EXHIBIT 10.1
STOCK AND WARRANT PURCHASE AGREEMENT
Acusphere, Inc.
Ladies & Gentlemen:
The undersigned, __________________________ (the "INVESTOR"), hereby
confirms its agreement with you as follows:
1. This Stock and Warrant Purchase Agreement is made as of July 29, 2004 between
Acusphere, Inc., a Delaware corporation (the "COMPANY"), and the Investor.
2. The Company has authorized the sale and issuance of up to 5,000,000 shares
(the "SHARES") of common stock of the Company, $0.01 par value per share (the
"COMMON STOCK"), and warrants to purchase up to 1,000,000 shares (the "WARRANT
SHARES") of Common Stock at an exercise price per share of $8.50 (the
"WARRANTS") to certain investors in a private placement (the "OFFERING") at two
Closings.
3. The Company and the Investor agree that the Investor will purchase from the
Company and the Company will issue and sell to the Investor at the Initial
Closing __________ Shares and a Warrant to purchase __________ [20% of the
Shares] Warrant Shares, and at the Subsequent Closing __________ Shares and a
Warrant to purchase __________ [20% of the Shares] Warrant Shares, in each case
for a purchase price of $6.25 per share, or an aggregate cumulative purchase
price of $________, pursuant to the Terms and Conditions for Purchase of Shares
and Warrants attached hereto as Annex I and incorporated herein by reference as
if fully set forth herein (the "TERMS AND CONDITIONS"). The Company and the
Investor, having adverse interests and as a result of arm's length negotiation,
agree that (i) neither the Investor nor any of its respective partners, members
or affiliates has rendered or has agreed to render any services to the Company
in connection with this Agreement or this sale and issuance of Shares and
Warrants; and (ii) the Warrants are not being issued as compensation. This Stock
and Warrant Purchase Agreement, together with the Terms and Conditions which are
incorporated herein by reference as if fully set forth herein, may hereinafter
be referred to as the "AGREEMENT". Unless otherwise requested by the Investor,
the Warrant and certificates representing the Shares purchased by the Investor
will be registered in the Investor's name and address as set forth below. The
Warrant shall have the rights, preferences, privileges and restrictions as set
forth in the form of Warrant attached hereto as Exhibit A.
4. The Investor represents that, except as set forth below, (a) it has had no
position, office or other material relationship within the past three years with
the Company or persons known to it to be affiliates of the Company, (b) neither
it, nor any group of which it is a member or to which it is related,
beneficially owns (including the right to acquire or vote) any securities of the
Company and (c) it has no direct or indirect affiliation or association with any
NASD (as defined in Annex I) member as of the date hereof. Exceptions:__________
_______________________________________________________________________________.
(If no exceptions, write "none." If left blank, response will be deemed to be
"none.")
Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose. By executing
this Agreement, the Investor acknowledges that the Company may use the
information in paragraph 4 above and the name and address information below in
preparation of the Registration Statement (as defined in Annex I).
[Signature page follows]
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AGREED AND ACCEPTED:
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Acusphere, Inc. Investor:______________________________
By:____________________________________
By:_________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Print Name:____________________________
Title: President and CEO
Title:_________________________________
Address:_______________________________
_______________________________________
Tax ID No.:____________________________
Contact name:__________________________
Telephone:_____________________________
Name in which shares should be
registered (if different):
_______________________________________
Shares:________________________________
Warrants to purchase_____Warrant Shares
Aggregate purchase price:______________
Stock and Warrant Purchase Agreement
ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF SHARES AND WARRANTS
1. Authorization and Sale of the Shares. Subject to these Terms and
Conditions, the Company has authorized the sale of up to 5,000,000 Shares and
Warrants to purchase up to 1,000,000 Warrant Shares. The Company reserves the
right to increase or decrease this number.
2. Agreement to Sell and Purchase the Shares; Subscription Date.
2.1 At each Closing (as defined in Section 3), the Company
will sell to the Investor, and the Investor will purchase from the Company, upon
the terms and conditions hereinafter set forth, the number of Shares and a
Warrant to purchase the number of Warrant Shares, each as set forth in Section 3
of the Stock and Warrant Purchase Agreement for such Closing to which these
Terms and Conditions are attached at the purchase price set forth thereon.
2.2 The Company may enter into the same form of Stock and
Warrant Purchase Agreement at the Initial Closing, including these Terms and
Conditions, with certain other investors (the "OTHER INVESTORS") and expects to
complete sales of Shares and Warrants to them at each Closing. (The Investor and
the Other Investors are hereinafter sometimes collectively referred to as the
"INVESTORS," and the Stock and Warrant Purchase Agreement to which these Terms
and Conditions are attached and the Stock and Warrant Purchase Agreements
(including attached Terms and Conditions) executed by the Other Investors at the
Initial Closing are hereinafter sometimes collectively referred to as the
"AGREEMENTS.") The Company may accept executed Agreements from Investors for the
purchase of Shares and Warrants commencing upon the date on which the Company
provides the Investors with the proposed purchase price per Share plus Warrant
exercise price and concluding upon the date (the "SUBSCRIPTION DATE") on which
the Company has (i) executed Agreements with Investors for the purchase of
5,000,000 Shares in the aggregate at the Closings and Warrants to purchase
1,000,000 Warrant Shares in the aggregate at the Closings, and (ii) notified ▇▇
▇▇▇▇▇ & Co., LLC, in its capacity as Placement Agent for this transaction, that
it is no longer accepting additional Agreements from Investors for the purchase
of Shares and Warrants. The Company may not enter into any Agreements after the
Subscription Date.
2.3 The obligations of each Investor under any Agreement are
several and not joint with the obligations of any Other Investor, and no
Investor shall be responsible in any way for the performance of the obligations
of any other Investor under any Agreement. Nothing contained herein, and no
action taken by any Investor hereto, shall be deemed to constitute the Investors
as a partnership, an association, a joint venture or any other kind of entity,
or create a presumption that the Investors are in any way acting in concert or
as a group with respect to such obligations or the transactions contemplated
hereby, provided that such obligations or the transactions contemplated hereby
may be modified, amended or waived in accordance with Section 9 below. Each
Investor shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement (provided,
that such rights may be modified, amended or waived in accordance with Section 9
below) and the Warrant, and it shall not be necessary for any Other Investor to
be joined as an additional party in any proceeding for such purpose.
3. Delivery of the Shares and Warrants at the Closings.
(a) The initial closing of the purchase and sale of the Shares and
Warrants (the "INITIAL CLOSING") shall occur on or before August 3, 2004 (the
"INITIAL CLOSING DATE") at the offices of the Company's counsel.
(b) The subsequent closing of the purchase and sale of the Shares and
Warrants (the "SUBSEQUENT CLOSING", and together with the Initial Closing, each
a "CLOSING") shall occur on a date that is within five (5) business days after
the date on which the conditions set forth in Sections 3(d) and 3(e) have been
satisfied or waived (the "SUBSEQUENT CLOSING DATE", and together with the
Initial Closing Date, each a "CLOSING DATE") at the offices of the Company's
counsel, or at such other time, date and place as are mutually agreeable to the
Company and the Purchasers.
(c) At each Closing, the Company shall deliver to the Investor a
Warrant representing the number of Warrant Shares and one or more stock
certificates representing the number of Shares, in each case as is set forth in
Section 3 of the Stock and Warrant Purchase Agreement for such Closing, each
such certificate to be registered in the name of the Investor or, if so
indicated on the signature page of the Stock and Warrant Purchase Agreement, in
the name of a nominee designated by the Investor.
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(d) The Company's obligation to issue the Shares and the Warrant to the
Investor at each Closing shall be subject to the following conditions, any one
or more of which may be waived by the Company: (i) receipt by the Company of a
certified or official bank check or wire transfer of funds in the full amount of
the purchase price for the Shares and the Warrant being purchased hereunder for
such Closing as set forth in Section 3 of the Stock and Warrant Purchase
Agreement; (ii) completion of the purchases and sales under the Agreements with
the Other Investors for such Closing; (iii) the accuracy of the representations
and warranties made by the Investors and the fulfillment of those undertakings
of the Investors to be fulfilled prior to such Closing; and (iv) with respect to
the Subsequent Closing only, the Company shall have obtained the Required
Stockholder Approval (as defined in Section 4.2) on or prior to the Subsequent
Closing.
(e) The Investor's obligation to purchase the Shares and the Warrant at
each Closing shall be subject to the following conditions, any one or more of
which may be waived by the Investor: (i) Investors shall have executed
Agreements for the purchase of at least a cumulative aggregate of 3,000,000
Shares and Warrants for the purchase of at least a cumulative aggregate of
600,000 Warrant Shares for the Closings; (ii) the representations and warranties
of the Company set forth herein shall be true and correct as of such Closing in
all material respects (except for representations and warranties that speak as
of a specific date, which representations and warranties shall be true and
correct as of such date); (iii) the Investor shall have received such documents
on or prior to the Initial Closing Date as such Investor shall reasonably have
requested, including, a customary opinion of the Company's counsel as to the
matters set forth in Section 4.2 and as to exemption from the registration
requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
of the sale of the Shares and Warrants; and (iv) with respect to the Subsequent
Closing only, the Company shall have obtained the Required Stockholder Approval
on or prior to the Subsequent Closing.
4. Representations, Warranties and Covenants of the Company. The
Company hereby represents and warrants to, and covenants with, the Investor, as
follows:
4.1 Organization. The Company is a corporation validly
existing and in good standing under the laws of the State of Delaware. The
Company has full power and authority to own, lease and operate its properties
and to conduct its business as presently conducted and as described in the
documents filed by the Company under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), since the end of its most recently completed
fiscal year through the date hereof, including, without limitation, its most
recent report on Form 10-Q (the "EXCHANGE ACT DOCUMENTS"). The Company is
registered or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the location
of the properties owned or leased by it requires such qualification and where
the failure to be so registered or qualified would have a material adverse
effect upon the condition (financial or otherwise), earnings, properties,
business or operations of the Company (a "MATERIAL ADVERSE EFFECT"), and no
proceeding has been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification. Other than Acusphere Securities Corporation and Acusphere
Limited, each a wholly-owned subsidiary of the Company, the Company does not,
directly or indirectly, own a majority of the common stock or other similar
interest in any corporation or other entity.
4.2 Due Authorization and Valid Issuance. Except for the
requirement that the Company's stockholders approve the issuance, sale and
delivery of the Shares, Warrants and the Warrant Shares (other than the Shares
and Warrants being sold at the Initial Closing and the related Warrant Shares)
pursuant to Nasdaq Marketplace Rule 4350(i)(1) (the "Required Stockholder
Approval"), the Company has all requisite power and authority to execute,
deliver and perform its obligations under the Agreements and the Warrants, and
the Agreements and the Warrants have been duly authorized and validly executed
and delivered by the Company and constitute legal, valid and binding agreements
of the Company enforceable against the Company in accordance with their terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors'
and contracting parties' rights generally, 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 and contribution agreements herein may be legally
unenforceable. The Shares and the Warrant being purchased by the Investor
hereunder and the Warrant Shares issuable pursuant to the Warrant will, upon
issuance and payment therefor pursuant to the terms hereof and thereof, be duly
authorized, validly issued, fully-paid and nonassessable.
4.3 Non-Contravention; Governmental Authorization. The
execution and delivery of the Agreements and the Warrants, the issuance and sale
of the Shares and the Warrants under the Agreements and the Warrant Shares under
the Warrant, the fulfillment of the terms of the Agreements and the Warrants and
the consummation of the transactions contemplated thereby will not (A) conflict
with or constitute a violation of, or default (with the passage of time or
otherwise) under, (i) any agreement or other instrument filed or incorporated by
reference as an exhibit to any of the Exchange Act Documents (the "EXCHANGE ACT
EXHIBITS"), (ii) the charter, by-laws or other organizational documents of the
Company, or (iii) any law,
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administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company or its
properties, except in the case of clauses (i) and (iii) for any such conflicts,
violations or defaults which are not reasonably likely to have a Material
Adverse Effect or (B) result in the creation or imposition of any lien,
encumbrance, claim, security interest or restriction whatsoever upon any of the
material properties or assets of the Company or an acceleration of indebtedness
pursuant to any obligation, agreement or condition contained in any Exchange Act
Exhibit. No consent, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative agency, or
other governmental body in the United States is required for the execution and
delivery of the Agreements and the Warrants, and the valid issuance and sale of
the Shares and Warrants to be sold pursuant to the Agreements, and the valid
issuance of the Warrant Shares under the Warrant, other than such as have been
made or obtained, and except for any post-closing securities filings or
notifications required to be made under federal and state securities laws.
4.4 Capitalization. The capitalization of the Company as of
March 31, 2004 is as set forth in the most recent applicable Exchange Act
Documents, increased as set forth in the next sentence. The Company has not
issued any capital stock since that date other than pursuant to (i) employee
benefit plans disclosed in the Exchange Act Documents or (ii) outstanding
warrants, options or other securities disclosed in the Exchange Act Documents.
The Shares and the Warrants to be sold pursuant to the Agreements, and the
Warrant Shares to be issued pursuant to the Warrants, have been duly authorized,
and when issued and paid for in accordance with the terms of the Agreements and
the Warrants, as the case may be, will be duly and validly issued, fully paid
and nonassessable. The outstanding shares of capital stock of the Company have
been duly and validly issued and are fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, and were not
issued in violation of any preemptive rights or similar rights to subscribe for
or purchase securities. Except as set forth in or contemplated by the Exchange
Act Documents, there are no outstanding rights (including, without limitation,
preemptive rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any unissued shares of capital stock or other equity
interest in the Company, or any contract, commitment, agreement, understanding
or arrangement of any kind to which the Company is a party or of which the
Company has knowledge and relating to the issuance or sale of any capital stock
of the Company, any such convertible or exchangeable securities or any such
rights, warrants or options, other than the Company's agreement to issue a
warrant to purchase shares of the Company's common stock (not to exceed 50,000
shares) to its financial adviser in connection with the Company's Collaboration
Agreement with Nycomed Danmark APS. Without limiting the foregoing, except as
disclosed in the Exchange Act Documents, no preemptive right, co-sale right,
right of first refusal, registration right, or other similar right exists with
respect to the Shares, the Warrants or the Warrant Shares or the issuance and
sale thereof, other than as provided in the Agreements. No further approval or
authorization of any stockholder, other than the Required Stockholder Approval,
the Board of Directors of the Company or others is required for the issuance and
sale of the Shares, the Warrants and the Warrant Shares. The Company owns the
entire equity interest in each of its subsidiaries (each, a "SUBSIDIARY" and
collectively, the "SUBSIDIARIES"), free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest, other than as described in
the Exchange Act Documents. Except as disclosed in the Exchange Act Documents,
there are no stockholders agreements, voting agreements or other similar
agreements with respect to the Common Stock to which the Company is a party or,
to the knowledge of the Company, between or among any of the Company's
stockholders.
4.5 Legal Proceedings. There is no material legal or
governmental proceeding pending or, to the knowledge of the Company, threatened
to which the Company is or may be a party or of which the business or property
of the Company is subject that is not disclosed in the Exchange Act Documents.
4.6 No Violations. The Company is not in violation of its
charter, bylaws, or other organizational document, or in violation of any
federal, state or local law, administrative regulation, ordinance or order
(including, without limitation, those relating to federal securities laws) 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 the passage of time or otherwise, would
constitute a default) in any material respect in the performance of any Exchange
Act Exhibit, which would be reasonably likely to have a Material Adverse Effect.
4.7 Governmental Permits, Etc.; Conformance with Laws. With
the exception of the matters which are dealt with separately in Sections 4.1,
4.12 and 4.13, the Company has all necessary franchises, licenses, certificates
and other authorizations from any foreign, federal, state or local government or
governmental agency, department, or body that are currently necessary for the
operation of the business of the Company as currently conducted and as described
in the Exchange Act Documents except where the failure to currently possess
could not reasonably be expected to have a Material Adverse Effect. The Company
currently operates its business in conformity with all applicable laws, rules
and regulations of each jurisdiction in which
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the Company is conducting business, including, without limitation, the United
States Food and Drug Administration (the "FDA"), except where the failure to be
so in compliance could not reasonably be expected to have a Material Adverse
Effect.
4.8 Intellectual Property. Except as disclosed in the Exchange
Act Documents (i) the Company owns or possesses sufficient rights to use all
material patents, patent rights, trademarks, copyrights, licenses, inventions,
trade secrets, trade names and know-how (collectively, "INTELLECTUAL PROPERTY")
described or referred to in the Exchange Act Documents as owned or possessed by
it or that are necessary for the conduct of its business as now conducted or as
proposed to be conducted as described in the Exchange Act Documents except where
the failure to currently own or possess would not have a Material Adverse
Effect, (ii) to the knowledge of the Company, the Company is not infringing, and
has not received any notice of, and does not have any knowledge of, any asserted
infringement by the Company of, any valid rights of a third party with respect
to any Intellectual Property that, individually or in the aggregate, would have
a Material Adverse Effect, and (iii) the Company has not received any notice of,
and does not have any knowledge of, infringement by a third party with respect
to any Intellectual Property rights of the Company that, individually or in the
aggregate, would have a Material Adverse Effect.
4.9 Financial Statements. The financial statements of the
Company and the related notes contained in the Exchange Act Documents present
fairly in all material respects, in accordance with generally accepted
accounting principles, the financial position of the Company and its
Subsidiaries as of the dates indicated, and the results of its operations and
cash flows for the periods therein specified consistent with the books and
records of the Company and its Subsidiaries except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments. Such financial statements (including the related notes) have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods therein specified, except as may be
disclosed in the notes to such financial statements, or in the case of unaudited
statements, as may be permitted by the Securities and Exchange Commission (the
"SEC") on Form 10-Q under the Exchange Act and except as disclosed in the
Exchange Act Documents.
4.10 No Material Adverse Change. Except as disclosed in the
Exchange Act Documents, since March 31, 2004, there has not been (i) any
material adverse change in the financial condition or earnings of the Company,
(ii) any material adverse event affecting the Company, (iii) any obligation,
direct or contingent, that is material to the Company, incurred by the Company,
except obligations incurred in the ordinary course of business, (iv) any
dividend or distribution of any kind declared, paid or made on the capital stock
of the Company, or (v) any loss or damage (whether or not insured) to the
physical property of the Company which has been sustained which has a Material
Adverse Effect.
4.11 Disclosure; Non-Public Information. The representations
and warranties of the Company contained in this Section 4 as of the date hereof
and as of the Initial Closing Date, do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Except with respect to the material terms
and conditions of the transaction contemplated by the Agreements, which shall be
publicly disclosed by the Company pursuant to Section 16 hereof, the Company
confirms that neither it nor any person acting on its behalf has provided
Investor with any information that the Company believes constitutes material,
non-public information, unless Investor shall have first agreed to maintain the
confidentiality of such information. The Company understands and confirms that
Investor will rely on the foregoing representations in effecting transactions in
securities of the Company.
4.12 Nasdaq Compliance. The Company's Common Stock is
registered pursuant to Section 12(g) of the Exchange Act and is listed on The
Nasdaq Stock Market, Inc. National Market (the "NASDAQ NATIONAL MARKET"), and
the Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
de-listing the Common Stock from the Nasdaq National Market, nor has the Company
received any notification that the SEC or the National Association of Securities
Dealers, Inc. (the "NASD") is currently contemplating terminating such
registration or listing.
4.13 Reporting Status. The following documents complied in all
material respects with the SEC's requirements as of their respective filing
dates, and the information contained therein as of the date thereof did 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:
(a) Annual Report on Form 10-K for the year ended
December 31, 2003;
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(b) Quarterly Report on Form 10-Q for the quarter
ended March 31, 2004; and
(c) Proxy Statement on Schedule 14A filed on April
29, 2004.
4.14 No Manipulation of Stock. The Company has not taken and
will not, in violation of applicable law, take, any action 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 Shares
or the Warrant Shares.
4.15 Company not an "Investment Company". The Company has been
advised of the rules and requirements under the Investment Company Act of 1940,
as amended (the "INVESTMENT COMPANY ACT"). The Company is not, and immediately
after receipt of payment for the Shares and the Warrants will not be, an
"investment company" or an entity "controlled" by an "investment company" within
the meaning of the Investment Company Act and shall conduct its business in a
manner so that it will not become subject to the Investment Company Act.
4.16 Foreign Corrupt Practices. Neither the Company, nor to
the knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any corrupt funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
4.17 Accountants. To the Company's knowledge, Deloitte &
Touche LLP, who the Company expects will consent to the inclusion (or
incorporation by reference, as the case may be) of its report dated March 15,
2004 with respect to the consolidated financial statements of the Company
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2003 in (or into) the Registration Statement (as defined below) and the
prospectus which forms a part thereof, are independent accountants as required
by the Securities Act and the rules and regulations promulgated thereunder.
4.18 Contracts. To the Company's knowledge, the contracts
described in the Exchange Act Documents that are material to the Company are in
full force and effect on the date hereof, and neither the Company nor, to the
Company's knowledge, any other party to such contracts is in breach of or
default under any of such contracts which would have a Material Adverse Effect.
4.19 Taxes. To the best of its knowledge, the Company has
filed (or has obtained an extension of time within which to file) all material
federal, state and foreign income tax returns and has paid all material taxes
shown as due on such tax returns, except where the failure to so file or the
failure to so pay could not reasonably be expected to have a Material Adverse
Effect. The Company has not been advised (in a writing directed to a responsible
officer of the Company) of any income tax deficiency proposed to be assessed
that would have a Material Adverse Effect.
4.20 Transfer Taxes. On the applicable Closing Date, all stock
transfer taxes which are imposed by the Commonwealth of Massachusetts or the
State of Delaware, the nonpayment of which would constitute a lien on the Shares
or the Warrants, shall have been paid or provided for by the Company.
4.21 Insurance. The Company carries insurance covering its
properties and businesses customary for the type and scope of its properties and
business. All such policies are in full force and effect, and are underwritten
by financially sound and reputable insurers. All such policies will remain in
full force and effect and will not in any way be affected by, or terminate or
lapse by, reason of any of the transactions contemplated hereby.
5. Representations, Warranties and Covenants of the Investor.
5.1 The Investor represents and warrants to, and covenants
with, the Company that: (i) the Investor is an "accredited investor" as defined
in Regulation D under the Securities Act and the Investor is also knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions with
respect to investments in shares presenting an investment decision like that
involved in the purchase of the Shares and the Warrant, including investments in
securities issued by the Company and investments in comparable companies, and
has requested, received, reviewed and considered all information it deemed
relevant in
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making an informed decision to purchase the Shares and the Warrant; (ii) the
Investor is acquiring the Warrant to purchase the number of Warrant Shares and
the number of Shares, each as set forth in Section 3 of the Stock and Warrant
Purchase Agreement, in the ordinary course of its business and for its own
account for investment only and with no present intention of distributing any of
such Shares, Warrant or Warrant Shares or any arrangement or understanding with
any other persons regarding the distribution of such Shares, Warrant or Warrant
Shares; (iii) the Investor will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares, Warrant or Warrant
Shares except in compliance with the Securities Act, applicable state securities
laws and the respective rules and regulations promulgated thereunder; (iv) the
Investor has answered all questions on the Investor Questionnaire for use in
preparation of the Registration Statement and the answers thereto are true,
correct and complete as of the date hereof and will be true, correct and
complete as of the applicable Closing Date; (v) the Investor will notify the
Company immediately of any change in any of such information prior to the
Subsequent Closing Date, and thereafter, to the extent reasonably required under
applicable law or regulation, until such time as the Investor has sold all of
its Shares and Warrant Shares or until the Company is no longer required to keep
the Registration Statement effective; (vi) the Investor has, in connection with
its decision to purchase the number of Shares and the Warrant to purchase the
number of Warrant Shares, each as set forth in Section 3 of the Stock and
Warrant Purchase Agreement, relied only upon the Exchange Act Documents and the
representations and warranties of the Company contained herein; and (vii)
Investor has no liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which the Company could become liable or obligated. The Investor
understands that its acquisition of the Shares and the Warrant has not been
registered under the Securities Act or registered or qualified under any state
securities law in reliance on specific exemptions therefrom, which exemptions
may depend upon, among other things, the bona fide nature of the Investor's
investment intent as expressed herein. Subject to compliance with the Securities
Act, applicable securities laws and the respective rules and regulations
promulgated thereunder, nothing contained herein shall be deemed a
representation or warranty by such Investor to hold the Shares, Warrant or
Warrant Shares for any period of time. The Investor has completed or caused to
be completed and delivered to the Company the Investor Questionnaire, which
questionnaire is true, correct and complete.
5.2 The Investor acknowledges, represents and agrees that no
action has been or will be taken in any jurisdiction outside the United States
by the Company that would permit an offering of the Shares, Warrant or Warrant
Shares or possession or distribution of offering materials in connection with
the issue of the Shares, Warrant or Warrant Shares in any jurisdiction outside
the United States where legal action by the Company for that purpose is
required. Each Investor outside the United States will comply with all
applicable laws and regulations in each foreign jurisdiction in which it
purchases, offers, sells or delivers Shares, the Warrant or Warrant Shares or
has in its possession or distributes any offering material, in all cases at its
own expense.
5.3 The Investor hereby covenants with the Company not to make
any sale of the Shares, Warrant or Warrant Shares without complying with the
provisions of this Agreement and without causing the prospectus delivery
requirement under the Securities Act to be satisfied (whether by delivery of the
Prospectus or pursuant to and in compliance with an exemption from such
requirement), and the Investor acknowledges that the certificates evidencing the
Shares and Warrant Shares will be imprinted with a legend that prohibits their
transfer except in accordance therewith. The Investor acknowledges that there
may occasionally be times when the Company determines that it must suspend the
use of the Prospectus forming a part of the Registration Statement, as set forth
in Section 7.2(c).
5.4 The Investor further represents and warrants to, and
covenants with, the Company that (i) the Investor 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 Investor enforceable
against the Investor 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 Investors
herein may be legally unenforceable.
5.5 Neither Investor nor any affiliate of such Investor which:
(i) had knowledge of the transactions contemplated hereby; (ii) has or shares
discretion relating to such Investor's investments or trading or information
concerning such Investor's investments, including in respect of the Securities;
or (iii) is subject to such Investor's review or input concerning such
affiliate's investments or trading, has made or will make, directly or
indirectly, any net short sale of the Company's Common Stock for the period
beginning on the fifteenth (15th) day prior to the date of this Agreement and
ending on the earlier of (a) the Initial
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Closing Date or (b) the date that the transactions contemplated by this
Agreement are publicly announced. For purposes of this Section 4.7, a "net short
sale" by any Purchaser shall mean a sale of Common Stock by such Investor that
is marked as a short sale and that is made at a time when there is no equivalent
offsetting long position in Common Stock held by such Investor, where an
"equivalent offsetting long position" includes all shares of Common Stock held
by such Investor and all underlying shares of Common Stock which are issuable
upon conversion, exercise or exchange of convertible securities, warrants,
options or other rights to subscribe for or to purchase or exchange for shares
of Common Stock. Without limiting the foregoing, Investor will not use any of
the Shares or the Warrant acquired pursuant to this Agreement, or the Warrant
Shares acquired pursuant to the Warrant, to cover any short position in the
Common Stock of the Company if doing so would be in violation of applicable
securities laws. Each Investor acknowledges that it is aware that the SEC has
published its position that covering a short position established prior to
effectiveness of a resale registration statement with shares included in such
registration statement would be a violation of Section 5 of the Securities Act.
5.6 The Investor understands that nothing in the Exchange Act
Documents, this Agreement or any other materials presented to the Investor in
connection with the purchase and sale of the Shares and the Warrant constitutes
legal, tax or investment advice. The Investor 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 Shares and the Warrant.
5.7 The Company acknowledges and agrees that Investor does not
make or has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Sections 5 and 16(a) of this Agreement, or in the Investor Questionnaire.
6. Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Investor herein shall survive the execution of this Agreement, the delivery
to the Investor of the Shares and the Warrant being purchased and the payment
therefor.
7. Registration of the Shares; Compliance with the Securities Act.
7.1 Registration Procedures and Other Matters. The Company
shall:
(a) subject to receipt of necessary information from
the Investors, prepare and file with the SEC a registration statement on Form
S-1 or Form S-3 (or another form appropriate for such registration in accordance
herewith) (the "REGISTRATION STATEMENT") to enable the resale of the Shares and
the Warrant Shares by the Investors from time to time through the automated
quotation system of the Nasdaq National Market or in privately-negotiated
transactions and use its commercially reasonable efforts to cause the
Registration Statement to become effective within 120 days after the
Registration Statement is filed by the Company (the "EFFECTIVENESS DEADLINE")
such efforts to include, without limiting the generality of the foregoing,
preparing and filing with the SEC in such 120-day period any financial
statements that are required to be filed prior to the effectiveness of such
Registration Statement;
(b) use its commercially reasonable efforts to
prepare and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus used in connection therewith (the
"PROSPECTUS") as may be necessary to maintain the Registration Statement,
subject to customary blackout periods, current, effective and free from any
material misstatement or omission 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, and to maintain the
listing of the Company's Common Stock on the Nasdaq National Market, for a
period not exceeding, the earlier of (i) (A) with respect to each Investor's
Shares purchased hereunder, two years after the applicable Closing Date at which
such Shares were purchased by the Investor, and (B) with respect to each
Investor's Warrant Shares purchased under the Warrant, three years after the
applicable Closing Date at which such Warrant was purchased by the Investor, or
(ii) with respect to each Investor's Shares purchased hereunder and Warrant
Shares purchased under the Warrant, such time as all Shares purchased by such
Investor in this Offering and Warrant Shares issuable pursuant to the Warrant
have been sold pursuant to a registration statement;
(c) furnish to the Investor with respect to the
Shares and Warrant Shares registered under the Registration Statement such
number of copies of the Registration Statement, Prospectuses and Preliminary
Prospectuses in conformity with the requirements of the Securities Act and such
other documents as the Investor may reasonably request, in order
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to facilitate the public sale or other disposition of all or any of the Shares
or Warrant Shares by the Investor; provided, however, that the obligation of the
Company to deliver copies of Prospectuses or Preliminary Prospectuses to the
Investor shall be subject to the receipt by the Company of reasonable assurances
from the Investor that the Investor will comply with the applicable provisions
of the Securities Act and of such other securities or blue sky laws as may be
applicable in connection with any use of such Prospectuses or Preliminary
Prospectuses;
(d) file documents required of the Company for normal
blue sky clearance in states specified in writing by the Investor and use its
commercially reasonable efforts to maintain such blue sky qualifications during
the period the Company is required to maintain the effectiveness of the
Registration Statement pursuant to Section 7.1(b); provided, however, that the
Company shall not be required to qualify to do business or consent to service of
process in any jurisdiction in which it is not now so qualified or has not so
consented;
(e) bear all expenses in connection with the
procedures in paragraph (a) through (d) of this Section 7.1 (other than
underwriting discounts or commissions, brokers' fees and similar selling
expenses, and any other fees or expenses incurred by the Investor, including
attorneys' fees) and the registration of the Shares and Warrant Shares pursuant
to the Registration Statement; and
(f) advise the Investor, promptly after it shall
receive notice or obtain knowledge of the issuance of any stop order by the SEC
delaying or suspending the effectiveness of the Registration Statement or of the
initiation or threat of any proceeding for that purpose.
Notwithstanding anything to the contrary herein, the Registration
Statement shall cover only the Shares and the Warrant Shares. In no event at any
time before the Registration Statement becomes effective with respect to the
Shares and the Warrant Shares shall the Company publicly announce or file any
other registration statement not covering the Shares and Warrant Shares, other
than registrations on Form S-8, without the prior written consent of a majority
in interest of the Investors.
If the Registration Statement initially filed pursuant to this
Agreement is a registration statement on Form S-1, the Company shall, within 10
days after the Company first becomes eligible to file a registration statement
on Form S-3, use its commercially reasonable efforts to seek the conversion of
such Registration Statement to a registration statement on Form S-3 (through a
post-effective amendment or otherwise), and the Investor shall promptly provide
such information as may reasonably be requested by the Company in connection
with such conversion and to otherwise cooperate with the Company in connection
with such conversion to the extent reasonably requested by the Company.
The Company understands that the Investor disclaims being an
underwriter, but if the SEC deems the Investor to be an underwriter, the Company
shall not be relieved of any obligations it has hereunder; provided, however
that if the Company receives notification from the SEC that the Investor is
deemed an underwriter, then the period by which the Company is obligated to
submit an acceleration request to the SEC shall be extended to the earlier of
(i) the 90th day after such SEC notification, or (ii) 120 days after the initial
filing of the Registration Statement with the SEC.
7.2 Transfer of Shares and Warrant Shares After Registration;
Suspension.
(a) The Investor agrees that it will not effect any
disposition of the Shares or the Warrant Shares or its right to purchase the
Shares or the Warrant Shares that would constitute a sale within the meaning of
the Securities Act except as contemplated in the Registration Statement referred
to in Section 7.1 and as described below or as otherwise permitted by law, and
that it will promptly notify the Company of any changes in the information set
forth in the Registration Statement regarding the Investor or its plan of
distribution. In connection with any transfer of Shares or the Warrant Shares
other than pursuant to an effective registration statement, to the Company or to
an affiliate of the Investor (who is an accredited investor and executes a
customary representation letter), the Company may require the transferor thereof
to provide to the Company an opinion of counsel reasonably satisfactory to the
Company selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities Act, provided, however, that in the case of a transfer pursuant to
Rule 144, no opinion shall be required if the transferor provides the Company
with a customary seller's representation letter, and if such sale is not
pursuant to subsection (k) of Rule 144, a customary broker's representation
letter and a Form 144. Any such transferee that agrees in writing to be bound by
the terms of the Agreements.
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(b) Except in the event that paragraph (c) below
applies, the Company shall (i) 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 therein or necessary to make the statements therein, not misleading, and
so that, as thereafter delivered to purchasers of the Shares and Warrant 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; (ii) provide the Investor copies of any
documents filed pursuant to Section 7.2(b)(i) as the Investor may reasonably
request; and (iii) inform each Investor that the Company has complied with its
obligations in Section 7.2(b)(i) (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 Investor to that effect, will
use its best efforts to secure the effectiveness of such post-effective
amendment as promptly as possible and will promptly notify the Investor pursuant
to Section 7.2(b)(i) hereof when the amendment has become effective).
(c) Subject to paragraph (d) below, in the event (i)
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; (ii) 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;
(iii) 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
Shares or the Warrant Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; or (iv) of any event or
circumstance which, in the good faith judgment of the Company's Board of
Directors, 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 (a "BLACKOUT PERIOD"); then the Company shall deliver a certificate
in writing to the Investor (the "SUSPENSION NOTICE") to the effect of the
foregoing and, upon receipt of such Suspension Notice, the Investor will refrain
from selling any Shares and Warrant Shares pursuant to the Registration
Statement (a "SUSPENSION") until the Investor'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 seek to cause the use of the
Prospectus so suspended to be resumed as soon as reasonably practicable after
the delivery of a Suspension Notice to the Investor. The Filing Deadline and the
Effectiveness Deadline shall be delayed for the duration of any Blackout Period.
(d) Notwithstanding the foregoing paragraphs of this
Section 7.2, the Investor shall not be prohibited from selling Shares or Warrant
Shares under the Registration Statement as a result of Suspensions on more than
two occasions of not more than 45 days each in any twelve month period, unless,
in the good faith judgment of the Company's Board of Directors, the sale of
Shares and Warrant Shares under the Registration Statement in reliance on this
paragraph 7.2(d) would be reasonably likely to cause a violation of the
Securities Act or the Exchange Act and result in liability to the Company.
(e) Provided that a Suspension is not then in effect,
the Investor may sell Shares and Warrant Shares under the Registration
Statement, provided that it arranges for delivery of a current Prospectus to the
transferee of such Shares or Warrant Shares. Upon receipt of a reasonable
request therefor, the Company has agreed to provide an adequate number of
current Prospectuses to the Investor and to supply copies to any other parties
requiring such Prospectuses.
7.3 Indemnification. For the purpose of this Section 7.3:
(i) the term "SELLING STOCKHOLDER" means the Investor and any
affiliate of such Investor;
(ii) the term "REGISTRATION STATEMENT" shall include the
Prospectus in the form first filed with the SEC pursuant to Rule 424(b) of the
Securities Act or filed as part of the Registration Statement at the time of
effectiveness if no
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Rule 424(b) filing is required, and any exhibit, supplement or amendment
included in or relating to the Registration Statement referred to in Section
7.1; and
(iii) the term "UNTRUE STATEMENT" means any untrue statement
of a material fact contained in the Registration Statement, or any omission to
state in the Registration Statement 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.
(a) The Company agrees to indemnify and hold harmless
each Selling Stockholder, its directors, officers, agents and employees (and
each person, if any, who controls the Selling Stockholder within the meaning of
Section 15 of the Securities Act, and each of the directors, officers, agents
and employees of such controlling persons), from and against any losses, claims,
damages or liabilities to which such Selling Stockholder may become subject
(under the Securities Act or otherwise) insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) are based upon (i)
any breach of the representations or warranties of the Company contained herein
or failure to comply with the covenants and agreements of the Company contained
herein, (ii) any Untrue Statement, or (iii) any failure by the Company to
fulfill any undertaking included in the Registration Statement as amended or
supplemented from time to time, and the Company will reimburse such Selling
Stockholder for any reasonable legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim, provided, however, that the Company shall not be liable in any such case
to the extent that such loss, claim, damage or liability arises out of, or is
based upon, an Untrue Statement made in reliance upon and in conformity with
information furnished to the Company by or on behalf of such Selling Stockholder
specifically for use in preparation of the Registration Statement, as amended or
supplemented from time to time (including, without limitation, information set
forth in the Investor Questionnaire), or information relating to such Investor
or such Investor's proposed method of distribution of the Shares or Warrant
Shares, or the failure of such Selling Stockholder to comply with its covenants
and agreements contained in Section 7.2 hereof respecting sale of the Shares or
Warrant Shares or any statement or omission in any Prospectus that is corrected
in any subsequent Prospectus that was delivered to the Selling Stockholder prior
to the pertinent sale or sales by the Selling Stockholder. The Company shall
reimburse each Selling Stockholder for the indemnifiable amounts provided for
herein on demand as such expenses are incurred.
(b) The Investor agrees to indemnify and hold
harmless the Company, its directors, officers, agents and employees (and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act, and each of the its directors, officers, agents and employees of
such controlling persons), from and against any losses, claims, damages or
liabilities to which the Company (or any such officer, director or controlling
person) may become subject (under the Securities Act or otherwise), insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) are based upon, (i) any breach of the representations or
warranties of the Investor contained herein or failure to comply with the
covenants and agreements of the Company contained herein, including without
limitation any failure to comply with the covenants and agreements contained in
Section 7.2 hereof respecting sale of the Shares and Warrant Shares, or (ii) any
Untrue Statement if such Untrue Statement was made in reliance upon and in
conformity with written information furnished by or on behalf of the Investor
specifically for use in preparation of the Registration Statement, as amended or
supplemented from time to time (including, without limitation, information set
forth in the Investor Questionnaire), or information relating to such Investor
or such Investor's proposed method of distribution of the Shares or Warrant
Shares, and the Investor will reimburse the Company (or such officer, director
or controlling person), as the case may be, for any legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim. The Investor shall reimburse the Company or such
officer, director or controlling person, as the case may be, for the
indemnifiable amounts provided for herein on demand as such expenses are
incurred. Notwithstanding the foregoing, the Investor's aggregate obligation to
indemnify the Company and such officers, directors and controlling persons shall
be limited to the net amount received by the Investor from the sale of the
Shares and Warrant Shares.
(c) Promptly after receipt by any indemnified person
of a notice of a claim or the beginning of any action in respect of which
indemnity is to be sought against an indemnifying person pursuant to this
Section 7.3, such indemnified person shall notify the indemnifying person in
writing of such claim or of the commencement of such action, but the omission to
so notify the indemnifying person will not relieve it from any liability which
it may have to any indemnified person under this Section 7.3 (except to the
extent that such omission shall have materially and adversely prejudiced the
indemnifying person). Subject to the provisions hereinafter stated, in case any
such action shall be brought against an indemnified person, the indemnifying
person shall be entitled to participate therein, and shall be entitled to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
person. After notice from the indemnifying person to such indemnified person of
its election to assume the defense thereof, such indemnifying person shall not
be liable to such indemnified person for any legal expenses subsequently
incurred by such indemnified person in connection with the defense thereof,
provided, however, that if there
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exists or shall exist a conflict of interest that would make it inappropriate,
in the opinion of counsel to the indemnified person, for the same counsel to
represent both the indemnified person and such indemnifying person or any
affiliate or associate thereof, the indemnified person shall be entitled to
retain its own counsel at the expense of such indemnifying person; provided,
however, that no indemnifying person shall be responsible for the fees and
expenses of more than one separate counsel (together with appropriate local
counsel) for all indemnified parties. In no event shall any indemnifying person
be liable in respect of any amounts paid in settlement of any action unless the
indemnifying person shall have approved the terms of such settlement; provided
that such consent shall not be unreasonably withheld or delayed. No indemnifying
person shall, without the prior written consent of the indemnified person,
effect any settlement of any pending or threatened proceeding in respect of
which any indemnified person is a party and indemnification could have been
sought hereunder by such indemnified person, unless such settlement includes an
unconditional release of such indemnified person from all liability on claims
that are the subject matter of such proceeding.
(d) If the indemnification provided for in this
Section 7.3 is unavailable to or insufficient to hold harmless an indemnified
person under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying person shall contribute to the amount paid or
payable by such indemnified person as a result of such losses, claims, damages
or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and the
Investor, as well as any other Selling Stockholders under such Registration
Statement on the other, in connection with the statements or omissions or other
matters which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, in the case of an Untrue Statement, whether the Untrue Statement
relates to information supplied by the Company on the one hand or an Investor or
other Selling Stockholder on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
Untrue Statement. The Company and the Investor agree that it would not be just
and equitable if contribution pursuant to this subsection (d) were determined by
pro rata allocation (even if the Investor and other Selling Stockholders were
treated as one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations referred to above
in this subsection (d). Notwithstanding the provisions of this subsection (d),
the Investor shall not be required to contribute any amount in excess of the
amount received by the Investor from the sale of the Shares and Warrant Shares
to which such loss relates. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Investor's obligations in this subsection to contribute
shall be several and not joint with any other Selling Stockholders.
(e) The parties to this Agreement hereby acknowledge
that they are sophisticated business persons who were represented by counsel
during the negotiations regarding the provisions hereof including, without
limitation, the provisions of this Section 7.3, and are fully informed regarding
said provisions. They further acknowledge that the provisions of this Section
7.3 fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement as required by the Securities
Act and the Exchange Act. The parties are advised that federal or state public
policy as interpreted by the courts in certain jurisdictions may be contrary to
certain of the provisions of this Section 7.3, and the parties hereto hereby
expressly waive and relinquish any right or ability to assert such public policy
as a defense to a claim under this Section 7.3 and further agree not to attempt
to assert any such defense.
7.4 Termination of Conditions and Obligations. The conditions
precedent imposed by Section 5 or this Section 7 upon the transferability of the
Shares and Warrant Shares shall cease and terminate as to any particular number
of the Shares or Warrant Shares when such shares shall have been effectively
registered under the Securities Act and sold or otherwise disposed of in
accordance with the intended method of disposition set forth in the Registration
Statement covering such shares or at such time as an opinion of counsel
reasonably satisfactory to the Company shall have been rendered to the effect
that such conditions are not necessary in order to comply with the Securities
Act.
7.5 Information Available. So long as the Registration
Statement is effective covering the resale of Shares and Warrant Shares owned by
the Investor, the Company will furnish to the Investor upon reasonable request
from the Investor:
(a) as soon as practicable after it is available, one
copy of (i) any Annual Report to Stockholders (which Annual Report shall contain
financial statements audited in accordance with generally accepted accounting
principles by a firm of certified public accountants that is independent and in
good standing), (ii) its Annual Report on Form 10-K and (iii) its Quarterly
Reports on Form 10-Q (the foregoing, in each case, excluding exhibits);
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(b) all exhibits excluded by the parenthetical to
subparagraph (a) of this Section 7.5 as filed with the SEC and all other
information that is made available to shareholders; and
(c) a reasonably adequate number of copies of the
Prospectuses to supply to any other party requiring such Prospectuses; and upon
the reasonable request of the Investor, the President or the Chief Financial
Officer of the Company (or an appropriate designee thereof) will meet with the
Investor or a representative thereof at the Company's headquarters to discuss
all information relevant for disclosure in the Registration Statement covering
the Shares and Warrant Shares and will otherwise cooperate with any Investor
conducting an investigation for the purpose of reducing or eliminating such
Investor's exposure to liability under the Securities Act, including the
reasonable production of information at the Company's headquarters; provided,
that the Company shall not be required to disclose any confidential information
to or meet at its headquarters with any Investor until and unless the Investor
shall have entered into a confidentiality agreement in form and substance
reasonably satisfactory to the Company with the Company with respect thereto.
7.6. Legend; Restrictions on Transfer. The certificate or
certificates for the Shares and Warrant Shares (and any securities issued in
respect of or exchange for the Shares or Warrant Shares) shall be subject to a
legend or legends restricting transfer under the Securities Act and referring to
restrictions on transfer herein, such legend to be substantially as follows:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY FOREIGN
JURISDICTION AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, UNLESS AND UNTIL REGISTERED UNDER THE ACT AND
APPLICABLE STATE AND FOREIGN SECURITIES LAWS OR, IN THE
OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH
LAWS.
7.7. Liquidated Damages. The Company and Investor agree that
Investor will suffer damages if the Company fails to fulfill its obligations
pursuant to Section 7.1 and 7.2 hereof and that it would not be possible to
ascertain the extent of such damages with precision. Accordingly, the Company
hereby agrees to pay liquidated damages ("LIQUIDATED DAMAGES") to Investor if
the Registration Statement is not declared effective by the SEC on or prior to
120 days after the Initial Closing Date (such an event, a "REGISTRATION
DEFAULT"). In the event of a Registration Default, the Company shall as
Liquidated Damages pay to Investor, for each 30-day period of a Registration
Default, an amount in cash equal to 1% of the aggregate purchase price paid by
Investor for the Shares and Warrant pursuant to this Agreement; provided that in
no event shall the aggregate amount of cash to be paid as Liquidated Damages
pursuant to this Section 7.7 exceed 100% of the aggregate purchase price paid by
Investor for the Shares and Warrant. The Company shall pay the Liquidated
Damages in connection with a Registration Default on the 135th day after the
Initial Closing Date, and each 30th day thereafter until the Registration
Statement is declared effective by the SEC. Notwithstanding the foregoing, all
periods shall be tolled during delays directly caused by the action or inaction
of any Investor, and the Company shall have no liability to any Investor in
respect of any such delay. The Liquidated Damages payable herein shall apply on
a pro rata basis for any portion of a 30-day period of a Registration Default.
8. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within the United States
by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile, or (B) if delivered
from outside the United States, by International Federal Express (or other
recognized international express courier) or facsimile, and shall be deemed
given (i) if delivered by first-class registered or certified mail, three
business days after so mailed, (ii) if delivered by nationally recognized
overnight carrier, one business day after so mailed, (iii) if delivered by
International Federal Express (or other recognized international express
courier), two business days after so mailed, (iv) if delivered by facsimile,
upon electronic confirmation of receipt and shall be delivered as addressed as
follows:
(a) if to the Company, to:
Acusphere, Inc.
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▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Chief Financial Officer
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Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) with a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
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Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to the Investor, at its address on the signature
page hereto, or at such other address or addresses as
may have been furnished to the Company in writing.
9. Changes. This Agreement may be modified, amended or waived only
pursuant to a written instrument signed by the Company and (a) Investors holding
a majority of the Shares issued and sold in the Offering, provided that such
modification, amendment or waiver is made with respect to all Agreements and
does not adversely affect the Investor without adversely affecting all Investors
in a similar manner; or (b) the Investor.
10. Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.
11. Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
12. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of Delaware, without giving
effect to the principles of conflicts of law.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
14. Entire Agreement. This Agreement and the Warrants constitute the
entire agreement between the parties hereto and supersedes any prior
understandings or agreements concerning the purchase and sale of the Shares and
the Warrants and the resale registration of the Shares and Warrant Shares.
15. Rule 144. As long as any Investor holds Shares or Warrant Shares,
the Company covenants that it will timely 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 (or, if the Company is not required to
file such reports, it will, upon the request of any Investor holding Shares
purchased hereunder or Warrant Shares purchased under the Warrants made after
the first anniversary of the Initial Closing Date, make publicly available such
information as necessary to permit sales pursuant to Rule 144 under the
Securities Act), and it will take such further action as any such Investor may
reasonably request, all to the extent required from time to time to enable such
Investor to sell such Shares and Warrant 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. Upon the request of
the Investor, the Company will deliver to such holder a written statement as to
whether it has complied with such information and requirements.
16. Confidential Information.
(a) The Investor represents to the Company that, at all times
during the Company's offering of the Shares and the Warrants, the Investor
maintained in confidence all non-public information regarding the Company
received by the Investor from the Company or its agents, including without
limitation the existence of the transactions contemplated herein, and covenants
that it
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will continue to maintain in confidence such information until such information
(a) becomes generally publicly available other than through a violation of this
provision by the Investor or its agents or (b) is required to be disclosed in
legal proceedings (such as by deposition, interrogatory, request for documents,
subpoena, civil investigation demand, filing with any governmental authority or
similar process), provided, however, that before making any use or disclosure in
reliance on this subparagraph (b) the Investor shall give the Company at least
fifteen (15) days prior written notice (or such shorter period as required by
law) specifying the circumstances giving rise thereto and will furnish only that
portion of the non-public information which is legally required and will
exercise its best efforts to obtain reliable assurance that confidential
treatment will be accorded any non-public information so furnished.
(b) The Company shall on the Initial Closing Date issue a
press release disclosing the material terms of the transactions contemplated
hereby (including at least the number of Shares and Warrants sold at the Initial
Closing and proceeds therefrom and the number of Shares and Warrants proposed to
be sold at the Subsequent Closing and potential proceeds therefrom).
17. Placement Agent. The Investor acknowledges and agrees that the
Company has retained ▇▇ ▇▇▇▇▇ & Co., LLC to serve as placement agent (the
"PLACEMENT AGENT") in connection with the transactions contemplated hereby, in
connection with which the Placement Agent will receive a cash fee which shall be
determined with reference to the gross proceeds raised in connection with this
financing.
18. No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
19. Expenses. The parties shall pay their own legal and other expenses
in connection with the preparation, negotiation and execution of the Agreements
and the consummation of the transactions contemplated herein.
20. Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
any other party to better evidence and reflect the transactions described herein
and contemplated hereby and to carry into effect the intents and purposes of
this Agreement.
21. Required Corporate Action. The Company shall take all action
required under the Delaware General Corporation Law and the Company's
certificate of incorporation, as amended, and its By-laws to convene a meeting
of the stockholders of the Company to consider and obtain the Required
Stockholder Approval. The Company shall promptly (but in any event, no later
than September 30, 2004) prepare and file a preliminary proxy statement with the
SEC to solicit the consents of the Company's stockholders necessary to obtain
the Required Stockholder Approval. The Company shall use its commercially
reasonable efforts to hold the meeting of the stockholders to obtain the
Required Stockholder Approval as promptly as practicable following the filing of
such proxy with the SEC. If, at any time or from time to time, any other action
is required to fully implement the transactions contemplated by this Agreement
(including the actions necessary to obtain the Required Stockholder Approval
such as providing information about such Purchaser as is required in a
definitive proxy statement), each Purchaser shall take such action.
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INVESTORS
Quaker Capital Partners I, L.P.
Quaker Capital Partners II, L.P.
Kings Road Investments Ltd.
SF Capital Partners Ltd.
Bay Resource Partners, L.P.
ADAR Investment Fund Ltd.
Capital Ventures International
Portside Growth and Opportunity Fund
Atlas Equity I, Ltd.
Sunrise Equity Partners, L.P.
Bluegrass Growth Fund LP
Bluegrass Growth Fund, Ltd.
MFN LLC
Smithfield Fiduciary LLC
Ursus Capital, L.P.
Ursus Offshore Ltd.
Wasatch Funds, Inc. for Wasatch Global Science & Technology Fund
Wasatch Funds, Inc. for Wasatch Micro Cap Value Fund
Delta Opportunity Fund, Ltd.
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ACUSPHERE, INC.
INVESTOR QUESTIONNAIRE
(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)
To: Acusphere, Inc.
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This Investor Questionnaire ("QUESTIONNAIRE") must be completed by each
potential investor in connection with the offer and sale of the shares of the
common stock, par value $0.01 per share (the "COMMON STOCK"), of Acusphere,
Inc., together with warrants to purchase shares of Common Stock (collectively,
the "SECURITIES"). The Securities are being offered and sold by Acusphere, Inc.
(the "CORPORATION") without registration under the Securities Act of 1933, as
amended (the "ACT"), and the securities laws of certain states, in reliance on
the exemptions contained in Section 4(2) of the Act and on Regulation D
promulgated thereunder and in reliance on similar exemptions under applicable
state laws. The Corporation must determine that a potential investor meets
certain suitability requirements before offering or selling Securities to such
investor. The purpose of this Questionnaire is to assure the Corporation that
each investor will meet the applicable suitability requirements. The information
supplied by you will be used in determining whether you meet such criteria, and
reliance upon the private offering exemption from registration is based in part
on the information herein supplied.
This Questionnaire does not constitute an offer to sell or a
solicitation of an offer to buy any security. Your answers will be kept strictly
confidential. However, by signing this Questionnaire you will be authorizing the
Corporation to provide a completed copy of this Questionnaire to such parties as
the Corporation deems appropriate in order to ensure that the offer and sale of
the Securities will not result in a violation of the Act or the securities laws
of any state and that you otherwise satisfy the suitability standards applicable
to purchasers of the Securities. All potential investors must answer all
applicable questions and complete, date and sign this Questionnaire. Please
print or type your responses and attach additional sheets of paper if necessary
to complete your answers to any item.
A. BACKGROUND INFORMATION
Name:___________________________________________________________________________
Business Address:_______________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Telephone Number: (___)_________________________________________________________
Residence Address:______________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Telephone Number: (___)_________________________________________________________
If an individual:
Age:_________ Citizenship:___________ Where registered to vote:__________
If a corporation, partnership, limited liability company, trust or other entity:
Type of entity:____________________________________________________________
State of formation:__________________ Date of formation:__________________
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Social Security or Taxpayer Identification No.__________________________________
Send all correspondence to (check one):___Residence Address____ Business Address
Current ownership of securities of the Corporation:
__________ shares of common stock, par value $0.01 per share (the
"Common Stock") options to purchase __________ shares of Common Stock
B. STATUS AS ACCREDITED INVESTOR
The undersigned is an "accredited investor" as such term is defined in
Regulation D under the Act, as at the time of the sale of the Securities the
undersigned falls within one or more of the following categories (Please initial
one or more, as applicable):(1)
____ (1) a bank as defined in Section 3(a)(2) of the Act, or a savings
and loan association or other institution as defined in Section 3(a)(5)(A) of
the Act whether acting in its individual or fiduciary capacity; a broker or
dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934;
an insurance company as defined in Section 2(13) of the Act; an investment
company registered under the Investment Corporation Act of 1940 or a business
development company as defined in Section 2(a)(48) of that Act; a Small Business
Investment Corporation licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan
established and maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions for the benefit of
its employees, if such plan has total assets in excess of $5,000,000; an
employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with the investment decisions made solely by persons that
are accredited investors;
____ (2) a private business development company as defined in Section
202(a)(22) of the Investment Adviser Act of 1940;
____ (3) an organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring the
Securities offered, with total assets in excess of $5,000,000;
____ (4) a natural person whose individual net worth(1), or joint net
worth(1) with that person's spouse, at the time of such person's purchase of the
Securities exceeds $1,000,000;
____ (5) a natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
____ (6) a trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the Securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) of
Regulation D; and
____ (7) an entity in which all of the equity owners are accredited
investors (as defined above).
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(1) As used in this Questionnaire, the term "net worth" means the
excess of total assets over total liabilities. In computing net worth for the
purpose of subsection (4), the principal residence of the investor must be
valued at cost, including cost of improvements, or at recently appraised value
by an institutional lender making a secured loan, net of encumbrances. In
determining income, the investor should add to the investor's adjusted gross
income any amounts attributable to tax exempt income received, losses claimed as
a limited partner in any limited partnership, deductions claimed for depiction,
contributions to an ▇▇▇ or ▇▇▇▇▇ retirement plan, alimony payments, and any
amount by which income from long-term capital gains has been reduced in arriving
at adjusted gross income.
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C. REPRESENTATIONS
The undersigned hereby represents and warrants to the Corporation as
follows:
1. Any purchase of the Securities would be solely for the account of the
undersigned and not for the account of any other person or with a view
to any resale, fractionalization, division, or distribution thereof.
2. The information contained herein is complete and accurate and may be
relied upon by the Corporation, and the undersigned will notify the
Corporation immediately of any material change in any of such
information occurring prior to the closing, if any, with respect to the
purchase of Securities by the undersigned or any co-purchaser.
3. There are no suits, pending litigation, or claims against the
undersigned that could materially affect the net worth of the
undersigned as reported in this Questionnaire.
4. The undersigned acknowledges that there may occasionally be times when
the Corporation determines that it must suspend the use of the
Prospectus forming a part of the Registration Statement (as such terms
are defined in the Stock and Warrant Purchase Agreement to which this
Questionnaire is attached), as set forth in Section 7.2(c) of the Stock
and Warrant Purchase Agreement. The undersigned is aware that, in such
event, the Securities will not be subject to ready liquidation, and
that any Securities purchased by the undersigned would have to be held
during such suspension. The overall commitment of the undersigned to
investments which are not readily marketable is not excessive in view
of the undersigned's net worth and financial circumstances, and any
purchase of the Securities will not cause such commitment to become
excessive. The undersigned is able to bear the economic risk of an
investment in the Securities.
5. The undersigned has carefully considered the potential risks relating
to the Corporation and a purchase of the Securities, and fully
understands that the Securities are speculative investments which
involve a high degree of risk of loss of the undersigned's entire
investment. Among others, the undersigned has carefully considered each
of the risks identified in the Exchange Act Documents.
6. The undersigned is aware of is obligations under applicable federal and
state securities laws with respect to the use and disclosure of
non-public information regarding the Company. The undersigned agrees to
maintain in confidence all information that the Company advised the
undersigned to be material non-public information in connection with
its decision to purchase the Securities from the Company and to the
extent it is in possession of such information to not to trade in
securities of the Company until such information is publicly disclosed.
7. The undersigned (i) has a pre-existing relationship with either (a) the
Company or any of its officers, directors or controlling persons or (b)
the Placement Agent and (ii) by reason of the undersigned's business or
financial experience of the undersigned's professional advisors who are
unaffiliated with and who are not compensated by the Company or the
Placement Agent or any affiliate of them, directly or indirectly, can
be reasonably assumed to have the capacity to protect the undersigned's
interests in connection with an investment in the Securities.
8. The Securities to be acquired by the undersigned will be acquired for
investment for the undersigned's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part
thereof, and such investor has no present intention of selling,
granting any participation in, or otherwise distributing the same. Such
investor does not have any contract, undertaking, agreement, or
arrangement with any person to sell, transfer, or grant participation
to any person with respect to any of the Securities.
9. The undersigned understands that the Securities that it is acquiring
are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired in a transaction
not involving a public offering, and that under such laws and
applicable regulations such securities may be resold without
registration under the Act, only in certain limited circumstances. In
this connection, the undersigned represents that it is familiar with
SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
10. It us understood that the certificates evidencing the Common Stock
shall bear a legend, reading substantially as follows:
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"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR THE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY FOREIGN JURISDICTION AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED
UNDER THE ACT AND APPLICABLE STATE AND FOREIGN SECURITIES LAWS OR, IN
THE OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS."
IN WITNESS WHEREOF, the undersigned has executed this
Questionnaire this _____ day of _____, 2004, and declares under oath
that it is truthful and correct.
________________________________________
Print Name
By:_____________________________________
Signature
Title:__________________________________
(required for any purchaser that
is a corporation, partnership,
trust or other entity)
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Acusphere, Inc.
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_________, 200_
Re: Acusphere, Inc.; Registration Statement on Form S-3
Dear Selling Stockholder:
Enclosed please find five (5) copies of a prospectus dated
______________, ____ (the "Prospectus") for your use in reselling your shares of
common stock, $0.01 par value (the "Shares"), of Acusphere, Inc. (the
"Company"), under the Company's Registration Statement on Form S-3 (Registration
No. 333- ) (the "Registration Statement"), which has been declared effective
by the Securities and Exchange Commission. AS A SELLING SHAREHOLDER UNDER THE
REGISTRATION STATEMENT, YOU HAVE AN OBLIGATION TO DELIVER A COPY OF THE
PROSPECTUS TO EACH PURCHASER OF YOUR SHARES, EITHER DIRECTLY OR THROUGH THE
BROKER-DEALER WHO EXECUTES THE SALE OF YOUR SHARES.
The Company is obligated to notify you in the event that it suspends
trading under the Registration Statement in accordance with the terms of the
Stock and Warrant Purchase Agreement between the Company and you. During the
period that the Registration Statement remains effective and trading thereunder
has not been suspended, you will be permitted to sell your Shares which are
included in the Prospectus under the Registration Statement. Upon a sale of any
Shares under the Registration Statement, you or your broker will be required to
deliver to the Transfer Agent, American Stock Transfer and Trust Company, (1)
your restricted stock certificate(s) representing the Shares, and (2)
instructions for transfer of the Shares sold.
Please note that you are under no obligation to sell your Shares during
the registration period. However, if you do decide to sell, you must comply with
the requirements described in this letter or otherwise applicable to such sale.
Your failure to do so may result in liability under the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended. Please remember
that all sales of your Shares must be carried out in the manner set forth under
the caption "Plan of Distribution" in the Prospectus if you sell under the
Registration Statement. The Company may require an opinion of counsel reasonably
satisfactory to the Company if you choose another method of sale. YOU SHOULD
CONSULT WITH YOUR OWN LEGAL ADVISOR(S) ON AN ONGOING BASIS TO ENSURE YOUR
COMPLIANCE WITH THE RELEVANT SECURITIES LAWS AND REGULATIONS.
IN ORDER TO MAINTAIN THE ACCURACY OF THE PROSPECTUS, YOU MUST NOTIFY
THE UNDERSIGNED UPON THE SALE, GIFT, OR OTHER TRANSFER OF ANY SHARES BY YOU,
INCLUDING THE NUMBER OF SHARES BEING TRANSFERRED, AND IN THE EVENT OF ANY OTHER
CHANGE IN THE INFORMATION REGARDING YOU WHICH IS CONTAINED IN THE PROSPECTUS.
FOR EXAMPLE, YOU MUST NOTIFY THE UNDERSIGNED IF YOU ENTER INTO ANY ARRANGEMENT
WITH A BROKER-DEALER FOR THE SALE OF SHARES THROUGH A BLOCK TRADE, SPECIAL
OFFERING, EXCHANGE DISTRIBUTION OR SECONDARY DISTRIBUTION OR A PURCHASE BY A
BROKER-DEALER. DEPENDING ON THE CIRCUMSTANCES, SUCH TRANSACTIONS MAY REQUIRE THE
FILING OF A SUPPLEMENT TO THE PROSPECTUS IN ORDER TO UPDATE THE INFORMATION SET
FORTH UNDER THE CAPTION "PLAN OF DISTRIBUTION" IN THE PROSPECTUS.
Should you need any additional copies of the Prospectus, or if you have
any questions concerning the foregoing, please write to me at Acusphere, Inc.,
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Sincerely,
Exhibit A