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Exhibit 4.2
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ARADIGM CORPORATION
COMMON STOCK PURCHASE AGREEMENT
January 27, 1999
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TABLE OF CONTENTS
PAGE
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Section 1 Authorization and Sale of Common Stock........................ 1
1.1 Authorization ................................................ 1
1.2 Sale of Common ............................................... 1
Section 2 Closing Date; Delivery ....................................... 1
2.1 Closing Date ................................................. 1
2.2 Delivery ..................................................... 1
Section 3 Representations and Warranties of the Company ................ 2
3.1 Organization and Standing .................................... 2
3.2 Corporate Power; Authorization ............................... 2
3.3 Issuance and Delivery of the Shares .......................... 2
3.4 SEC Documents; Financial Statements .......................... 2
3.5 Governmental Consents ........................................ 3
3.6 No Material Adverse Change ................................... 3
3.7 Authorized Capital Stock ..................................... 3
3.8 Litigation ................................................... 3
Section 4 Representations; Warranties and Covenants of the Purchasers .. 3
4.1 Authorization ................................................ 4
4.2 Investment Experience ........................................ 4
4.3 Investment Intent ............................................ 4
4.4 Registration or Exemption Requirements ....................... 4
4.5 Restriction on Short Sales ................................... 4
4.6 No Legal, Tax or Investment Advice ........................... 5
Section 5 Conditions to Closing Obligations of Purchasers .............. 5
5.1 Registration Statement ....................................... 5
Section 6 Conditions to Closing Obligations of Company ................. 5
6.1 Representations and Warranties ............................... 5
6.2 Covenants .................................................... 5
6.3 Blue Sky ..................................................... 5
Section 7 Covenants of the Company ..................................... 6
7.1 Definitions .................................................. 6
7.2 Registration Procedures and Expenses ......................... 6
7.3 Indemnification .............................................. 7
7.4 Prospectus Delivery .......................................... 9
7.5 Termination of Obligations ................................... 9
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TABLE OF CONTENTS
(continued)
PAGE
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7.6 Reporting Requirements ....................................... 9
Section 8 Restrictions on Transferability of Shares:
Compliance with Securities Act ............................... 10
8.1 Restrictions on Transferability .............................. 10
8.2 Instruction Sheet ............................................ 10
8.3 Transfer of Shares After Registration ........................ 10
8.4 Purchaser Information ........................................ 10
Section 9 Miscellaneous ................................................ 10
9.1 Waivers and Amendments ....................................... 10
9.2 Broker's Fee ................................................. 11
9.3 Governing Law ................................................ 11
9.4 Survival ..................................................... 11
9.5 Successors and Assigns ....................................... 11
9.6 Entire Agreement ............................................. 11
9.7 Notices, etc. ................................................ 11
9.8 Severability of this Agreement ............................... 11
9.9 Counterparts ................................................. 12
9.10 Further Assurances ........................................... 12
9.11 Termination .................................................. 12
9.12 Expenses ..................................................... 12
9.13 Currency ..................................................... 12
Exhibit A -- Schedule of Purchasers
Exhibit B -- Form of Purchaser's Questionnaire
Exhibit C -- Instruction Sheet
Exhibit D -- Form of Purchaser's Certificate of Subsequent Sale
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ARADIGM CORPORATION
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") is made as of
January 27, 1999, by and among Aradigm Corporation, a California corporation
(the "Company") with its principal office at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the persons listed on the Schedule of Investors attached
hereto as Exhibit A (the "Purchasers").
Section 1
Authorization and Sale of Common Stock
1.1 Authorization. The Company has authorized the sale and issuance of
up to 2,428,338 shares of its Common Stock pursuant to this Agreement (the
"Shares").
1.2 Sale of Common. Subject to the terms and conditions of this
Agreement, the Company agrees to issue and sell to each Purchaser and each
Purchaser severally agrees to purchase from the Company the number of Shares set
forth opposite each Purchaser's name on Exhibit A for $10.50 per share.
Section 2
Closing Date; Delivery
2.1 Closing Date. The closing of the purchase and sale of the Shares
hereunder (the "Closing") shall be held at the officers of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, Two Embarcadero Place, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ at
the time the Registration Statement (as defined below) registering the resale of
the Shares by the Purchasers is declared effective by the Securities and
Exchange Commission (the "SEC") or at such other time and place upon which the
Company and the Purchasers purchasing the majority of the Shares shall agree.
The date of the Closing is hereinafter referred to as the "Closing Date".
2.2 Delivery. At the Closing, the Company will deliver to each
Purchaser a certificate, registered in the Purchaser's name as shown on Exhibit
A, representing the number of Shares to be purchased by the Purchaser. Such
delivery shall be against payment of the purchase price therefor by wire
transfer to an escrow account established by ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. and Perkevich &
Partners, LLC (collectively, the "Placement Agents") in the amount set forth on
Exhibit A.
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Section 3
Representations and Warranties of the Company
The Company represents and warrants to the Purchasers as of the Closing
Date as follows:
3.1 Organization and Standing. The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of the State
of California and is in good standing as a domestic corporation under the laws
of said state.
3.2 Corporate Power; Authorization. The Company has all requisite legal
and corporate power and has taken all requisite corporate action to execute and
deliver this Agreement, to sell and issue the Shares and to carry out and
perform all of its obligations under this Agreement. This Agreement constitutes
the legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting the
enforcement of creditors' rights generally and (ii) as limited by equitable
principles generally. The execution and delivery of this Agreement does not,
and the performance of this Agreement and the compliance with the provisions
hereof and the issuance, sale and delivery of the Shares by the Company will not
materially conflict with, or result in a material breach or violation of the
terms, conditions or provisions of, or constitute a material default under, or
result in the creation or imposition of any material lien pursuant to the terms
of, the Certificate of Incorporation or Bylaws of the Company or any statute,
law, rule or regulation or any state or federal order, judgment or decree or
any indenture, mortgage, lease or other material agreement or instrument to
which the Company or any of its properties is subject.
3.3 Issuance and Delivery of the Shares. The Shares, when issued in
compliance with the provisions of this Agreement, will be validly issued, fully
paid and nonassessable. The issuance and delivery of the Shares is not subject
to preemptive or any other similar rights of the stockholders of the Company or
any liens or encumbrances.
3.4 SEC Documents; Financial Statements. Each report or proxy statement
delivered to the Purchasers is a true and complete copy of such documents as
filed by the Company with the Securities and Exchange Commission (the "SEC").
The Company has filed in a timely manner all documents that the Company was
required to file with the SEC under Sections 13, 14(a) and 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), during the
twelve (12) months preceding the date of this Agreement. As of their respective
filing dates, all documents filed by the Company with the SEC (the "SEC
Documents") complied in all material respects with the requirements of the
Exchange Act or the Securities Act of 1933, as amended (the "Securities Act"),
as applicable. None of the SEC Documents as of their respective dates contained
any untrue statement of material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Documents (the
"Financial Statements") comply as to form in all material respects with
applicable
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accounting requirements and with the published rules and regulations of the SEC
with respect thereto. The Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied and fairly
present the consolidated financial position of the Company and any subsidiaries
at the dates thereof and the consolidated results of their operations and
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal, recurring adjustments).
3.5 Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with,
any federal, state, or local governmental authority on the part of the Company
is required in connection with the consummation of the transactions
contemplated by this Agreement except for (a) compliance with the securities
and blue sky laws in the states in which Shares are offered and/or sold, which
compliance will be effected in accordance with such laws, (b) the filing of
Form S-3 and all amendments thereto with the SEC as contemplated by Section 7.2
of this Agreement and (c) the filing of the Nasdaq National Market Notification
Form with the Nasdaq National Market and Form 10-C with the SEC.
3.6 No Material Adverse Change. Except as otherwise disclosed herein,
since September 30, 1998, there have not been any changes in the assets,
liabilities, financial condition, business prospects or operations of the
Company from that reflected in the Financial Statements except changes in the
ordinary course of business which have not been, either individually or in the
aggregate, materially adverse.
3.7 Authorized Capital Stock. The authorized capital stock of the Company
consists of (i) 40,000,000 shares of Common Stock, no par value, of which, as
of September 30, 1998, 12,150,867 shares were outstanding, and (ii) 5,000,000
shares of Preferred Stock, no par value, none of which shares are currently
outstanding.
3.8 Litigation. Except as disclosed in the SEC Documents, there are no
actions, suits proceedings or investigations pending or, to the best of the
Company's knowledge, threatened against the Company or any of its properties
before or by any court or arbitrator or any governmental body, agency or
official in which there is a reasonable likelihood (in the judgment of the
Company) of an adverse decision that (a) could have a material adverse effect
on the Company's properties or assets or the business of the Company as
presently conducted or proposed to be conducted or (b) could impair the ability
of the Company to perform in any material respect its obligations under this
Agreement.
Section 4
Representations, Warranties and Covenants of the Purchasers
Each Purchaser hereby severally represents and warrants to the Company,
effective as of the Closing Date, as follows:
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4.1 Authorization. Purchaser represents and warrants to the Company
that: (i) Purchaser has all requisite legal and corporate or other power and
capacity and has taken all requisite corporate or other action to execute and
deliver this Agreement, to purchase the Shares to be purchased by it and to
carry out and perform all of its obligations under this Agreement; and (ii) this
Agreement constitutes the legal, valid and binding obligation of the Purchaser,
enforceable in accordance with its terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, or similar laws relating to or affecting
the enforcement of creditors' rights generally and (b) as limited by equitable
principles generally.
4.2 Investment Experience. Purchaser is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. Purchaser is aware of the
Company's business affairs and financial condition and has had access to and has
acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the Shares. Purchaser has such business and
financial experience as is required to give it the capacity to protect its own
interests in connection with the purchase of the Shares.
4.3 Investment Intent. Purchaser is purchasing the Shares for its own
account as principal, for investment purposes only, and not with a present view
to, or for, resale, distribution or fractionalization thereof, in whole or in
part, within the meaning of the Securities Act. Purchaser understands that its
acquisition of the Shares 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 Purchaser's investment intent as expressed herein. Purchaser
has completed or caused to be completed the Purchaser Questionnaire attached
hereto as Exhibit B for use in preparation of the Registration Statement (as
defined below), and the responses provided therein shall be true and correct as
of the Closing Date and will be true and correct as of the effective date of the
Registration Statement. Purchaser has, in connection with its decision to
purchase the number of shares set forth in Exhibit A relied solely upon the SEC
Documents and the representations and warranties of the Company contained
herein. Purchaser 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 except in compliance
with the Securities Act, and the rules and regulations promulgated thereunder.
4.4 Registration or Exemption Requirements. Purchaser further
acknowledges and understands that the Shares may not be resold or otherwise
transferred except in a transaction registered under the Securities Act or
unless an exemption from such registration is available.
4.5 Restriction on Short Sales. Purchaser represents and warrants to
and covenants with the Company that Purchaser has not engaged and will not
engage in any short sales of the Company's Common Stock prior to the
effectiveness of the Registration Statement, except to the extent that any such
short sale is fully covered by shares of Common Stock of the Company other than
the Shares.
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4.6 No Legal, Tax or Investment Advice. Purchaser understands that
nothing in this Agreement or any other materials presented to Purchaser in
connection with the purchase and sale of the Shares constitutes legal, tax or
investment advice. Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Shares.
Section 5
Conditions to Closing Obligations of Purchasers
Each Purchaser's obligation to purchase the Shares at the Closing is,
at the option of such Purchaser, subject to the fulfillment or waiver as of the
Closing Date of the following conditions:
5.1 Registration Statement. The Registration Statement (as defined
below) registering the resale of the Shares by the Purchasers shall have been
filed with and declared effective by the SEC. In the event that the
Registration Statement is not declared effective by the SEC within ninety (90)
days from the date of filing, this Agreement, and all obligations of all
parties hereto, shall terminate.
Section 6
Conditions to Closing Obligations of Company
The Company's obligation to sell and issue the Shares at the Closing
is, at the option of the Company, subject to the fulfillment or waiver of the
following conditions:
6.1 Representations and Warranties. The representations made by the
Purchasers in Section 4 hereof shall be true and correct in all material
respects when made, and shall be true and correct in all material respects on
the Closing Date with the same force and effect as if they had been made on and
as of such date.
6.2 Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Purchasers on or prior to the Closing
Date shall have been performed or complied with in all material respects.
6.3 Blue Sky. The Company shall have obtained and maintained all
necessary blue sky law permits and qualifications, or secured exemptions
therefrom, required by any state for the offer and sale of the Shares.
5.
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Section 7
Covenants of the Company
7.1 Definitions. For the purpose of this Section 7:
(a) the term "Registration Statement" shall mean any registration
statement required to be filed by Section 7.2 below, and shall include any
preliminary prospectus, final prospectus, exhibit or amendment included in or
relating to such registration statement; and
(b) the term "untrue statement" shall include any untrue statement or
alleged untrue statement, or any omission or alleged omission to state in the
Registration Statement 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
(c) the term "Registrable Shares" shall mean the shares of Common Stock
issued pursuant to this Agreement.
7.2 Registration Procedures and Expenses. The Company shall:
(a) use its best efforts to file a registration statement with the SEC
within ten (10) business days following the date of this Agreement to register
the Registrable Shares on Form S-3 under the Securities Act (providing for
shelf registration of the Common Stock under SEC Rule 415) or on such other
form which is appropriate to register all of the Registrable Shares for resale
from time to time by the Purchasers;
(b) use its best efforts, subject to receipt of necessary information from
the Purchasers, to cause such Registration Statement to become effective as
promptly after filing as practicable;
(c) prepare and file with the SEC such amendment and supplements to such
Registration Statement and the prospectus used in connection therewith as may
be necessary to keep such Registration Statement effective until termination of
such obligation as provided in Section 7.5 below, subject to the Company's
right to suspend pursuant to Section 7.4;
(d) furnish to each Purchaser (and to each underwriter, if any, of such
Common Stock) such number of copies of prospectuses in conformity with the
requirements of the Securities Act and such other documents as the Purchasers
may reasonably request, in order to facilitate the public sale or other
disposition of all or any of the Registrable Shares by the Purchasers;
(e) file such documents as may be required of the Company for normal
securities law clearance for the resale of the Registrable Shares in such
states of the United States as may be reasonably requested by each Purchaser;
provided, however, that the Company shall not be required
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in connection with this paragraph (e) to qualify as a foreign corporation or
execute a general consent to service of process in any jurisdiction;
(f) advise each Purchaser promptly:
(i) of any request by the SEC for amendments to the Registration
Statement or amendments to the prospectus or for additional information
relating thereto;
(ii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement under the Securities Act or of the
suspension by any state securities commission of the qualification of the
Registrable Shares for offering or sale in any jurisdiction, or the initiation
of any proceeding for any preceding purposes; and
(iii) of the existence of any fact and the happening of any event
that makes any statement of a material fact made in the Registration Statement,
the prospectus and amendment or supplement thereto, or any document
incorporated by reference therein, untrue, or that requires the making of any
additions to or changes in the Registration Statement or the prospectus in
order to make the statements therein not misleading;
(g) in connection with the filing of any document that is to be
incorporated by reference into the Registration Statement or the prospectus
(after the initial filing of the Registration Statement):
(i) use its best efforts to provide copies of such document to the
Purchasers concurrently with such filing; and
(ii) make a Company representative available for discussion of such
document;
(h) use its best efforts to cause all Registrable Shares to be listed on
each securities exchange, if any, on which equity securities by the Company are
then listed; and
(i) bear all expenses in connection with the procedures in paragraphs (a)
through (h) of this Section 7.2 and the registration of the Registrable Shares
on such Registration Statement and the satisfaction of the blue sky laws of
such states.
7.3 Indemnification.
(a) The Company agrees to indemnify and hold harmless Purchaser from and
against any losses, claims, damages or liabilities to which such Purchaser may
become subject (under the Securities Act or otherwise) insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make
7.
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the statements therein not misleading, in each case on the effective date
thereof, or arise out of any failure by the Company to fulfill any undertaking
included in the Registration Statement and the Company will, as incurred,
reimburse such Purchaser for any 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 or omission or alleged untrue statement or
omission made in such Registration Statement in reliance upon and in conformity
with written information furnished to the Company by or on behalf of such
Purchaser specifically for use in preparation of the Registration Statement or
any breach of this Agreement by Purchaser.
(b) Each Purchaser, severally and not jointly, agrees to indemnify and hold
harmless the Company (and each person, if any, who controls the Company within
the meaning of Section 5 of the Securities Act or Section 20 of the Exchange
Act, each officer of the Company who signs the Registration Statement and each
director of the Company), 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) arise out of, or are based upon, any breach of this Agreement
by such Purchaser or any untrue statement of a material fact contained in the
Registration Statement or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in each case, on the effective date thereof, if, and to
the extent, such untrue statement was made in reliance upon and in conformity
with written information furnished by or on behalf of such Purchaser
specifically for use in preparation of the Registration Statement, and such
Purchaser will reimburse the Company (and each of its officers, directors or
controlling persons) for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim.
(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, and, subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person and such indemnifying shall have been notified thereof, such
indemnifying person shall be entitled to participate therein, and, to the
extent that it shall wish, 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 exists or shall exist a conflict of interest that would make it
inappropriate in the reasonable judgment of 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,
further, that no indemnifying person shall be responsible for the fees and
expense of more than one separate counsel
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for all indemnified parties. The indemnifying party shall not settle an action
without the consent of the indemnified party, which shall not be unreasonably
withheld.
(d) If after proper notice of a claim or the commencement of any
action against the indemnified party, the indemnifying party does not choose to
participate, then the indemnified party shall defend itself at its own cost and
expense until there is an adjudication at which point the indemnifying party
shall then reimburse the indemnified party for its costs and expenses.
(e) If the indemnification provided for in this Section 7.3 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party in respect of any
losses, claims, damages or liabilities referred to above, then each applicable
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities.
7.4 Prospectus Delivery. The Purchaser hereby covenants with the
Company not to make any sale of the Shares without effectively causing the
prospectus delivery requirement under the Securities Act to be satisfied. The
Purchaser acknowledges that there may be times when the Company must suspend
the use of the prospectus forming a part of the Registration Statement until
such time as an amendment to the Registration Statement has been filed by the
Company and declared effective by the SEC, or until such time as the Company
has filed an appropriate report with the SEC pursuant to the Exchange Act. The
Purchaser hereby covenants that it will not sell any Shares pursuant to said
prospectus during the period commencing at the time at which the Company gives
the Purchaser notice of the suspension of the use of said prospectus and ending
at the time the Company gives the Purchaser notice that the Purchaser may
thereafter effect sales pursuant to said prospectus. Such suspension periods
shall in no event exceed 60 days in any 12 month period.
7.5 Termination of Obligations. The obligations of the Company
pursuant to Section 7.2 hereof shall cease and terminate upon the earlier to
occur of (i) such time as all of the Registrable Shares have been resold, or
(ii) such time as all of the Registrable Shares may be resold in a three-month
period pursuant to Rule 144, or (iii) the second anniversary of the Closing
Date.
7.6 Reporting Requirements.
(a) With a view to making available the benefits of certain rules
and regulations of the SEC that may at any time permit the sale of the Shares
to the public without registration or pursuant to a registration statement on
Form S-3, the Company agrees to use its best efforts to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
Exchange Act of 1934; and
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(iii) so long as any of the Purchasers own Registrable
Securities, to furnish to the Purchasers forthwith upon request (1) a written
statement by the Company as to whether it is in compliance with the reporting
requirements of said Rule 144, the Securities Act and Securities Exchange Act
of 1934, or whether it is qualified as a registrant whose securities may be
resold pursuant to SEC Form S-3, and (2) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed
by the Company.
Section 8
Restrictions on Transferability of Shares:
Compliance with Securities Act
8.1 Restrictions on Transferability. The Shares shall not be
transferable in the absence of a registration under the Securities Act or an
exemption therefrom or in the absence of compliance with any term of this
Agreement. The Company shall be entitled to give stop transfer instructions to
its transfer agent with respect to the Shares in order to enforce the foregoing
restrictions.
8.2 Instruction Sheet. Each certificate representing Shares shall
bear the Instruction Sheet attached hereto as Exhibit C (in addition to any
legends required under applicable securities laws).
8.3 Transfer of Shares After Registration. Each Purchaser hereby
covenants with the Company not to make any sale of the Shares except either (i)
in accordance with the Registration Statement, in which case Purchaser
covenants to comply with the requirement of delivering a current prospectus, or
(ii) in accordance with Rule 144, in which case Purchaser covenants to comply
with Rule 144. Purchaser further acknowledges and agrees that such Shares are
not transferable on the books of the Company unless the certificate submitted
to the Company's transfer agent evidencing such Shares is accompanied by a
separate certificate executed by an officer of, or other person duly authorized
by, the Purchaser in the form attached hereto as Exhibit D.
8.4 Purchaser Information. Each Purchaser covenants that it will
promptly notify the Company of any changes in the information set forth in the
Registration Statement regarding such Purchaser or such Purchaser's "Plan of
Distribution."
Section 9
Miscellaneous
9.1 Waivers and Amendments. With the exception of Section 7 hereof,
the terms of this Agreement may be waived or amended with the written consent
of the Company and each Purchaser. With respect to Section 7.1 and 7.2 hereof,
with the written consent of the Company and the record holders of more than
fifty percent (50%) of the Shares then outstanding and held by
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Purchasers, the terms of the Agreement may be waived or amended and any such
amendment or waiver shall be binding upon the Company and all holders of Shares.
9.2 Broker's Fee. Each Purchaser acknowledges that the Company intends to
pay a fee in respect of the sale of the Shares to the Placement Agents. Each of
the parties hereto hereby represents that, on the basis of any actions and
agreements by it, there are no other brokers or finders entitled to
compensation in connection with the sale of the Shares to the Purchasers.
9.3 Governing Law. This Agreement shall be governed in all respects by
and construed in accordance with the laws of the State of California without
any regard to conflicts of laws principles.
9.4 Survival. The representations, warranties, covenants and agreements
made in this Agreement shall survive any investigation made by the Company or
the Purchasers and the Closing.
9.5 Successors and Assigns. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties to this Agreement. Notwithstanding the foregoing,
no Purchaser shall assign this Agreement without the prior written consent of
the Company.
9.6 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
thereof.
9.7 Notices, etc. All notices and other communications required or
permitted under this Agreement shall be in writing and may be delivered in
person, by telecopy, overnight delivery service or registered or certified
United States mail, addressed to the Company or the Purchasers, as the case may
be, at their respective addresses set forth at the beginning of this Agreement
or on Exhibit A, or at such other address as the Company or the Purchasers
shall have furnished to the other party in writing. All notices and other
communications shall be effective upon the earlier of actual receipt thereof by
the person to whom notice is directed or (i) in the case of notices and
communications sent by personal delivery or telecopy, one business day after
such notice or communication arrives at the applicable address or was
successfully sent to the applicable telecopy number, (ii) in the case of
notices and communications sent by overnight delivery service, at noon (local
time) on the second business day following the day such notice or communication
was sent, and (iii) in the case of notices and communications sent by United
States mail, seven days after such notice or communication shall have been
deposited in the United States mail.
9.8 Severability of this Agreement. If any provision of this Agreement
shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
11.
15
9.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
9.10 Further Assurances. Each party to this Agreement shall do and
perform or cause to be done and performed all such further acts and things and
shall execute and deliver all such other agreements, certificates, instruments
and documents as the other party hereto may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
9.11 Termination. In the event that the Registration Statement is not
declared effective by the SEC within ninety (90) days from the date the Company
files such Registration Statement with the SEC, this Agreement shall terminate.
9.12 Expenses. The Company and each such Purchaser shall bear its own
expenses incurred on its behalf with respect to this Agreement and the
transactions contemplated hereby, including fees of legal counsel.
9.13 Currency. All references to "dollars" or "$" in this Agreement
shall be deemed to refer to United States dollars.
12.
16
The forgoing agreement is hereby executed as of the date first above written.
"COMPANY"
ARADIGM CORPORATION,
a Delaware corporation
By: ____________________________________
Title: _________________________________
"PURCHASERS"
Name: __________________________________
By: ____________________________________
Title: _________________________________
[SIGNATURE PAGE TO ARADIGM CORPORATION
COMMON STOCK PURCHASE AGREEMENT]
17
Exhibit A
SCHEDULE OF PURCHASERS
Purchaser Commitment Shares
--------- ---------- ------
The ▇▇▇▇▇▇▇▇ Fund, Inc. $7,000,003.50 666,667
Invesco Global Health Services, Inc $3,999,996.00 380,952
Biotechnology Investments Limited $3,675,000.00 350,000
H&Q Healthcare Investors $2,362,500.00 225,000
Bank Invest $2,100,000.00 200,000
H&Q Life Sciences Investors $1,680,000.00 125,000
State of Oregon PERS/ZCG $1,312,500.00 160,000
Pharma w/Health FCP $ 892,500.00 85,000
Public Employee Retirement System
of Idaho $ 525,000.00 50,000
Delta Opportunity Fund, Ltd. $ 499,999.50 47,619
The ▇▇▇▇▇/Bernhard LLC $ 262,500.00 25,000
NFIB Employee Pension Trust $ 262,500.00 25,000
The A&JS Family LLC $ 157,500.00 15,000
A&S ▇▇▇▇▇ Family LLC $ 157,500.00 15,000
▇▇▇▇▇▇ Trust Co. of the Bahamas
Ltd. as Trustee u/a/d 11/30/93 $ 157,500.00 15,000
Roanoke College $ 157,500.00 15,000
Amherst College $ 105,000.00 10,000
Merlin BioMed L.P. $ 84,000.00 8,000
Merlin BioMed International $ 73,500.00 7,000
Alza Corporation Retirement Fund $ 21,000.00 2,000
▇▇▇▇▇▇▇ Investment Partners LP $ 11,500.00 1,100
---------
TOTAL 2,428,338
18
INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire
Common Stock Purchase Agreement)
A. Complete the following items in the Common Stock Purchase Agreement:
1. Provide the information regarding the Purchaser requested on the
signature page. The Agreement must be executed by an individual
authorized to bind the Purchaser.
2. Exhibit B-1 - Stock Certificate Questionnaire:
Provide the information requested by the Stock Certificate
Questionnaire;
3. Exhibit B-2 - Registration Statement Questionnaire:
Provide the information requested by the Registration Statement
Questionnaire.
4. Exhibit B-3 - Purchaser Certificate:
Provide the information requested by the Certificate for Individual
Purchasers or the Certificate for Corporate, Partnership, Trust,
Foundation and Joint Purchasers, as applicable.
5. Return the signed Purchase Agreement to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Two Embarcadero Place
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
B. Instructions regarding the transfer of funds for the purchase of Shares
will be telecopied to the Purchaser by the Placement Agents at a later
date.
C. Upon the resale of the Shares by the Purchaser after the Registration
Statement covering the Shares is effective, as described in the Purchase
Agreement, the Purchaser:
(i) must deliver a current prospectus, and annual and quarterly
reports of the Company to the buyer (prospectuses, and annual
and quarterly reports may be obtained from the Company at the
Purchaser's request); and
(ii) must send a letter in the form of Exhibit D to the Company so
that the Shares may be properly transferred.
19
ARADIGM CORPORATION
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 4.3 of the Agreement, please provide us with the
following information.
1. The exact name that the Shares are to be
registered in (this is the name that will appear on
the stock certificate(s)). You may use a nominee
name if appropriate:
--------------------
2. The relationship between the Purchaser of the
Share and the Registered Holder listed in
response to item 1 above:
--------------------
3. The mailing address of the Registered Holder
listed in response to item 1 above:
--------------------
--------------------
--------------------
--------------------
--------------------
4. The Tax Identification Number of the Registered
Holder listed in response to item 1 above:
--------------------
-2-
20
ARADIGM CORPORATION
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please
provide us with the following information regarding the Purchaser.
1. Please state your organization's name exactly as it should appear in
the Registration Statement:
2. Have you or your organization had any position, office or other
material relationship within the past three years with the Company or its
affiliates other than as disclosed in this Prospectus included in the
Registration Statement?
------- YES ------- NO
If yes, please indicate the nature of any such relationships below.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
21
ARADIGM CORPORATION
CERTIFICATE FOR INDIVIDUAL PURCHASERS
If the investor is an individual Purchaser (or married couple) the
Purchaser must complete, date and sign this Certificate.
CERTIFICATE
I certify that the representations and responses below are true and
accurate:
In order for the Company to offer and sell the Shares in conformance with
state and federal securities laws, the following information must be obtained
regarding your investor status. Please initial each category applicable to you
as an investor in the Company.
__ (1) A natural person whose net worth, either individually or jointly
with such person's spouse exceeds $1,000,000;
__ (2) A natural person who had an income in excess of $200,000, or
joint income with the person's spouse in excess of $300,000, in 1996, 1997 and
1998, and reasonably expects to have individual income reaching the same level
in 1999.
__ (3) An executive officer or director of the Company.
Dated: __________________ ________________________________
Name(s) of Purchaser
________________________________
Signature
________________________________
Signature
22
ARADIGM CORPORATION
CERTIFICATE FOR CORPORATE, PARTNERSHIP,
TRUST, FOUNDATION AND JOINT PURCHASERS
If the investor is a corporation, partnership, trust, pension plan,
foundation, joint purchasers (other than a married couple) or other entity, an
authorized officer, partner, or trustee must complete, date and sign this
Certificate.
CERTIFICATE
The undersigned certifies that the representations and responses below are
true and accurate.
(a) The investor has been duly formed and is validly existing and has
full power and authority to invest in the Company. The person signing on behalf
of the undersigned has the authority to exercise and deliver the Common Stock
Purchase Agreement on behalf of the Purchaser, and to take other sections with
respect thereto.
(b) Indicate the form of entity of the undersigned:
- Limited Partnership
- General Partnership
- Corporation
- Revocable Trust (identify each grantor and indicate under what
circumstances the trust is revocable by the grantor: _______________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________ (Continue on a separate piece of paper, if necessary.)
- Other Type of Trust (indicate type of trust and, for trusts other
than pension trust, name the guarantors and beneficiaries:__________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
_________. (Continue on a separate piece of paper, if necessary.)
- Other form of organization (indicate form of organization (_______)
(c) Indicate the approximate date the undersigned entity was formed: _____
(d) In order for the Company to offer and sell the Shares in conformance
with state and federal securities laws, the following information must be
obtained regarding your investor sums. Please initial each category applicable
to you as an investor in the Company.
23
____ 1. A bank as defined in Section 3(a)(2) of the Securities Act, or
any savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act whether acting in its individual or
fiduciary capacity;
____ 2. A broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934;
____ 3. An insurance company as defined in Section 2(13) of the
Securities Act;
____ 4. As investment company registered under the Investment Company Act
of 1940 or a business development company as defined in Section 2(a)(48) of
that Act;
____ 5. A Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958;
____ 6. 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;
____ 7. 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 investment
decisions made solely by persons that are accredited investors;
____ 8. A private business development company as defined in Section
202(a)(23) of the Investment Advisers Act of 1940;
____ 9. An organization described in Section 501(c)(3) of the Internal
Revenue Code, a corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the Shares,
with total assets in excess of $5,000,000;
____ 10. A trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the Shares, whose purchase is
directed by a sophisticated person who has such knowledge and experience in
financial and business matters that such person is capable of evaluating
the merits and risks of investing in the Company;
-2-
24
____ 11. An entity in which all of the equity owners qualify under any of
the above subparagraphs. If the undersigned belongs to this investor
category only, list the equity owners of the undersigned, and the investor
category which each such equity owner satisfies:
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
(Combine on a separate piece of paper, if necessary.)
Dated: _________________________ , 19 ____
__________________________________________
Name of investors
__________________________________________
Signature and title of authorized
officer, partner or trustee
-3-
25
ARADIGM CORPORATION
IMPORTANT -- DO NOT REMOVE THIS INSTRUCTION SHEET FROM THE ATTACHED SHARE
CERTIFICATE UNLESS AND UNTIL THE SHARES ARE SOLD AS FOLLOWS:
(1) THE SHARES ARE RESOLD PURSUANT TO THE REGISTRATION STATEMENT ON FORM
S-3 (NO. [ ]), AND, IN CONNECTION WITH SUCH RESALE, THE HOLDER HAS
DELIVERED TO THE PURCHASER OF THE SHARES A CURRENT PROSPECTUS AND HAS
PROVIDED TO THE COMPANY OR TO THE TRANSFER AGENT FOR THE COMPANY'S STOCK A
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE; OR
(2) THE SHARES ARE RESOLD IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, PROVIDED THAT,
PRIOR TO SUCH RESALE, THE HOLDER HAS NOTIFIED THE COMPANY OF SUCH
DISPOSITION AND PROVIDED THE COMPANY WITH WRITTEN ASSURANCES, IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY OF COMPLIANCE WITH THE REQUIREMENTS
OF SUCH EXEMPTION.
DO NOT REMOVE THIS INSTRUCTION SHEET FROM
THE ATTACHED SHARE CERTIFICATE
EXCEPT IN ACCORDANCE WITH
THE INSTRUCTIONS SET FORTH ABOVE.
26
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
To: [INSERT TRANSFER AGENT]
Attention: [________]
The undersigned, the Purchaser or an officer of, or other person duly
authorized by the Purchaser, hereby certifies that ___________________________
[Fill in name of Purchaser]
institution was the Purchaser of the shares evidenced by the attached
certificate, and as such, proposes to transfer such shares on or about _______
[Date]
either (i) in accordance with the registration statement, file number [______]
in which case the Purchaser certifies that the requirement of delivering a
current prospectus has been complied with or will be complied with in
connection with such sale, or (ii) in accordance with Rule 144 under the
Securities Act of 1933 ("Rule 144"), in which case the Purchaser certifies that
it has complied with or will comply with the requirements of Rule 144.
Print or type:
Name of Purchaser: __________________________________________________
Name of Individual
representing
Purchaser (if an
Institution): __________________________________________________
Title of Individual
representing
Purchaser (if an
Institution): __________________________________________________
Signature by:
Purchaser or
Individual
representing
Purchaser: __________________________________________________