Exhibit 10.1
PENWEST PHARMACEUTICALS CO.
SECURITIES PURCHASE AGREEMENT
AUGUST 1, 2003
SECTION 1 AUTHORIZATION AND SALE OF SECURITIES................................................................... 1
1.1 Authorization.................................................................................. 1
1.2 Sale of Units.................................................................................. 1
SECTION 2 CLOSING DATE: DELIVERY................................................................................. 1
2.1 Closing Date................................................................................... 1
2.2 Delivery....................................................................................... 1
2.3 Purchase Price................................................................................. 2
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................................... 2
3.1 Subsidiaries; Organization and Standing........................................................ 2
3.2 Corporate Power, Authorization................................................................. 2
3.3 Issuance and Delivery of the Securities........................................................ 3
3.4 SEC Documents; Financial Statements............................................................ 3
3.5 Governmental Consents.......................................................................... 3
3.6 No Material Adverse Change..................................................................... 4
3.7 Intellectual Property.......................................................................... 4
3.8 Authorized Capital Stock....................................................................... 4
3.9 Litigation..................................................................................... 4
3.10 Use of Proceeds................................................................................ 5
3.11 Accountants.................................................................................... 5
3.12 Compliance With Other Instruments.............................................................. 5
3.13 Permits........................................................................................ 5
3.14 Investment Company............................................................................. 5
3.15 Securities Laws Disclosure; Publicity.......................................................... 5
3.16 Private Placement.............................................................................. 6
3.17 Form S-3 Eligibility........................................................................... 6
3.18 Listing and Maintenance Requirements........................................................... 6
3.19 Application of Takeover Protections............................................................ 6
3.20 Insurance...................................................................................... 6
3.21 Non-Public Information......................................................................... 6
3.22 Acknowledgment Regarding Purchasers' Purchase of Securities.................................... 7
SECTION 4 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS............................................ 7
4.1 Power; Authorization........................................................................... 7
4.2 Investment Experience.......................................................................... 7
4.3 Investment Intent.............................................................................. 7
4.4 Registration or Exemption Requirements......................................................... 8
4.5 Certain Trading Limitations.................................................................... 8
4.6 Pledge Arrangements............................................................................ 9
SECTION 5 CONDITIONS TO CLOSING OF PURCHASERS.................................................................... 9
5.1 Representations and Warranties................................................................. 9
5.2 Covenants...................................................................................... 9
5.3 Blue Sky....................................................................................... 9
5.4 Legal Opinion.................................................................................. 9
5.5 Nasdaq Qualification........................................................................... 10
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5.6 Absence of Litigation.......................................................................... 10
5.7 No Governmental Prohibition.................................................................... 10
SECTION 6 CONDITIONS TO CLOSING OF COMPANY....................................................................... 10
6.1 Representations and Warranties................................................................. 10
6.2 Covenants...................................................................................... 10
6.3 Blue Sky....................................................................................... 10
6.4 Nasdaq Qualification........................................................................... 10
6.5 Absence of Litigation.......................................................................... 10
6.6 No Governmental Prohibition.................................................................... 11
SECTION 7 AFFIRMATIVE COVENANTS OF THE COMPANY................................................................... 11
7.1 Registration Requirements...................................................................... 11
7.2 Indemnification and Contribution............................................................... 13
7.3 Restrictions on Transferability................................................................ 15
SECTION 8 RESTRICTIONS ON TRANSFERABILITY OF SHARES: COMPLIANCE WITH SECURITIES ACT.............................. 15
8.1 Securities Law Transfer Restrictions........................................................... 15
8.2 Restrictive Legend............................................................................. 16
8.3 Transfer of Shares After Registration.......................................................... 16
8.4 Purchaser Information.......................................................................... 17
SECTION 9 MISCELLANEOUS.......................................................................................... 17
9.1 Waivers and Amendments......................................................................... 17
9.2 Brokers and Finders............................................................................ 17
9.3 Governing Law.................................................................................. 17
9.4 Survival....................................................................................... 17
9.5 Successors and Assigns......................................................................... 17
9.6 Entire Agreement............................................................................... 18
9.7 Notices, etc................................................................................... 18
9.8 Severability of this Agreement................................................................. 18
9.9 Counterparts................................................................................... 18
9.10 Further Assurances............................................................................. 18
9.11 Expenses....................................................................................... 18
9.12 Currency....................................................................................... 18
9.13 Replacement of Securities...................................................................... 19
9.14 Remedies....................................................................................... 19
9.15 Independent Nature of Purchasers' Obligations and Rights....................................... 19
Exhibit A - Schedule of Purchasers
Exhibit B - Form of Additional Investment Right
Exhibit C - Instruction Sheet for Purchaser
Exhibit C-1 - Stock Certificate Questionnaire
Exhibit C-2 - Registration Statement Questionnaire
Exhibit C-3 - Certificate for Individual Purchasers
Exhibit C-4 - Certificate for Corporate, Partnership, Trust, Foundation
and Joint Purchasers
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Exhibit D-1 - Form of Opinion of Company Washington Counsel
Exhibit D-2 - Form of Opinion of Company Corporate Counsel
Exhibit E - Form of Purchaser's Certificate of Subsequent Sale
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PENWEST PHARMACEUTICALS CO.
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the "Agreement") is made as of
August 1, 2003, by and among Penwest Pharmaceuticals Co., a Washington
corporation (the "Company"), with its principal office at 00 Xxx Xxxxxxxxx Xxxx,
Xxxxx 00, Xxxxxxx, Xxxxxxxxxxx 00000, and the persons listed on the Schedule of
Purchasers attached hereto as Exhibit A (the "Purchasers").
SECTION 1
AUTHORIZATION AND SALE OF SECURITIES
1.1 Authorization. The Company has authorized (i) the sale and issuance pursuant
to this Agreement of up to 1,904,762 Units, each Unit consisting of one share of
Common Stock, $0.001 par value per share (the "Common Stock") and an additional
investment right (an "Additional Investment Right") to purchase 0.2 shares of
Common Stock at an exercise price of $26.00 per share on the terms and in the
form set forth on Exhibit B hereto.
1.2 Sale of Units. 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 Units set forth opposite such
Purchaser's name on Exhibit A for $21.00 per Unit (the "Purchase Price"). The
maximum aggregate purchase price payable by the Purchasers to the Company for
all of the Units shall be $40,000,002.
SECTION 2
CLOSING DATE: DELIVERY
2.1 Closing Date. The closing of the purchase and sale of the Units hereunder
(the "Closing") shall be held at the offices of Xxxx and Xxxx LLP, 00 Xxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, at or before 10:00 a.m. New York local
time, on the date that is two business days after the execution of this
Agreement by the Company and the Purchasers, or at such time and place upon
which the Company and the Purchasers 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, or cause to be
delivered, to each Purchaser:
(a) a stock certificate, registered in such Purchaser's name as
shown on Exhibit A, representing a number of shares of Common Stock equal to the
number of Units purchased by such Purchaser (the "Purchased Shares");
(b) Additional Investment Rights, registered in such Purchaser's
name as shown on Exhibit A, pursuant to which such Purchaser shall have the
right to acquire a number
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of shares of Common Stock equal to 20% of the number of Units purchased by such
Purchaser; and
(c) a certificate from the Company that the representations and
warranties made by the Company are 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 said date.
2.3 Purchase Price. The delivery of the Purchased Shares and the Additional
Investment Rights pursuant to Section 2.2 shall be made against payment of the
purchase price therefor by wire transfer of immediately available funds to the
Company's account as designated in writing by the Company in the amount set
forth on Exhibit A.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers as of the date
hereof as follows:
3.1 Subsidiaries; Organization and Standing. The Company has no direct or
indirect subsidiaries. The Company is a corporation duly organized and validly
existing under, and by virtue of, the laws of the State of Washington and is in
good standing as a domestic corporation under the laws of said state and has all
requisite corporate power and authority to conduct its business as currently
conducted and as currently proposed to be conducted as disclosed in the SEC
Documents (as defined below). The Company is qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, would not reasonably be expected to materially and adversely
affect the business, properties or financial condition of the Company.
3.2 Corporate Power, Authorization. The Company has all requisite corporate
power and has taken all requisite corporate action to execute and deliver this
Agreement, to sell and issue the Units and the Purchased Shares and Additional
Investment Rights comprising such Units (collectively, the "Securities") 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 against the Company 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, (ii) as
limited with respect to rights of indemnity and contribution by state or federal
securities laws or the public policy underlying such laws and (iii) 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 Securities and the
shares of Common Stock issuable upon exercise of the Additional Investment
Rights by the Company will not, conflict with or result in a breach or violation
of the terms, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of any lien pursuant to the terms of, the
Articles 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 agreement or instrument to which the Company or any of
its properties is subject.
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3.3 Issuance and Delivery of the Securities. The Purchased Shares, when issued
in compliance with the provisions of this Agreement, and the shares of Common
Stock issuable upon exercise of the Additional Investment Rights, when issued
upon such exercise and payment of the consideration provided for therein, will
be validly issued, fully paid and nonassessable and not subject to any liens or
other encumbrances. The Company has duly authorized and reserved for issuance a
sufficient number of its authorized but unissued shares of Common Stock for the
issuance and delivery of the Purchased Shares. The issuance and delivery of the
Securities are not, and the issuance and delivery of the shares of Common Stock
issuable upon exercise of the Additional Investment Rights will not be, subject
to preemptive or any other similar rights of the stockholders of the Company.
3.4 SEC Documents; Financial Statements. The Company has filed in a timely
manner all documents that the Company was required to file with the Securities
and Exchange Commission (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 (the "SEC Documents").
As of their respective filing dates all 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"), as of the
dates included in the SEC documents, complied as to form in all material
respects with applicable 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 as of the dates included in the SEC Documents 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; provided, however, that the
unaudited financial statements are subject to normal recurring year-end
adjustments (which in any case will not be material) and do not contain all
footnotes required under generally accepted accounting principles. All material
agreements that are required to have been filed as exhibits to the SEC Documents
under Item 601 of Regulation S-K to which the Company is a party or to which the
property or assets of the Company are subject have been filed as exhibits to the
SEC Documents.
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 the Securities and the shares of Common Stock issuable
upon exercise of the Additional Investment Rights are offered and/or sold, (b)
the filing of the registration statement and all amendments thereto (the
"Registration Statement") with the SEC as contemplated by Section 7.1 of this
Agreement, (c) all required filings with The Nasdaq National Market necessary
for the listing of the Purchased Shares and the shares of Common Stock issuable
upon exercise of the Additional Investment Rights (collectively with the
Purchased Shares, the "Shares") or (d) those consents, approvals, orders or
authorizations of or registrations, qualifications, designations, declarations
or filings with, any federal, state, or local
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governmental authority on the part of the Company that have been obtained and
will be in effect as of the Closing Date.
3.6 No Material Adverse Change. Except as otherwise disclosed in the SEC
Documents, since March 31, 2003, there have not been any changes in the
business, assets, liabilities, properties, financial condition or operations of
the Company from those 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 Intellectual Property. The Company owns or possesses sufficient rights to
use all patents, patent rights, inventions, trade secrets, know-how, proprietary
rights and processes that are necessary for the conduct and proposed conduct of
its business as described in the SEC Documents (the "Company's Proprietary
Rights"). The Company believes that there are no third parties who have or will
be able to establish rights to any of the Company's Proprietary Rights, except
for (i) the ownership rights of the third party licensors to the Company's
Proprietary Rights which are licensed to the Company by such third party
licensors and (ii) the third party licensees of the Company's Proprietary
Rights. To the knowledge of the Company, there is no infringement by any third
parties of any of the Company's Proprietary Rights. Except as disclosed in the
SEC Documents, the Company has not received any notice of, and has no knowledge
of any infringement of or conflict with asserted rights of others with respect
to any patent, patent right, invention, trade secret, know-how or other
proprietary rights.
3.8 Authorized Capital Stock. All outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and the
authorized and outstanding capital stock of the Company conforms, as of the
dates for which such information is given, in all material respects to the
statements relating thereto contained in the SEC Documents; there is no capital
stock outstanding as of such dates other than as described in the SEC Documents.
As of July 31, 2003, the authorized capital stock of the Company consists of
39,000,000 shares of Common Stock, of which 15,702,299 shares are outstanding,
and 1,000,000 shares of Preferred Stock, $0.001 par value per share, of which
100,000 shares have been designated Series A Junior Participating Preferred
Stock, none of which shares are outstanding. Except as disclosed in or
contemplated by the SEC Documents and the Financial Statements of the Company
and the related notes thereto, the Company does not have outstanding any options
to purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any such options,
rights, convertible securities or obligations other than options granted under
the Company's stock plan and its employee stock purchase plan. No stockholder of
the Company, other than the Purchasers, has any right (which has not been waived
or has not expired by reason of lapse of time following notification of the
Company's intent to file the Registration Statement) to require the Company to
register the sale of any shares owned by such stockholder under the Securities
Act in the Registration Statement.
3.9 Litigation. Except as set forth in the SEC Documents, as of the date hereof,
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
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any governmental body, agency or official in which there is the possibility of
an adverse decision that (a) would reasonably be expected to have a material
adverse effect on the business, properties or financial condition of the Company
or (b) would reasonably be expected to impair the ability of the Company to
perform its obligations under this Agreement.
3.10 Use of Proceeds. The Company will use the net proceeds from the sale of the
Units to fund the research, development, marketing and commercialization of its
products and technologies, including without limitation oxymorphone ER. The
remainder of the net proceeds will be used for general corporate purposes. The
Company also may use a portion of the net proceeds, currently intended for
general corporate purposes, to acquire or invest in technologies, products or
services that complement its business, although the Company has no present plans
or commitments and is not currently engaged in any material negotiations with
respect to these types of transactions. Pending these uses, the Company intends
to invest the net proceeds from this offering in short-term, interest-bearing,
investment-grade securities.
3.11 Accountants. Ernst & Young LLP, who will express their opinion with respect
to the audited financial statements and schedules to be included as a part of
the Registration Statement prior to the filing of the Registration Statement,
are independent accountants as required by the Securities Act and the rules and
regulations promulgated thereunder.
3.12 Compliance With Other Instruments. The Company is not in violation or
default of any provision of its Articles of Incorporation or Bylaws, each as
amended to date or, in any material respect, of any provision of any federal or
state statute, rule or regulation applicable to the Company. Except as to
defaults and violations which individually or in the aggregate would not
reasonably be expected to have a material adverse effect on the business,
properties or financial condition of the Company, the Company is not in
violation or default of any provision of any agreement, license, permit,
instrument, judgment, order, writ or decree to which it is a party or by which
it is bound.
3.13 Permits. The Company has all franchises, permits, licenses, and any similar
authority necessary for the conduct of its business as now being conducted by it
and as currently proposed to be conducted as disclosed in the SEC Documents, the
lack of which would reasonably be expected to have a material adverse effect on
the business, properties or financial condition of the Company. The Company is
not in default in any material respect under any of such franchises, permits,
licenses, or other similar authority.
3.14 Investment Company. The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
3.15 Securities Laws Disclosure; Publicity. On or before 8:30 a.m., New York
local time, on August 4, 2003 the Company shall issue a press release announcing
the signing of this Agreement and describing the terms of the transactions
contemplated by the Transaction Documents (as defined below). On August 4, 2003,
the Company shall file a Current Report on Form 8-K with the Commission
describing the terms of the transactions contemplated by the Transaction
Documents and including as an exhibit to such Current Report on Form 8-K this
Agreement, in the form required by the Exchange Act.
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3.16 Private Placement. Neither the Company nor any person acting on the
Company's behalf has sold or offered to sell or solicited any offer to buy any
of the Units by means of any form of general solicitation or advertising.
Neither the Company nor any person acting on the Company's behalf has, directly
or indirectly, at any time within the past six months, made any offer or sale of
any security or solicitation of any offer to buy any security under
circumstances that would (i) eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with the
offer and sale by the Company of the Units as contemplated hereby or (ii) cause
the offering of the Units (the "Offering") to be integrated with prior offerings
by the Company for purposes of any applicable law, regulation or stockholder
approval provisions, including, without limitation, under the rules and
regulations of any Trading Market (as defined below). The Company is not a
United States real property holding corporation within the meaning of the
Foreign Investment in Real Property Tax Act of 1980. "Trading Market" means the
NASDAQ National Market or any other eligible market, or any national securities
exchange, market or trading or quotation facility on which the Common Stock is
then listed or quoted.
3.17 Form S-3 Eligibility. The Company is eligible to register the Shares for
resale by the Purchasers using Form S-3 promulgated under the Securities Act.
3.18 Listing and Maintenance Requirements. The Company has not, in the two years
preceding the date hereof, received notice (written or oral) from any Trading
Market on which the Common Stock is or has been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is in compliance with all such
listing and maintenance requirements.
3.19 Application of Takeover Protections. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will not
impose any restriction on any Purchaser, or create in any party (including any
current stockholder of the Company) any rights, under any share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provisions under the Company's charter
documents or the laws of its state of incorporation.
3.20 Insurance. The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as the Company
believes are prudent and customary for a company (i) in the businesses and
location in which the Company is engaged, (ii) with the resources of the Company
and (iii) with products at a similar stage of development as the Company. The
Company has not received any written notice that the Company will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost.
3.21 Non-Public Information. The Company has not, to the Company's knowledge,
provided the Purchasers with any material non-public information in connection
with the Offering other than information relating to the transactions
contemplated by this Agreement which information shall be disclosed in a press
release issued on August 4, 2003 in accordance with Section 3.15.
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3.22 Acknowledgment Regarding Purchasers' Purchase of Securities. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm's length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that no
Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity with respect to the Company) with respect to this Agreement
and the transactions contemplated hereby and any advice given by any Purchaser
or any of their respective representatives or agents to the Company in
connection with this Agreement and the transactions contemplated hereby is
merely incidental to such Purchaser's purchase of the Securities. The Company
further represents to each Purchaser that the Company's decision to enter into
this Agreement has been based on the independent evaluation of the transactions
contemplated hereby by the Company and its representatives.
SECTION 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS
Each Purchaser hereby severally represents and warrants to the Company,
effective as of the date hereof, as follows:
4.1 Power; Authorization. (i) Such Purchaser has all requisite corporate or
other power and capacity and has taken all requisite corporate or other action
to execute and deliver this Agreement, to purchase the Securities and the shares
of Common Stock issuable upon exercise of the Additional Investment Rights 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 such Purchaser, enforceable against such Purchaser 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, (b) as limited with respect to rights of indemnity
and contribution by state or federal securities laws or the public policy
underlying such laws and (c) as limited by equitable principles generally.
4.2 Investment Experience. Such Purchaser is an "accredited investor" as defined
in Rule 501(a) of Regulation D under the Securities Act. Such Purchaser has
received and reviewed the SEC Documents, 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 Securities being acquired on the date hereof and the
shares of Common Stock that may be acquired by such Purchaser upon exercise of
the Additional Investment Rights. Purchaser has such business and financial
experience as is required to permit it to protect its own interests in
connection with the purchase of such Securities and such shares of Common Stock
issuable upon exercise of the Additional Investment Rights. Such Purchaser's
financial condition is such that it is able to bear the risk of holding such
Securities and such shares of Common Stock for an indefinite period of time and
the risk of loss of its entire investment.
4.3 Investment Intent. Such Purchaser is purchasing the Securities being
acquired on the date hereof and the shares of Common Stock issuable upon
exercise of the Additional Investment
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Rights for its own account as principal, for investment purposes only, and not
with a present view to, or for, the resale distribution thereof, in whole or in
part, within the meaning of the Securities Act or any state securities laws.
Purchaser understands that its acquisition of such Securities and the shares of
Common Stock issuable upon exercise of the Additional Investment Rights has not
been registered under the Securities Act or registered or qualified under any
state law in reliance on specific exemptions therefrom, which exemptions may
depend upon, among other things, the bona fide nature of such Purchaser's
investment intent as expressed herein. Such Purchaser has completed or caused to
be completed the Purchaser Questionnaire attached hereto as Exhibit C-2 for use
in the Registration Statement, and the responses provided therein shall be true
and correct as of the Closing Date. Except as contemplated by this Agreement,
such Purchaser has no present agreement, undertaking, arrangement, obligation or
commitment providing for the disposition of the Securities or the shares of
Common Stock issuable upon exercise of the Additional Investment Rights. Any
Purchaser that is a corporation or other entity represents that it has not been
organized, reorganized or recapitalized specifically for the purpose of
investing in the Securities or the shares of Common Stock issuable upon exercise
of the Additional Investment Rights. Purchaser has, in connection with its
decision to purchase the Securities or the shares of Common Stock issuable upon
exercise of the Additional Investment Rights, relied solely upon the SEC
Documents, the documents attached as appendices thereto and the materials
provided to the Purchasers by the Company and representations and warranties of
the Company contained herein. Such 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 Securities or
the shares of Common Stock issuable upon exercise of the Additional Investment
Rights except in compliance with the Securities Act, and the rules and
regulations promulgated thereunder and applicable state securities laws.
4.4 Registration or Exemption Requirements. Such Purchaser further acknowledges,
understands and agrees that the Securities being acquired on the date hereof and
the shares of Common Stock issuable upon exercise of the Additional Investment
Rights may not be resold or otherwise transferred unless (i) they are registered
or such registration is not required, and (ii) if the transfer is pursuant to an
exemption from registration other than Rule 144 under the Securities Act and, if
the Company shall so request in writing, an opinion of counsel reasonably
satisfactory to the Company is obtained to the effect that the transaction is so
exempt; provided, however, that no opinion shall be required with respect to a
transfer to a transferee that is a Qualifying Holder (as defined in Section 7.3)
under clause (i) or (ii) of the definition of Qualifying Holder. The Company
shall affix a legend to the Additional Investment Rights and the certificate(s)
evidencing the Shares to the foregoing effect.
4.5 Certain Trading Limitations. Each Purchaser agrees that beginning on the
date hereof until the earlier to occur of (a) 90 days from the Closing Date and
(b) the effective date of the Registration Statement, it will not enter into any
Short Sales. For purposes of this Section 4.5, a "Short Sale" by a Purchaser
means a sale of Common Stock that is marked as a short sale and that is executed
at a time when such Purchaser has no equivalent offsetting long position in the
Common Stock. For purposes of determining whether a Purchaser has an equivalent
offsetting long position in the Common Stock, all Common Stock that would be
issuable upon exercise in full of all options then held by such Purchaser
(assuming that such options were then fully exercisable, notwithstanding any
provisions to the contrary, and giving effect to any exercise
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price adjustments scheduled to take effect in the future) shall be deemed to be
held long by such Purchaser.
4.6 Pledge Arrangements. Notwithstanding anything to the contrary herein, the
Company acknowledges and agrees that a Purchaser may from time to time pledge or
grant a security interest in some or all of the Securities (including shares of
Common Stock issuable upon exercise of the Additional Investment Rights) in
connection with a bona fide margin agreement or other loan or financing
arrangement secured by the Securities, provided that such pledge or grant of a
security interest is consistent with all applicable laws, rules and regulations,
including all applicable securities laws (a "Bona Fide Pledge Arrangement"). If
required under the terms of such Bona Fide Pledge Arrangement, such Purchaser
may transfer pledged or secured Securities to the pledgees or secured parties
thereunder, provided that such transfer is consistent with all applicable laws,
rules and regulations, including all applicable securities laws. A Bona Fide
Pledge Arrangement would not be subject to approval of the Company and no legal
opinion of the pledgee, secured party or pledgor shall be required in order to
effectuate such Bona Fide Pledge Arrangement or to transfer pledged shares
pursuant to such Bona Fide Pledge Arrangement. Further, the Purchaser shall not
be required hereunder to notify the Company of a Bona Fide Pledge Agreement. At
the appropriate Purchaser's expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with the inclusion of the pledgee or secured
party in the prospectus contemplated by Section 7, through a prospectus
supplement or otherwise.
SECTION 5
CONDITIONS TO CLOSING OF PURCHASERS
Each Purchaser's obligation to purchase the Units 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 Representations and Warranties. The representations and warranties made by
the Company in Section 3 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 said date.
5.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all material respects.
5.3 Blue Sky. The Company shall have obtained all necessary blue sky law permits
and qualifications, or secured exemptions therefrom, required by any state or
foreign or other jurisdiction for the offer and sale of the Securities and
shares of Common Stock issuable upon exercise of the Additional Investment
Rights.
5.4 Legal Opinion. The Purchasers shall have received a legal opinion of Xxxxxxx
Coie LLP, Washington counsel to the Company, with respect to the matters set
forth on Exhibit D-1 and
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Xxxx and Xxxx LLP, corporate counsel to the Company, with respect to the matters
set forth on Exhibit D-2.
5.5 Nasdaq Qualification. The Shares shall be duly authorized for listing by The
Nasdaq National Market, subject to official notice of issuance, to the extent
required by the rules of The Nasdaq National Market.
5.6 Absence of Litigation. No proceeding challenging this Agreement or the
transactions contemplated hereby, or seeking to prohibit, alter, prevent or
materially delay the Closing, shall have been instituted or be pending before
any court, arbitrator, governmental body, agency or official.
5.7 No Governmental Prohibition. The sale of Securities and the shares of Common
Stock issuable upon exercise of the Additional Investment Rights by the Company
shall not be prohibited by any law or governmental order or regulation.
SECTION 6
CONDITIONS TO CLOSING OF COMPANY
The Company's obligation to sell and issue the Units at the Closing is,
at the option of the Company, subject to the fulfillment or waiver as of the
Closing Date 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 all necessary blue sky law permits
and qualifications, or secured exemptions therefrom, required by any state for
the offer and sale of the Securities and shares of Common Stock issuable upon
exercise of the Additional Investment Rights.
6.4 Nasdaq Qualification. The Shares to be issued shall be duly authorized for
listing by The Nasdaq National Market, subject to official notice of issuance,
to the extent required by the rules of The Nasdaq National Market.
6.5 Absence of Litigation. No proceeding challenging this Agreement or the
transactions contemplated hereby, or seeking to prohibit, alter, prevent or
materially delay the Closing, shall have been instituted or be pending before
any court, arbitrator, governmental body, agency or official.
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6.6 No Governmental Prohibition. The sale of Securities and the shares of Common
Stock issuable upon exercise of the Additional Investment Rights by the Company
shall not be prohibited by any law or governmental order or regulation.
SECTION 7
AFFIRMATIVE COVENANTS OF THE COMPANY
The Company hereby covenants and agrees as follows:
7.1 Registration Requirements.
(a) The Company shall use its best efforts to prepare and file the
Registration Statement with the SEC under the Securities Act to register the
resale of the Shares by the Purchasers no later than 30 days after the Closing
Date.
(b) The Company shall pay all Registration Expenses (as defined
below) in connection with any registration, qualification or compliance
hereunder, and each Purchaser shall pay all Selling Expenses (as defined below)
and other expenses that are not Registration Expenses relating to the Shares
resold by such Purchaser. Registration Expenses shall mean all expenses, except
for Selling Expenses, incurred by the Company in complying with the registration
provisions herein described, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, and the
expense of any special audits incident to or required by any such registration.
Selling Expenses shall mean all selling commissions, underwriting fees and stock
transfer taxes applicable to the Purchased Shares and the shares of Common Stock
issuable upon exercise of the Additional Investment Right and all fees and
disbursements of counsel for any Purchaser.
(c) In the case of the registration effected by the Company pursuant
to these registration provisions, the Company will use its reasonable best
efforts to: (i) cause the Registration Statement to become effective as soon as
practicable after the filing thereof but in any event within 90 days after the
Registration Statement is filed by the Company, subject to receipt of necessary
information from the Purchasers after prompt request from the Company to the
Purchasers to provide such information; (ii) keep such registration effective
until the earlier (such date being referred to as the "Registration Termination
Date") of (A) the later of (1) the second anniversary of the Closing Date and
(2) the last date on which Shares are issued upon exercise of an Additional
Investment Right, or (B) such date as all of the Shares have been resold by the
original Purchasers thereof; (iii) prepare and file with the SEC such amendments
and supplements to the Registration Statement and the prospectus used in
connection with the Registration Statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by the Registration Statement; (iv) furnish such number of
prospectuses and other documents incident thereto, including any amendment of or
supplement to the prospectus, as a Purchaser from time to time may reasonably
request; (v) cause all Shares registered as described herein to be listed on
each securities exchange and quoted on each quotation service on which similar
securities issued by the Company are then listed or quoted; (vi) provide a
transfer agent and registrar for all Shares registered pursuant to
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the Registration Statement and a CUSIP number for all such Shares; (vii) to
comply with all applicable rules and regulations of the SEC; and (viii) file the
documents required of the Company and maintain requisite blue sky clearance in
(A) all jurisdictions in which any of the Shares are originally sold and (B) all
other states reasonably specified in writing by a Purchaser, provided, however,
that the Company shall not be required to qualify to do business or consent to
service of process in any state in which it is not now so qualified or has not
so consented. After the Registration Termination Date, the Company shall be
entitled to withdraw the Registration Statement and the Purchasers shall have no
further right to offer or sell any of the Shares pursuant to the Registration
Statement.
(d) With a view to making available to the Purchasers the benefits of Rule 144
promulgated under the Securities Act ("Rule 144") and any other rule or
regulation of the SEC that may at any time permit a Purchaser to sell Shares to
the public without registration or pursuant to a registration on Form S-3, the
Company covenants and agrees to: (i) make and keep public information available,
as those terms are understood and defined in Rule 144, until the earlier of (A)
the second anniversary of the date hereof or (B) such date as all of the Shares
shall have been resold; (ii) file with the SEC in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act; and (iii) furnish to any Purchaser upon request, as long as the
Purchaser owns any Shares, (A) a written statement by the Company that it is in
compliance with the reporting requirements of the Securities Act and the
Exchange Act, (B) a copy of the most recent annual or quarterly report of the
Company, and (C) such other information as may be reasonably requested in order
to avail any Purchaser of any rule or regulation of the SEC that permits the
selling of any such Shares without registration or pursuant to such Form S-3.
(e) Notwithstanding anything in this Agreement to the contrary, if the Company
shall furnish to the selling Purchasers a certificate signed by the Chief
Executive Officer or the Chief Financial Officer of the Company stating that the
Board of Directors of the Company has made the good faith and reasonable
determination (i) that continued use by the selling Purchasers of the
Registration Statement for purposes of effecting offers or sales of Shares
pursuant thereto would require, under the Securities Act, premature disclosure
in the Registration Statement (or the prospectus relating thereto) of material,
nonpublic information concerning the Company, its business or prospects or any
proposed material transaction involving the Company, (ii) that such premature
disclosure would be materially adverse to the Company, its business or prospects
or any such proposed material transaction or would make the successful
consummation by the Company of any such material transaction significantly less
likely and (iii) that is therefore desirable to suspend the use by the
Purchasers of such Registration Statement (and the prospectus relating thereto)
for purposes of effecting offers or sales of Shares pursuant thereto, then the
right of the selling Purchasers to use the Registration Statement (and the
prospectus relating thereto) for purposes of effecting offers or sales of Shares
pursuant thereto shall be suspended. Notwithstanding the foregoing, the Company
shall not under any circumstances be entitled to exercise its right to suspend
the use of the Registration Statement more than on more than three occasions
during any 12-month period or for more than 30 days per such occasion. Each
Purchaser hereby covenants and agrees that it will not sell any Shares pursuant
to the Registration Statement during the periods the Registration Statement is
withdrawn or the ability to sell thereunder is suspended as set forth in this
Section 7.1(e).
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7.2 Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each selling
Purchaser, each of its directors, officers, members, agents, employees and each
person who controls the Purchaser within the meaning of the Securities Act (a
"Purchaser Indemnified Person") from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which such
Purchaser Indemnified 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, (X) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any preliminary prospectus or final prospectus contained
in the Registration Statement, or any amendment or supplement to such
Registration Statement or prospectus or (Y) the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading (in the case of any prospectus or any form of
prospectus or supplement thereto, in light of the circumstances under which they
were made), and the Company will, as incurred, reimburse such Purchaser
Indemnified Person 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 to a Purchaser
Indemnified Person in any such case to the extent that such loss, claim, damage
or liability arises out of or is based upon (i) an untrue statement or omission
made in such Registration Statement, preliminary prospectus or prospectus, or
any such amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Purchaser
Indemnified Person specifically for use in the Registration Statement, (ii) the
failure of the selling Purchaser related to such Purchaser Indemnified Person to
comply with the covenants and agreements contained in Section 8.3 hereof, or
(iii) any untrue statement in any prospectus that is corrected in any subsequent
prospectus that was delivered to the Purchaser related to such Purchaser
Indemnified Person prior to the pertinent sale or sales by such Purchaser.
(b) Each Purchaser, severally and not jointly, agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed the Registration Statement and each person who controls the Company
within the meaning of the Securities Act (a "Company Indemnified Person") from
and against any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) to which the Company 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 (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, any preliminary prospectus or
final prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement or prospectus, or any omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (in the case of any
prospectus or any form of prospectus or supplement thereto, in light of the
circumstances under which they were made) in reliance upon and in conformity
with written information furnished to the Company by or on behalf of such
Purchaser specifically for use in the Registration Statement, provided, however,
that no Purchaser shall be liable to a Company Indemnified Person in any such
case for any untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact included in any prospectus
which statement or omission has been corrected, in writing, by such Purchaser
and delivered to the Company before the sale from which such loss
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occurred, or (ii) the delivery by the Purchaser of a prospectus (the "Previous
Prospectus") containing an untrue statement or omission that was corrected by
the Company by delivery to the Purchaser prior to the pertinent sale or sales by
the Purchaser of (X) a subsequent prospectus not containing such untrue
statement or omission and (Y) a written notice advising the Purchaser to
terminate use of the Previous Prospectus, and each Purchaser, severally and not
jointly, will, as incurred, reimburse such Company Indemnified Person for any
legal or other expenses reasonably incurred in investigating, defending or
preparing to defend any such action, proceeding or claim; provided that each
Purchasers' obligations pursuant to this Section 7.2(b) shall be limited to the
net proceeds received by the Purchaser from the sale of the Shares under the
Registration Statement.
(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 7.2, 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 the indemnifying person shall have been notified thereof,
the indemnifying person shall be entitled to participate therein, and, to the
extent that it shall wish, to assume at its expense the defense thereof, with
counsel reasonably satisfactory to the indemnified person. After notice from the
indemnifying person to such indemnified person of the indemnifying person's
election to assume the defense thereof, the 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.
No indemnifying party, in the defense of any such claim or litigation shall,
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation, and no
indemnified party shall consent to entry of any judgment or settle such claim or
litigation without the prior written consent of the indemnifying party, which
consent shall not be unreasonably withheld, conditioned or delayed.
(d) If the indemnification provided for in this Section 7.2 is
unavailable to or insufficient to hold harmless an indemnified party 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 party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as
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 Purchasers on the other in connection with
the statements or omissions 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, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or a Purchaser on
the other
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and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Purchasers 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 Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claim, damages, or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Purchaser
shall be required to contribute any amount in excess of the amount by which the
net amount received by the Purchaser from the sale of the Shares to which such
loss relates exceeds the amount of any damages which such Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. 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 Purchasers' obligations in this subsection (d)
to contribute are several in proportion to their respective sales of Shares to
which such loss relates and not joint.
(e) The obligations of the Company and the Purchasers under this
Section 7.2 shall be in addition to any liability which the Company and the
respective Purchasers may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls the Company or any
Purchaser within the meaning of the Act.
7.3 Restrictions on Transferability. None of the rights of any Purchaser under
this Agreement shall be transferred or assigned to any person unless (a) such
person is a Qualifying Holder (as defined below), and (b) such person agrees to
become a party to, and bound by, all of the terms and conditions of, this
Agreement by duly executing and delivering to the Company an instrument of
adherence in the form prescribed by the Company. For purposes of this Section
7.3, the term "Qualifying Holder" shall mean, with respect to any Purchaser, (i)
any partner thereof, (ii) any corporation, partnership controlling, controlled
by, or under common control with, such Investor or any partner thereof, or (iii)
up to two other direct transferees from such Purchaser. None of the rights of
any Purchaser under this Agreement shall be transferred or assigned to any
Person (including, without limitation, a Qualifying Holder) that acquires Shares
in the event that and to the extent that such Person is eligible to resell such
Shares pursuant to Rule 144(k) of the Securities Act.
SECTION 8
RESTRICTIONS ON TRANSFERABILITY OF SHARES:
COMPLIANCE WITH SECURITIES ACT
8.1 Securities Law Transfer Restrictions. No Purchaser shall sell, assign,
pledge, transfer or otherwise dispose of or encumber any of the Shares, except
(i) pursuant to an effective registration statement under the Securities Act or
(ii) pursuant to an available exemption from registration under the Securities
Act and applicable state securities laws and, if requested by the Company, upon
delivery by such Purchaser of an opinion of counsel reasonably satisfactory to
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the Company to the effect that the proposed transfer is exempt from registration
under the Securities Act and applicable state securities laws; provided that no
such opinion shall be requested for any transfer of Shares that is exempt from
such registration under Rule 144 under the Securities Act. Any transfer or
purported transfer of the Shares in violation of this Section 8.1 shall be
voidable by the Company. The Company shall not register any transfer of the
Shares in violation of this Section 8.1. The Company may, and may instruct any
transfer agent for the Company, to place such stop transfer orders as may be
required on the transfer books of the Company in order to ensure compliance with
the provisions of this Section 8.1.
8.2 Restrictive Legend. Each certificate representing Shares shall bear
substantially the following legends (in addition to any legends required under
applicable securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THE SHARES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM.
ADDITIONALLY THE TRANSFER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SPECIFIED IN
THE SECURITIES PURCHASE AGREEMENT DATED AUGUST 1, 2003 BETWEEN
THE COMPANY AND THE ORIGINAL PURCHASER, AND NO TRANSFER OF
SHARES SHALL BE VALID OR EFFECTIVE ABSENT COMPLIANCE WITH SUCH
RESTRICTIONS. ALL SUBSEQUENT HOLDERS OF THIS CERTIFICATE WILL
HAVE AGREED TO BE BOUND BY CERTAIN OF THE TERMS OF THE
AGREEMENT, INCLUDING SECTIONS 8.1 AND 8.3 OF THE AGREEMENT.
COPIES OF THE AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE REGISTERED HOLDER OF THIS CERTIFICATE TO
THE SECRETARY OF THE COMPANY.
The legends contained in this Section 8.2 may be removed from a
certificate in accordance with Section 8.3.
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 such Purchaser covenants to
comply with the requirement of delivering a current prospectus, or (ii) pursuant
to an available exemption from registration under the Securities Act and
applicable state securities laws and, if requested by the Company, upon delivery
by such Purchaser of an opinion of counsel reasonably satisfactory to the
Company to the effect that the proposed transfer is exempt from registration
under the Securities Act and applicable state securities laws; provided that no
such opinion shall be requested for any transfer of Shares that is exempt from
such registration under Rule 144 under the Securities Act. Such
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Purchaser further acknowledges and agrees that such Shares are not transferable
on the books of the Company pursuant to the Registration Statement 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, such Purchaser in the form attached hereto as Exhibit E.
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"
and of any sale of Shares by such Purchaser.
SECTION 9
MISCELLANEOUS
9.1 Waivers and Amendments. The terms of this Agreement may be waived or amended
with the written consent of the Company and each Purchaser.
9.2 Brokers and Finders. Other than Banc of America Securities LLC and its
subagents, each of the parties hereto hereby represents there are no brokers or
finders entitled to compensation in connection with the sale of the Shares to
the Purchasers.
9.3 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Each party
hereby irrevocable submits to the exclusive jurisdiction of the state and
federal courts sitting in the city of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. The Company and the Purchasers
hereby waive all rights to trial by jury.
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. Except as provided in Section
7.3, notwithstanding the foregoing, no Purchaser shall assign this Agreement
without the prior written consent of the Company.
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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 effective upon receipt and 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 at its
address set forth below or the Purchasers 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.
Notices to the Company shall be addressed
to: with a copy to:
Penwest Pharmaceuticals Co. Xxxx and Xxxx LLP
Attn: Chief Financial Officer Attn: Xxxxxx X. Xxxxxx, Esq
00 Xxx Xxxxxxxxx Xxxx, Xxxxx 00 60 State Street
Danbury, Connecticut 06810 Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000. Fax: (000) 000-0000
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.
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 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.
9.12 Currency. All references to "dollars" or "$" in this Agreement shall be
deemed to refer to United States dollars.
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9.13 Replacement of Securities. If any certificate or instrument evidencing any
Securities or Common Stock issued upon exercise of the Additional Investment
Right is mutilated, lost, stolen or destroyed, the Company shall issue or cause
to be issued, in exchange and substitution for and upon cancellation thereof, or
in lieu of and substitution therefor, a new certificate or instrument, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity, if requested, and
upon satisfaction by the Purchaser of any requirements of the Company's transfer
agent. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with
the issuance of such replacement Securities or Shares.
9.14 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Purchasers
and the Company will be entitled to seek specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence.
9.15 Independent Nature of Purchasers' Obligations and Rights. The obligations
of each Purchaser under this Agreement and Additional Investment Rights
(collectively, the "Transaction Documents") are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance of the obligations of any other Purchaser under any
Transaction Document. Each Purchaser represents that the decision of each
Purchaser to purchase Shares pursuant to this Agreement has been made by such
Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or of the Subsidiary which
may have been made or given by any other Purchaser or by any agent or employee
of any other Purchaser, and no Purchaser or any of its agents or employees shall
have any liability to any other Purchaser (or any other Person) relating to or
arising from any such information, materials, statements or opinions. Nothing
contained herein or in any Transaction Document, and no action taken by any
Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction Document. Each Purchaser acknowledges that no other Purchaser has
acted as agent for such Purchaser in connection with making its investment
hereunder and that no other Purchaser will be acting as agent of such Purchaser
in connection with monitoring its investment hereunder. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.
[Remainder of This Page Intentionally Left Blank.]
-19-
The foregoing agreement is hereby executed as of the date first above
written.
PENWEST PHARMACEUTICALS CO.
a Washington corporation
/s/ Xxxxxxxx X. Good
-----------------------------------
By: Xxxxxxxx X. Good
Title: Senior Vice President, Finance, and
Chief Financial Officer
PURCHASERS:
Counterpart signature pages attached.
-20-
Purchaser Signature Page
By its execution and delivery of this signature page, the undersigned
Purchaser hereby joins in and agrees to be bound by the terms and conditions of
the Securities Purchase Agreement dated as of August __, 2003 (the "Purchase
Agreement") by and among Penwest Pharmaceuticals Co. and the Purchasers (as
defined therein), as to the number of shares of Common Stock set forth below,
and authorizes this signature page to be attached to the Purchase Agreement or
counterparts thereof.
Name of Purchaser:
By:
-----------------------------------
Title
Record
Address:
-------------------------------
Telecopy No.:
--------------------------
Number of Units:
------------------------
Aggregate Purchase Price: $
------------
Agreed to and accepted this
___ day of August, 2003
Penwest Pharmaceuticals Co.
By:
--------------------------------
Name:
Title:
EXHIBIT A
Purchased Investment
Purchaser Units Shares Right Shares Purchase Price
--------- ----- ------ ------------ --------------
Cranshire Capital, L.P. 150,000 150,000 30,000 $3,150,000.00
c/o Xxxxxxxx X. Xxxxx
000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Deephaven Small Cap 150,000 150,000 30,000 $3,150,000.00
Growth Fund, LLC
000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Smithfield Fiduciary LLC 221,562 221,562 44,312 $4,652,802.00
c/o Highbridge Capital
Management, LLC
0 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxx X. Xxxxxx /
Xxxx X. Chill
Narragansett I, LP 53,200 53,200 10,640 $1,117,200.00
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Narragansett Offshore, Ltd. 86,800 86,800 17,360 $1,822,800.00
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Xxxxxxxxxxx Discovery Fund 302,000 302,000 60,400 $6,342,000.00
c/o Oppenheimer Funds, Inc.
0000 Xxxxx Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
Attn: Banking Operations
Xxxxxxxxxxx Emerging 20,000 20,000 4,000 $ 420,000.00
Growth Fund
c/o Oppenheimer Funds, Inc.
0000 Xxxxx Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
Attn: Banking Operations
USAZ Xxxxxxxxxxx 8,000 8,000 1,600 $ 168,000.00
Emerging Growth Fund
c/o Oppenheimer Funds, Inc.
0000 Xxxxx Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
Attn: Banking Operations
ProMed Offshore Fund, Ltd. 3,650 3,650 730 $ 76,650.00
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
ProMed Partners, L.P. 21,350 21,350 4,270 $ 448,350.00
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
RS Emerging Growth Pacific 54,500 54,500 10,900 $1,144,500.00
Partners Master Fund
Unit Trust
000 Xxxxxx Xxxxxx
Xxxxx 00
Xxx Xxxxxxxxx, XX 00000
RS Emerging Growth Pacific 18,700 18,700 3,740 $ 392,700.00
Partners Onshore LP
000 Xxxxxx Xxxxxx
Xxxxx 00
Xxx Xxxxxxxxx, XX 00000
Rx Healthcare Partners I LP 8,100 8,100 1,620 $ 170,100.00
c/o Rx Capital Management
LP
000 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
With a copy to:
Xxxxxxx Xxxxx, Esq.
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Rx Healthcare Partners II LP 83,200 83,200 16,640 $ 1,747,200.00
c/o Rx Capital Management
LP
000 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
With a copy to:
Xxxxxxx Xxxxx, Esq.
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Rx Healthcare Overseas Fund 58,700 58,700 11,740 $ 1,232,700.00
c/o Rx Capital Management
LP
000 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
With a copy to:
Xxxxxxx Xxxxx, Esq.
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
S.A.C. Healthco Fund, LLC 165,000 165,000 33,000 $ 3,465,000.00
X.X. Xxx 00, Xxxxxxxx Xxxxx
Xxx Xxxxxx
Xxxxxxxx, BWI
With a copy to:
S.A.C. Capital Advisors, LLC
00 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: General Counsel
Mainfield Enterprises Inc. 450,000 450,000 90,000 $ 9,450,000.00
c/o Sage Capital Growth Inc.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
SF Capital Partners Ltd. 50,000 50,000 10,000 $ 1,050,000.00
0000 Xxxxx Xxxx Xxxxx
Xx. Xxxxxxx, XX 00000
TOTAL 1,904,762 1,904,762 380,952 $40,000,002.00
EXHIBIT B
FORM OF ADDITIONAL INVESTMENT RIGHT
EXHIBIT C
INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire
Securities Purchase Agreement)
A. Complete the following items in the Securities Purchase Agreement:
1. Complete and execute the Purchaser Signature Page. The Agreement
must be executed by an individual authorized to bind the Purchaser.
2. Exhibit C-1 - Stock Certificate Questionnaire:
Provide the information requested by the Stock Certificate
Questionnaire;
3. Exhibit C-2 - Registration Statement Questionnaire:
Provide the information requested by the Registration Statement
Questionnaire.
4. Exhibit C-3 /C-4 - Purchaser Certificate:
Provide the information requested by the Certificate for Individual
Purchasers (B-3) or the Certificate for Corporate, Partnership, Trust,
Foundation and Joint Purchasers (B-4), as applicable.
5. Return, via facsimile, the signed Securities Purchase Agreement
including the properly completed Exhibits C-1 through C-4, to:
Xxxx and Xxxx LLP
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attn: Xxxx Xxxxx
6. After completing instruction number five (5) above, deliver the
original signed Securities Purchase Agreement including the properly
completed Exhibits C-1 through C-4 to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Attn: Xxxx Xxxxx
B. Instructions regarding the transfer of funds for the purchase of Units
will be telecopied to the Purchaser by the Company at a later date.
C. Upon the resale of any Shares by the Purchaser after the Registration
Statement covering any 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 E to the
Company and the Company's transfer agent so that the Shares
may be properly transferred.
EXHIBIT C-1
PENWEST PHARMACEUTICALS CO.
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 4.3 of the Agreement, please provide us with the
following information:
1. The exact name that the Units 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 Securities and the
Registered Holder listed in response to item 1 above: --------------
3. The mailing address, telephone and telecopy number 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: --------------
EXHIBIT C-2
PENWEST PHARMACEUTICALS CO.
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with 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?
_______ Yes _______ No
If yes, please indicate the nature of any such relationship below:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3. Are you the beneficial owner of any other securities of the Company?
_______ Yes _______ No
If yes, please describe the nature and amount of such ownership.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4. Have you made or are you aware of any arrangements relating to the
distribution of the shares of the Company pursuant to the Registration
Statement?
_______ Yes _______ No
If yes, please describe the nature and amount of such arrangements.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EXHIBIT C-3
PENWEST PHARMACEUTICALS CO.
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 Units 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 individual net worth, or joint net worth
with that person's spouse, at the time of his purchase exceeds $1,000,000;
___ (2) 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;
___ (3) An executive officer or director of the Company.
Set forth in the space provided below the state(s), if any, in the U.S.
in which you maintained your residence during the past two years and the dates
during which you resided in each state
------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Dated: Name(s) of Purchaser
------- -------------------------------------
Signature
----------------------------------
Signature
----------------------------------
Dated , 2003
-----------------------------
EXHIBIT C-4
PENWEST PHARMACEUTICALS CO.
CERTIFICATE FOR CORPORATE, PARTNERSHIP,
TRUST, FOUNDATION AND JOINT PURCHASERS
If the investor is a corporation, partnership, trust, pension plan,
foundation, joint purchaser (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 execute and deliver the Securities
Purchase Agreement on behalf of the Purchaser and to take other actions 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 trusts, name the grantors 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 Units 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 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. An 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 advisor,
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)(22) of the Investment Advisers Act
of 1940;
___ 9. An organization described in Section 501(c)(3) of
the Internal Revenue Code, 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 as described in Rule
506(b)(2)(ii) of the Exchange Act;
___ 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:
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
(Continue on a separate piece of paper, if
necessary.)
Please set forth in the space provided below the (i) states, if any, in
the U.S. in which you maintained your principal office during the past two years
and the dates during which you maintained your office in each state, (ii)
state(s), if any, in which you are incorporated or otherwise organized and (iii)
state(s), if any, in which you pay income taxes.
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
Dated: ., 2003
--------------------
------------------------------------
Name of investor
------------------------------------
Signature and title of authorized officer, partner or trustee
EXHIBIT D-1
OPINION OF COMPANY WASHINGTON COUNSEL
(a) The Company is a corporation duly incorporated and validly existing
under the laws of the State of Washington;
(b) The Company has the necessary corporate power and authority to enter
into the Agreement and to issue, sell and deliver to the Purchasers the
Purchased Shares and the Additional Investment Rights to be issued and
sold by it thereunder and to issue, sell and deliver the Common Stock
issuable upon exercise of the Additional Investment Rights.
(c) The execution and delivery of this Agreement has been duly authorized
by all necessary corporate action on the part of the Company;
(d) The performance by the Company of this Agreement and the consummation
by the Company of the transactions herein contemplated will not
contravene any provision of the Company's Articles of Incorporation,
By-laws or the Washington Business Corporation Act; and
(e) The Shares to be issued by the Company pursuant to the terms of the
Agreement will be, upon issuance and delivery against payment therefor
in accordance with the terms of the Agreement or the Additional
Investment Rights, as applicable, duly authorized, validly issued,
fully paid and nonassessable. The Additional Investment Rights, when
issued, sold and delivered in accordance with the terms of the
Agreement and for the consideration expressed therein, will be validly
issued. The shares of Common Stock issuable upon exercise of the
Additional Investment Rights have been validly authorized and reserved
for issuance and, when issued in accordance with the terms of the
Additional Investment Rights and for the consideration expressed
therein, such shares of Common Stock will be fully paid and
nonassessable. Shareholders of the Company have no preemptive rights
under the Company's Articles of Incorporation or Bylaws.
EXHIBIT D-2
OPINION OF COMPANY CORPORATE COUNSEL
(a) The consummation by the Company of the transactions herein
contemplated do not conflict with, violate or breach any of the terms and
provisions, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, or any lease, contract or other agreement or instrument filed by
the Company as an exhibit to any filing, report or registration statement with
the SEC (an "SEC Exhibit"), or, to such counsel's knowledge, any order, writ or
decree of any court or governmental agency or body having jurisdiction over the
Company, or over any of its properties or operations specifically naming the
Company; provided however, that no opinion need be rendered concerning state or
foreign securities laws, Blue Sky laws or any other laws other than United
States federal laws, the Delaware General Corporate Law statute and the state
laws of the Commonwealth of Massachusetts;
(b) This Agreement constitutes a valid and binding obligation of the
Company, enforceable against the Company according to its terms, except to the
extent that they may be subject to or affected by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar laws
relating to or affecting the rights of creditors generally, (ii) statutory or
decisional law concerning recourse by creditors to security in the absence of
notice or hearing, (iii) duties and standards imposed on creditors and parties
to contracts, including, without limitation, requirements of good faith,
reasonableness and fair dealing, (iv) general equitable principles and (v) other
customary qualifications (it being recognized that in giving this opinion
counsel will rely on the opinions delivered by Xxxxxxx Coie, LLP with respect to
corporate power and authority, due authorization and non-contravention); and
(c) The stockholders of the Company have no preemptive rights under the
SEC Exhibits; and
(d) Based in part on the representations of the Purchasers in Section 4
of this Agreement, the offer and sale of the Units was exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as
amended.
(e) As of their respective filing dates, the SEC Documents (other than
the financial statements and other financial data therein, including the notes
and schedules thereto, as to which such counsel expresses no opinion) complied
as to form in all material respects with the requirements of the Exchange Act
and the rules and regulations of the SEC promulgated thereunder.
EXHIBIT E
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
To: [Transfer agent name and address]
Attention:
---------------------------------
The undersigned, the Purchaser or an officer of, or other person duly
authorized by the Purchaser, hereby certifies that _____________________ was the
Purchaser of the Shares_______________________ (fill in name of Purchaser)
evidenced by the attached certificate, and as such, proposes to transfer such
Shares on or about __________ in accordance with the registration statement,
file number ______, and the Purchaser certifies that the transfer has complied
with and will comply with all applicable requirements of the Securities Act of
1933, as amended (the "Act"), including without limitation the requirement of
delivering a current prospectus in a timely manner.
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:
----------------------------------------------
