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COMMON STOCK AND WARRANT PURCHASE AGREEMENT
THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT (the
"Agreement") is entered into as of May 28, 1999 by and among MARTEK
BIOSCIENCES CORPORATION, a Delaware corporation ("Martek"), and the
purchasers listed on Schedule I hereto (individually a "Purchaser" and
collectively the "Purchasers").
WHEREAS, Martek desires to sell and the Purchasers desire to
purchase shares of common stock, par value $.10 per share, of Martek ("Common
Stock") and warrants to purchase shares of Common Stock, for the
consideration and upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. Sale and Purchase of Common Shares and Warrants.
(a) Sale and Purchase. Subject to the terms and
conditions hereof, Martek hereby agrees to sell, and the Purchasers,
severally and not jointly, hereby agree to purchase, on the Closing Date (as
defined below) shares of Common Stock (together with related share purchase
rights pursuant to the Rights Agreement (the "Rights Agreement") between
Martek and Registrar and Transfer Company, dated January 24, 1996, as amended
November 5, 1998, the "Common Shares") and stock purchase warrants (the
"Warrants," and together with the Common Shares, the "Units") at a price per
Unit (the "Unit Price") equal to the average of the closing bid price of the
Common Stock on the Nasdaq Stock Market or the principal securities exchange
or quotation system on which the Common Stock is traded for the thirty (30)
trading days ending on the trading day immediately preceding the Closing Date
(as defined below). Each Unit shall consist of one share of Common Stock and
a warrant to purchase three tenths (3/10) of a share of Common Stock. The
Warrants shall have an exercise price per one whole share equal to one
hundred and twenty percent (120%) of the applicable Unit Price. All Warrants
acquired by a given Purchaser shall initially be represented by a single
Common Stock Purchase Warrant in the form of Exhibit A hereto. The total
purchase price to be paid by each Purchaser is set forth opposite each
Purchaser's name as that Purchaser's "purchase commitment" on Schedule I
hereto. The number of Units to be purchased by a Purchaser shall be equal to
the dollar amount for "purchase commitment" set forth opposite the
Purchaser's name on Schedule I hereto divided by the applicable Unit Price.
The total aggregate purchase price to be paid by all of the Purchasers (the
"Purchase Price") shall not exceed $13,805,000.00.
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(b) Closing Date. The closing shall take place at the
date, time and place specified in Section 8(a) hereof.
(c) Payment of Purchase Price. On the Closing Date, each
Purchaser will pay and deliver to Martek that portion of the Purchase Price
set forth opposite such Purchaser's name as that Purchaser's "purchase
commitment" on Schedule I hereto by wire transfer of immediately available
funds.
(d) Delivery of Common Shares and Warrants. On the
Closing Date, against delivery by the applicable Purchaser of that portion of
the Purchase Price to be paid by it, Martek will issue and deliver to such
Purchaser (i) a certificate representing that number of Common Shares to be
purchased by Purchaser on the Closing Date pursuant to Section 1(a),
registered in the name of such Purchaser or the designated nominee(s) of such
Purchaser and (ii) a fully executed Warrant to purchase that number of Common
Shares as determined pursuant to Section 1(a).
2. Representations and Warranties of Martek. Martek hereby
represents, warrants and agrees, as follows:
(a) Martek is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and
has full corporate power and corporate authority to carry on its business as
it is now being conducted, to execute and deliver this Agreement and the
Warrants and to consummate the transactions contemplated hereby and thereby.
Martek is qualified as a foreign corporation in the State of Maryland and the
Commonwealth of Kentucky, and in every other jurisdiction in which the
failure to so qualify would have a material adverse effect on its business.
Martek has no subsidiaries.
(b) The authorized capital of Martek consists of
35,000,000 shares of capital stock, (i) of which 30,000,000 shares are
designated Common Stock, of which 14,953,294 shares of Common Stock were
outstanding and were duly authorized, validly issued, fully paid and
nonassessable on May 27, 1999, and (ii) of which 5,000,000 shares are
designated preferred stock, par value $.01 per share, none of which were
outstanding on May 27, 1999 or are outstanding on the date hereof. Martek
has no other classes of stock authorized or outstanding. Martek has reserved
from its authorized and unissued capital stock a sufficient number of shares
of Common Stock to provide for the issuance of the shares underlying the
Warrants upon exercise of the Warrants. As of May 27, 1999, options and
warrants to purchase 2,259,960 and 247,920 shares of Common Stock,
respectively, were outstanding, and when such options and warrants are
exercised and the prescribed exercise price paid, the shares of Common Stock
issued with
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respect to such options and warrants will be duly authorized, validly issued,
fully paid and nonassessable. Except as set forth above and granted pursuant to
the Rights Agreement, and except for the rights under the Company's Common Stock
and Warrant Purchase Agreement dated April 27, 1998 (the "Prior Agreement")
there are no existing options, warrants, calls, commitments or rights of any
character to purchase or otherwise acquire from Martek shares of capital stock
of any class, no outstanding securities of Martek that are convertible into
shares of capital stock of Martek of any class, and no options, warrants or
rights to purchase from Martek any such convertible securities. Martek has no
outstanding contractual or other obligation to repurchase, redeem or otherwise
acquire any outstanding shares of its capital stock. The issued and outstanding
shares of Common Stock have not been, and the Common Shares to be issued to
Purchasers hereunder and the Common Shares issuable upon exercise of the
Warrants will not be, issued in violation of any preemptive or other rights of
any person, whether arising by statute, under the Certificate of Incorporation
or By-Laws of Martek or in any other manner known to Martek. No person or entity
is entitled to any preemptive or similar right with respect to the issuance of
any capital stock of Martek.
(c) The Board of Directors of Martek has approved this
Agreement and the transactions contemplated hereby in the manner prescribed
by law and authorized the execution, delivery and performance of this
Agreement and the Warrants.
(d) This Agreement constitutes and the Warrants, when
executed and delivered against payment therefor in accordance with the terms
hereof, will constitute, valid and binding obligations of Martek, enforceable
in accordance with their respective terms. Neither the execution and
delivery of this Agreement and the Warrants, nor the consummation of the
transactions contemplated herein and therein, will violate any law, rule,
regulation, judgment, injunction, decree, determination, award or order of
any court or governmental agency or instrumentality, domestic or foreign, or
conflict with or result in any breach of any of the terms of or constitute a
default under, or result in the termination of or the creation or imposition
of any mortgage, lien, security interest or other charge or encumbrance of
any nature under, Martek's Certificate of Incorporation or By-Laws or the
terms of any contract or agreement to which Martek is a party or by which
Martek or any of the assets and properties of Martek is bound. Neither the
execution and delivery by Martek of this Agreement and the Warrants, nor the
consummation by Martek of any of the transactions contemplated herein or
therein, requires any consent, approval, order or authorization of, or
registration with, or the giving of notice to, any governmental or public
body or authority or any other person, except for such notices, consents or
approvals which have previously been obtained or which will be obtained on or
before each closing date, as applicable, and notices and filings that may be
required under applicable
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state and federal securities laws that will be undertaken after each closing
date, as applicable.
(e) Upon consummation of the transactions contemplated by
this Agreement, the Common Shares will be validly issued, fully paid and
nonassessable, and the Common Shares issuable upon exercise of the Warrants
will, upon exercise and payment of the exercise price therefor, be validly
issued, fully paid and nonassessable.
(f) Since becoming subject to the periodic reporting
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), Martek has made all required filings pursuant to the rules
and regulations promulgated thereunder, and all such filings complied in all
materials respects with the Exchange Act and such rules and regulations as of
the date filed with the Securities and Exchange Commission (the "SEC").
(g) As of their respective dates, the financial
statements of Martek included in all of its filings made pursuant to the
Exchange Act complied in form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles,
consistently applied, during the period involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of Martek as of the
dates thereof and its results of operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments).
(h) Martek owns, or possesses adequate rights to use, all
patents, patent rights, inventions, trade secrets, licenses, know-how,
trademarks, service marks, trade names and copyrights which are necessary for
the conduct of Martek's business as presently conducted.
(i) Martek agrees to keep reserved from its authorized
and unissued capital stock a sufficient number of shares of Common Stock or
other securities issuable upon exercise of the Warrants to provide for the
issuance of Common Stock or other securities on the exercise of the Warrants.
(j) Martek agrees to use its best efforts to promptly
secure the listing of the Common Shares and the Common Shares issuable upon
exercise of the Warrants upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to
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official notice of issuance) and, so long as any Purchaser owns any of the
Common Shares, the Warrants and the shares underlying the Warrants
(collectively, the "Securities"), shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Common Shares and shares
issuable upon exercise of the Warrants.
3. Representations and Warranties of the Purchasers. Each
Purchaser for itself, severally and not jointly, hereby represents, warrants
and agrees, as follows:
(a) Such Purchaser is acquiring the Common Shares and the
Warrants subscribed for hereunder for its own account as principal, for
investment purposes and not with a view to any distribution thereof in
violation of the Securities Act of 1933, as amended (the "Securities Act"),
or any other securities laws. Such Purchaser further understands and
acknowledges that the offer and sale of the Securities to the Purchasers
pursuant to this Agreement will not be registered under the Securities Act or
any state securities laws on the assumption that the offer and sale of the
Securities to the Purchasers are exempt from registration pursuant to Section
4(2) of the Securities Act and Regulation D thereunder and that Martek's
reliance upon such exemption is predicated upon such Purchaser's
representations set forth in the Agreement and as shall be made by any holder
of the Warrants upon exercise thereof.
(b) Such Purchaser is an "accredited investor" within the
meaning of Rule 501(a) of Regulation D under the Securities Act, and by
virtue of such Purchaser's experience in financial and business matters, is
capable of evaluating the merits and risks of such Purchaser's investment in
the Securities, has the ability to bear the economic risks of such an
investment, including a complete loss of the investment, and has the capacity
to protect the Purchaser's own interests. For purposes of the requirements
of state securities laws, such Purchaser represents that it is solely a
resident of the state set forth opposite its name on Schedule I hereto and
that the offer and purchase of the Securities pursuant hereto has and will
occur solely in such state.
(c) Such Purchaser acknowledges that the Warrants and the
certificates representing the Common Shares and the shares underlying the
Warrants shall bear a legend substantially as set forth below indicating the
restrictions on transfers to which the Securities and the Warrants are
subject, and instructions shall be given to the transfer agent for the Common
Stock that no transfer is to be effected except in compliance with such
transfer restrictions:
The securities represented hereby have not been
registered under the Securities Act of 1933, as
amended (the "Act"), or applicable state securities
laws and may
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not be offered, sold or transferred in the absence of
registration or the availability of an exemption from
registration under the Act and regulations promulgated
thereunder and applicable state securities laws.
(d) Because the Securities have not been registered under
the Securities Act or applicable state securities laws, such Purchaser
acknowledges that the economic risk of the investment must be borne
indefinitely by such Purchaser, the Securities cannot be sold by the
Purchaser unless subsequently registered under the Securities Act and such
laws or unless an exemption from such registration is available, and while
Martek intends to file a registration statement covering the Securities for
public resale as set forth in Section 4 below, there is no assurance that the
Securities will in fact be so registered.
(e) Such Purchaser hereby acknowledges that Martek has
made available to such Purchaser such books, records, corporate documents and
all other information as Purchaser has requested and considers necessary to
evaluating the merits and risks of an investment in the Securities,
including, but not limited to, information which Martek has not yet disclosed
to the public. Purchaser specifically acknowledges that it has declined to
receive certain non-public information offered to it by Martek and that such
information could be material to an investment decision. Purchaser
acknowledges that its decision to not receive such information is entirely
voluntary and that Martek may assert this acknowledgment as a defense in any
action Purchaser might bring arising out of its non-receipt of the non-public
information. Each Purchaser acknowledges that it has been afforded the
opportunity to ask questions concerning Martek and has received satisfactory
answers thereto, to obtain all additional information that it has requested
and to request and receive all documents concerning Martek and the terms and
conditions of such Purchaser's investment. Such Purchaser acknowledges that
it has not been offered the Securities by any means of general solicitation
or advertisement, and that no commission or sales charge is payable by the
Purchaser to any third party in connection with the purchase of the
Securities.
(f) Such Purchaser recognizes that investment in the
Securities involves a high degree of risk. In evaluating the suitability of
an investment in the Securities, such Purchaser has not (A) relied upon any
representations or other information (whether oral or written) other than (i)
the representations and warranties set forth in this Agreement, (ii) the
documents and answers to questions furnished to such Purchaser by Martek (or
its designated representatives) and (iii) Martek's filings made pursuant to
the Exchange Act , or (B) relied upon any projections or predictions as to
the future business or financial performance of Martek which Martek has not
disclosed to the public. Such Purchaser is aware that no federal or state
agency has made any finding or
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determination as to the fairness of the Securities for investment, nor any
recommendation or endorsement of the Securities.
4. Registration Rights.
(a) Initial Registration. As soon as reasonably
practicable, but in no event more than thirty-one (31) days following the
Closing Date (except that if the thirty-first day falls on a day which is not
a business day, on the next business day following the thirty-first day),
Martek shall prepare and file with the SEC (and such state securities
commissions as may be necessary or appropriate to permit the registration of
the Securities in all 50 states and the District of Columbia) a registration
statement on Form S-3 (or, if Martek is ineligible to use Form S-3, such
other form as Martek deems appropriate) (the "Registration Statement") to
effect the registration under the Securities Act and relevant state
securities laws of the Securities in connection with (i) the disposition of
the Common Shares and the shares received upon exercise of the Warrants by
the Purchasers, from time to time in the open market, in one or more
transactions (which may involve block transactions), in negotiated,
underwritten, or other transactions or through a combination of such methods
of sale, at market prices prevailing at the time of sale, at prices relating
to such prevailing market prices or at negotiated prices, (ii) the
disposition of the Warrants by the Purchasers from time to time in such
manner, and (iii) the issuance of the shares underlying the Warrants upon
exercise of the Warrants by persons or entities that receive the Warrants
upon transfer thereof pursuant to the terms of such Warrants (the "Record
Transferees"). It is specifically acknowledged that the Registration
Statement may also cover Common Stock and Common Stock issuable upon exercise
of certain other outstanding warrants issued under the Prior Agreement.
Martek shall use its best efforts to obtain effectiveness of the Registration
Statement as soon as practicable.
All expenses of Martek associated with the
preparation of the Registration Statement and the filing thereof shall be
borne by Martek, including the payment of any applicable listing fees. The
Purchasers, and, as necessary, Record Transferees shall be responsible for
fees and expenses of their own counsel and any commissions or underwriting
discounts payable with respect to any resale of the Common Shares and/or
shares underlying the Warrants. In connection with the Registration
Statement, but subject to the limitations of Section 4(b) hereof, Martek will
prepare and file with the SEC and any state securities commissions such
amendments and supplements to the Registration Statement and the prospectus
used in connection therewith as may be necessary to keep such Registration
Statement effective and to comply with the provisions of the Securities Act
and Rule 415 thereunder with respect to the disposition of all the Securities
and issuance of all shares underlying the Warrants to Record Transferees
covered by such Registration Statement. Notwithstanding the foregoing,
Martek will only be
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required to maintain the effectiveness of the Registration Statement (i) with
respect to the Securities registered thereunder for resale by the Purchasers,
until the earlier of (a) such time as all of such Securities have been disposed
of in accordance with the intended methods of disposition by the Purchasers set
forth in such Registration Statement, (b) such date on which each of the
Purchasers may dispose of all of the Securities held by it in one transaction in
the open market pursuant to Rule 144(k) under the Securities Act, or (c) with
respect to the Common Shares and Warrants, two years from the effective date of
the Registration Statement, and with respect to the shares underlying the
Warrants, two years from the date on which such shares are issued to a Purchaser
upon exercise of the Warrants; and (ii) with respect to the shares underlying
the Warrants which are registered for issuance to Record Transferees, until the
earlier of (a) the expiration of the Warrants in accordance with their terms or
(b) the issuance of all of the shares underlying the Warrants pursuant to
exercise of the Warrants.
Martek shall furnish to each Purchaser such number of
copies of the Registration Statement and of each amendment and supplement
thereto, such number of copies of the prospectus included in such
Registration Statement and such other related documents as such Purchaser may
reasonably request in order to facilitate the disposition of the Securities
by such Purchaser.
(b) Limitations. Notwithstanding the foregoing, Martek shall
notify each Purchaser at any time after effectiveness of the Registration
Statement (when a prospectus relating thereto is required to be delivered under
the Securities Act) of the happening of any event or other circumstance as the
result of which (i) the prospectus included in such Registration Statement, as
then in effect, would include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
or (ii) the continued effectiveness of such Registration Statement or a
subsequent Registration Statement, and the use of such prospectus, would
otherwise have a material and adverse affect on any proposed or pending
acquisition, merger, business combination or other material transaction
involving Martek, and, upon receipt of such notice and until Martek makes
available to each Purchaser a supplemented or amended prospectus, each Purchaser
shall not offer or sell any Securities pursuant to such Registration Statement
and shall return all copies of such prospectus to Martek if requested to do so
by it. As promptly as practicable following any such occurrence, Martek shall
prepare and furnish to each Purchaser a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to subsequent purchasers of the Common Shares, such
prospectus shall meet the requirements of the Securities Act and relevant state
securities laws, provided that such obligation on the part of Martek shall be
suspended for such period of time as Martek considers reasonably necessary and
in its best interest due to circumstances then
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existing (but not more than 120 days in any 360-day period). Each Purchaser
shall furnish to Martek such information regarding each such Purchaser and its
proposed method of distribution of the Securities as Martek may from time to
time request and as shall be required by law to effect and maintain the
registration of such Securities under the Securities Act and any state
securities laws.
(c) Agreements of Martek. Martek shall use
reasonable efforts to (i) register and qualify the Securities under such
other securities or "blue sky" laws of such jurisdictions in the United
States as the Purchasers shall reasonably request, (ii) prepare and file in
those jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the effectiveness of the
Registration Statement, provided, however, that Martek shall not be required
in connection therewith or as a condition thereto to (a) qualify to do
business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 4(c), (b) subject itself to general taxation in
any jurisdiction, (c) file a general consent to service of process in any
such jurisdiction, (d) provide any undertakings that cause Martek undue
expense or burden, or (e) make any change in its charter or bylaws, which in
each case Martek's Board of Directors determines to be contrary to the best
interests of Martek and its stockholders.
(d) Indemnification.
(i) Martek will indemnify each Purchaser, each of
the officers, directors and partners of, and each person controlling, such
Purchaser with respect to which any registration statement under the
Securities Act has been filed and become effective pursuant to this
Agreement, against all claims, losses, expenses, damages and liabilities (or
actions in respect thereto) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any prospectus
contained in any registration statement covering the Securities for resale,
or based on any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading and for any misrepresentation or breach of any
representation or warranty given or made by Martek in this Agreement, and
will reimburse each such Purchaser, each of its officers, directors and
partners, and each person controlling such Purchaser for any reasonable legal
and any other expenses incurred in connection with investigating, defending
or settling any such claim, loss, damage, liability or action, provided that
Martek will not be liable in any such case to the extent that any such claim,
loss, damage or liability arises out of or is based on any untrue statement
or omission based upon written information furnished to Martek by such
Purchaser specifically for use therein.
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(ii) Each Purchaser will indemnify Martek, each of
its directors and officers, each person who controls Martek within the
meaning of the Securities Act, and each other such Purchaser, each of its
officers, directors and partners and each person controlling such Purchaser
against all claims, losses, expenses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such prospectus, or
any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse Martek, such Purchaser, and such directors,
officers, partners or controlling persons for any reasonable legal or any
other expenses incurred in connection with investigating, defending or
settling any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such
prospectus in reliance upon and in conformity with written information
furnished to Martek by such Purchaser specifically for use therein.
(iii) Each party entitled to indemnification under
this Section 4(d) (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such indemnified party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct the defense of
such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld), and the Indemnified Party may
participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations hereunder, unless
such failure resulted in actual detriment to the Indemnifying Party. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(iv) In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
any person or entity entitled to indemnification under Section 4(d) makes a
claim for indemnification pursuant to this Section 4(d) but it is judicially
determined (by entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 4(d) provides for indemnification
in such case; then, and in such case, the party that would otherwise be
required to indemnify under Section 4(d) will contribute to the aggregate
losses, claims, damages or liabilities to which the other
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parties may be subject (after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the parties in connection with the
losses suffered, as well as any other relevant equitable considerations.
5. Information Rights. At such time as Martek is not subject
to the reporting requirements of the Exchange Act, and so long as the
aggregate number of Common Shares and shares underlying the Warrants then
beneficially owned (as determined pursuant to Rule 13d-3 under the Exchange
Act) by a Purchaser is not less than 50% of the sum of the initial number of
Common Shares purchased by such Purchaser hereunder and the initial number of
shares issuable upon exercise of the Warrants purchased by such Purchaser
hereunder, Martek shall deliver the following to such Purchaser:
(a) As soon as available, and in any event within 45 days
after the end of each of the first three quarters in each fiscal year of
Martek, unaudited consolidated statements of income, cash flows and
stockholders' equity for such quarterly period and for the period from the
beginning of the then current fiscal year to the end of such quarterly
period, and an unaudited consolidated balance sheet of Martek as at the end
of such quarterly period, in each case setting forth in comparative form
consolidated figures for the corresponding periods in the preceding fiscal
year, all in reasonable detail, prepared by Martek in accordance with
generally accepted accounting principles consistently followed throughout the
periods involved, subject to normal year-end adjustments, and certified by
the principal financial officer of Martek and accompanied by a written
discussion of operations in summary form with respect to such quarterly
period.
(b) As soon as available, and in any event within 90 days
after the end of each fiscal year of Martek, consolidated statements of
income, cash flows and stockholders' equity for such fiscal year, and a
consolidated balance sheet of Martek as at the end of such year, in each case
setting forth in comparative form consolidated figures for the preceding
fiscal year, prepared by Martek in accordance with generally accepted
accounting principles consistently followed throughout the periods involved,
and certified by Ernst & Young LLP or another nationally recognized firm of
independent public accountants, and accompanied by a written discussion of
operations in summary form with respect to such fiscal year.
6. Notices. All notices, demands, requests, or other
communications which may be or are required to be given, served, or sent by
any party to any other party pursuant to this Agreement shall be in writing
and shall be mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, or transmitted by hand delivery,
overnight or express mail, telegram or telex, addressed as follows:
(i) If to Martek:
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Martek Biosciences Corporation
0000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Corporate Secretary
Telefax No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx X. Silver
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
Telefax No.: (000) 000-0000
(ii) If to Purchasers:
The address listed under each Purchaser's name on
Schedule I hereto.
Each party may designate by notice in writing a new address to which any
notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request, or communication which shall be
mailed, delivered or transmitted in the manner described above shall be
deemed sufficiently given, served, sent and received for all purposes at such
time as it is delivered to the addressee (with the return receipt, the
delivery receipt, the affidavit of messenger or (with respect to a telex) the
answerback being deemed conclusive evidence of such delivery) or at such time
as delivery is refused by the addressee upon presentation.
7. Publicity. Martek and the Purchasers shall notify each
other prior to issuing any press releases or otherwise making any news
release or other public announcement with respect to the transactions
contemplated hereby, other than as required in connection with any filings
with any federal or state governmental or regulatory agency with respect
thereto, and in no event will the Purchasers issue any such release or make
any such public announcement without the prior approval of Martek.
Notwithstanding the foregoing, the Purchasers hereby agree that Martek may
issue a press release with regard to the subject matter of this Agreement on
or after the First Initial Purchase Closing Date without providing the
Purchasers with the notification required by this Section 7.
8. Conditions to Closing.
(a) Closing Date. Subject to the terms and conditions of this
Purchase Agreement, the Closing shall take place at the offices of Xxxxx &
Xxxxxxx
- 12 -
13
L.L.P., 000 Xxxxx Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000 at 10:00
a.m. local time within two (2) business days of the satisfaction of the
conditions set forth in Sections 8(b) and (c) (the day on which the Closing
takes place being the "Closing Date").
(b) Conditions to Obligations of Purchasers. Each Purchaser's
obligation hereunder to purchase and pay for the Units on the Closing Date is
subject to the satisfaction of the following conditions, any or all of which
conditions may be waived by the Purchaser or Purchasers at any time on or
prior to the Closing Date:
(i) Each of the representations and warranties of Martek
contained in Section 2 hereof shall be true on and as of the Closing Date
with the same effect as though made on and as of the Closing Date.
(ii) As of and on the Closing Date, the issuance and sale
of the Units to such Purchaser hereunder shall be legally permitted by all
laws and regulations to which such Purchaser is subject.
(c) Conditions to Obligations of Martek. Martek's obligation
hereunder to sell and issue the Units on the Closing Date is subject to the
satisfaction of the following conditions, any or all of which conditions may
be waived by Martek at any time on or prior to the Closing Date:
(i) Each of the representations and warranties of each of
the Purchasers contained in Section 3 hereof shall be true on and as of the
Closing Date, with the same effect as though made on and as of the Closing
Date.
(ii) As of and on the Closing Date, the purchase of the
Units by the Purchaser hereunder shall be legally permitted by all laws and
regulations to which Martek is subject.
(iii) The Closing Date shall be on or prior to May 28,
1999, unless the Purchasers and Martek otherwise agree.
9. Miscellaneous.
(a) Martek shall pay the reasonable legal fees and
disbursements of counsel to each Purchaser incident to this Agreement and the
transactions contemplated hereunder, in an amount that will not exceed $2,500
to each Purchaser. The Purchasers agree to pay any other expenses incurred
by them in completing the transactions contemplated by this Agreement.
- 13 -
14
(b) This Agreement and the Warrants constitute the entire
agreement between the parties hereto with respect to the transactions
contemplated herein, and the Agreement and the Warrants supersede and
terminate all prior oral or written agreements, commitments or understandings
with respect to the matters provided for herein.
(c) No amendment or modification hereof shall be binding
unless set forth in writing and duly executed by the parties hereto. This
Agreement and the rights and obligations of the parties hereunder may not be
assigned without the prior written consent of the other parties hereto.
(d) The representations or warranties of the Purchasers
and Martek contained herein shall survive the execution and delivery of this
Agreement and consummation of the transactions contemplated hereby.
(e) Each of the Purchasers and Martek agrees to take such
further actions and to execute and deliver such further instruments as may
reasonably be necessary from time to time in order to fully effectuate the
purposes, terms and conditions of this Agreement.
(f) For purposes of this Agreement, the term "business
day" shall mean any day other than a Saturday, Sunday or a day on which
banking institutions in the State of Maryland are authorized or obligated by
law or executive order to close. For purposes of this Agreement, the term
"trading day" shall mean any day on which the Nasdaq Stock Market or the
principal securities exchange or quotation system on which the Common Stock
is traded is open for regular trading.
(g) This Agreement shall be enforced, governed and
construed in accordance with the laws of the State of Delaware. The parties
hereby expressly agree that all claims in respect of this Agreement shall be
brought in the state and federal courts of the State of Maryland, the parties
hereby irrevocably submit to the jurisdiction of such courts for purposes of
any such action and the parties hereby expressly waive the right to a jury
trial in connection with any such action. The Purchasers acknowledge that
any breach or threatened breach by a Purchaser of the terms of this Agreement
would cause irreparable harm to Martek which would not be compensable by
money damages alone, and the Purchasers agree that Martek shall have the
right to enforce this Agreement and any such terms by injunction, specific
performance or other equitable relief in order to prevent or restrain any
such breach by a Purchaser.
(h) This Agreement and the rights, power and duties set
forth herein shall be binding upon the Purchasers and Martek, their
successors and assigns, and shall inure to the benefit of Martek and the
Purchasers, respectively.
- 14 -
15
Failure of the Purchasers or Martek to exercise any right or remedy under this
Agreement, or a delay by the Purchasers or Martek in exercising the same, will
not operate as a waiver thereof. No waiver by the Purchasers or Martek will be
effective unless and until it is in writing and signed by the party whose
consent is required by the terms hereof.
(i) It is the explicit intention of the parties hereto
that no person or entity other than the parties hereto is or shall be
entitled to bring any action to enforce any provision of this Agreement
against any of the parties hereto, and that the covenants, undertaking and
agreement set forth in this Agreement shall be solely for the benefit of, and
shall be enforceable only by the parties hereto or their respective
successors and assigns as permitted hereunder.
(j) If any provision or clause of this Agreement shall
for any reason be held to be invalid, illegal or unenforceable, such
invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement, but this Agreement shall be construed as if such
provision or clause had never been contained in the Agreement, and there
shall be deemed substituted therefor such other provision or clause as will
most nearly accomplish the intent of the parties as expressed in this
Agreement to the fullest extent permitted by law.
(k) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
shall constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, or have caused this Agreement to be executed, as of the date
written below.
Date: May 28, 1999
MARTEK BIOSCIENCES CORPORATION
By:
---------------------------------
Xxxxx X. Xxxx
Chief Financial Officer
- 15 -
16
PURCHASERS:
BLACK BEAR FUND I, L.P.
By:
------------------------------
Its:
------------------------------
BLACK BEAR FUND II, L.L.C.
By:
------------------------------
Its:
------------------------------
BLACK BEAR OFFSHORE L.T.D.
By:
------------------------------
Its:
------------------------------
BLACK BEAR PACIFIC MASTER FUND UNIT TRUST
By:
------------------------------
Its:
------------------------------
-------------------------------
XXXXXX XXXXXXX
STATE OF WISCONSIN
By:
------------------------------
Xxxx X. Xxxxxx
Investment Director
Small Cap Stock Portfolio
- 16 -
17
MFS MID CAP GROWTH FUND (EXOT)
By:
------------------------------
Its: Treasurer
MFS MID CAP GROWTH FUND (OTC)
By:
------------------------------
Its: Treasurer
MFS NEW DISCOVERY FUND (NDF)
By:
------------------------------
Its: Treasurer
MFS/SUN LIFE NEW DISCOVERY FUND (NWD)
By:
------------------------------
Its: Treasurer
MFS NEW DISCOVERY FUND (UND)
By:
------------------------------
Its: Treasurer
Closing Date: May 28, 1999
- 17 -
18
AGR HALIFAX FUND, LTD.
By: AG Ramius Partners, LLC
Investment Advisor
By:
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Officer
Closing Date: May 28, 1999
- 18 -
19
SCHEDULE I
----------
NAME AND ADDRESS OF
PURCHASER PURCHASE COMMITMENT STATE OF RESIDENCE
--------- ------------------- ------------------
Eastbourne: Black Bear
Fund I, L.P.
0000 0xx Xxx.
Xxxxx 000
Xxx Xxxxxx, Xxxxxxxxxx 00000 $1,500,000 California
Eastbourne: Black Bear
Fund II, L.L.C.
0000 0xx Xxx.
Xxxxx 000
Xxx Xxxxxx, Xxxxxxxxxx 00000 $145,000 California
Eastbourne: Black Bear
Offshore L.T.D.
0000 0xx Xxx.
Xxxxx 000
Xxx Xxxxxx, Xxxxxxxxxx 00000 $1,525,000 California
Eastbourne: Black Bear
Pacific Master Fund Unit
Trust
0000 0xx Xxx.
Xxxxx 000
Xxx Xxxxxx, Xxxxxxxxxx 00000 $330,000 California
Xxxxxx Xxxxxxx
000 0xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000 $3,000,000 New York
State of Wisconsin
Investment Board
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx
00000-0000
Attn: Small Cap Stocks
Investment Director $4,000,000 Wisconsin
MFS Mid Cap Growth Fund
(ESOT)
c/o MFS Investment
Management
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn.: Xxxx Xxxxx $1,300,000 Massachusetts
- 19 -
20
NAME AND ADDRESS OF
PURCHASER PURCHASE COMMITMENT STATE OF RESIDENCE
--------- ------------------- ------------------
MFS Mid Cap Growth Fund
(OTC)
c/o MFS Investment
Management
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn.: Xxxx Xxxxx $700,000 Massachusetts
MFS New Discovery Fund (ZND)
c/o MFS Investment
Management
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn.: Xxxx Xxxxx $1,000,000 Massachusetts
MFS/Sun Life New Discovery
Fund (NWD)
c/o MFS Investment
Management
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn.: Xxxx Xxxxx $50,000 Massachusetts
MFS New Discovery Fund (UND)
c/o MFS Investment
Management
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn.: Xxxx Xxxxx $5,000 Massachusetts
AGR Halifax Fund, Ltd.
c/o AG Ramius Partners, LLC
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx $250,000 New York
TOTAL $13,805,000.00
- 20 -
21
EXHIBIT A
THIS STOCK PURCHASE WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED,
SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND REGULATIONS PROMULGATED THEREUNDER
AND APPLICABLE STATE SECURITIES LAWS.
MARTEK BIOSCIENCES CORPORATION
COMMON STOCK PURCHASE WARRANT
EXPIRING [________, 2002]
Number of Shares:____________________ Warrant No._________
Martek Biosciences Corporation, a Delaware corporation (the "Company"),
hereby certifies that, for value received, [NAME OF HOLDER], or its registered
assigns (the "Holder"), is entitled, subject to the terms and conditions herein
set forth, to purchase from the Company at any time before 5:00 p.m. New York
City time on [________, 2002], [NUMBER OF SHARES] of Common Stock of the
Company, par value $.10 per share ("Common Stock"), at a price of $[PRICE PER
SHARE] per share ("Warrant Price"). The Warrant Price and the number of shares
of Common Stock for which this warrant (the "Warrant") may be exercised are
subject to adjustment as provided herein. This Warrant is one of a duly
authorized issue of Warrants of like tenor of the Company to be issued from time
to time pursuant to the terms of, and subject to, that certain Common Stock and
Warrant Purchase Agreement, dated _________________, by and among the Company
and the Purchasers named in Schedule I thereto (the "Purchase Agreement"). Any
transferee of this Warrant, by acceptance hereof, assumes and agrees to the
rights and restrictions set forth herein and in the Purchase Agreement.
2. Adjustment of Warrant Price and Number of Shares. The number of
shares of Common Stock issuable upon the exercise of this Warrant and the
Warrant Price shall be subject to adjustment from time to time, and the Company
agrees to provide notice upon the happening of certain events as follows:
(a) Stock Splits, Dividends and Stock Combinations. In case the
Company shall at any time subdivide the outstanding shares of Common Stock into
a greater number of shares, or shall issue a stock dividend on such shares of
Common Stock or on any security or right convertible into shares of Common
Stock,
22
the number of shares of Common Stock issuable upon exercise of this
Warrant shall be proportionately increased and the Warrant Price shall be
proportionately decreased, and in case the Company shall at any time combine the
outstanding shares of Common Stock, the number of shares of Common Stock
issuable upon exercise of this Warrant shall be proportionately decreased, and
the Warrant Price proportionately increased, effective at the time of such
subdivision, dividend or combination as the case may be.
(b) Reclassification, Reorganization or Merger. In case of any
reclassification, capital reorganization or other change in the outstanding
shares of Common Stock, or in the case of any consolidation or merger of the
Company with or into another corporation or business entity (other than a
consolidation or merger (a) with a subsidiary in which the Company is the
surviving corporation or (b) which does not result in any reclassification,
capital reorganization or other change of outstanding shares of Common Stock),
the Company shall cause effective provision to be made so that the Holder shall
have the right thereafter by exercising this Warrant to purchase such kind and
amount of shares of stock or other securities, cash or property which such
Holder would have received had such Holder exercised this Warrant in full
immediately prior to such reclassification, capital reorganization or other
change, consolidation or merger (including, without limitation, provisions for
adjustments of the number of shares of Common Stock purchasable and receivable
upon exercise of this Warrant and adjustments to the Warrant Price as
necessary). The foregoing provisions of this subsection 2(b) shall similarly
apply to successive reclassifications, capital reorganizations and other
changes, consolidations or mergers.
(c) Certificate of Adjustment. Whenever the Warrant Price or
number or type of securities issuable upon exercise of this Warrant is adjusted,
as herein provided, the Company shall promptly deliver to the record holder of
this Warrant a certificate of an officer of the Company setting forth the nature
of such adjustment and a brief statement of the facts requiring such adjustment.
3. No Stockholder Rights.
(a) Except as set forth in subsection 3(b) below, this Warrant,
by itself as distinguished from the shares purchasable hereunder, shall not
entitle the Holder to any of the rights of a stockholder of the Company.
(b) If the Company shall effect an offering of shares of Common
Stock or other stock pro rata among it stockholders, the Holder shall be
entitled, at the Holder's option to the extent this Warrant is then exerciseable
and has not been exercised, to elect to participate in each and every such
offering as though this Warrant had been exercised and the Holder were, at the
time of any rights offering, then a holder of that number of shares of Common
Stock to which the Holder is then entitled upon exercise of this Warrant.
- 2 -
23
4. Authorization and Reservation of Stock. The Company will reserve from
its authorized and unissued capital stock a sufficient number of shares of
Common Stock or other securities issuable upon exercise hereof to provide for
the issuance of Common Stock or other securities on the exercise of this
Warrant. Issuance of this Warrant shall constitute full authority to the
Company's officers who are charged with the duty of executing stock certificates
to execute and issue the necessary certificates for shares of Common Stock or
other securities upon the exercise of this Warrant.
5. Exercise of Warrant.
(a) Exercise Procedures. This Warrant may be exercised in whole
or in part by the surrender of this Warrant, together with the Notice of
Exercise attached hereto as Exhibit A and, if the exercise is by the initial
Holder hereof or any subsequent Holder during any period when the Warrant Shares
are not registered for issuance pursuant hereto under the Securities Act of 1933
(the "Securities Act"), the Investment Representation Statement in the form
attached hereto as Exhibit B, duly completed and executed, at the principal
office of the Company prior to 5:00 p.m. on [________, 2002], accompanied by
payment in full of the Warrant Price in cash or by check with respect to the
shares of Common Stock or other securities being purchased. Notwithstanding the
foregoing, this Warrant may not be exercised by Holders, other than the initial
Holder hereof (or their affiliates), during the period (the "Registration
Period") commencing on the date of the transfer to such Holder and ending on the
effective date of a registration statement under the Securities Act covering the
issuance of the Warrant Shares to such subsequent Holders (or, if such
registration statement is withdrawn prior to its effectiveness, for a period
ending six months from the date of withdrawal). This Warrant shall be deemed to
have been exercised immediately prior to the close of business on the date of
its surrender for exercise as provided above, and the person entitled to receive
the shares of Common Stock or other securities issuable upon such exercise shall
be treated for all purposes as the holder of such shares of record as of the
close of business on such date. As promptly as practicable after such date, the
Company shall issue and deliver to the person or persons entitled to receive the
same a certificate or certificates for the number of full shares of Common Stock
or other securities issuable upon such exercise. Upon any partial exercise of
this Warrant, the Company will issue to the Holder a new Warrant for the number
of shares of Common Stock or other securities as to which this Warrant was not
exercised.
(b) Fractional Shares. The Company shall not be required upon any
exercise of this Warrant to issue a certificate representing any fraction of a
share of Common Stock. Instead of any fractional share of Common Stock which
would otherwise be issuable upon exercise of this Warrant, the Company shall pay
a cash adjustment in respect of such fractional interest in an amount equal to
the
- 3 -
24
fair market value of such fractional interest. For purposes hereof "fair
market value" of a share of Common Stock shall be determined as follows: if on
the date the determination is made the Common Stock is listed on an established
national or regional stock exchange, is admitted to quotation on the National
Association of Securities Dealers Automated Quotation System, or is publicly
traded on an established securities market, the fair market value of the Common
Stock shall be the closing price of the Stock on such exchange or in such market
(the highest such closing price if there is more than one such exchange or
market) on the trading day immediately preceding the date on which such
determination is being made (or, if there is no such reported closing price, the
fair market value shall be the mean between the highest bid and lowest asked
prices or between the high and low sale prices on such trading day), or, if no
sale of the Common Stock is reported for such trading day, on the next preceding
day on which any sale shall have been reported. If the Common Stock is not
listed on such an exchange, quoted on such system or traded on such a market,
fair market value shall be determined by the Company's board of directors in
good faith (whose good faith determination shall be conclusive).
(c) Legends. Except in the case of exercises by holders other
than the initial Holder after the expiration of the Registration Period, each
certificate for Warrant Shares initially issued upon exercise of this Warrant
shall bear the following legend:
This securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or applicable state securities laws and may not be
offered, sold or transferred in the absence of registration or
the availability of an exemption from registration under the Act
and regulations promulgated thereunder and applicable state
securities laws.
Any certificate issued at any time in exchange or
substitution for any certificate bearing such legend shall also bear the above
legend unless, in the opinion of counsel to the Company, the securities
represented thereby need no longer be subject to the restriction on
transferability. The provisions of this Section 5 shall be binding upon all
holders of this Warrant.
6. Transfer of Warrant. This Warrant may be transferred or assigned by
the Holder hereof in whole or in part provided that the transferring Holder
executes and delivers to the Company an instrument of assignment in the form of
Exhibit C hereto and, if transferred prior to effectiveness of a registration
statement covering dispositions of the Warrants under the Securities Act, an
opinion of counsel to the effect that such transfer may occur without such
registration.
7. Period of Exercise. This Warrant will terminate and shall no longer
be exerciseable at 5:00 p.m., New York City time, on [________, 2002].
- 4 -
25
8. Loss, Destruction, etc. of Warrant. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any such loss, theft or destruction, upon
delivery of a bond of indemnity in such form and amounts as shall be reasonably
satisfactory to the Company, provided however, that the requirement to deliver
such bond shall not apply to the initial Holder of this Warrant, or in the event
of such mutilation, upon surrender and cancellation of the Warrant, the Company
will make and deliver a new Warrant, of like tenor, in lieu of such lost,
stolen, destroyed or mutilated Warrant. Any Warrant issued under the provision
of this Section 8 in lieu of any Warrant alleged to be lost, destroyed or
stolen, or in lieu of any mutilated Warrant, shall constitute an original
contractual obligation on the part of the Company.
9. Miscellaneous. This Warrant shall be governed by the internal laws of
the State of Delaware. The headings in this Warrant are for purposes of
convenience and reference only, and shall not be deemed to constitute a part
hereof. Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the Company and the Holder hereof. If any provision or clause of this Warrant
shall for any reason be held to be invalid, illegal or unenforceable, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Warrant, but this Warrant shall be construed as if such provision or
clause had never been contained in the Warrant, and there shall be deemed
substituted therefor such other provision or clause as will most nearly
accomplish the intent of the Company and the initial holder of this Warrant as
expressed in this Warrant to the fullest extent permitted by law. All notices,
demands, requests, or other communications which may be or are required to be
given, served, or sent by the Company of a holder hereof pursuant to this
Warrant shall be in writing and shall be mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or transmitted by
hand delivery, overnight or express mail, telegram or telex, addressed as
follows:
(i) If to the Company:
Martek Biosciences Corporation
0000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Corporate Secretary
Telefax No.: (000) 000-0000
(ii) If to a Holder, to the last address shown on the books
of the Company or at any more recent address of which any holder hereof shall
have notified the Company in writing pursuant to the terms hereof.
- 5 -
26
The Company or a Holder hereof may designate by notice in writing a new address
to which any notice, demand, request or communication may thereafter be so
given, served or sent. Each notice, demand, request, or communication which
shall be mailed, delivered or transmitted in the manner described above shall be
deemed sufficiently given, served, sent and received for all purposes at such
time as it is delivered to the addressee (with the return receipt, the delivery
receipt, the affidavit of messenger or (with respect to a telex) the answerback
being deemed conclusive evidence of such delivery) or at such time as delivery
is refused by the addressee upon presentation.
ISSUED this ____th day of __________, _____.
MARTEK BIOSCIENCES CORPORATION
By:
------------------------------------
- 6 -
27
EXHIBIT A
TO COMMON STOCK PURCHASE WARRANT, DATED [DATE]
NOTICE OF EXERCISE
TO: MARTEK BIOSCIENCES CORPORATION
1. The undersigned hereby elects to purchase ________ shares of Common
Stock of Martek Biosciences Corporation pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price in full, together
with all applicable transfer taxes, if any.
2. Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other names as is
specified below and issue to the undersigned a new Warrant representing the
balance of the attached Warrant to the extent not exercised in full:
---------------------------------------
(Name)
---------------------------------------
(Address)
--------------------------- --------------------------------
(Date) (Name of Warrant Holder)
By:
------------------------------
Title:
---------------------------
(name of purchaser, and title and
signature of authorized person)
28
EXHIBIT B
TO COMMON STOCK PURCHASE WARRANT, DATED [DATE]
INVESTMENT REPRESENTATION STATEMENT
Date:_________________, 199__ ________ Shares of
Common Stock of
Martek Biosciences Corporation
In connection with the purchase of the above-listed securities pursuant
to exercise of the warrant referred to herein, the undersigned (the "Holder")
hereby represents to Martek Biosciences Corporation (the "Company") as follows:
1. Receipt of Information. The Holder has received all the information
it considers necessary or appropriate to determine whether to purchase the
shares of Common Stock (the "Warrant Shares") issuable upon exercise of the
Warrant dated [DATE] (the "Warrant") originally issued by the Company pursuant
to the terms of that certain Common Stock and Warrant Purchase Agreement, dated
[DATE], by and among the Company and the Purchasers named in Schedule I thereto
(the "Purchase Agreement").
2. Investment Representations.
(a) The Holder is acquiring the Warrant Shares to be
received upon exercise of this Warrant for its own account as principal, for
investment purposes and not with a view to any distribution thereof in violation
of the Securities Act of 1933, as amended (the "Securities Act"), or any other
securities laws, and further understands and acknowledges that the offer and
sale of the Warrant Shares to the Holder pursuant to this Warrant will not be
registered under the Securities Act or any state securities laws on the
assumption that the offer and sale of the Warrant Shares are exempt from
registration pursuant to Section 4(2) of the Securities Act and Regulation D
thereunder and that Company's reliance upon such exemption is predicated upon
such Holder's representations set forth herein.
(b) The Holder is an "accredited investor" within the
meaning of Rule 501(a) of Regulation D under the Securities Act, and by virtue
of such Holder's experience in financial and business matters, is capable of
evaluating the merits and risks of such Holder's investment in the Warrant
Shares, has the ability to bear the economic risks of such an investment,
including a complete loss of the investment, and has the capacity to protect the
Holder's own interests. For purposes of the requirements of state securities
laws, such Holder represents that it
29
is solely a resident of the state of _______________________ and that the offer
and purchase of the Warrant Shares pursuant hereto will occur solely in such
state.
(c) The Holder acknowledges that the certificates
representing the Warrant Shares shall bear a legend substantially as set forth
below indicating the restrictions on transfers to which the Warrants Shares are
subject, and instructions shall be given to the transfer agent for the Common
Stock that no transfer is to be effected except in compliance with such transfer
restrictions:
The securities represented hereby have not been registered under
the Securities Act of 1933, as amended (the "Act"), or applicable
state securities laws and may not be offered, sold or transferred
in the absence of registration or the availability of an
exemption from registration under the Act and regulations
promulgated thereunder and applicable state securities laws.
(d) Because the Warrant Shares have not been registered
under the Securities Act or applicable state securities laws, the Holder
acknowledges that the economic risk of the investment must be borne indefinitely
by such Holder, the Warrant Shares cannot be sold by the Holder unless
subsequently registered under the Securities Act and such laws or unless an
exemption from such registration is available, and there is no assurance that
the Warrant Shares will ever be so registered in the future.
(e) The Holder hereby acknowledges that the Company has
made available to such Holder such books, records, corporate documents and all
other information as such Holder has requested and considers necessary to
evaluating the merits and risks of an investment in the Warrant Shares,
including, but not limited to, information which the Company has not yet
disclosed to the public. The Holder specifically acknowledges that it has
declined to receive certain non-public information offered to it by the Company
and that such information could be material to an investment decision. Purchaser
acknowledges that its decision to not receive such information is entirely
voluntary and that the Company may assert this acknowledgment as a defense in
any action the Company might bring arising out of this investment. Each Holder
acknowledges that it has been afforded the opportunity to ask questions
concerning the Company and has received satisfactory answers thereto, to obtain
all additional information that it has requested, and to request and receive all
documents concerning the Company and the terms and conditions of such Holder's
investment in the Warrant Shares. The Holder acknowledges that it has not been
offered the Warrant Shares by any means of general solicitation or
advertisement, and that no commission or sales charges is payable to any third
party in connection with the exercise of the Warrant.
- 2 -
30
(f) The Holder recognizes that investment in the Warrant
Shares involves a high degree of risk. Such Holder is aware that no federal or
state agency has made any finding or determination as to the fairness of the
Warrant Shares for investment, nor any recommendation or endorsement of the
Warrant Shares.
Dated:_________, _______ HOLDER:
-------------------------------------------
(Signature)
-------------------------------------------
(Typed or Printed Name)
-------------------------------------------
(Title)
- 3 -
31
EXHIBIT C
TO COMMON STOCK PURCHASE WARRANT, DATED [DATE]
ASSIGNMENT
TO BE EXECUTED BY THE REGISTERED HOLDER IF HE, SHE OR IT
DESIRES TO TRANSFER THE WITHIN WARRANT OF
MARTEK BIOSCIENCES CORPORATION
FOR VALUE RECEIVED ___________________________________________________
hereby sells, assigns and transfers unto _____________________________________
with an address at ____________________________, the right to purchase _______
shares of Common Stock of Martek Biosciences Corporation (the "Company")
covered by the within Warrant, and does hereby irrevocably constitute and
appoint _______________ Attorney to transfer the said Warrant on the books of
the Company, with full power of substitution.
-------------------------------------------
Name of Holder:
-------------------------------------------
Signature
-------------------------------------------
Print Name:
-------------------------------------------
Title:
Address:
-----------------------------------
-----------------------------------
-----------------------------------
Dated:_______________, _______
In the presence of
------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or change whatsoever.
