Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of July
25, 2003 is made by and among Sonus Pharmaceuticals, Inc., a Delaware
corporation, with headquarters located at 00000 00xx Xxxxxx X.X., Xxxxxxx,
Xxxxxxxxxx 00000 (the "Company"), and the investors named on the signature pages
hereto, together with their permitted transferees (each, an "Investor" and
collectively, the "Investors").
RECITALS:
A. The Company and the Investors are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Section 4(2) of the Securities Act and Rule 506 under Regulation D.
B. The Investors desire, upon the terms and conditions stated in
this Agreement, to purchase shares of the Company's Common Stock (the "Common
Shares") and warrants, in the form of Exhibit A hereto, to purchase such number
of shares of the Company's Common Stock equal to 50% of the Common Shares
purchased by the Investors, rounded down to the nearest whole share (the
"Warrants," and collectively with the Common Shares, the "Securities"), for an
aggregate purchase price of at least Ten Million Dollars ($10,000,000) and not
to exceed Twenty Million Dollars ($20,000,000). The purchase price per share of
the Common Shares is $3.56, which is equal to the lesser of (i) average per
share closing prices as reported on Nasdaq for the five (5) trading days ending
on the day prior to the date of this Agreement or (ii) the per share closing
price as reported on Nasdaq on the trading day immediately preceding the date of
this Agreement. The purchase price for each Warrant is $.125 multiplied by the
number of Shares of Common Stock purchasable under each Warrant (the "Warrant
Shares").
C. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement under which the Company has agreed to provide certain registration
rights under the Securities Act, the rules and regulations promulgated
thereunder and applicable state securities laws.
D. The capitalized terms used herein and not otherwise defined
have the meanings given them in Article IX hereof.
In consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Investors hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES
1.1 Purchase and Sale of Securities. At the Closing, subject to
the terms of this Agreement and the satisfaction or waiver of the conditions set
forth in Articles VI and VII hereof, the Company will issue and sell to each
Investor, and each Investor will (on a several and not a joint basis) purchase
from the Company, the number of Securities set forth beneath such Investor's
name on the signature pages hereof.
1.2 Payment. At or prior to the Closing, each Investor will pay
the purchase price for the number of Securities set forth beneath its name on
the signature pages hereof, by wire transfer of immediately available funds in
accordance with the wire instructions set forth on Exhibit B hereto. Such funds
shall be held, without interest, by the Company's legal counsel in trust for the
benefit of each such Investor until the Closing Date and such time as the
Company or the Company's legal counsel receives written confirmation from each
Investor (which may be transmitted by facsimile or email) that all closing
conditions have been satisfied, at which time such funds shall be immediately
forwarded by wire transfer to the Company. The Company shall deliver to each
Investor certificates representing the Securities so purchased by such Investor
within two (2) business days following the Closing Date against delivery of the
purchase price as described above.
1.3 Closing Date. Subject to the satisfaction or waiver of the
conditions set forth in Articles VI and VII hereof, the Closing will take place
at 8 a.m. Pacific Standard Time on July 25, 2003 or at such other date or time
agreed upon by the parties to this Agreement (the "Closing Date"). The Closing
will be held at the offices of Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx or at such other
place as the parties agree. In no event (i) will the Closing occur unless and
until the Company's legal counsel has received deposits for the purchase of
Securities in accordance with Section 1.2 of at least Ten Million Dollars
($10,000,000) or (ii) will the Company sell Securities pursuant to this
Agreement for an aggregate purchase price in excess of Twenty Million Dollars
($20,000,000).
ARTICLE II
INVESTOR'S REPRESENTATIONS AND WARRANTIES
Each Investor represents and warrants to the Company, severally and
solely with respect to itself and its purchase hereunder and not with respect to
any other Investor, that:
2.1 Investment Purpose. The Investor is purchasing the Securities
for its own account and not with a present view toward the public sale or
distribution thereof, except pursuant to sales registered or exempted from
registration under the Securities Act; provided, however, that by making the
representation herein, the Investor does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption from registration under the Securities Act.
2.2 Accredited Investor Status. The Investor is an "accredited
investor" as defined in Rule 501(a) of Regulation D. The Investor has delivered
an Investor Questionnaire in the form of Exhibit C to the Company and to Punk,
Xxxxxx & Company.
2.3 Reliance on Exemptions. The Investor understands that the
Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Investor's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Investor to acquire the Securities.
2.4 Information. The Investor has received and read the
Confidential Offering Memorandum, dated July 21, 2003, as the same has been
amended or supplemented, including the Exhibits A, B and C thereto (Exhibit A,
being the Company's 10-Q for the period ended March 31,
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2003; Exhibit B, the Company's 10-K for the period ended December 31, 2002; and
Exhibit C, the Company's Proxy Statement filed on March 2, 2003) (the "Offering
Memorandum"). The Investor and its advisors, if any, have been furnished with
all materials relating to the business, finances and operations of the Company,
and materials relating to the offer and sale of the Securities, that have been
requested by the Investor or its advisors, if any. The Investor and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company. Neither such inquiries nor any other due diligence investigation
conducted by Investor or any of its advisors or representatives modify, amend or
affect the Investor's right to rely on the Company's representations and
warranties contained in Article III below. The Investor acknowledges and
understands that its investment in the Securities involves a significant degree
of risk, including the risks reflected in the Offering Memorandum.
2.5 Governmental Review. The Investor understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities or
an investment therein.
2.6 Transfer or Resale. The Investor understands that:
(a) except as provided in the Registration Rights Agreement, the
Securities have not been and are not being registered under the Securities Act
or any applicable state securities laws and, consequently, the Investor may have
to bear the risk of owning the Securities for an indefinite period of time
because the Securities may not be transferred unless (i) the resale of the
Securities is registered pursuant to an effective registration statement under
the Securities Act; (ii) the Investor has delivered to the Company an opinion of
counsel (in form, substance and scope customary for opinions of counsel in
comparable transactions) to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; (iii) the Securities are sold or transferred pursuant to Rule 144;
or (iv) the Securities are sold or transferred to an affiliate (as defined in
Rule 144) of the Investor;
(b) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and regulations of the SEC
thereunder; and
(c) except as set forth in the Registration Rights Agreement,
neither the Company nor any other person is under any obligation to register the
Securities under the Securities Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.
2.7 Legends. The Investor understands that until (a) the
Securities may be sold by the Investor under Rule 144(k) or (b) such time as the
resale of the Securities has been registered under the Securities Act as
contemplated by the Registration Rights Agreement, the certificates representing
the Securities will bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of the
certificates for such Securities):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES. THE
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SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE
SECURITIES LAWS, OR UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
The legend set forth above will be removed and the Company will issue a
certificate without the legend to the holder of any certificate upon which it is
stamped, in accordance with the terms of Article V hereof.
2.8 Authorization; Enforcement. This Agreement and the
Registration Rights Agreement have been duly and validly authorized, executed
and delivered on behalf of the Investor and are valid and binding agreements of
the Investor enforceable in accordance with their terms, subject to the effect
of any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and the application of general
principles of equity.
2.9 Residency. The Investor is a resident of (or, if an entity,
has its principal place of business in) the jurisdiction set forth immediately
below such Investor's name on the signature pages hereto.
2.10 Acknowledgements Regarding Placement Agent. The Investor
acknowledges that Punk, Xxxxxx & Company is acting as placement agent (the
"Placement Agent") for the Securities being offered hereby and will be
compensated by the Company for acting in such capacity. The Investor further
acknowledges that the Placement Agent has acted solely as placement agent in
connection with the offering of the Securities by the Company, that the
information and data provided to the Investor in connection with the
transactions contemplated hereby have not been subjected to independent
verification by the Placement Agent, and that the Placement Agent makes no
representation or warranty with respect to the accuracy or completeness of such
information, data or other related disclosure material. The Investor further
acknowledges that in making its decision to enter into this Agreement and
purchase the Securities it has relied on its own examination of the Company and
the terms of, and consequences, of holding the Securities. The Investor further
acknowledges that the provisions of this Section 2.10 are for the benefit of,
and may be enforced by, the Placement Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors that:
3.1 Organization and Qualification. The Company is duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, with full power and authority
(corporate and other) to own, lease, use and operate its properties and to carry
on its business as and where now owned, leased, used, operated and conducted.
The Company is duly qualified to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect.
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3.2 Authorization; Enforcement. (a) The Company has all requisite
corporate power and authority to enter into and to perform its obligations under
this Agreement, the Registration Rights Agreement and the Warrants, to
consummate the transactions contemplated hereby and thereby and to issue the
Securities in accordance with the terms hereof and thereof; (b) the execution,
delivery and performance of this Agreement, the Registration Rights Agreement
and the Warrants by the Company and the consummation by it of the transactions
contemplated hereby and thereby (including without limitation the issuance of
the Securities) have been duly authorized by the Company's Board of Directors
and no further consent or authorization of the Company, its Board or Directors,
or its shareholders is required; (c) this Agreement, the Registration Rights
Agreement and the Warrants have been duly executed by the Company; and (d) each
of this Agreement, the Registration Rights Agreement and the Warrants
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to the effect of any
applicable bankruptcy, insolvency, reorganization, or moratorium or similar laws
affecting the rights of creditors generally and the application of general
principles of equity.
3.3 Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of (a) 30,000,000 shares of Common Stock, par
value $.001 per share, of which 13,749,237 shares are issued and outstanding,
2,095,647 shares are reserved for issuance upon exercise of stock options
outstanding under the Company's employee and director stock option plans,
907,164 shares are reserved for grants of rights to purchase under the Company's
employee and director stock option plans, 19,297 shares are reserved for
issuance pursuant to the Company's employee stock purchase plan and 516,675
shares are reserved for issuance under warrants issued by the Company on June
15, 2001 and January 18, 2002; (b) 5,000,000 shares of preferred stock, par
value $.001 per share, 500,000 of which shares are designated Series A Junior
Participating Preferred Stock, par value $.001 per share, none of which is
issued and outstanding. All of such outstanding shares of capital stock are, or
upon issuance will be, duly authorized, validly issued, fully paid and
nonassessable. No shares of capital stock of the Company, including the
Securities issuable pursuant to this Agreement, are subject to preemptive rights
or any other similar rights of the stockholders of the Company or any liens or
encumbrances imposed through the actions or failure to act of the Company.
Except as disclosed in this Section 3.3 and except for the transactions
contemplated hereby, (i) there are no outstanding options, warrants, scrip,
rights to subscribe for, puts, calls, rights of first refusal or preemptive or
other similar rights, agreements, understandings, claims or other commitments or
rights of any character whatsoever relating to, or securities or rights directly
or indirectly convertible into, exercisable for, or exchangeable for any shares
of capital stock of the Company, or arrangements by which the Company is or may
become bound to issue additional shares of capital stock of the Company; (ii)
there are no agreements or arrangements (other than the Registration Rights
Agreement, the Registration Rights Agreements entered into on June 15, 2001 and
January 18, 2002 and the Purchase Warrants dated June 15, 2001) under which the
Company is obligated to register the sale of any of its securities under the
Securities Act and (iii) there are no anti-dilution or price adjustment
provisions contained in any security issued by the Company (or in any agreement
providing rights to security holders) that will be triggered by the issuance of
the Securities (other than the exercise price adjustments pursuant to the
warrants to purchase an aggregate of 385,800 shares of Common Stock, issued by
the Company on January 18, 2002). The Company has furnished to the Investors
true and correct copies of the Company's Certificate of Incorporation, as
amended, as in effect on the date hereof, the Company's Bylaws as in effect on
the date hereof and the terms of all securities convertible into or exercisable
for Common Stock of the Company and the material rights of the holders thereof
in respect thereto.
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3.4 Issuance of Securities. The Securities are duly authorized
and, upon issuance in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, free from all taxes, liens,
claims, encumbrances and charges with respect to the issue thereof, will not be
subject to preemptive rights or other similar rights of stockholders of the
Company, and will not impose personal liability on the holders thereof. The
Company has reserved a sufficient number of shares of Common Stock for issuance
upon exercise of the Warrants, and upon payment of the exercise price and
exercise of the Warrants in accordance with its terms, the Warrant Shares will
be validly issued, fully paid and non-assessable, free from all taxes, liens,
claims, encumbrances and charges with respect to the issue thereof, will not be
subject to preemptive rights or other similar rights of stockholders of the
Company and will not impose personal liability on the holders thereof.
3.5 No Conflicts; No Violation.
(a) The execution, delivery and performance of this
Agreement, the Registration Rights Agreement and the Warrants by the Company and
the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the issuance of the Securities) will not
(i) conflict with or result in a violation of any provision of its Certificate
of Incorporation or Bylaws or (ii) violate or conflict with, or result in a
breach of any provision of, or constitute a default (or an event which with
notice or lapse of time or both could become a default) under, or give to others
any rights of termination, amendment (including without limitation, the
triggering of any anti-dilution provision), acceleration or cancellation of, any
agreement, indenture, patent, patent license, or instrument to which the Company
is a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including U.S. federal and state securities laws and
regulations and regulations of any self-regulatory organizations to which the
Company or its securities are subject) applicable to the Company or by which any
property or asset of the Company is bound or affected (except for such
conflicts, breaches, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect).
(b) The Company is not in violation of its Certificate of
Incorporation, Bylaws or other organizational documents and the Company is not
in default (and no event has occurred which with notice or lapse of time or both
could put the Company in default) under any agreement, indenture or instrument
to which the Company is a party or by which any property or assets of the
Company is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect.
(c) The Company is not conducting its business in
violation of any law, ordinance or regulation of any governmental entity, the
failure to comply with which would, individually or in the aggregate, have a
Material Adverse Effect.
(d) Except as specifically contemplated by this Agreement
and as required under the Securities Act and any applicable state securities
laws or any listing agreement with any securities exchange or automated
quotation system, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self regulatory agency in order for it
to execute, deliver or perform any of its obligations under this Agreement, the
Registration Rights Agreement or the Warrants, in each case in accordance with
the terms hereof or thereof, or to issue and sell the Securities in accordance
with the terms hereof. All consents, authorizations, orders, filings and
registrations which the
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Company is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof. The Company is not in
violation of the listing requirements of Nasdaq.
3.6 SEC Documents, Financial Statements. Since June 30, 2000, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents (other than exhibits) incorporated by reference therein,
being hereinafter referred to herein as the "SEC Documents"). The Company has
delivered to each Investor, or each Investor has had access to, true and
complete copies of the SEC Documents, except for such exhibits and incorporated
documents. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act or the Securities
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Offering
Memorandum does not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of
the Company included in the Offering Memorandum complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with U.S. generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly present
in all material respects the financial position of the Company as of the dates
thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the financial statements included in the
Offering Memorandum, the Company has no liabilities, contingent or otherwise,
other than liabilities incurred in the ordinary course of business subsequent to
March 31, 2003, and liabilities of the type not required under generally
accepted accounting principles to be reflected in such financial statements.
Such liabilities incurred subsequent to March 31, 2003, are not, in the
aggregate, material to the financial condition or operating results of the
Company.
3.7 Absence of Certain Changes. Except as disclosed in the
Offering Memorandum, since December 31, 2002, there has been no material adverse
change in the assets, liabilities, business, properties, operations, financial
condition, prospects or results of operations of the Company, and the Company
has not (i) varied its business plan or practices, in any material respect, from
past practices, (ii) entered into any material financing, joint venture, license
or similar arrangements or (iii) suffered or permitted to be incurred any
liability or obligation against any of its properties or assets that would limit
or restrict its ability to perform its obligations hereunder.
3.8 Absence of Litigation. Except as disclosed in the SEC
Documents, there is no action, suit, claim, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its officers or directors acting as
such that could, individually or in the aggregate, have a Material Adverse
Effect.
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3.9 Intellectual Property Rights. The Company owns or possesses
the licenses or rights to use all patents, patent applications, patent rights,
inventions, know-how, trade secrets, trademarks, trademark applications, service
marks, service names, trade names and copyrights necessary to enable it to
conduct its business as now operated or as currently proposed to be operated
(the "Intellectual Property"). Except as set forth in the SEC Documents, there
are no material outstanding options, licenses or agreements relating to the
Intellectual Property, nor is the Company bound by or a party to any material
options, licenses or agreements relating to the patents, patent applications,
patent rights, inventions, know-how, trade secrets, trademarks, trademark
applications, service marks, service names, trade names or copyrights of any
other person or entity. Except as disclosed in the SEC Documents, there is no
claim or action or proceeding pending or, to the Company's knowledge, threatened
that challenges the right of the Company with respect to any Intellectual
Property. Except as set forth in the SEC Documents, to the knowledge of the
Company, the Company's Intellectual Property does not infringe any intellectual
property rights of any other person which, if the subject of an unfavorable
decision, ruling or finding would have a Material Adverse Effect.
3.10 Tax Status. The Company has timely made or filed all federal,
state and foreign income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject (unless and only to the
extent that the Company has set aside on its books provisions reasonably
adequate for the payment of all unpaid and unreported taxes) and has timely paid
all taxes and other governmental assessments and charges, shown or determined to
be due on such returns, reports and declarations, except those being contested
in good faith, and has set aside on its books provisions reasonably adequate for
the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. To the knowledge of the Company, there
are no unpaid taxes claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any such
claim. The Company has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign, federal,
state or local tax. None of the Company's tax returns is presently being audited
by any taxing authority.
3.11 Environmental Laws. The Company (i) is in compliance with all
applicable foreign federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii)
has received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct its business and (iii) is in compliance
with all terms and conditions of any such permit, license or approval where, in
each of the three foregoing clauses, the failure to so comply would have,
individually or in the aggregate, a Material Adverse Effect.
3.12 No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any offers to
buy any security under circumstances that would require registration under the
Securities Act of the issuance of the Securities to the Investors. The issuance
of the Securities to the Investors will not be integrated with any other
issuance of the Company's securities (past, current or future) for purposes of
the Securities Act or any applicable rules of Nasdaq.
3.13 No Brokers. The Company has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments relating to this Agreement or the transactions contemplated
hereby, except for dealings with Punk, Xxxxxx & Company, whose commissions and
fees will be paid for by the Company.
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3.14 Insurance. The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company is engaged.
3.15 Employment Matters. The Company is in compliance with all
federal, state, local and foreign laws and regulations respecting employment and
employment practices, terms and conditions of employment and wages and hours,
except where failure to be in compliance would not have a Material Adverse
Effect. The Company is not bound by or subject to (and none of its assets or
properties is bound by or subject to) any written or oral, express or implied,
contract, commitment or arrangement with any labor union, and no labor union has
requested or, to the Company's knowledge, has sought to represent any of the
employees, representatives or agents of the Company. There is no strike or other
labor dispute involving the Company pending, or to the Company's knowledge,
threatened nor is the Company aware of any labor organization activity involving
its employees. The Company is not aware that any officer or key employee, or
that any group of officers or key employees, intends to terminate their
employment with the Company, nor does the Company have a present intention to
terminate the employment of any of the foregoing.
3.16 Employee Benefit Plans. Except as set forth in the Offering
Memorandum, the Company does not have any Employee Benefit Plans, as such term
is defined in the Employee Retirement Security Act of 1974.
3.17 Investment Company Status. The Company is not and upon
consummation of the sale of the Securities will not be an "investment company,"
a company controlled by an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
3.18 No Subsidiaries. The Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
association, joint venture, partnership or other business entity and the Company
is not a direct or indirect participant in any joint venture or partnership.
3.19 No Conflict of Interest. The Company is not indebted, directly
or indirectly, to any of its officers or directors or to their respective
spouses or children, in any amount whatsoever other than in connection with
expenses or advances of expenses incurred in the ordinary course of business or
relocation expenses of employees. None of the Company's officers, directors or
employees, or any members of their immediate families, are directly, or
indirectly, indebted to the Company or, to the best of the Company's knowledge,
have any direct or indirect ownership interest in any entity with which the
Company is affiliated or with which the Company has a business relationship, or
any entity which competes with the Company, except that officers, directors,
employees and/or stockholders of the Company may own stock in (but not exceeding
five percent (5%) of the outstanding capital stock of) any publicly traded
company that may compete with the Company. To the best of the Company's
knowledge, none of the Company's officers, directors or employees or any members
of their immediate families are, directly or indirectly, interested in any
material contract with the Company. The Company is not a guarantor or indemnitor
of any indebtedness of any other person or entity.
3.20 Nasdaq Notification. The Company has notified Nasdaq of the
issuance and listing of the Common Shares and Warrant Shares on Nasdaq and the
Common Shares and Warrant Shares
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have been approved for quotation on Nasdaq, upon official notice of issuance.
3.21 Reporting Status; Eligibility to Use Form S-3. The Company's
Common Stock is registered under Section 12g of the Exchange Act. The Company
currently meets the "registrant eligibility" requirements set forth in the
general instructions to Form S-3 to enable the registration of the Registrable
Securities, as defined in the Registration Rights Agreement.
3.22 No Manipulation of Stock. The Company has not taken and will
not, in violation of applicable law, take, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Common
Shares.
3.23 Representations Complete. The representations and warranties
made by the Company in this Agreement, the statements made in any certificates
furnished by the Company pursuant to this Agreement, and the statements made by
the Company in any documents mailed, delivered or furnished to the Investors in
connection with this Agreement, taken as a whole, do not contain and will not
contain, as of their respective dates and as of the Closing Date, any untrue
statement of a material fact, nor do they omit or will they omit, as of their
respective dates or as of the Closing Date, to state any material fact necessary
in order to make the statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading.
ARTICLE IV
COVENANTS
4.1 Best Efforts. Each party will use its best efforts to satisfy
in a timely fashion each of the conditions to be satisfied by it under Articles
VI and VII of this Agreement.
4.2 Form D; Blue Sky Laws. The Company will timely file a Notice
of Sale of Securities on Form D with respect to the Securities, as required
under Regulation D. The Company will, on or before the Closing Date, take such
action as it reasonably determines to be necessary to qualify the Securities for
sale to the Investors under this Agreement under applicable securities (or "blue
sky") laws of the states of the United States (or to obtain an exemption from
such qualification).
4.3 Continued Eligibility to Use Form S-3. Throughout the
Registration Period (as defined in the Registration Rights Agreement), the
Company will timely file all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC under the reporting
requirements of the Exchange Act, and the Company will not terminate its status
as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination. The Company will take all reasonably necessary action to continue
to meet, the "registrant eligibility" requirements set forth in the general
instructions to Form S-3 to enable the registration of the Registrable
Securities as defined in the Registration Rights Agreement.
4.4 Expenses. The Company and each Investor is liable for, and
will pay, its own expenses incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement and the other agreements
to be executed in connection herewith, including, without
10
limitation, attorneys' and consultants' fees and expenses; provided, that if the
transactions contemplated hereby are consummated, the Company will pay the fees
and expenses of one special counsel to the Investors, not to exceed $15,000.
4.5 Financial Information. As long as an Investor owns any of the
Securities or Warrant Shares, the financial statements of the Company will be
prepared in accordance with United States generally accepted accounting
principles, consistently applied, and will fairly present in all material
respects the consolidated financial position of the Company and results of its
operations and cash flows as of, and for the periods covered by, such financial
statements (subject, in the case of unaudited statements, to normal year-end
audit adjustments).
4.6 Compliance with Law. As long as an Investor owns any of the
Securities or Warrant Shares, the Company will conduct its business in
compliance with all applicable laws, rules and regulations of the jurisdictions
in which it is conducting business, including, without limitation, all
applicable local, state and federal environmental laws and regulations, the
failure to comply, individually or in the aggregate, with which would have a
Material Adverse Effect.
4.7 No Integration. The Company will not make any offers or sales
of any security or solicit offers to buy or otherwise negotiate in respect of
any offer or sale of any security (other than the Securities) under
circumstances that would cause the offering of the Securities to be integrated
with any other offering of securities by the Company (i) for the purpose of any
stockholder approval provision applicable to the Company or its securities or
(ii) for purposes of any registration requirement under the Securities Act.
4.8 Sales by Investors. Each Investor will sell any Securities
sold by it in compliance with applicable prospectus delivery requirements, if
any, or otherwise in compliance with the requirements for an exemption from
registration under the Securities Act and the rules and regulations promulgated
thereunder. No Investor will make any sale, transfer or other disposition of the
Securities in violation of federal or state securities laws.
ARTICLE V
TRANSFER AGENT INSTRUCTIONS; REMOVAL OF LEGENDS
5.1 Issuance of Certificates. The Company will, or will instruct
its transfer agent to, issue certificates, registered in the name of each
Investor or its nominee, for the Securities and, promptly upon exercise of any
Warrants, the applicable Warrant Shares. All such certificates will bear the
restrictive legend described in Section 2.7, except as otherwise specified in
this Article V. The Company will not give to its transfer agent any instruction
other than as described in this Article V and stop transfer instructions to give
effect to Section 2.7 hereof (prior to registration of the Securities under the
Securities Act). Nothing in this Section will affect in any way the Investor's
obligations to comply with all applicable prospectus delivery requirements, if
any, upon resale of the Common Shares and/or Warrant Shares.
5.2 Unrestricted Securities. If, unless otherwise required by
applicable state securities laws, (a) the Securities or Warrant Shares
represented by a certificate have been registered under an effective
registration statement filed under the Securities Act, (b) a holder of
Securities or Warrant Shares provides the Company and its transfer agent with an
opinion of counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions, to the effect that a public
11
sale or transfer of such Securities or Warrant Shares may be made without
registration under the Securities Act and such sale either has occurred or may
occur without restriction on the manner of such sale or transfer, (c) such
holder provides the Company and its transfer agent with reasonable assurances
that such Securities or Warrant Shares can be sold under Rule 144, or (d) the
Securities or Warrant Shares represented by a certificate can be sold without
restriction as to the number of securities sold under Rule 144(k), the Company
will permit the transfer of the Securities or Warrant Shares, and the Company's
transfer agent will issue one or more certificates, free from any restrictive
legend, in such name and in such denominations as specified by such holder.
Notwithstanding anything herein to the contrary, the Securities or Warrant
Shares may be pledged as collateral in connection with a bona fide margin
account or other lending arrangement; provided that such pledge will not alter
the provisions of this Article V with respect to the removal of restrictive
legends.
5.3 Enforcement of Provision. The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
Investor by vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Article V will be inadequate and agrees, in
the event of a breach or threatened breach by the Company of the provisions of
this Section, that the Investor will be entitled, in addition to all other
available remedies, to an injunction restraining any breach and requiring
immediate transfer of the Securities and/or Warrant Shares, as applicable,
without the necessity of showing economic loss and without any bond or other
security being required.
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
The obligation of the Company to issue and sell the Securities to each
Investor at the Closing is subject to the satisfaction by such Investor, on or
before the Closing Date, of each of the following conditions. These conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion:
6.1 The Investor will have executed this Agreement, the Investor
Questionnaire and the Registration Rights Agreement and will have delivered
those agreements to the Company.
6.2 The Investor will have delivered the purchase price for the
Securities to the Company in accordance with this Agreement.
6.3 The representations and warranties of the Investor must be
true and correct in all material respects as of the Closing Date as though made
at that time (except for representations and warranties that speak as of a
specific date, which representations and warranties must be correct as of such
date), and the Investor will have performed and complied in all material
respects with the covenants and conditions required by this Agreement to be
performed or complied with by the Investor at or prior to the Closing.
6.4 No statute, rule, regulation, executive order, decree, ruling
or injunction will have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement or the Registration Rights Agreement or the Warrants.
12
ARTICLE VII
CONDITIONS TO THE INVESTOR'S OBLIGATION TO PURCHASE
The obligation of each Investor hereunder to purchase the Securities
from the Company at the Closing is subject to the satisfaction, on or before the
Closing Date, of each of the following conditions. These conditions are for each
Investor's respective benefit and may be waived by any Investor at any time in
its sole discretion:
7.1 The Company will have executed this Agreement, the
Registration Rights Agreement and the Warrants and will have delivered those
Agreements to the Investor.
7.2 The Investors shall have received an opinion of counsel from
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, counsel to the Company, in customary form,
acceptable to Investors and their counsel.
7.3 Each of the representations and warranties of the Company
qualified by materiality must be true and correct in all respects as of the
Closing as though made at that time (except for representations and warranties
that speak as of a specific date, which representations and warranties must be
true and correct as of such date) and each of the representations and warranties
of the Company not qualified by materiality must be true and correct in all
material respects as of the Closing as though made at that time (except for
representations and warranties that speak as of a specific date, which
representations and warranties must be true and correct as of such date) and the
Company must have performed and complied in all material respects with the
covenants and conditions required by this Agreement to be performed or complied
with by the Company at or prior to the Closing. The Investor must have received
a certificate or certificates dated as of the Closing Date and executed by the
Chief Executive Officer or the Chief Financial Officer of the Company certifying
as to the matters in contained in this Section 7.3 and as to such other matters
as may be reasonably requested by such Investor, including, but not limited to,
the Company's Certificate of Incorporation, Bylaws, Board of Directors'
resolutions relating to the transactions contemplated hereby and the incumbency
and signatures of each of the officers of the Company who may execute on behalf
of the Company any document delivered at the Closing.
7.4 No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction will have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Registration Rights Agreement or the
Warrants and which could, individually or in the aggregate, have a Material
Adverse Effect.
7.5 Trading and listing of the Common Stock on Nasdaq must not
have been suspended by the SEC or Nasdaq.
7.6 Irrevocable transfer agent instructions, in form and substance
satisfactory to the Investors, will have been delivered to the Company's
transfer agent and acknowledged in writing by such transfer agent.
13
ARTICLE VIII
INDEMNIFICATION
In consideration of each Investor's execution and delivery of this
Agreement and its acquisition of the Securities hereunder, and in addition to
all of the Company's other obligations under this Agreement and the Registration
Rights Agreement and the Warrants, the Company will defend, protect, indemnify
and hold harmless each Investor and each other holder of the Securities and all
of their stockholders, officers, directors, employees and direct or indirect
investors and any of the foregoing person's agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Indemnitees")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (regardless of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by
an Indemnitee as a result of, or arising out of, or relating to (a) any breach
of any representation or warranty made by the Company herein or in any other
certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Company contained herein
or in any other certificate, instrument or document contemplated hereby or
thereby or (c) any cause of action, suit or claim brought or made against such
Indemnitee and arising out of or resulting from the execution, delivery,
performance, breach or enforcement of this Agreement or the Registration Rights
Agreement or Warrants by the Company. To the extent that the foregoing
undertaking by the Company is unenforceable for any reason, the Company will
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities that is permissible under applicable law.
The Indemnitees shall have the right to employ separate counsel in any
such proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnitees unless: (i)
the Company has agreed in writing to pay such fees and expenses; (ii) the
Company shall have failed to promptly assume the defense of such proceeding and
to employ counsel reasonably satisfactory to such Indemnitees in any such
proceeding; or (iii) the named parties to any such proceeding (including any
impleaded parties) include both such Indemnitees and the Company, and such
Indemnitees shall have been advised by counsel that a conflict of interest is
likely to exist if the same counsel were to represent such Indemnitees and the
Company (in which case, if such Indemnitees notify the Company in writing that
they elect to employ separate counsel at the expense of the Company, the Company
shall not have the right to assume the defense thereof and such counsel shall be
at the reasonable expense of the Company; provided, however, that in no event
shall the Company be responsible for the fees and expenses of more than one
separate counsel). The Company shall not be liable for any settlement of any
such proceeding effected without its written consent, which consent shall not be
unreasonably withheld. The Company shall not, without the prior written consent
of a majority of the Indemnitees, effect any settlement of any pending
proceeding in respect of which Indemnitees are a party, unless such settlement
includes an unconditional release of such Indemnitees from all liabilities that
are the subject matter of such proceeding. Subject to the foregoing, all fees
and expenses (including reasonable fees and expenses to the extent incurred in
connection with investigating or preparing to defend any such proceeding in a
manner inconsistent with this Article VIII) of the Indemnitees shall be paid to
the Indemnitees as incurred, within ten (10) business days of written notice
thereof to the Company, which notice shall be delivered no more frequently than
on a monthly basis; provided, that the Indemnitees shall reimburse the Company
for any and all such fees and expenses to the extent it is finally judicially
determined that such Indemnitees are not entitled to indemnification hereunder.
14
ARTICLE IX
DEFINITIONS
9.1 "Closing" means the closing of the purchase and sale of the
Securities under this Agreement.
9.2 "Closing Date" has the meaning set forth in Section 1.3.
9.3 "Common Shares" has the meaning set forth in the Recitals.
9.4 "Common Stock" means the common stock, par value $.001 per
share, of the Company.
9.5 "Company" means Sonus Pharmaceuticals, Inc.
9.6 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
9.7 "Indemnified Liabilities" has the meaning set forth in Article
VIII.
9.8 "Indemnitees" has the meaning set forth in Article VIII.
9.9 "Investors" means the investors whose names are set forth on
the signature pages of this Agreement, and their permitted transferees.
9.10 "Material Adverse Effect" means a material adverse effect on
(a) the business, operations, prospects, assets or financial condition of the
Company or (b) the ability of the Company to perform its obligations pursuant to
the transactions contemplated by this Agreement or under the agreements or
instruments to be entered into or filed in connection herewith, including the
Registration Rights Agreement and the Warrants.
9.11 "Nasdaq" means the Nasdaq National Market System.
9.12 "Offering Memorandum" has the meaning set forth in Section
2.4.
9.13 "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Agreement and among the parties to this
Agreement, in the form attached hereto as Exhibit D.
9.14 "Regulation D" means Regulation D as promulgated under by the
SEC under the Securities Act.
9.15 "Rule 144" and "Rule 144(k)" mean Rule 144 and Rule 144(k),
respectively, promulgated under the Securities Act, or any successor rule.
9.16 "SEC" means the United States Securities and Exchange
Commission.
9.17 "SEC Documents" has the meaning set forth in Section 3.6.
9.18 "Securities" has the meaning set forth in the Recitals.
15
9.19 "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder, or any similar successor statute.
9.20 "Warrants" and "Warrant Shares" have the meanings set forth in
the Recitals.
ARTICLE X
GOVERNING LAW; MISCELLANEOUS
10.1 Governing Law; Jurisdiction; Jury Trial Waiver. This Agreement
will be governed by and interpreted in accordance with the laws of the State of
Delaware without regard to the principles of conflict of laws. The parties
hereto hereby submit to the exclusive jurisdiction of the United States federal
and state courts located in the State of Delaware with respect to any dispute
arising under this Agreement, the agreements entered into in connection herewith
or the transactions contemplated hereby or thereby. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT THAT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY.
10.2 Counterparts; Signatures by Facsimile. This Agreement may be
executed in two or more counterparts, all of which are considered one and the
same agreement and will become effective when counterparts have been signed by
each party and delivered to the other parties. This Agreement, once executed by
a party, may be delivered to the other parties hereto by facsimile transmission
of a copy of this Agreement bearing the signature of the party so delivering
this Agreement.
10.3 Headings. The headings of this Agreement are for convenience
of reference only, are not part of this Agreement and do not affect its
interpretation.
10.4 Severability. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified in order to conform with such statute or rule of law.
Any provision hereof that may prove invalid or unenforceable under any law will
not affect the validity or enforceability of any other provision hereof.
10.5 Entire Agreement; Amendments. This Agreement and the
Registration Rights Agreement (including all schedules and exhibits thereto) and
the Warrants constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein or therein. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof. No provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the party to be charged with enforcement.
10.6 Notices. Any notices required or permitted to be given under
the terms of this Agreement must be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and will be effective five days
after being placed in the mail, if mailed by regular U.S. mail, or upon receipt,
if delivered personally, by courier (including a recognized overnight delivery
service) or by facsimile, in each case addressed to a party. The addresses for
such communications are:
16
If to the Company: Chief Financial Officer
Sonus Pharmaceuticals, Inc.
00000 00xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
With copies to: X.X. Xxxxxx, Esq.
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Xxxxx X. Xxxxxx
Punk Xxxxxx & Company, L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
If to an Investor: To the address set forth immediately below such
Investor's name on the signature pages hereto.
Each party will provide written notice to the other parties of any
change in its address in accordance with the notice provisions hereof.
10.7 Successors and Assigns. This Agreement is binding upon and
inures to the benefit of the parties and their successors and assigns. The
Company will not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Investors, and no Investor may assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the Company. Notwithstanding the foregoing, an Investor may assign
all or part of its rights and obligations hereunder to any of its "affiliates,"
as that term is defined under the Securities Act, without the consent of the
Company so long as the affiliate is an accredited investor (within the meaning
of Regulation D under the Securities Act) and agrees in writing to be bound by
this Agreement. This provision does not limit the Investor's right to transfer
the Securities pursuant to the terms of this Agreement or to assign the
Investor's rights hereunder to any such transferee pursuant to the terms of this
Agreement.
10.8 Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and, except as contemplated in Section 2.10, is not for the benefit of,
nor may any provision hereof be enforced by, any other person.
10.9 Survival. The representations and warranties of the Company
and the agreements and covenants set forth herein will survive the Closing
hereunder for a period of twelve (12) months. The Company makes no
representations or warranties in any oral or written information provided to
Investors, other than the representations and warranties included herein.
10.10 Further Assurances. Each party will do and perform, or cause
to be done and performed, all such further acts and things, and will execute and
deliver all other agreements, certificates, instruments and documents, as
another party may reasonably request in order to carry out
17
the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
10.11 No Strict Construction. The language used in this Agreement is
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
10.12 Equitable Relief. The Company recognizes that, if it fails to
perform or discharge any of its obligations under this Agreement, any remedy at
law may prove to be inadequate relief to the Investors. The Company therefore
agrees that the Investors are entitled to seek temporary and permanent
injunctive relief in any such case.
18
IN WITNESS WHEREOF, the undersigned Investors and the Company have
caused this Securities Purchase Agreement to be duly executed as of the date
first above written.
COMPANY:
SONUS PHARMACEUTICALS, INC.
By:_________________________________
Name:__________________________
Title:_________________________
For purposes of Section 2.10 hereof:
PUNK XXXXXX & COMPANY
By:__________________________________
Xxxxx X. Xxxxxx
Managing Director
19
OMNIBUS SIGNATURE PAGE TO
SONUS PHARMACEUTICALS, INC.
SECURITIES PURCHASE AGREEMENT
The undersigned hereby executes and delivers the Securities Purchase
Agreement to which this Signature Page is attached, which, together with all
counterparts of the Agreement and Signature Pages of the other parties named in
said Agreement, shall constitute one and the same document in accordance with
the terms of the Agreement.
Sign Name:________________________________
Print Name:_______________________________
Address:__________________________________
__________________________________
__________________________________
Telephone:________________________________
Facsimile:________________________________
Number of Securities Purchased:
Common Shares:____________________________
Warrants (Number of Warrant Shares):______
20
SCHEDULE OF INVESTORS
21
Exhibit A
Form of Warrant
Exhibit A-1
Exhibit B
Wire Transfer Instructions
Please remit payment to:
Xxxxx Fargo Bank
0 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Routing #: 121 000 248
Account #: 0643108848
A/C Name: Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
Trust Account
Exhibit B-1
Exhibit C
Investor Questionnaire
I CERTIFY THAT I AM AN ACCREDITED INVESTOR BECAUSE I FALL WITHIN ONE OF THE
FOLLOWING CATEGORIES.
____ 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;
____ A natural person who had "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;
____ An employee benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974, and 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;
____ 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;
____ A broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934, as amended;
____ An insurance company as defined in Section 2(13) of the Securities Act;
____ 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;
____ 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;
____ 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;
____ A private business development company as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940;
____ 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 securities offered, with total
assets in excess of $5,000,000;
____ A director, executive officer, or general partners of the issuer of the
securities being offered or sold, or any director, executive officer, or general
partner of a general partner of that issuer;
___ A trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is directed
by a sophisticated person who has such
C-1
knowledge and experience in financial and business matters that such person is
capable of evaluating the merits and risks of investing in the Company; or
____ An entity in which all of the equity owners qualify under any of the above
subparagraphs.
NET WORTH. The term "net worth" means the excess of total assets over total
liabilities. In calculating net worth, the stockholder may include the estimated
fair market value of the stockholder's principal residence as an asset.
INCOME. In determining individual "income," the stockholder should add to the
stockholder's individual taxable adjusted gross income (exclusive of any spousal
income) any amounts attributable to tax exempt income received, losses claimed
as a limited partner in any limited partnership, deductions claimed for
depletion, contributions to an XXX or Xxxxx retirement plan, alimony payments,
and any amount by which income from long-term capital gains has been reduced in
arriving at adjusted gross income.
Dated: July ___, 2003 ____________________________________________
Exhibit C-2
Exhibit D
Registration Rights Agreement
Exhibit D-1
