second Amended and Restated Bylaws (the "Bylaws") of the Company or in
any other manner known to the Company. No person or entity is entitled to any
preemptive or similar right with respect to the issuance of any capital stock of
the Company.
(c) The Company has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly authorized and validly executed and delivered by
the Company and constitutes a legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Company
herein may be legally unenforceable.
(d) None of the execution and delivery of this Agreement, the
issuance and sale of the Common Shares by the Company hereunder, the fulfillment
of the terms hereof or the consummation of the transactions contemplated herein,
will (i) violate any law, rule, regulation, judgment, injunction, decree,
determination, award or order of any court or governmental agency or
instrumentality, domestic or foreign, or (ii) conflict with or result in any
breach of any of the terms of or constitute a default (with or without the
giving of notice or the passage of time or otherwise) under, or result in the
termination of or the creation or imposition of any mortgage, lien, security
interest or other charge or encumbrance of any nature under the terms of: (A)
any material contract or agreement to which the Company is a party or by which
the Company or any of the assets and properties of the Company is bound, other
than any such conflict, breach or default that would not have a Material Adverse
Effect; or (B) the Company's Certificate of Incorporation, Certificate of
Designation or Bylaws. None of the execution and delivery of this Agreement, the
issuance and sale of the Common Shares by the Company hereunder, the fulfillment
of the terms hereof or the consummation of the transactions contemplated herein,
requires any consent, approval, order or authorization of, or registration with,
or the giving of notice to, any governmental or public body or authority or any
other person, except for such notices, consents or approvals which have
previously been obtained or which will be obtained on or before the Closing Date
and notices and filings that may be required under applicable state and federal
securities laws that will be undertaken by the Company after the Closing Date.
(e) The Common Shares being sold hereunder have been duly authorized,
and when issued and paid for in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable.
(f) The Common Stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is listed
on The Nasdaq National Market (the "Nasdaq Stock Market"), and the Company has
taken no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the Nasdaq Stock Market.
(g) Since becoming subject to the periodic reporting requirements of
the Exchange Act, the Company has made all required filings pursuant to the
rules and regulations promulgated thereunder, and all such filings, as may have
been amended, complied in all
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material respects with the Exchange Act and such rules and regulations as of the
date filed with the SEC. . None of the SEC Documents, as of their respective
dates (as amended through the date hereof), contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. There is, to the best of the Company's
knowledge, no fact, other than general biotechnology information or other
information which is in the public domain and not specific to the Company or its
business, which materially and adversely affects the business, prospects,
condition, affairs or operations of the Company or any of its properties or
assets which has not been disclosed orally to the Purchasers or in the SEC
Documents.
(h) As of their respective dates, the financial statements of the
Company, together with related notes and schedules, included in all of the SEC
Documents complied in form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. Such financial statements and related notes and schedules have been
prepared in accordance with United States generally accepted accounting
principles, consistently applied, during the period 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 as of the dates
thereof and its results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(i) The Company is not in violation of its charter, bylaws or other
organizational documents, or in violation of any law, administrative regulation,
ordinance or order of any court or governmental agency, arbitration panel or
authority applicable to the Company, which violation, individually or in the
aggregate, would be reasonably likely to have a Material Adverse Effect, and is
not in default (and there exists no condition which, with or without the passage
of time or giving of notice or otherwise, would constitute a default) in the
performance of any bond, debenture, note or any other evidence of indebtedness
in any indenture, mortgage, deed of trust or any other agreement or instrument
to which the Company is a party or by which the Company is bound or by which the
property of the Company is bound, which would be reasonably likely to have a
Material Adverse Effect.
(j) The Company has ownership or license or legal right to use all
patent, copyright, trade secret, trademark, customer lists, designs,
manufacturing or other processes, computer software, systems, data compilation,
research results or other proprietary rights used in the business of the Company
and material to the Company (collectively, "Intellectual Property") other than
Intellectual Property generally available on commercial terms from other
sources. All of such patents, registered trademarks and registered copyrights
owned by the Company have been duly registered in, filed in or issued by the
United States Patent and Trademark Office, the United States Register of
Copyrights or the corresponding offices of other jurisdictions and have been
maintained and renewed in accordance with all applicable provisions of law and
administrative regulations in the United States and all such jurisdictions,
except where the failure to do so would not reasonably be expected to have a
Material Adverse Effect. All material licenses or other material agreements
under which (i) the Company is granted rights in Intellectual Property, other
than Intellectual Property generally available on commercial terms
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from other sources, and (ii) the Company has granted rights to others in
Intellectual Property owned or licensed by the Company, are, to the knowledge of
the Company, in full force and effect and, to the knowledge of the Company,
there is no material default by the Company thereto. The Company believes it has
taken all steps required in accordance with sound business practice and business
judgment to establish and preserve its ownership of or rights to all material
Intellectual Property. To the knowledge of the Company, the present business,
activities and products of the Company do not infringe any intellectual property
of any other person, except where such infringement would not have a Material
Adverse Effect. Except as described in the SEC Documents, no proceeding charging
the Company with infringement of any adversely held Intellectual Property has
been filed. To the knowledge of the Company, the Company is not making
unauthorized use of any confidential information or trade secrets of any person.
Neither the Company nor, to the knowledge of the Company, any of its employees
has any agreements or arrangements with any persons other than the Company
related to confidential information or trade secrets of such persons other than
such agreements that would not materially restrict the Company from conducting
its business as currently conducted.
(k) There is no material legal or governmental proceeding pending or,
to the knowledge of the Company, threatened, to which the Company is a party or
of which the business or property of the Company is subject that is not
disclosed in the Company's SEC Documents under the heading "Legal Proceedings."
There are no requests for confidential treatment of information currently
pending before the SEC. There is no investigation, inquiry or proceeding by the
SEC of or against the Company currently pending, and, to the Company's
knowledge, no such investigation, inquiry or proceeding has been threatened.
(l) Since September 30, 2002, there has not been (i) any Material
Adverse Effect, whether or not arising in the ordinary course of business, (ii)
any obligation, direct or contingent, that is material to the Company, incurred
by the Company, except obligations incurred in the ordinary course of business
consistent with past practice, (iii) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company, or (iv) any loss or
damage (whether or not insured) to the physical property of the Company which
has been sustained which has had a Material Adverse Effect.
(m) Except as set forth in Schedule 2(m), the Company has good and
marketable title to its properties, free and clear of all material security
interests, mortgages, pledges, liens, charges, encumbrances and claims of
record. The properties of the Company are, in the aggregate, in good repair
(reasonable wear and tear excepted), and suitable for their respective uses. To
the Company's knowledge, any real property held under lease by the Company is
held under valid, subsisting and enforceable leases with such exceptions as are
not material and do not interfere with the conduct of the business of the
Company. The Company owns or leases all such properties as are necessary to its
business or operations as now conducted.
(n) Except as would not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect: (i) the Company is in compliance
with all applicable Environmental Laws (as defined below), (ii) the Company has
all permits, authorizations and approvals required under any applicable
Environmental Laws and is in compliance with the requirements of such permits
authorizations and approvals, (iii) there are no pending or, to the
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knowledge of the Company, threatened Environmental Claims (as defined below)
against the Company, and (iv) under applicable law, there are no circumstances
with respect to any property or operations of the Company that are reasonably
likely to form the basis of an Environmental Claim against the Company. For
purposes of this Agreement, "Environmental Law" means any United States (or
other applicable jurisdiction's) Federal, state, local or municipal statute,
law, rule, regulation, ordinance, code, policy or rule of common law and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or any chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority and
"Environmental Claims" means any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of noncompliance
or violation, investigations or proceedings relating in any way to any
Environmental Law.
(o) The Company has filed all material tax returns required to be
filed, which returns are true and correct in all material respects, and the
Company is not in default in the payment of any taxes, including penalties and
interest, assessments, fees and other charges, shown thereon due or otherwise
assessed, other than those being contested in good faith and for which adequate
reserves have been provided or those currently payable without interest which
were payable pursuant to said returns or any assessments with respect thereto.
(p) The Company has not taken any action outside the ordinary course
of business designed to or that might reasonably be expected to cause or result
in stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Common Shares.
(q) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for an investment company,
within the meaning of the Investment Company Act of 1940, as amended.
(r) Except as contemplated by Section 4 of this Agreement and except
with respect to up to 286,097 shares of Common Stock that may be held by ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇ Development Corporation, the Company is not under any obligation to
"register" any of its presently outstanding securities or any of its securities
which may hereafter be issued. For the purposes of this Agreement, the term
"register" refers to a registration effected by filing a registration statement
in compliance with the Securities Act (as defined below) or the securities laws
of any state.
(s) The Company is not indebted, either directly or indirectly, to
any present or former stockholder, officer or director, or to any of their
respective spouses or children or any of their respective Affiliates (as such
term is defined in Rule 405 under the 1933 Act), in any amount whatsoever,
including, without limitation, any amounts due under any deferred compensation
plan, other than for payment of consulting fees or salaries (but not deferred
fees or salaries) for services rendered, employee benefits and reasonable
expenses incurred on the Company's behalf. Except as disclosed in the SEC
document, no present or former officer, director or stockholder of the Company
(nor any person in the immediate family of any such officer, director or
stockholder) nor any of their respective Affiliates is indebted to the Company
or has any material direct or indirect ownership interest in any firm or
corporation with which the
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Company is affiliated or with which the Company has a business relationship with
the Company or which competes with the Company. To the Company's knowledge, no
officer, director or holder of any of its capital stock or any member of their
immediate families or any of their respective Affiliates, is, directly or
indirectly, interested in any contract with the Company. The Company is not a
guarantor or indemnitor of any indebtedness of any person, firm or corporation.
(t) Except as required by this Agreement and except as disclosed in
the SEC Documents, there are no agreements or arrangements between the Company
and any of the Company's stockholders, or to the best of the Company's
knowledge, between or among any of the Company's stockholders, which grant
special rights with respect to any shares of the Company's capital stock or
which in any way affect any stockholder's ability or right freely to alienate or
vote such shares.
3. Representations and Warranties of the Purchasers. Each Purchaser for
itself, severally and not jointly, hereby represents and warrants as follows:
(a) Such Purchaser represents and warrants to the Company that (i)
the Purchaser has full right, power, authority and capacity to enter into this
Agreement and to consummate the transactions contemplated hereby and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement, and (ii) this Agreement constitutes a valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
the indemnification agreements of the Purchasers herein may be legally
unenforceable.
(b) Such Purchaser understands that nothing in this Agreement or any
other materials presented to the Purchaser in connection with the purchase and
sale of the Common Shares constitutes legal, tax or investment advice. Such
Purchaser has consulted such legal, tax and investment advisors as it, in its
sole discretion, has deemed necessary or appropriate in connection with its
purchase of Common Shares.
(c) Such Purchaser is acquiring the Common Shares subscribed for
hereunder for its own account as principal, for investment purposes and not with
a view to any distribution thereof in violation of the Securities Act of 1933,
as amended (the "Securities Act"), or any other securities laws. Such Purchaser
further understands and acknowledges that the offer and sale of the Common
Shares to the Purchaser pursuant to this Agreement will not be registered under
the Securities Act or any foreign or state securities laws on the assumption
that the offer and sale of the Common Shares to the Purchasers are exempt from
registration pursuant to Section 4(2) of the Securities Act and Regulation D
thereunder and that the Company's reliance upon such exemption is predicated
upon such Purchaser's representations set forth in the Agreement.
(d) Such Purchaser is an "accredited investor" within the meaning of
Rule 501(a) of Regulation D under the Securities Act, and by virtue of such
Purchaser's experience in financial and business matters, is capable of
evaluating the merits and risks of such Purchaser's
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investment in the Common Shares, has the ability to bear the economic risks of
such an investment, including a complete loss of the investment, and has the
capacity to protect the Purchaser's own interests. For purposes of the
requirements of state securities laws, such Purchaser represents that it is
solely a resident of the state set forth opposite its name on Schedule I hereto
and that the offer and purchase of the Common Shares pursuant hereto has and
will occur solely in such state.
(e) Such Purchaser acknowledges that the certificates representing
the Common Shares shall bear a legend substantially as set forth below
indicating the restrictions on transfers to which the Common Shares are subject,
and instructions shall be given to the transfer agent for the Common Stock that
no transfer is to be effected except in compliance with such transfer
restrictions:
THE SHARES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE
BEEN ISSUED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND APPROPRIATE EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES LAWS
OF APPLICABLE JURISDICTIONS. THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD OR TRANSFERRED OTHER THAN PURSUANT TO AN EFFECTIVE
REGISTRATION OR AN EXEMPTION FROM REGISTRATION SATISFACTORY TO THE
ISSUER OF COMPLIANCE WITH THE SECURITIES ACT AND THE APPLICABLE
SECURITIES LAWS OF ANY OTHER JURISDICTION. THE ISSUER SHALL BE
ENTITLED TO REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
IT WITH RESPECT TO COMPLIANCE WITH THE SECURITIES ACT.
(f) Because the Common Shares have not been registered under the
Securities Act or applicable foreign or state securities laws, such Purchaser
acknowledges that the economic risk of the investment must be borne indefinitely
by such Purchaser, the Common Shares cannot be sold by the Purchaser unless
subsequently registered under the Securities Act and such laws or unless an
exemption from such registration is available, and while the Company intends to
file a registration statement covering the Common Shares for public resale as
set forth in Section 4 below, there is no assurance that the Common Shares will
in fact be so registered.
(g) Such Purchaser hereby acknowledges that the Company has made
available to such Purchaser such books, records, corporate documents and all
other information as Purchaser has requested and considers necessary to
evaluating the merits and risks of an investment in the Common Shares. Each
Purchaser acknowledges that it has been afforded the opportunity to ask
questions concerning the Company and has received satisfactory answers thereto,
to obtain all additional information that it has requested and to request and
receive all documents concerning the Company and the terms and conditions of
such Purchaser's investment. Such Purchaser acknowledges that it has not been
offered the Common Shares by
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any means of general solicitation or advertisement, and that no commission or
sales charge is payable by the Purchaser to any third party in connection with
the purchase of the Common Shares.
(h) Such Purchaser recognizes that investment in the Common Shares
involves a high degree of risk. In evaluating the suitability of an investment
in the Common Shares, such Purchaser has not (i) relied upon any representations
or other information (whether oral or written) other than (A) the
representations and warranties set forth in this Agreement, (B) the documents
and answers to questions furnished to such Purchaser by the Company (or its
designated representatives) and (C) the Company' filings made pursuant to the
Exchange Act, or (ii) relied upon any projections or predictions as to the
future business or financial performance of the Company which the Company has
not disclosed to the public. Such Purchaser is aware that no federal or state
agency has made any finding or determination as to the fairness of the Common
Shares for investment, nor any recommendation or endorsement of the Common
Shares.
4. Registration Rights.
(a) Initial Registration. No later than 45 days following the Closing
Date, the Company shall prepare and file with the SEC (and such state securities
commissions as may be necessary or appropriate to permit the registration of the
Common Shares (and any other shares of Common Stock that the Company is required
to register) in all 50 states and the District of Columbia) a registration
statement on Form S-3 (or such other form as the Company deems appropriate) (the
"Registration Statement") to effect the registration under the Securities Act
and relevant state securities laws of the Common Shares in connection with the
disposition of the Common Shares by the Purchasers, from time to time in the
open market, in one or more transactions (which may involve block transactions),
in negotiated, underwritten, or other transactions or through a combination of
such methods of sale, at market prices prevailing at the time of sale, at prices
relating to such prevailing market prices or at negotiated prices. The Company
shall use its reasonable best efforts to obtain effectiveness of the
Registration Statement as soon as practicable, but in no event later than 120
days following the Closing Date (the "Effectiveness Deadline"), and shall notify
the Purchasers promptly upon the Registration Statement being declared effective
by the SEC.
All expenses of the Company associated with the preparation of the
Registration Statement and the filing thereof shall be borne by the Company,
including the payment of any applicable listing, blue sky compliance and
printing fees. The Purchasers shall be responsible for fees and expenses of
their own counsel and any broker fees and commissions or underwriting discounts,
and transfer taxes, if any, payable with respect to any resale of the Common
Shares. In connection with the Registration Statement, but subject to the
limitations of Section 4(b) hereof, the Company will prepare and file with the
SEC and any state securities commissions such amendments and supplements to the
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective and to comply with the
provisions of the Securities Act and Rule 415 thereunder with respect to the
disposition of all the Common Shares covered by such Registration Statement.
Notwithstanding the foregoing, the Company will only be required to maintain the
effectiveness of the Registration Statement with respect to the Common Shares
registered thereunder for resale by
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the Purchasers, until the earlier of (i) such time as all of such Common Shares
have been disposed of in accordance with the intended methods of disposition by
the Purchasers set forth in such Registration Statement, (ii) such date on which
each of the Purchasers may dispose of all of the Common Shares held by it in one
transaction in the open market pursuant to Rule 144(k) under the Securities Act,
or (iii) two years from the effective date of the Registration Statement.
The Company shall furnish to each Purchaser such number of copies of
the Registration Statement and of each amendment and supplement thereto, such
number of copies of the prospectus included in such Registration Statement and
such other related documents as such Purchaser may reasonably request in order
to facilitate the disposition of the Common Shares by such Purchaser.
(b) Information from Purchasers. Each Purchaser shall furnish to the
Company such information regarding each such Purchaser and its proposed method
of distribution of the Common Shares as the Company may from time to time
request and as shall be required by law to effect and maintain the registration
of such Common Shares under the Securities Act and any state securities laws.
(c) Agreements of the Company. The Company shall use reasonable
efforts to (i) register and qualify the Common Shares under such other
securities or "blue sky" laws of such jurisdictions in the United States as the
Purchasers shall reasonably request, and (ii) prepare and file in those
jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the effectiveness of the Registration
Statement; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (A) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 4(c), (B) subject itself to general taxation in any jurisdiction,
(C) file a general consent to service of process in any such jurisdiction, (D)
provide any undertakings that cause the Company undue expense or burden, or (E)
make any change in its charter or bylaws, which in each case the Company's Board
of Directors determines to be contrary to the best interests of the Company and
its shareholders.
(d) Transfer of Common Shares After Registration; Suspension.
(i) The Purchaser agrees that it will not effect any
disposition of the Common Shares or its right to purchase the Common Shares that
would constitute a sale within the meaning of the Securities Act except as
contemplated in the Registration Statement referred to in Sections 4(a) and (b)
and as described below or as permitted by the Securities Act, and that it will
promptly notify the Company of any changes in the information set forth in the
Registration Statement regarding the Purchaser or its plan of distribution.
(ii) Except in the event that paragraph (iii) below applies,
the Company shall: (A) if deemed necessary by the Company, prepare and file from
time to time with the SEC a post-effective amendment to the Registration
Statement or a supplement to the related prospectus or a supplement or amendment
to any document incorporated therein by reference or file any other required
document so that such Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated
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therein or necessary to make the statements therein not misleading, and so that,
as thereafter delivered to purchasers of the Common Shares being sold
thereunder, such prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; (B) provide the Purchaser copies of any documents
filed pursuant to Section 4(d)(ii)(A); and (C) inform each Purchaser that the
Company has complied with its obligations in Section 4(d)(ii)(A) (or that, if
the Company has filed a post-effective amendment to the Registration Statement
which has not yet been declared effective, the Company will notify the Purchaser
to that effect, will use its reasonable efforts to secure the effectiveness of
such post-effective amendment as promptly as possible and will promptly notify
the Purchaser pursuant to Section 4(d)(ii)(A) hereof when the amendment has
become effective).
(iii) Subject to paragraph (iv) below, in the event: (A) of any
request by the SEC or any other federal or state governmental authority during
the period of effectiveness of the Registration Statement for amendments or
supplements to a Registration Statement or related prospectus or for additional
information; (B) of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose;
(C) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Common Shares for sale in any jurisdiction or the initiation of any proceeding
for such purpose; or (D) of any event or circumstance which necessitates the
making of any changes in the Registration Statement or prospectus, or any
document incorporated or deemed to be incorporated therein by reference, so
that, in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or any omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and that in the case of the prospectus, it will not contain any untrue statement
of a material fact or any omission to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; then the Company shall
immediately deliver a certificate in writing to the Purchaser (the "Suspension
Notice") to the effect of the foregoing and, upon receipt of such Suspension
Notice, the Purchaser will refrain from selling any Common Shares pursuant to
the Registration Statement (a "Suspension") until the Purchaser's receipt of
copies of a supplemented or amended prospectus prepared and filed by the
Company, or until it is advised in writing by the Company that the current
prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in any such prospectus. In the event of any Suspension, the Company will use its
best efforts to cause the use of the prospectus so suspended to be resumed as
soon as reasonably practicable within 30 calendar days after delivery of a
Suspension Notice to the Purchasers. In addition to and without limiting any
other remedies (including, without limitation, at law or at equity) available to
the Purchaser, the Purchaser shall be entitled to specific performance in the
event that the Company fails to comply with the provisions of this Section
4(d)(iii).
(iv) Notwithstanding the foregoing paragraphs of this 4(d), the
Purchaser shall not be prohibited from selling Common Shares under the
Registration Statement as a result of Suspensions on more than four occasions of
not more than 30 days each in any twelve month period.
-11-
(v) If a Suspension is not then in effect, the Purchaser may
sell Common Shares under the Registration Statement, provided that the Purchaser
arranges for delivery of a current prospectus to the transferee of such Common
Shares. Upon receipt of a request therefor, the Company agrees to provide an
adequate number of current prospectuses to the Purchaser and to supply copies to
any other parties requiring such prospectuses.
(e) Failure to Become Effective On or Prior to the Effectiveness
Deadline. The Company and the Purchasers agree that the Purchasers will suffer
damages if the Registration Statement is not declared effective by the SEC on or
prior to the Effectiveness Deadline. The Company and the Purchasers further
agree that it would not be feasible to ascertain the extent of such damages with
precision. Accordingly, if the Registration Statement is not declared effective
by the SEC on or prior to the Effectiveness Deadline, the Company shall pay as
liquidated damages for such failure and not as a penalty (the "Liquidated
Damages") to each Purchaser an amount equal to one percent (1%) of the total
purchase price paid by such Purchaser pursuant to Section 1 hereof for each 30
day period after the Effectiveness Deadline, pro rated for any period less than
30 days, following the Effectiveness Deadline until the Registration Statement
has been declared effective by the SEC. Payments to be made pursuant to this
Section 4(e) shall be due and payable in cash to a Purchaser immediately upon
demand of such Purchaser. The parties agree that the Liquidated Damages
represent 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 Purchasers
if the Registration Statement has not been declared effective by the SEC on or
prior to the Effectiveness Deadline.
(f) Indemnification.
(i) To the extent permitted by law, the Company will indemnify
each Purchaser and each person (including each officer, director or partner
thereof) who controls the Purchaser within the meaning of Section 15 of the
Securities Act with respect to which any registration statement under the
Securities Act has been filed and become effective pursuant to this Agreement,
against all claims, losses, expenses, damages and liabilities (or actions in
respect thereto) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any definitive prospectus
contained in any registration statement, as may be amended or supplemented,
covering the Common Shares for resale, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading and for any material misrepresentation or
breach of any representation or warranty given or made by the Company in this
Agreement, and will reimburse each such Purchaser and each person (including
each officer, director or partner thereof) who controls the Purchaser within the
meaning of Section 15 of the Securities Act for any reasonable legal and any
other expenses incurred in connection with investigating, defending or settling
any such claim, loss, damage, liability or action, provided that (A) such legal
and other expenses shall be limited to not more than one legal counsel for the
Purchasers and each person (including each officer, director or partner thereof)
who controls the Purchaser within the meaning of Section 15 of the Securities
Act, and (B) the Company will not be liable in any such case to the extent that
(x) any such claim, loss, damage or liability arises out of or is based on any
untrue statement (or alleged untrue statement) or omission (or alleged omission)
based upon written information furnished to the Company by such Purchaser
specifically for use in such prospectus, or (y) the
-12-
Purchaser or its representative fail to deliver a copy of the definitive
prospectus contained in any such registration statement, as may be amended or
supplemented, to the buyer of any Common Shares.
(ii) To the extent permitted by law, each Purchaser will
indemnify the Company and each person (including each officer and director
thereof) who controls the Company within the meaning of Section 15 the
Securities Act, and each other such Purchaser and each person (including each
officer, director and partner thereof) who controls the Purchaser within the
meaning of Section 15 of the Securities Act against all claims, losses,
expenses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such prospectus, or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and will reimburse the Company, such Purchaser and each
person (including directors, officers or partners thereof) who controls the
Company or such Purchaser within the meaning of Section 15 of the Securities Act
for any reasonable legal or any other expenses incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such prospectus in reliance upon and in conformity with written
information furnished to the Company by such Purchaser specifically for use
therein.
(iii) Each party entitled to indemnification under this Section
4(f) (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations hereunder, unless such failure prejudiced
the rights of the Indemnifying Party. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.
(iv) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which any person or
entity entitled to indemnification under Section 4(f) makes a claim for
indemnification pursuant to this Section 4(f) but it is judicially determined
(by entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 4(f) provides for indemnification in such case; then, and in
such case, the party that would otherwise be required to indemnify under Section
4(f) will contribute to the aggregate losses, claims, damages or liabilities to
which the other parties may be subject (after contribution from others)
-13-
in such proportion as is appropriate to reflect the relative fault of the
parties in connection with the losses suffered, as well as any other relevant
equitable considerations.
(g) Rule 144. The Company covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder in a timely manner in
accordance with the requirements of the Securities Act and the Exchange Act and,
for so long as any Common Shares may not be sold under Rule 144(k) under the
Securities Act. The Company further covenants that it will use its reasonable
best efforts to take such further action as any Purchaser may reasonably
request, all to the extent required from time to time to enable such holder to
sell Common Shares without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC.
(h) The Company has not, as of the date hereof, and the Company shall
not, after the date of this Agreement, enter into any agreement with respect to
any of its securities that is inconsistent with the rights granted to the
Purchasers under this Agreement or otherwise conflicts with the provisions
hereof.
5. Information Rights. At such time as the Company is not subject to the
reporting requirements of the Exchange Act, and so long as the aggregate number
of Common Shares then beneficially owned (as determined pursuant to Rule 13d-3
under the Exchange Act) by a Purchaser is not less than 50% of the sum of the
initial number of Common Shares purchased by such Purchaser hereunder, the
Company shall deliver the following to such Purchaser:
(a) As soon as available, and in any event within 45 days after the
end of each of the first three quarters in each fiscal year of the Company,
unaudited consolidated statements of income, cash flows and shareholders' equity
for such quarterly period and for the period from the beginning of the then
current fiscal year to the end of such quarterly period, and an unaudited
consolidated balance sheet of the Company as at the end of such quarterly
period, in each case setting forth in comparative form consolidated figures for
the corresponding periods in the preceding fiscal year, all in reasonable
detail, prepared by the Company in accordance with generally accepted accounting
principles consistently followed throughout the periods involved, subject to
normal year-end adjustments, and certified by the principal financial officer of
the Company and accompanied by a written discussion of operations in summary
form with respect to such quarterly period.
(b) As soon as available, and in any event within 90 days after the
end of each fiscal year of the Company, consolidated statements of income, cash
flows and shareholders' equity for such fiscal year, and a consolidated balance
sheet of the Company as at the end of such year, in each case setting forth in
comparative form consolidated figures for the preceding fiscal year, prepared by
the Company in accordance with generally accepted accounting principles
consistently followed throughout the periods involved, and certified by KPMG LLP
or another nationally recognized firm of independent public accountants, and
accompanied by a written discussion of operations in summary form with respect
to such fiscal year.
-14-
6. Notices. All notices, demands, requests, or other communications which
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid, or transmitted by hand delivery, overnight or express mail, facsimile,
telegram or telex, addressed as follows:
If to the Company:
Neose Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: C. ▇▇▇▇ ▇▇▇▇▇▇
President and Chief Executive Officer
with copies (which shall not constitute notice) to:
Neose Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
3000 Two ▇▇▇▇▇ Square
Eighteenth and Arch Streets
Philadelphia, PA 19103-2799
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to Purchasers:
The address listed under each Purchaser's name on Schedule I
hereto.
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request, or communication which shall be mailed, delivered
or transmitted in the manner described above shall be deemed sufficiently given,
served, sent and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt, the affidavit of
messenger or (with respect to a facsimile or telex) the answer back being deemed
conclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
7. Publicity. The Company and the Purchasers shall notify each other
prior to issuing any press releases or otherwise making any news release or
other public announcement
-15-
with respect to the transactions contemplated hereby, other than as required in
connection with any filings with any federal or state governmental or regulatory
agency with respect thereto, and in no event will the Purchasers issue any such
release or make any such public announcement without the prior approval of the
Company. Notwithstanding the foregoing, the Purchasers hereby agree that the
Company may issue a press release with regard to the subject matter of this
Agreement on or after the Closing Date without providing the Purchasers with the
notification required by this Section 7.
8. Legal Opinion of Company Counsel. On or before the Closing Date, the
Company shall deliver to each Purchaser an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
counsel to the Company, in form attached hereto as Exhibit A.
9. Miscellaneous.
(a) This Agreement constitutes the entire agreement between the
parties hereto with respect to the transactions contemplated herein, and the
Agreement supersedes and terminates all prior oral or written agreements,
commitments or understandings with respect to the matters provided for herein.
(b) No amendment or modification hereof shall be binding unless set
forth in writing and duly executed by the Company and Purchasers holding a
majority of the Common Shares purchased hereunder. This Agreement and the rights
and obligations of the parties hereunder may not be assigned without the prior
written consent of the other parties hereto. Whenever any action, waiver or
consent of Purchasers hereunder (collectively, "Action") is required or
permitted to be done, made or given by a majority of the Purchasers, such Action
shall have been duly approved in accordance with the terms of this Agreement, if
the Purchasers holding a majority of Common Shares acquired under this Agreement
consent to or approve such Action.
(c) The representations or warranties of the Purchasers and the
Company contained herein shall survive the execution and delivery of this
Agreement and consummation of the transactions contemplated hereby.
(d) Each of the Purchasers and the Company agrees to take such
further actions and to execute and deliver such further instruments as may
reasonably be necessary from time to time in order to fully effectuate the
purposes, terms and conditions of this Agreement.
(e) For purposes of this Agreement, the term "business day" shall
mean any day other than a Saturday, Sunday or a day on which banking
institutions in the Commonwealth of Pennsylvania are authorized or obligated by
law or executive order to close. For purposes of this Agreement, the term
"trading day" shall mean any day on which the Nasdaq Stock Market or the
principal securities exchange or quotation system on which the Common Stock is
traded is open for regular trading. For the purposes of this Agreement, the
phrase "to the knowledge of the Company" or "to the Company's knowledge" shall
mean to the actual knowledge of any of the persons holding the following
executive offices of the Company: President and Chief Executive Officer; Senior
Vice President and Chief Financial Officer; Vice President, Finance; Senior Vice
President, General Counsel and Secretary; Senior Vice President, Pharmaceutical
-16-
Development; Executive Vice President, Research and Development; Senior Vice
President, Business and Commercial Development; and Vice President, Regulatory
and Project Management.
(f) This Agreement shall be enforced, governed and construed in
accordance with the laws of the Commonwealth of Pennsylvania. The parties hereby
expressly agree that all claims in respect of this Agreement shall be brought in
the state and federal courts of the Commonwealth of Pennsylvania, the parties
hereby irrevocably submit to the jurisdiction of such courts for purposes of any
such action and the parties hereby expressly waive the right to a jury trial in
connection with any such action. The Purchasers acknowledge that any breach or
threatened breach by a Purchaser of the terms of this Agreement would cause
irreparable harm to the Company which would not be compensable by money damages
alone, and the Purchasers agree that the Company shall have the right to enforce
this Agreement and any such terms by injunction, specific performance or other
equitable relief in order to prevent or restrain any such breach by a Purchaser.
(g) This Agreement and the rights, power and duties set forth herein
shall be binding upon the Purchasers and the Company, their successors and
assigns, and shall inure to the benefit of the Company and the Purchasers,
respectively. Failure of the Purchasers or the Company to exercise any right or
remedy under this Agreement, or a delay by the Purchasers or the Company in
exercising the same, will not operate as a waiver thereof. No waiver by the
Purchasers or the Company will be effective unless and until it is in writing
and signed by the party whose consent is required by the terms hereof.
(h) It is the explicit intention of the parties hereto that no person
or entity other than the parties hereto is or shall be entitled to bring any
action to enforce any provision of this Agreement against any of the parties
hereto, and that the covenants, undertakings and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto or their respective successors and assigns as permitted
hereunder.
(i) If any provision or clause of this Agreement shall for any reason
be held to be invalid, illegal or unenforceable, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement, but
this Agreement shall be construed as if such provision or clause had never been
contained in the Agreement, and there shall be deemed substituted therefor such
other provision or clause as will most nearly accomplish the intent of the
parties as expressed in this Agreement to the fullest extent permitted by law.
(j) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original or a photocopy or facsimile of an original
and all of which together shall constitute one and the same document.
-17-
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, or have caused this Agreement to be executed, as of the date written
below.
Date: February 13, 2003
NEOSE TECHNOLOGIES, INC.
By: /s/ C. ▇▇▇▇ ▇▇▇▇▇▇
-------------------
Name: C. ▇▇▇▇ ▇▇▇▇▇▇
Title: CEO
-18-
PURCHASERS:
BLACK BEAR FUND I, L.P., a California limited partnership
By Eastbourne Capital Management, L.L.C., its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Operating Officer
BLACK BEAR FUND II, L.L.C., a California limited liability company
By Eastbourne Capital Management, L.L.C., its manager
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Operating Officer
BLACK BEAR OFFSHORE MASTER FUND LIMITED, a Cayman Islands exempted company
By Eastbourne Capital Management, L.L.C., its manager
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Operating Officer
-19-
CADUCEUS CAPITAL TRUST
By ▇▇▇▇ ▇. ▇▇▇▇▇, General Partner of the General Partner
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇
-----------------
▇▇▇▇ ▇. ▇▇▇▇▇
General Partner
CADUCEUS CAPITAL II, L.P.
By ▇▇▇▇ ▇. ▇▇▇▇▇, General Partner of the General Partner
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇
-----------------
▇▇▇▇ ▇. ▇▇▇▇▇
General Partner
PW EUCALYPTUS FUND, L.L.C.
By ▇▇▇▇ ▇. ▇▇▇▇▇, General Partner of the JV Partner
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇
-----------------
▇▇▇▇ ▇. ▇▇▇▇▇
General Partner
PW EUCALYPTUS FUND, LTD.
By ▇▇▇▇ ▇. ▇▇▇▇▇, General Partner of the JV Partner
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇
-----------------
▇▇▇▇ ▇. ▇▇▇▇▇
General Partner
-▇▇-
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Private Investor
-21-
DOMAIN PARTNERS V, L.P.
By: One ▇▇▇▇▇▇ Square Associates V, L.L.C.,
its General Partner
By: /s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Managing Member
DP V ASSOCIATES, L.P.
By: One ▇▇▇▇▇▇ Square Associates V, L.L.C.
its General Partner
By: /s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Managing Member
-22-
BAYSTAR CAPITAL II, LP
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Financial Officer
BAYSTAR INTERNATIONAL II LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Financial ▇▇▇▇▇▇▇
-▇▇-
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
By: RBC DOMINION SECURITIES CORPORATION, acting as agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
-24-
▇▇▇▇ EMERGING GROWTH FUND
By: ▇▇▇▇ Investment Advisors, Inc.
Its: Investment Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
-25-
SCHEDULE I
-------------------------------------------------------------------------------------------------------------------
Name and Address of Purchase Commitment State of Residence
------------------- ------------------
Purchaser
---------
-------------------------------------------------------------------------------------------------------------------
Black Bear Fund I, L.P. $ 593,568 California
c/o Eastbourne Capital Management, L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------------------------------------------------------------------------------
Black Bear Fund II, L.L.C. $ 98,580 California
c/o Eastbourne Capital Management, L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------------------------------------------------------------------------------
Black Bear Offshore Master Fund Limited $1,807,848 Cayman Islands
c/o Eastbourne Capital Management, L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------------------------------------------------------------------------------
Caduceus Capital Trust $ 734,500 British Virgin Islands
c/o OrbiMed Advisors LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------------------------------------------------------------------------------------
Caduceus Capital II, L.P. $ 357,500 Delaware
c/o OrbiMed Advisors LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------------------------------------------------------------------------------------
PW Eucalyptus Fund, L.L.C. $ 806,000 Delaware
c/o OrbiMed Advisors LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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PW Eucalyptus Fund, Ltd. $ 104,000 Cayman Islands
c/o OrbiMed Advisors LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name and Address of Purchase Commitment State of Residence
------------------- ------------------
Purchaser
---------
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $ 1,000,000 New York
c/▇ ▇▇▇▇▇▇ & Vris, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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Domain Partners V, L.P. $ 5,567,088 Delaware
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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DP V Associates, L.P. $ 131,508 Delaware
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Royal Bank of Canada $ 2,500,000 New York
c/o RBC Dominion Securities Corporation
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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BayStar Capital II, LP $ 1,350,000 Delaware
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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BayStar International II Ltd $ 150,000 British Virgin Islands
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇ Emerging Growth Fund $ 2,000,000 Minnesota
c/o Kopp Investment Advisors
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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TOTAL $17,200,592
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SCHEDULE 2(m)
▇▇▇▇▇▇▇▇▇▇ County (Pennsylvania) Industrial Development Authority Bonds
In 1997, we issued, through the ▇▇▇▇▇▇▇▇▇▇ County (Pennsylvania) Industrial
Development Authority, $9.4 million of taxable and tax-exempt bonds. The bonds
are supported by an AA-rated letter of credit, and a reimbursement agreement
between our bank and the letter of credit issuer. The interest rate on the bonds
will vary weekly, depending on market rates for AA-rated taxable and tax-exempt
obligations, respectively.
The terms of the bond issuance provide for monthly, interest-only payments
and a single repayment of principal at the end of the twenty-year life of the
bonds. However, under our agreement with our bank, we are making monthly
payments to an escrow account to provide for an annual prepayment of principal.
To provide credit support for this arrangement, we have given a first
mortgage on land, building, improvements, and certain machinery and equipment to
our bank. We have also agreed to maintain a minimum required cash and short-term
investments balance of at least two times the current loan balance. If we fail
to comply with this covenant, we are required to deposit with the lender cash
collateral up to, but not more than, the unpaid balance of the loan, which was
$5.1 million as of December 31, 2002.
Equipment Financings
During 2002, we borrowed an aggregate of $2.3 million to finance the
purchase of laboratory equipment. The terms of the financings are as follows:
. 8% Equipment Loan. We borrowed $2.2 million at an annual interest
rate of 8%, secured by laboratory equipment. We are committed to
make monthly principal and interest payments over a three-year
period ending February 2006.
. 6.2% Equipment Loan. We borrowed $0.1 million at an annual
interest rate of 6.2%, secured by computer equipment. We are
committed to make monthly principal and interest payments over a
three-year period ending November 2005.
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EXHIBIT A
FORM OF LEGAL OPINION
(i) 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
corporate power and corporate authority to enter into, execute, deliver and
perform the Agreement.
(ii) The Agreement has been duly authorized, executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
that we express no opinion as to the validity or enforceability of the
indemnification and contribution provisions of the Agreement.
(iii) The execution and delivery by the Company of the Agreement, the
performance by the Company of its obligations thereunder and the issuance, sale
and delivery of the Common Shares will not (a) violate any provision of any law
applicable to the Company or the Certificate of Incorporation, the Certificate
of Designation or the Bylaws of the Company, or (b) violate any law, rule,
regulation, judgment, injunction, decree, determination, award or order of any
court or governmental agency or instrumentality.
(iv) The Common Shares have been duly authorized, and when issued,
delivered and paid for in accordance with the terms of the Agreement, will be
validly issued, fully paid and nonassessable. To our knowledge, the Common
Shares are free of preemptive or similar rights restricting the transfer of the
Common Shares or entitling any person to acquire the Common Shares from the
Company.
(v) Assuming the accuracy and completeness of all representations and
warranties made by the Purchasers under the Agreement, the sale and issuance of
the Common Shares are exempt from the registration requirements of Section 5 of
the Securities Act of 1933, as amended, subject to the filing of a Form D
pursuant to Regulation D as promulgated by the Securities and Exchange
Commission.
(vi) The Company is not an "investment company" within the meaning of
such term under the Investment Company Act of 1940, as amended, and the rules
and regulations promulgated thereunder.
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