EXHIBIT 1
ARADIGM CORPORATION
SECURITIES PURCHASE AGREEMENT
FEBRUARY 10, 2003
TABLE OF CONTENTS
PAGE
ARTICLE 1 AUTHORIZATION AND SALE OF COMMON SHARES AND WARRANTS.................................................. 1
1.1 Authorization...................................................................................... 1
1.2 Sale of Common Shares and Warrants................................................................. 2
ARTICLE 2 CLOSING DATE; DELIVERY................................................................................ 2
2.1 Closing Date....................................................................................... 2
2.2 Delivery........................................................................................... 2
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................................................... 2
3.1 Organization and Standing.......................................................................... 2
3.2 Corporate Power; Authorization..................................................................... 2
3.3 Issuance and Delivery of the Shares................................................................ 3
3.4 SEC Documents; Financial Statements................................................................ 3
3.5 Governmental Consents.............................................................................. 3
3.6 No Material Adverse Change......................................................................... 4
3.7 Authorized Capital Stock........................................................................... 4
3.8 Litigation......................................................................................... 4
3.9 Eligibility to Use Form S-3........................................................................ 4
3.10 Company not an Investment Company................................................................. 4
3.11 NASDAQ Compliance................................................................................. 5
3.12 Use of Proceeds................................................................................... 5
3.13 Brokers and Finders............................................................................... 5
3.14 No Directed Selling Efforts or General Solicitation............................................... 5
3.15 No Integrated Offering............................................................................ 5
3.16 Private Placement................................................................................. 5
3.17 Intellectual Property............................................................................. 5
3.18 Questionable Payments............................................................................. 6
3.19 Transactions with Affiliates...................................................................... 6
3.20 Disclosure........................................................................................ 6
ARTICLE 4 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS........................................... 6
4.1 Authorization...................................................................................... 7
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4.2 Investment Experience.............................................................................. 7
4.3 Investment Intent.................................................................................. 7
4.4 Registration or Exemption Requirements............................................................. 7
4.5 Dispositions....................................................................................... 7
4.6 No Legal, Tax or Investment Advice................................................................. 8
4.7 Confidentiality.................................................................................... 8
4.8 Residency.......................................................................................... 8
4.9 Governmental Review................................................................................ 8
4.10 Legend............................................................................................ 8
4.11 Foreign Investors................................................................................. 9
ARTICLE 5 CONDITIONS TO CLOSING OBLIGATIONS OF PURCHASERS....................................................... 9
5.1 Representations and Warranties..................................................................... 9
5.2 Covenants.......................................................................................... 9
5.3 Certificates....................................................................................... 9
5.4 Legal Opinion...................................................................................... 10
5.5 Shareholder Approval............................................................................... 10
5.6 Listing............................................................................................ 10
5.7 Warrant Repricing Agreement Approval............................................................... 10
5.8 Officer's Certificate.............................................................................. 10
5.9 Judgments.......................................................................................... 10
5.10 Secretary's Certificate........................................................................... 10
5.11 Stop Orders....................................................................................... 10
ARTICLE 6 CONDITIONS TO CLOSING OBLIGATIONS OF COMPANY.......................................................... 10
6.1 Receipt of Payment................................................................................. 10
6.2 Representations and Warranties..................................................................... 11
6.3 Covenants.......................................................................................... 11
6.4 Delivery of Purchaser Questionnaire................................................................ 11
6.5 Shareholder Approval............................................................................... 11
ARTICLE 7 COVENANTS............................................................................................. 11
7.1 Definitions........................................................................................ 11
7.2 Registration Procedures and Expenses............................................................... 11
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TABLE OF CONTENTS
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7.3 Delay in Effectiveness............................................................................. 13
7.4 Indemnification.................................................................................... 13
7.5 Prospectus Delivery................................................................................ 15
7.6 Termination of Obligations......................................................................... 16
7.7 Reporting Requirements............................................................................. 16
7.8 Shareholder Approval............................................................................... 16
7.9 Blue Sky........................................................................................... 16
ARTICLE 8 RESTRICTIONS ON TRANSFERABILITY OF SECURITIES; COMPLIANCE WITH SECURITIES ACT......................... 17
8.1 Restrictions on Transferability.................................................................... 17
8.2 Instruction Sheet.................................................................................. 17
8.3 Transfer of Securities............................................................................. 17
8.4 Purchaser Information.............................................................................. 18
ARTICLE 9 MISCELLANEOUS......................................................................................... 18
9.1 Termination........................................................................................ 18
9.2 Waivers and Amendments............................................................................. 19
9.3 Broker's Fee....................................................................................... 19
9.4 Governing Law...................................................................................... 19
9.5 Survival........................................................................................... 19
9.6 Successors and Assigns............................................................................. 19
9.7 Entire Agreement................................................................................... 19
9.8 Notices, etc....................................................................................... 19
9.9 Severability of this Agreement..................................................................... 20
9.10 Counterparts...................................................................................... 20
9.11 Further Assurances................................................................................ 20
9.12 Expenses.......................................................................................... 20
9.13 Currency.......................................................................................... 20
9.14 Waiver of Conflicts............................................................................... 20
9.15 Voting Agreement.................................................................................. 21
Exhibit A - Schedule of Purchasers
Exhibit B - Form of Warrant
Exhibit C - Form of Purchaser's Questionnaire
iii.
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(CONTINUED)
PAGE
Exhibit D - Form of Company Counsel Opinion
Exhibit E - Instruction Sheet
Exhibit F - Form of Purchaser's Certificate of Subsequent Sale
Exhibit G - Form of Voting Agreement
iv.
ARADIGM CORPORATION
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is made as of
February 10, 2003, by and among ARADIGM CORPORATION, a California corporation
(the "COMPANY") with its principal office at 0000 Xxxxx Xxxx Xxx, Xxxxxxx,
Xxxxxxxxxx 00000, and the persons listed on the Schedule of Purchasers attached
hereto as EXHIBIT A (the "PURCHASERS").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of the Common
Shares and the Warrants (each as defined herein);
WHEREAS, the Company and the Purchasers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D, as promulgated by the SEC (as defined herein)
under the Securities Act (as defined herein);
WHEREAS, at the Closing, the Company desires to sell, and each Purchaser
desires to purchase, the Shares and the Warrants, upon the terms and conditions
stated in this Agreement; and
WHEREAS, concurrent with the execution and delivery of this Agreement, as
a material inducement to the Purchasers to enter into this Agreement, certain
principal stockholders of the Company are entering into Voting Agreements, in
the form attached hereto as EXHIBIT G, with New Enterprise Associates 10,
Limited Partnership ("NEA-10").
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises, representations, warranties and covenants hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
AUTHORIZATION AND SALE OF COMMON SHARES AND WARRANTS
1.1 AUTHORIZATION. The Company has authorized (a) the sale and issuance of
up to eighteen million nine hundred ninety-two thousand three hundred ninety-one
(18,992,391) shares of its Common Stock (the "COMMON SHARES") and (b) the sale
and issuance of warrants, in the form attached hereto as EXHIBIT B (the
"WARRANTS"), to purchase up to four million two hundred seventy-three thousand
two hundred seventy-two (4,273,272) shares of the Company's Common Stock (the
"COMMON STOCK") pursuant to this Agreement.
1.
1.2 SALE OF COMMON SHARES AND WARRANTS. At the Closing (as defined
herein), subject to the terms and conditions of this Agreement, the Company
agrees to issue and sell to each Purchaser and each Purchaser severally agrees
to purchase from the Company:
(a) Common Shares in the amount and at the purchase price set forth
opposite each Purchaser's name on EXHIBIT A; and
(b) Warrants to purchase shares of the Company's Common Stock in the
amount set forth opposite each Purchaser's name on EXHIBIT A at an exercise
price equal to $1.07 per share of Common Stock (the "WARRANT PRICE"). The shares
of Common Stock issuable upon exercise of or otherwise pursuant to the Warrants
are referred to herein as the "WARRANT SHARES". The Common Shares and the
Warrant Shares are collectively referred to herein as the "SHARES". The Shares
and the Warrants are collectively referred to herein as the "SECURITIES."
ARTICLE 2
CLOSING DATE; DELIVERY
2.1 CLOSING DATE. Subject to the satisfaction (or waiver) of the
conditions thereto set forth in Article 5 and Article 6 of this Agreement, the
closing of the purchase and sale of the Common Shares and Warrants hereunder
(the "CLOSING") shall be held at the offices of Xxxxxx Godward LLP ("XXXXXX
GODWARD"), Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, at
10:00 a.m. California time on the date one (1) business day following the
Company's receipt of Shareholder Approval (as defined herein), or at such other
time and place upon which the Company and the Purchasers purchasing the majority
of the Common Shares shall agree. The date of the Closing is hereinafter
referred to as the "CLOSING DATE".
2.2 DELIVERY. At the Closing, the Company will deliver to each Purchaser a
duly executed Warrant and a certificate representing the number of Common Shares
to be purchased by such Purchaser, registered in the Purchaser's name as shown
on EXHIBIT A. Such delivery shall be against payment of the purchase price
therefor by wire transfer of immediately available funds to the Company in
accordance with the Company's written wiring instructions.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Disclosure Schedule delivered by the Company to
the Purchasers herewith, the Company represents and warrants to the Purchasers:
3.1 ORGANIZATION AND STANDING. The Company is a corporation duly organized
and validly existing under, and by virtue of, the laws of the State of
California and is in good standing as a domestic corporation under the laws of
said state.
3.2 CORPORATE POWER; AUTHORIZATION. The Company has all requisite legal
and corporate power and has taken all requisite corporate action to execute and
deliver this Agreement, to sell and issue the Common Shares and Warrants, to
issue the Warrant Shares upon
2.
exercise of the Warrants in accordance with the terms of such Warrants, and to
carry out and perform all of its obligations under this Agreement. This
Agreement constitutes, and upon execution and delivery by the Company of the
Warrants, the Warrants will constitute, legal, valid and binding obligations of
the Company, enforceable in accordance with their respective terms, except (a)
as limited by applicable bankruptcy, insolvency, reorganization or similar laws
relating to or affecting the enforcement of creditors' rights generally and (b)
as limited by equitable principles generally. The execution and delivery of this
Agreement does not, and the performance of this Agreement and the compliance
with the provisions hereof, the issuance, sale and delivery of the Common Shares
and the Warrants by the Company will not materially conflict with, or result in
a material breach or violation of the terms, conditions or provisions of, or
constitute a material default under, or result in the creation or imposition of
any material lien pursuant to the terms of, the Articles of Incorporation (the
"ARTICLES") or Bylaws of the Company or any statute, law, rule or regulation or
any state or federal order, judgment or decree or any indenture, mortgage, lease
or other material agreement or instrument to which the Company or any of its
properties is subject.
3.3 ISSUANCE AND DELIVERY OF THE SHARES. When issued in compliance with
the provisions of this Agreement and the Articles, the Common Shares will be
validly issued, fully paid and nonassessable. Upon exercise of the Warrants in
accordance with the terms thereof, the Warrant Shares will be validly issued,
fully paid and nonassessable. The issuance and delivery of the Common Shares and
the Warrants is not subject to preemptive or any other similar rights of the
shareholders of the Company or any liens or encumbrances.
3.4 SEC DOCUMENTS; FINANCIAL STATEMENTS. Each report or proxy statement
delivered to the Purchasers is a true and complete copy of such document as
filed by the Company with the Securities and Exchange Commission (the "SEC").
The Company has filed in a timely manner all documents that the Company was
required to file with the SEC under Sections 13, 14(a) and 15(d) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), during the
twelve (12) months preceding the date of this Agreement. As of their respective
filing dates, all documents filed by the Company with the SEC (the "SEC
DOCUMENTS") complied in all material respects with the requirements of the
Exchange Act or the Securities Act of 1933, as amended (the "SECURITIES ACT"),
as applicable. None of the SEC Documents as of their respective dates contained
any untrue statement of material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Documents (the
"FINANCIAL STATEMENTS") comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto. The Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently applied
and fairly present the consolidated financial position of the Company and any
subsidiaries at the dates thereof and the consolidated results of their
operations and consolidated cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal, recurring adjustments or to the
extent that such unaudited statements do not include footnotes).
3.5 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state, or local governmental authority on the part of the Company is
required in connection with the
3.
consummation of the transactions contemplated by this Agreement except for (a)
the Shareholder Approval, (b) compliance with the securities and blue sky laws
in the states in which the Common Shares and Warrants are offered and/or sold,
which compliance will be effected in accordance with such laws, (c) the filing
of the Registration Statement (as defined herein) and all amendments thereto
with the SEC as contemplated by Section 7.2 of this Agreement, and (d) the
filing of the Nasdaq National Market Notification Form with the Nasdaq National
Market.
3.6 NO MATERIAL ADVERSE CHANGE. Except as otherwise disclosed herein or in
the SEC Documents, since September 30, 2002, there have not been any changes in
the assets, liabilities, financial condition, business prospects or operations
of the Company from that reflected in the Financial Statements except changes in
the ordinary course of business which have not been, either individually or in
the aggregate, materially adverse.
3.7 AUTHORIZED CAPITAL STOCK. The authorized capital stock of the Company
consists of (a) one hundred million (100,000,000) shares of Common Stock, no par
value, of which, as of January 31, 2003, thirty-one million one hundred
fifty-seven thousand six hundred twelve (31,157,612) shares were outstanding,
and (b) five million (5,000,000) shares of Preferred Stock, no par value, one
million (1,000,000) shares of which are designated Series A Junior Participating
Preferred Stock, none of which shares is currently outstanding, and two million
fifty thousand (2,050,000) of which are designated Series A Convertible
Preferred Stock, of which, as of February 10, 2003, two million one thousand two
hundred thirty-six (2,001,236) shares are outstanding. Except as described on
Schedule 3.7 of the Disclosure Schedule, there are no outstanding warrants,
options, convertible securities or other rights, agreements or arrangements of
any character under which the Company is or may be obligated to issue any equity
securities of any kind and except as contemplated by this Agreement.
3.8 LITIGATION. Except as disclosed in the SEC Documents, there are no
actions, suits proceedings or investigations pending or, to the best of the
Company's knowledge, threatened against the Company or any of its properties
before or by any court or arbitrator or any governmental body, agency or
official in which there is a reasonable likelihood (in the judgment of the
Company) of an adverse decision that (a) could have a material adverse effect on
the Company's properties or assets or the business of the Company as currently
conducted, or (b) could impair the ability of the Company to perform in any
material respect its obligations under this Agreement.
3.9 ELIGIBILITY TO USE FORM S-3. The Company is eligible to use Form S-3
for the registration of its securities under the Securities Act which are
offered in transactions involving secondary offerings.
3.10 COMPANY NOT AN "INVESTMENT COMPANY". The Company has been advised of
the rules and requirements under the Investment Company Act of 1940, as amended
(the "Investment Company Act"). The Company is not, and immediately after
receipt of payment for the Shares will not be, an "investment company" or an
entity "controlled" by an "investment company" within the meaning of the
Investment Company Act and shall conduct its business in a manner so that it
will not become subject to the Investment Company Act.
4.
3.11 NASDAQ COMPLIANCE. The Company's Common Stock is registered pursuant
to Section 12(g) of the Exchange Act and is listed on The Nasdaq Stock Market,
Inc. National Market (the "NASDAQ NATIONAL MARKET"), and the Company has taken
no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or de-listing the Common
Stock from the Nasdaq National Market, nor has the Company received any
notification that the SEC or the National Association of Securities Dealers,
Inc. is contemplating terminating such registration or listing
3.12 USE OF PROCEEDS. The proceeds of the sale of the Common Shares and
the Warrants hereunder shall be used by the Company for working capital and
general corporate purposes.
3.13 BROKERS AND FINDERS. No person or entity will have, as a result of
the transactions contemplated by this Agreement, any valid right, interest or
claim against or upon the Company or a Purchaser for any commission, fee or
other compensation pursuant to any agreement, arrangement or understanding
entered into by or on behalf of the Company, other than XX Xxxxx.
3.14 NO DIRECTED SELLING EFFORTS OR GENERAL SOLICITATION. Neither the
Company nor any person or entity acting on its behalf has conducted any general
solicitation or general advertising (as those terms are used in Regulation D) in
connection with the offer or sale of any of the Securities.
3.15 NO INTEGRATED OFFERING. Neither the Company nor any of its
Affiliates, nor any person or entity acting on its or their behalf has, directly
or indirectly, made any offers or sales of any Company security or solicited any
offers to buy any security, under circumstances that would adversely affect
reliance by the Company on Section 4(2) for the exemption from registration for
the transactions contemplated hereby or would require registration of the
Securities under the Securities Act.
3.16 PRIVATE PLACEMENT. The offer and sale of the Securities to the
Purchasers as contemplated hereby is exempt from the registration requirements
of the Securities Act
3.17 INTELLECTUAL PROPERTY.
(a) "INTELLECTUAL PROPERTY" shall mean patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes.
(b) Except as disclosed in the SEC Documents and to the knowledge of
the Company, the Company owns or has the valid right to use all of the
Intellectual Property that is necessary for the conduct of the Company's
business as currently conducted or as currently proposed to be conducted with
respect to products currently in clinical trials, free and clear of all material
liens and encumbrances.
(c) Except as disclosed in the SEC Documents, the conduct of the
Company's business as currently conducted does not infringe or otherwise
conflict with (collectively, "Infringe") any Intellectual Property rights of any
third party or any confidentiality obligation
5.
owed by the Company to a third party, and, to the knowledge of the Company, the
Intellectual Property and confidential information of the Company are not being
Infringed by any third party.
(d) Each employee, consultant and contractor of the Company who has
had access to confidential information of the Company which is necessary for the
conduct of Company's business as currently conducted or as currently proposed to
be conducted has executed an agreement to maintain the confidentiality of such
confidential information and has executed appropriate agreements that are
substantially consistent with the Company's standard forms thereof.
3.18 QUESTIONABLE PAYMENTS. Neither the Company nor, to the knowledge of
the Company, any of its current or former stockholders, directors, officers,
employees, agents or other persons acting on behalf of the Company, has on
behalf of the Company or in connection with its business: (a) used any corporate
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity; (b) made any direct or indirect
unlawful payments to any governmental officials or employees from corporate
funds; (c) established or maintained any unlawful or unrecorded fund of
corporate monies or other assets; (d) made any false or fictitious entries on
the books and records of the Company; or (e) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment of any nature.
3.19 TRANSACTIONS WITH AFFILIATES. Except as disclosed in the SEC
Documents and as contemplated pursuant to this Agreement and the Warrant
Repricing Agreement of even date herewith, by and among the Company and the
persons listed on the Schedule of Holders attached thereto as Exhibit A, none of
the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction
with the Company or to a presently contemplated transaction (other than for
services as employees, officers and directors) that would be required to be
disclosed pursuant to Item 404 of Regulation S-K promulgated under the
Securities Act.
3.20 DISCLOSURE. Except as disclosed on Schedule 3.20 of the Disclosure
Schedule, the information contained in the Exchange Act Documents as of the date
hereof and as of the Closing Date, did not and shall not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. For purposes herein,
"Exchange Act Documents" are the documents filed by the Company under the
Exchange Act, since the end of its most recently completed fiscal year through
the date hereof, including, without limitation, its most recent report on Form
10-K.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS
Each Purchaser hereby severally represents and warrants to the Company:
4.1 AUTHORIZATION. Purchaser represents and warrants to the Company that:
(a) Purchaser has all requisite legal and corporate or other power and capacity
and has taken all requisite corporate or other action to execute and deliver
this Agreement, to purchase the
6.
Common Shares and the Warrants to be purchased by it and to carry out and
perform all of its obligations under this Agreement, and (b) this Agreement
constitutes the legal, valid and binding obligation of such Purchaser,
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, or similar laws relating to or affecting
the enforcement of creditors' rights generally and (ii) as limited by equitable
principles generally.
4.2 INVESTMENT EXPERIENCE. Purchaser is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. Purchaser is aware of the
Company's business affairs and financial condition and has had access to and has
acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the Common Shares and the Warrants. Purchaser
has such business and financial experience as is required to give it the
capacity to protect its own interests in connection with the purchase of the
Common Shares and Warrants.
4.3 INVESTMENT INTENT. Purchaser is purchasing the Common Shares and the
Warrants for its own account as principal, for investment purposes only, and not
with a present view to, or for, resale, distribution or fractionalization
thereof, in whole or in part, within the meaning of the Securities Act, other
than as contemplated by Article 7. Purchaser understands that its acquisition of
the Common Shares and the Warrants has not been registered under the Securities
Act or registered or qualified under any state securities law in reliance on
specific exemptions therefrom, which exemptions may depend upon, among other
things, the bona fide nature of Purchaser's investment intent as expressed
herein. Purchaser has completed or caused to be completed the Purchaser
Questionnaire attached hereto as EXHIBIT C for use in preparation of the
Registration Statement, and the responses provided therein shall be true and
correct as of the Closing Date and will be true and correct as of the effective
date of the Registration Statement. Purchaser, in connection with its decision
to purchase the Common Shares and the Warrants, has relied solely upon the SEC
Documents and the representations and warranties of the Company contained
herein. Purchaser will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Securities except in
compliance with the Securities Act, and the rules and regulations promulgated
thereunder.
4.4 REGISTRATION OR EXEMPTION REQUIREMENTS. Purchaser further acknowledges
and understands that the Securities may not be resold or otherwise transferred
except in a transaction registered under the Securities Act or unless an
exemption from such registration is available.
4.5 DISPOSITIONS. Purchaser will not, prior to the Effectiveness Deadline
Date (as defined below) of the Registration Statement, if then prohibited by law
or regulation: (a) sell, offer to sell, solicit offers to buy, dispose of, loan,
pledge or grant any right with respect to (collectively, a "DISPOSITION") the
Securities; or (b) engage in any hedging or other transaction which is designed
or could reasonably be expected to lead to or result in a Disposition of
Securities by such Purchaser or any person or entity. In addition, Purchaser
agrees that for so long as it owns any Shares, it will not enter into any short
sale of Shares executed at a time when the Purchaser has no equivalent
offsetting long position in the Common Stock. For purposes of determining
whether the Purchaser has an equivalent offsetting long position in the Shares,
shares that the Purchaser is entitled to receive within sixty (60) days (whether
pursuant to
7.
contract or upon conversion or exercise of convertible securities) will be
included as if held long by the Purchaser.
4.6 NO LEGAL, TAX OR INVESTMENT ADVICE. Purchaser understands that nothing
in this Agreement or any other materials presented to Purchaser in connection
with the purchase and sale of the Common Shares and the Warrants constitutes
legal, tax or investment advice. Purchaser has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Common Shares and the
Warrants.
4.7 CONFIDENTIALITY. Purchaser will hold in confidence all information
concerning this Agreement and the placement of the Securities hereunder until
the earlier of such time as (a) the Company has made a public announcement
concerning the Agreement and the placement of the Securities hereunder, or (b)
this Agreement is terminated; provided, however, that the foregoing provision of
this Section 4.7 shall not apply if the Company does not issue a press release
concerning the Agreement and the placement of the Securities hereunder within
one (1) day of the date hereof.
4.8 RESIDENCY. Purchaser's principal executive offices are in the
jurisdiction set forth immediately below Purchaser's name on the Schedule of
Purchasers attached hereto as EXHIBIT A.
4.9 GOVERNMENTAL REVIEW. Purchaser 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 Shares or the
Warrants.
4.10 LEGEND. Purchaser understands that, until such time as the
Registration Statement has been declared effective or the Securities may be sold
pursuant to Rule 144 under the Securities Act without any restriction as to the
number of securities as of a particular date that can then be immediately sold,
the Securities may bear a restrictive legend in substantially the following form
(and a stop transfer order may be placed against transfer of the certificates
for the Shares):
"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 OR IN ANY OTHER
JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED,
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THOSE LAWS."
If Rule 144(k) is available to a Purchaser, the Company shall, upon a
Purchaser's written request and delivery of appropriate documents reasonably
requested by the Company, promptly
8.
cause certificates evidencing the Securities to be replaced with certificates
which do not bear such restrictive legends, and Warrant Shares subsequently
issued upon due exercise of the Warrants shall not bear such restrictive legends
provided Rule 144(k) is available with respect to such Warrant Shares.
4.11 FOREIGN INVESTORS. If Purchaser is not a United States person (as
defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as
amended), Purchaser hereby represents that it has satisfied itself as to the
full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Common Shares and the Warrants or any use of
this Agreement, including (a) the legal requirements within its jurisdiction for
the purchase of the Common Shares and the Warrants, (b) any foreign exchange
restrictions applicable to such purchase or acquisition, (c) any government or
other consents that may need to be obtained, and (d) the income tax and other
tax consequences, if any, that may be relevant to the purchase, holding,
redemption, sale or transfer of the Securities. Purchaser's subscription and
payment for and continued beneficial ownership of the Securities will not
violate any applicable securities or other laws of Purchaser's jurisdiction.
ARTICLE 5
CONDITIONS TO CLOSING OBLIGATIONS OF PURCHASERS
Each Purchaser's obligation to purchase the Common Shares and the Warrants
at the Closing is, at the option of such Purchaser, subject to the fulfillment
or waiver as of the Closing Date of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Company in Article 3 hereof qualified as to materiality shall be
true and correct at all times prior to and on the Closing Date, except to the
extent any such representation or warranty expressly speaks as of an earlier
date, in which case such representation or warranty shall be true and correct as
of such earlier date, and the representations and warranties made by the Company
in Article 3 hereof not qualified as to materiality shall be true and correct in
all material respects at all times prior to and on the Closing Date, except to
the extent any such representation or warranty expressly speaks as of an earlier
date, in which case such representation or warranty shall be true and correct in
all material respects as of such earlier date.
5.2 COVENANTS. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all material respects.
5.3 CERTIFICATES. The Company shall have delivered to the Purchasers duly
executed certificates for the Common Shares and the Warrants (in such
denominations as set forth opposite each Purchaser's name on EXHIBIT A).
5.4 LEGAL OPINION. The Purchasers shall have received on the Closing Date
an opinion of Xxxxxx Godward, counsel for the Company, dated the Closing Date,
to the effect as set forth in EXHIBIT D.
9.
5.5 SHAREHOLDER APPROVAL. The Company shall have obtained the Shareholder
Approval.
5.6 LISTING. The Company shall have complied with all requirements with
respect to the listing of the Shares on the Nasdaq National Market, except for
such requirements not required until after the issuance of the Shares, such
requirements to be complied with promptly after Closing.
5.7 WARRANT REPRICING AGREEMENT. The Company shall have executed and
delivered the Warrant Repricing Agreement in the form attached hereto as EXHIBIT
H.
5.8 OFFICER'S CERTIFICATE. The Company shall have delivered a Certificate,
executed on behalf of the Company by its Chief Executive Officer or its Chief
Financial Officer, dated as of the Closing Date, certifying to the fulfillment
of the conditions specified in Sections 5.1 and 5.2.
5.9 JUDGMENTS. No judgment, writ, order, injunction, award or decree of or
by any court, or judge, justice or magistrate, including any bankruptcy court or
judge, or any order of or by any governmental authority, shall have been issued,
and no action or proceeding shall have been instituted by any governmental
authority, enjoining or preventing the consummation of the transactions
contemplated hereby.
5.10 SECRETARY'S CERTIFICATE. The Company shall have delivered a
Certificate, executed on behalf of the Company by its Secretary, dated as of the
Closing Date, certifying the resolutions adopted by the Board of Directors of
the Company approving the transactions contemplated by this Agreement and the
issuance of the Securities, certifying the current versions of the Articles and
Bylaws of the Company and certifying as to the signatures and authority of
persons signing this Agreement and related documents on behalf of the Company.
5.11 STOP ORDERS No stop order or suspension of trading shall have been
imposed by the Nasdaq National Market, the SEC or any other governmental
regulatory body with respect to public trading in the Common Stock.
5.12 MINIMUM INVESTMENT. The Company shall receive a minimum of
$15,000,000 of aggregate purchase price in connection with the Closing.
ARTICLE 6
CONDITIONS TO CLOSING OBLIGATIONS OF COMPANY
The Company's obligation to sell and issue the Common Shares and the
Warrants at the Closing is, at the option of the Company, subject to the
fulfillment or waiver of the following conditions:
6.1 RECEIPT OF PAYMENT. The Purchasers shall have delivered payment of the
purchase price to the Company for the Common Shares and the Warrants being
issued hereunder.
10.
6.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Purchasers in Article 4 hereof qualified as to materiality shall be
true and correct at all times prior to and on the Closing Date, except to the
extent any such representation or warranty expressly speaks as of an earlier
date, in which case such representation or warranty shall be true and correct as
of such earlier date, and, the representations and warranties made by the
Purchasers in Article 4 hereof not qualified as to materiality shall be true and
correct in all material respects at all times prior to and on the Closing Date,
except to the extent any such representation or warranty expressly speaks as of
an earlier date, in which case such representation or warranty shall be true and
correct in all material respects as of such earlier date.
6.3 COVENANTS. All covenants, agreements and conditions contained in this
Agreement to be performed by the Purchasers on or prior to the Closing Date
shall have been performed or complied with in all material respects.
6.4 DELIVERY OF PURCHASER QUESTIONNAIRE. The Company shall have received
from each Purchaser a fully completed Purchaser Questionnaire in the form
attached hereto as EXHIBIT C prior to the Closing for the Company's use in
preparing the Registration Statement pursuant to Article 7 below.
6.5 SHAREHOLDER APPROVAL. The Company shall have obtained the Shareholder
Approval.
ARTICLE 7
COVENANTS
7.1 DEFINITIONS. For the purpose of this Article 7:
(a) the term "REGISTRATION STATEMENT" shall mean any registration
statement required to be filed by Section 7.2 below, and shall include any
preliminary prospectus, final prospectus, exhibit or amendment included in or
relating to such registration statements; and
(b) the term "REGISTRABLE SHARES" shall mean all of the Common
Shares and the Warrant Shares.
7.2 REGISTRATION PROCEDURES AND EXPENSES. The Company shall:
(a) use its best efforts to file a Registration Statement with the
SEC within thirty (30) days following the Closing Date to register the
Registrable Shares on Form S-3 under the Securities Act (providing for shelf
registration of such Registrable Shares under SEC Rule 415) or on such other
form which is appropriate to register such Registrable Shares for resale from
time to time by the Purchasers;
(b) use its best efforts, subject to receipt of necessary
information from the Purchasers, to cause any such Registration Statement filed
pursuant to Section 7.2(a) above to become effective as promptly after filing of
such Registration Statement as practicable but in any event by the date (the
"EFFECTIVENESS DEADLINE DATE") that is sixty (60) days following the Closing
Date; provided, however, that in the event that a Registration Statement is
reviewed by
11.
the SEC, then the Effectiveness Deadline Date shall mean, with respect to any
Registration Statement, the date that is one hundred (120) days following the
Closing Date;
(c) prepare and file with the SEC such amendments and supplements to
such Registration Statement and the prospectus used in connection therewith as
may be necessary to keep such Registration Statement continuously effective
until termination of such obligation as provided in Section 7.6 below, subject
to the Company's right to suspend pursuant to Section 7.5;
(d) furnish to each Purchaser (and to each underwriter, if any, of
such Registrable Shares) such number of copies of prospectuses in conformity
with the requirements of the Securities Act and such other documents as the
Purchasers may reasonably request, in order to facilitate the public sale or
other disposition of all or any of the Registrable Shares by the Purchasers;
(e) file such documents as may be required of the Company for normal
securities law clearance for the resale of the Registrable Shares in such states
of the United States as may be reasonably requested by each Purchaser; provided,
however, that the Company shall not be required in connection with this
paragraph (e) to qualify as a foreign corporation or execute a general consent
to service of process in any jurisdiction;
(f) advise each Purchaser promptly:
(i) of the effectiveness of the Registration Statement or any
post-effective amendments thereto;
(ii) of any request by the SEC for amendments to the
Registration Statement or amendments to the prospectus or for additional
information relating thereto;
(iii) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement under the Securities Act or of
the suspension by any state securities commission of the qualification of the
Registrable Shares for offering or sale in any jurisdiction, or the initiation
of any proceeding for any of the preceding purposes; and
(iv) of the existence of any fact and the happening of any
event that makes any statement of a material fact made in the Registration
Statement, the prospectus and amendment or supplement thereto, or any document
incorporated by reference therein, untrue, or that requires the making of any
additions to or changes in the Registration Statement or the prospectus in order
to make the statements therein not misleading;
(g) use its best efforts to cause all Registrable Shares to be
listed on each securities exchange, if any, on which equity securities by the
Company are then listed;
(h) bear all expenses in connection with the procedures in
paragraphs (a) through (g) of this Section 7.2 and the registration of the
Registrable Shares on such Registration Statement and the satisfaction of the
blue sky laws of such states; and
12.
(i) otherwise use commercially reasonable efforts to make available
to its security holders no later than the Availability Date (as defined below),
an earnings statement covering a period of at least twelve (12) months,
beginning after the effective date of each Registration Statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act, including Rule 158 promulgated thereunder (for the purpose of
this subsection 3(i), "Availability Date" means the 45th day following the end
of the fourth fiscal quarter after the fiscal quarter that includes the
effective date of such Registration Statement, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year, "Availability
Date" means the 90th day after the end of such fourth fiscal quarter).
7.3 DELAY IN EFFECTIVENESS. If the Registration Statement is not declared
effective by the SEC on or prior to the Effectiveness Deadline Date, then for
each thirty (30) day period following the Effectiveness Deadline Date, until but
excluding the date the Registration Statement is declared effective, the Company
shall, for such period, pay each Purchaser, as liquidated damages and not as a
penalty, an amount equal to one and one-half percent (1.5%) of the purchase
price of the Common Shares purchased by such Purchaser hereunder, for such
period (or prorated for any partial period); and for any such period, such
payment shall be made no later than the first business day of the calendar month
next succeeding the last month in which such period occurs. The parties hereto
agree that the liquidated damages provided for in this Section 7.3 constitute a
reasonable estimate of the damages that may be incurred by the Purchasers by
reason of the failure of the Registration Statement to be declared effective in
accordance with the provisions hereof.
7.4 INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Purchaser, the partners, members, officers and directors of each Purchaser and
each person, if any, who controls such Purchaser within the meaning of the
Securities Act or the Exchange Act, from and against any losses, claims, damages
or liabilities to which they may become subject (under the Securities Act or
otherwise) insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading or arise out of any failure by the Company to fulfill any undertaking
included in the Registration Statement and the Company will, as incurred,
reimburse such Purchaser, partner, member, officer, director or controlling
person for any legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim; provided,
however, that the Company shall not be liable in any such case to the extent
that such loss, claim, damage or liability (collectively, "LOSS") arises out of,
or is based upon, an untrue statement or omission or alleged untrue statement or
omission made in such Registration Statement in reliance upon and in conformity
with written information furnished to the Company by or on behalf of such
Purchaser, partner, member, officer, director or controlling person specifically
for use in preparation of the Registration Statement or any breach of this
Agreement by such Purchaser; and provided further, however, that the Company
shall not be liable to any Purchaser of Registrable Shares (or any partner,
member, officer, director or controlling person of such Purchaser) to the extent
that any such Loss is caused by an untrue statement or omission or
13.
alleged untrue statement or omission made in any preliminary prospectus if
either (i)(A) such Purchaser failed to send or deliver a copy of the final
prospectus with or prior to the delivery of written confirmation of the sale by
such Purchaser to the person asserting the claim from which such Loss resulted
and (B) the final prospectus corrected such untrue statement or omission, (ii)
(X) such untrue statement or omission is corrected in an amendment or supplement
to the prospectus and (Y) having previously been furnished by or on behalf of
the Company with copies of the prospectus as so amended or supplemented, such
Purchaser thereafter fails to deliver such prospectus as so amended or
supplemented, with or prior to the delivery of written confirmation of the sale
of a Registrable Share to the person asserting the claim from which such Loss
resulted or (iii) such Purchaser sold Registrable Shares in violation of such
Purchaser's covenant contained in Section 7.5 of this Agreement.
(b) Each Purchaser, severally and not jointly, agrees to indemnify
and hold harmless the Company (and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, each officer of the Company who signs the Registration Statement
and each director of the Company), from and against any losses, claims, damages
or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any breach of
this Agreement by such Purchaser or any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading in each case, on the
effective date thereof, if, and to the extent, such untrue statement or omission
or alleged untrue statement or omission was made in reliance upon and in
conformity with written information furnished by or on behalf of such Purchaser
specifically for use in preparation of the Registration Statement, and such
Purchaser will reimburse the Company (and each of its officers, directors or
controlling persons) for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim; provided, however, that in no event shall any indemnity under this
Section 7.4(b) be greater in amount than the dollar amount of the proceeds (net
of the amount of any damages such Purchaser has otherwise been required to pay
by reason of such untrue statement or omission or alleged untrue statement or
omission) received by such Purchaser upon the sale of the Registrable Securities
included in the Registration Statement giving rise to such indemnification
obligation.
(c) Promptly after receipt by any indemnified person of a notice of
a claim or the beginning of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to this Section 7.4, such
indemnified person shall notify the indemnifying person in writing of such claim
or of the commencement of such action, and, subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person and such indemnifying person shall have been notified
thereof, such indemnifying person shall be entitled to participate therein, and,
to the extent that it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified person. After notice from the
indemnifying person to such indemnified person of its election to assume the
defense thereof, such indemnifying person shall not be liable to such
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the
14.
defense thereof; provided, however, that if there exists or shall exist a
conflict of interest that would make it inappropriate in the reasonable judgment
of the indemnified person for the same counsel to represent both the indemnified
person and such indemnifying person or any affiliate or associate thereof, the
indemnified person shall be entitled to retain its own counsel at the expense of
such indemnifying person; provided, further, that no indemnifying person shall
be responsible for the fees and expense of more than one separate counsel for
all indemnified parties. The indemnifying party shall not settle an action
without the consent of the indemnified party, which consent shall not be
unreasonably withheld.
(d) If after proper notice of a claim or the commencement of any
action against the indemnified party, the indemnifying party does not choose to
participate, then the indemnified party shall assume the defense thereof and
upon written notice by the indemnified party requesting advance payment of a
stated amount for its reasonable defense costs and expenses, the indemnifying
party shall advance payment for such reasonable defense costs and expenses (the
"ADVANCE INDEMNIFICATION PAYMENT") to the indemnified party. In the event that
the indemnified party's actual defense costs and expenses exceed the amount of
the Advance Indemnification Payment, then upon written request by the
indemnified party, the indemnifying party shall reimburse the indemnified party
for such difference; in the event that the Advance Indemnification Payment
exceeds the indemnified party's actual costs and expenses, the indemnified party
shall promptly remit payment of such difference to the indemnifying party.
(e) If the indemnification provided for in this Section 7.4 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any losses, claims, damages or liabilities referred to herein,
the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other, as well as any other relevant equitable considerations;
provided, that in no event shall any contribution by an indemnifying party
hereunder be greater in amount than the dollar amount of the proceeds (net of
the amount of any damages such indemnifying party has otherwise been required to
pay by reason of such untrue statement or omission or alleged untrue statement
or omission) received by such indemnifying party upon the sale of the
Registrable Securities included in the Registration Statement giving rise to
such indemnification obligation..
7.5 PROSPECTUS DELIVERY. Each Purchaser hereby covenants with the Company
not to make any sale of the Registrable Shares without complying with Section
8.3. The Purchaser acknowledges that there may be times when the Company must
suspend the use of the prospectus forming a part of the Registration Statement
until such time as an amendment to the Registration Statement has been filed by
the Company and declared effective by the SEC, or until such time as the Company
has filed an appropriate report with the SEC pursuant to the Exchange Act. The
Purchaser hereby covenants that it will not sell any Registrable Shares pursuant
to said prospectus during the period commencing at the time at which the Company
gives the Purchaser notice of the suspension of the use of said prospectus and
ending at the time the Company gives the Purchaser notice that the Purchaser may
thereafter effect sales pursuant to said prospectus; provided that such
suspension periods shall in no event exceed thirty (30) days in any twelve (12)
month period and that, in the good faith judgment of the Company's Board of
15.
Directors, the Company would, in the absence of such delay or suspension
hereunder, be required under state or federal securities laws to disclose any
corporate development, a potentially significant transaction or event involving
the Company, or any negotiations, discussions, or proposals directly relating
thereto, in either case the disclosure of which would reasonably be expected to
have a material adverse effect upon the Company or its shareholders.
7.6 TERMINATION OF OBLIGATIONS. The obligations of the Company pursuant to
Section 7.2 hereof shall cease and terminate upon the earlier to occur of (a)
such time as all of the Registrable Shares have been resold, (b) such time as
all of the Registrable Shares may be resold in a three-month period pursuant to
Rule 144, or (c) the third anniversary of the Closing Date.
7.7 REPORTING REQUIREMENTS.
(a) With a view to making available the benefits of certain rules
and regulations of the SEC that may at any time permit the sale of the
Securities to the public without registration or pursuant to a registration
statement on Form S-3, the Company agrees to use its best efforts to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(ii) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(iii) so long as any of the Purchasers own Registrable Shares,
to furnish to such Purchaser upon request (A) a written statement by the Company
as to whether it is in compliance with the reporting requirements of Rule 144,
the Securities Act and the Exchange Act, or whether it is qualified as a
registrant whose securities may be resold pursuant to SEC Form S-3, and (B) a
copy of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company.
7.8 SHAREHOLDER APPROVAL. The Company shall use best efforts to call, give
notice of and hold, no later than 30 days after the date hereof, a meeting of
the holders of Company Common Stock to vote on the approval of the authorization
and issuance of the Common Shares and the Warrants and the issuance of the
Warrant Shares upon exercise of or otherwise pursuant to the Warrants in
compliance with Rule 4350(i) of the Marketplace Rules of the National
Association of Securities Dealers, Inc. (the "SHAREHOLDER APPROVAL"), to the
extent required by the Nasdaq National Market. The term "Shareholder Approval"
shall specifically include a determination by the Nasdaq National Market that
approval of the holders of Company Common Stock is not required for the
authorization and issuance of the Common Shares and the Warrants and the
issuance of the Warrants Shares upon exercise of or otherwise pursuant to the
Warrants.
7.9 BLUE SKY. The Company shall obtain and maintain all necessary blue sky
law permits and qualifications, or secured exemptions therefrom, required by any
state for the offer and sale of Securities.
16.
7.10 MASSACHUSETTS BUSINESS TRUSTS. A copy of the Agreement and
Declaration of Trust of each Purchaser that is a fund or series investment
company (each, a "Fund") organized as a Massachusetts business trust (each, a
"Trust") is on file with the Secretary of the Commonwealth of Massachusetts. The
Company and the other Purchasers acknowledge and agree that this Agreement is
not executed on behalf of or binding upon any of the trustees, officers,
directors or shareholders of a Trust individually, but is binding upon the
applicable Fund and its assets and property. The Company agrees that no trustee,
officer, director or shareholder of a Trust or the applicable Fund may be held
personally liable or responsible for any obligations of a Fund arising out of
this Agreement. With respect to all obligations of the Fund arising out of this
Agreement, the Company shall look for payment or satisfaction of any claim
solely to the assets and property of the Fund. The Company is expressly put on
notice that the rights and obligations of each series of shares of a Trust under
its Agreement and Declaration of Trust are separate and distinct from those of
any and all other series.
ARTICLE 8
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES;
COMPLIANCE WITH SECURITIES ACT
8.1 RESTRICTIONS ON TRANSFERABILITY. The Securities shall not be
transferable in the absence of a registration under the Securities Act or an
exemption therefrom. The Company shall be entitled to give stop transfer
instructions to its transfer agent with respect to the Securities in order to
enforce the foregoing restrictions.
8.2 INSTRUCTION SHEET. Each certificate representing Registrable Shares
shall bear the Instruction Sheet attached hereto as EXHIBIT E (in addition to
any legends required under applicable securities laws).
8.3 TRANSFER OF SECURITIES.
(a) Each Purchaser hereby covenants with the Company not to make any
sale of the Securities except:
(i) in accordance with the Registration Statement, in which
case Purchaser covenants to comply with the requirement of delivering a current
prospectus; or
(ii) in accordance with Rule 144, in which case Purchaser
covenants to comply with Rule 144; or
(iii) (A) If the transferee has agreed in writing to be bound
by the terms of this Agreement, (B) such Purchaser shall have notified the
Company of the proposed disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the proposed disposition,
and (C) if reasonably requested by the Company, such Purchaser shall have
furnished the Company with an opinion of counsel, reasonably satisfactory to the
Company, that such disposition will not require registration of such shares
under the Securities Act.
17.
(b) Notwithstanding the provisions of subsection (a) above, no such
restriction shall apply to a transfer by a Purchaser that is (i) a partnership
transferring to its partners or former partners in accordance with partnership
interests, (ii) a corporation transferring to a wholly-owned subsidiary or a
parent corporation that owns all of the capital stock of the Purchaser, (iii) a
limited liability company transferring to its members or former members in
accordance with their interest in the limited liability company, or (iv) an
individual transferring to the Purchaser's family member or trust for the
benefit of an individual Purchaser; provided that in each case the transferee
will agree in writing to be subject to the terms of this Agreement to the same
extent as if he were an original Purchaser hereunder.
(c) Purchaser further acknowledges and agrees that, if a Purchaser
is selling the Securities using the prospectus forming a part of the
Registration Statement, such Securities are not transferable on the books of the
Company unless the certificate submitted to the Company's transfer agent
evidencing such Securities is accompanied by a separate certificate executed by
an officer of, or other person duly authorized by, the Purchaser in the form
attached hereto as EXHIBIT F.
8.4 PURCHASER INFORMATION. Each Purchaser covenants that it will promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding such Purchaser or such Purchaser's "Plan of
Distribution."
ARTICLE 9
MISCELLANEOUS
9.1 TERMINATION.
(a) This Agreement may be terminated and the sale and purchase of
the Common Shares and the Warrants abandoned at any time prior to the Closing:
(i) by written agreement of (A) the Company and (B) Purchasers
purchasing a majority of the Common Shares;
(ii) if the SEC has determined not to review the proxy
statement filed with the SEC by the Company in connection with obtaining the
Shareholder Approval (the "PROXY STATEMENT"), by written notice of any
individual Purchaser if the Shareholder Approval has not been obtained within 30
days of the date hereof (other than as a result of the failure on the part of
the party giving such notice of termination to perform its covenants and
obligations under this Agreement in all material respects); provided, however
that the abandonment of the sale and purchase of the Common Shares and the
Warrants shall be applicable only to such Purchaser providing such written
notice;
(iii) if the Proxy Statement is reviewed by the SEC, by
written notice of any individual Purchaser if the Shareholder Approval has not
been obtained within 45 days of the date hereof (other than as a result of the
failure on the part of the party giving such notice of termination to perform
its covenants and obligations under this Agreement in all material respects);
provided, however that the abandonment of the sale and purchase of the Common
18.
Shares and the Warrants shall be applicable only to such Purchaser providing
such written notice;
(iv) by written notice of any individual Purchaser if (i)
there is a material breach of any representation or warranty of the Company,
provided written notice of such breach has been given to the Company and the
Company has not cured such breach within 30 days of such notice, or (ii) the
Purchaser reasonably determines that the timely satisfaction of any condition
set forth in Article 5 has become impossible (other than as a result of any
failure on the part of the Purchaser to comply with or perform its covenants and
obligations under this Agreement);
(v) by written notice of the Company if (i) there is a
material breach of any representation or warranty of any Purchaser, provided
written notice of such breach has been given to such Purchaser and the Purchaser
has not cured such breach within 30 days of such notice or (ii) the Company
reasonably determines that the timely satisfaction of any condition set forth in
Article 6 has become impossible (other than as a result of any failure on the
part of the Company to comply with or perform any covenant or obligation set
forth in this Agreement); provided, however, that the abandonment of the sale
and purchase of the Common Shares and the Warrants pursuant to clause (i) of
this paragraph shall be applicable only with respect to such Purchaser to whom
the material breach applies; or
(vi) by written notice of the Company if Purchasers purchasing
seventy-five percent (75%) or more of the Common Shares have terminated this
Agreement.
(b) If this Agreement is terminated pursuant to this Section 9.1 all
further obligations of the parties shall terminate; provided, however, that (i)
no party shall be relieved of any liability arising from any breach by such
party of any provision of this Agreement and (ii) the parties shall, in all
events, remain bound by and continue to be subject to the provisions set forth
in this Article 9.
9.2 WAIVERS AND AMENDMENTS. Except as set forth in Section 9.1 and with
the exception of Article 7 hereof, the terms of this Agreement may be waived or
amended with the written consent of the Company and each Purchaser. With respect
to Article 7 hereof, with the written consent of the Company and the record
holders of more than fifty percent (50%) of the Registrable Shares then
outstanding and held by Purchasers, the terms of this Agreement may be waived or
amended and any such amendment or waiver shall be binding upon the Company and
all holders of Registrable Shares.
9.3 BROKER'S FEE. Each Purchaser acknowledges that the Company intends to
pay a fee in respect of the sale of the Securities to XX Xxxxx Securities
Corporation. Each of the parties to this Agreement represents that, on the basis
of any actions and agreements by it, there are no other brokers or finders
entitled to compensation in connection with the sale of Securities to the
Purchasers.
9.4 GOVERNING LAW. This Agreement shall be governed in all respects by and
construed in accordance with the laws of the State of California without any
regard to conflicts of laws principles.
19.
9.5 SURVIVAL. The representations, warranties, covenants and agreements
made in this Agreement shall survive any investigation made by the Company or
the Purchasers and the Closing.
9.6 SUCCESSORS AND ASSIGNS. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties to this Agreement. Upon a permitted transfer of a
Purchaser's Securities on the books of the Company in accordance with the terms
of Sections 8.3(a)(iii) or 8.3(b), the Purchaser may assign this Agreement to
the permitted transferee upon prior written notice to the Company. Except as set
forth in the previous sentence, no Purchaser shall assign this Agreement without
the prior written consent of the Company.
9.7 ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
thereof.
9.8 NOTICES, ETC. All notices and other communications required or
permitted under this Agreement shall be in writing and may be delivered in
person, by telecopy, overnight delivery service or registered or certified
United States mail, addressed to the Company or the Purchasers, as the case may
be, at their respective addresses set forth at the beginning of this Agreement
or on EXHIBIT A, or at such other address as the Company or the Purchasers shall
have furnished to the other party in writing. All notices and other
communications shall be effective upon the earlier of actual receipt thereof by
the person to whom notice is directed or (a) in the case of notices and
communications sent by personal delivery or telecopy, one business day after
such notice or communication arrives at the applicable address or was
successfully sent to the applicable telecopy number, (b) in the case of notices
and communications sent by overnight delivery service, at noon (local time) on
the second business day following the day such notice or communication was sent,
and (c) in the case of notices and communications sent by United States mail,
seven days after such notice or communication shall have been deposited in the
United States mail.
9.9 SEVERABILITY OF THIS AGREEMENT. If any provision of this Agreement
shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
9.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
9.11 FURTHER ASSURANCES. Each party to this Agreement shall do and perform
or cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as the other party hereto may reasonably request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
9.12 EXPENSES. The Company shall bear the expenses incurred on its behalf
with respect to this Agreement and the transactions contemplated hereby,
including fees of legal counsel. The Company agrees counsel for NEA-10 for its
reasonable fees and expenses (in an amount not to exceed twenty-five thousand
dollars ($25,000)) incurred by them with respect to
20.
this Agreement and the transactions contemplated hereby. Each party to this
Agreement acknowledges that with respect to the transactions contemplated
herein, Xxxxx, Xxxxxxx & Xxxxxxxxx LLP has represented NEA and not any other
party hereto.
9.13 CURRENCY. All references to "dollars" or "$" in this Agreement shall
be deemed to refer to United States dollars.
9.14 WAIVER OF CONFLICTS. Each party to this Agreement acknowledges that
legal counsel for the Company, Xxxxxx Godward, has in the past and may continue
in the future to perform legal services for one or more of the Purchasers or
their affiliates in matters unrelated to the transactions contemplated by this
Agreement, including, but not limited to, the representation of the Purchasers
in matters of a similar nature to the transactions contemplated herein. Each
party to this Agreement hereby (a) acknowledges that they have had an
opportunity to ask for and have obtained information relevant to such
representation, including disclosure of the reasonably foreseeable adverse
consequences of such representation; (b) acknowledges that with respect to the
transactions contemplated herein, Xxxxxx Godward has represented the Company and
not any individual Purchaser or any individual shareholder, director or employee
of the Company; and (c) gives its informed consent to Xxxxxx Godward's
representation of the Company in the transactions contemplated by this
Agreement.
9.15 VOTING AGREEMENT. The Company agrees that it has no rights to require
NEA-10 to enforce the terms of that certain Voting Agreement, of even date
herewith, by and between NEA-10 and certain persons and entities listed on
Exhibit A thereto.
21.
The foregoing agreement is hereby executed as of the date first above
written.
ARADIGM CORPORATION, a California corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President and CEO
PURCHASERS:
NEW ENTERPRISE ASSOCIATES 10, LIMITED PARTNERSHIP
By: NEA Partners 10, Limited Partnership
Its General Partner
By: /s/ Xxxxxx X. Xxxxxxx, III
--------------------------------------------
Name: Xxxxxx X. Xxxxxxx, III
Administrative General Partner &
Chief Operating Officer
Title: General Partner
SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.
By: /s/ [illegible]
-----------------------------------------------
Name: [illegible]
Title: Managing Director
SPECIAL SITUATIONS CAYMAN FUND, L.P.
By: /s/ [illegible]
-----------------------------------------------
Name: [illegible]
Title: Managing Director
SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
SPECIAL SITUATIONS FUND III, L.P.
By: /s/ [illegible]
-----------------------------------------------
Name: [illegible]
Title: Managing Director
CAMDEN PARTNERS STRATEGIC FUND II-A, L.P.
By: Camden Partners Strategic II, LLC, its
general partner
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Member
CAMDEN PARTNERS STRATEGIC FUND II-B, L.P.
By: Camden Partners Strategic II, LLC, its
general partner
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Member
CASTLE CREEK HEALTHCARE PARTNERS, LLC
By: Castle Creek Partners, LLC
By: /s/ Xxxxxx X. Xxxx
--------------------------------------------
Name: Xxxxxx X. Xxxx
Title: Investment Manager
Signature Page to Securities Purchase Agreement
2.
CC LIFESCIENCE, LTD.
By: Castle Creek Lifescience Partners, LLC
By: /s/ Xxxxxx X. Xxxx
---------------------------------------------
Name: Xxxxxx X. Xxxx
Title: Investment Manager
THE CONUS FUND L.P.
By: /s/ [illegible]
------------------------------------------------
Name: [illegible]
Title: Managing Member, G.P.
EAST XXXXXX INC. (BVI)
By: /s/ [illegible]
------------------------------------------------
Name: [illegible]
Title: Managing Director, Investment Manager
THE CONUS FUND OFFSHORE LTD.
By: /s/ [illegible]
------------------------------------------------
Name: [illegible]
Title: Director, Managing Director, Investment
Manager
DEUTSCHE BANK, AG
By: /s/ Xxxxx Xx
------------------------------------------------
Name: Xxxxx Xx
Title: Authorized Signatory
Signature Page to Securities Purchase Agreement
3.
BAYSTAR CAPITAL II, LP, a Delaware limited
partnership
By: BayStar Capital Management, LLC, its
general partner
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Member
BAYSTAR INTERNATIONAL II, LTD., a British Virgin
Islands exempt company
By: BayStar Capital Management, LLC, its
investment advisor
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Member
CRESTVIEW CAPITAL FUND I, LP
By: /s/ [illegible]
-----------------------------------------------
Name: [illegible]
Title: Managing Partner
CRESTVIEW OFFSHORE FUND, INC.
By: /s/ [illegible]
-----------------------------------------------
Name: [illegible]
Title: Secretary
Signature Page to Securities Purchase Agreement
4.
CRESTVIEW CAPITAL FUND II, LP
By: /s/ [illegible]
-----------------------------------------------
Name: [illegible]
Title: Managing Partner
DOMAIN PUBLIC EQUITY PARTNERS LP
By: Domain Public Equity Associates LP, its
general partner
By: /s/ Xxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Member
CAPITAL VENTURES INTERNATIONAL
By: Heights Capital Management, Inc., its
authorized agent
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Investment Manager
PENN FOOTWEAR CO.
By: /s/ Xxxx Xxxxxxxxxx
-----------------------------------------------
Name: Xxxx Xxxxxxxxxx
Title: President
URSUS CAPITAL, L.P.
By: /s/ [illegible]
-----------------------------------------------
Name: [illegible]
Title: General Partner
Signature Page to Securities Purchase Agreement
5.
URSUS OFFSHORE LTD.
By: /s/ [illegible]
-----------------------------------------------
Name: [illegible]
Title: Managing Director
STATE STREET RESEARCH HEALTH SCIENCES FUND, A
SERIES OF THE STATE STREET RESEARCH FINANCIAL
TRUST
By: /s/ [illegible]
-----------------------------------------------
Name: [illegible]
Title: Vice President
XXXXXXX XXXX XXXXXXXX
By: /s/ Xxxxxxx Xxxx Xxxxxxxx
-----------------------------------------------
Name: Xxxxxxx Xxxx Xxxxxxxx
Title: _______________
XXXXX X. XXXXXXXX
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President, Human Resources
V. XXXXX XXXXXX, XX.
By: /s/ V. Xxxxx Xxxxxx, Xx.
-----------------------------------------------
Name: V. Xxxxx Xxxxxx, Xx.
Title: Chief Operating Officer
Signature Page to Securities Purchase Agreement
6.
XXXXXX X. XXXXXXXXXX
By: /s/ Xxxxxx X. Xxxxxxxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title:
Signature Page to Securities Purchase Agreement
7.
EXHIBIT A
SCHEDULE OF PURCHASERS
PURCHASER PURCHASE COMMON
PRICE SHARES WARRANTS
New Enterprise Associates 10, Limited Partnership $ 4,199,999.45 5,316,455 1,196,202
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx Xxxxx
State or Country of Residence: Maryland
Special Situations Private Equity Fund L.P. $ 899,999.60 1,139,240 256,329
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (212) --
Attn: Xxxxx Xxxxxx
State or Country of Residence: New York
Special Situations Cayman Fund, L.P. $ 699,999.25 886,075 199,366
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (212) --
Attn: Xxxxx Xxxxxx
State or Country of Residence: [Cayman Islands]
Special Situations Fund III, L.P. $ 1,399,999.29 1,772,151 398,733
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (212) --
Attn: Xxxxx Xxxxxx
State or Country of Residence: New York
Camden Partners Strategic Fund II-A, L.P. $ 943,999.44 1,194,936 268,860
c/o Camden Partners Holdings, LLC
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
A-1.
PURCHASER PURCHASE COMMON
PRICE SHARES WARRANTS
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx
State or Country of Residence:
Maryland
Camden Partners Strategic Fund II-B, L.P. $ 55,999.94 70,886 15,949
c/o Camden Partners Holding, LLC
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx
State or Country of Residence:
Maryland
Castle Creek Healthcare Partners LLC $ 499,999.69 632,911 142,404
c/o Castle Creek Partners
000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxx
State or Country of Residence:
Delaware
CC Lifescience, Ltd. $ 499,999.69 632,911 142,404
c/o Castle Creek
000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxx
State or Country of Residence:
Delaware
A-2.
PURCHASER PURCHASE COMMON
PRICE SHARES WARRANTS
The Conus Fund L.P. $ 775,999.62 982,278 221,012
c/o Conus Partners, Inc.
0 Xxxxxxxxxxx Xx., 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (212) --
Attn: Xxxxxx Xxxxx
State or Country of Residence: New York
East Xxxxxx Inc. (BVI) $ 132,999.66 168,354 37,879
c/o Conus Partners, Inc.
0 Xxxxxxxxxxx Xx., 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxx
State or Country of Residence: British Virgin
Islands
The Conus Fund Offshore Ltd. $ 90,999.31 115,189 25,917
c/o Hedge Fund Services (BVI) Ltd.
Xxxxxxx Xxxxxxxx, 0xx Xxxxx
P.O. Box 23
Roadtown, Tortola, British Virgin Islands
State or Country of Residence: British Virgin
Islands
Deutsche Bank, AG $ 999,999.38 1,265,822 284,809
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx Xx
State or Country of Residence: New York
BayStar Capital II, LP $ 674,999.70 854,430 192,246
c/o BayStar Capital Management, LLC
00 X. Xxx Xxxxxxx Xxxxx Xxxx., Xxxxx 0X
Xxxxxxxx, Xxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx Xxxxx
State or Country of Residence: California
A-3.
PURCHASER PURCHASE COMMON
PRICE SHARES WARRANTS
BayStar International II, Ltd. $ 74,999.44 94,936 21,360
c/o Baystar Capital Management, LLC
00 X. Xxx Xxxxxxx Xxxxx Xxxx., Xxxxx 0X
Xxxxxxxx, Xxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx Xxxxx
State or Country of Residence: British Virgin
Islands
Crestview Capital Fund I, LP $ 172,499.66 218,354 49,129
00 Xxxxxx Xxxxx, Xxxxx X
Xxxxxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx Xxxxx
State or Country of Residence: Illinois
Crestview Capital Offshore Fund, Inc. $ 59,999.71 75,949 17,088
00 Xxxxxx Xxxxx, Xxxxx X
Xxxxxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx Xxxxx
State or Country of Residence: Illinois
Crestview Capital Fund II, LP $ 517,498.98 655,062 147,388
00 Xxxxxx Xxxxx, Xxxxx X
Xxxxxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx Xxxxx
State or Country of Residence: Illinois
Domain Public Equity Partners L.P. $ 629,999.72 797,468 179,430
Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx Xxxxxxx
State or Country of Residence:
New Jersey
A-4.
PURCHASER PURCHASE COMMON
PRICE SHARES WARRANTS
Capital Ventures International $ 359,999.84 455,696 102,531
c/o Heights Capital Management
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (415) --
Attn: Xxxxxx Xxxxxxxx
State or Country of Residence: Cayman Islands
Penn Footwear Co. $ 599,999.47 759,493 170,885
Line and Grove Streets, X.X. Xxx 00
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (570) --
Attn: Xxxx Xxxxxxxxxx
State or Country of Residence: Pennsylvania
Ursus Capital, L.P. $ 217,645.00 275,500 61,987
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx Xxxxxx
State or Country of Residence: New York
Ursus Offshore Ltd. $ 256,355.00 324,500 73,012
X.X. Xxx 000 GT
Harbour Center 0xx Xxxxx
Xxxxx Xxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx Xxxxxx
State or Country of Residence: Cayman Islands
A-5.
PURCHASER PURCHASE COMMON
PRICE SHARES WARRANTS
State Street Research Health Sciences Fund: a $ 99,999.78 126,582 28,480
series of State Street Research Financial Trust
c/o State Street Research & Management Company
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx Xxxxxxxxxx
w/a copy to: Xxx Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
State or Country of Residence: Massachusetts
Xxxxxxx Xxxx Xxxxxxxx $ 69,999.53 88,607 19,936
c/o Aradigm Corporation
0000 Xxxxx Xxxx Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
State or Country of Residence: California
V. Xxxxx Xxxxxx, Xx $ 29,999.46 37,974 8,544
c/o Aradigm Corporation
0000 Xxxxx Xxxx Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
State or Country of Residence: California
Xxxxx X. Xxxxxxxx $ 29,999.46 37,974 8,544
c/o Aradigm Corporation
0000 Xxxxx Xxxx Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
State or Country of Residence: California
Xxxxxx Xxxxxxxxxx $ 9,999.82 12,658 2,848
x/x Xxxxxxx Xxxxxxxxxxx
0000 Xxxxx Xxxx Way
A-6.
PURCHASER PURCHASE COMMON
PRICE SHARES WARRANTS
Xxxxxxx, Xxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
State or Country of Residence: California
TOTAL $15,003,988.89 18,992,391 4,273,272
A-7.
EXHIBIT B
FORM OF WARRANT
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
ARADIGM CORPORATION
WARRANT TO PURCHASE COMMON STOCK
______________, 2003
VOID AFTER _____________, 2007
THIS CERTIFIES THAT, for value received, ___________________________, with
its principal office at __________________________, or assigns (the "Holder"),
is entitled to subscribe for and purchase at the Exercise Price (defined below)
from Aradigm Corporation, a California corporation, with its principal office at
0000 Xxxxx Xxxx Xxx, Xxxxxxx, XX 00000 (the "Company") up to
____________________ (_____) shares of the Common Stock of the Company (the
"Common Stock").
1. DEFINITIONS. As used herein, the following terms shall have the
following respective meanings:
(a) "Exercise Period" shall mean the period commencing with the date
hereof and ending four (4) years from the date hereof, unless sooner terminated
as provided below.
(b) "Exercise Price" shall mean $1.07 per share, subject to
adjustment pursuant to Section 5 below.
(c) "Exercise Shares" shall mean the shares of the Company's Common
Stock issuable upon exercise of this Warrant.
2. EXERCISE OF WARRANT. The rights represented by this Warrant may be
exercised in whole or in part at any time during the Exercise Period, by
delivery of the following to the Company at its address set forth above (or at
such other address as it may designate by notice in writing to the Holder):
(a) An executed Notice of Exercise in the form attached hereto;
(b) Payment of the Exercise Price either (i) in cash or by check,
(ii) by cancellation of indebtedness, or (iii) pursuant to Section 2.1 below;
and
1.
(c) This Warrant.
Upon the exercise of the rights represented by this Warrant, a certificate
or certificates for the Exercise Shares so purchased, registered in the name of
the Holder or persons affiliated with the Holder, if the Holder so designates,
shall be issued and delivered to the Holder within a reasonable time after the
rights represented by this Warrant shall have been so exercised.
The person in whose name any certificate or certificates for Exercise
Shares are to be issued upon exercise of this Warrant shall be deemed to have
become the holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the date
of delivery of such certificate or certificates, except that, if the date of
such surrender and payment is a date when the stock transfer books of the
Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
2.1 NET EXERCISE. Notwithstanding any provisions herein to the contrary,
if the fair market value of one share of the Company's Common Stock is greater
than the Exercise Price (at the date of calculation as set forth below), in lieu
of exercising this Warrant by payment of cash, the Holder may elect to receive
shares equal to the value (as determined below) of this Warrant (or the portion
thereof being canceled) by surrender of this Warrant at the principal office of
the Company together with the properly endorsed Notice of Exercise in which
event the Company shall issue to the Holder a number of shares of Common Stock
computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to
the Holder
Y = the number of shares of Common Stock purchasable
under the Warrant or, if only a portion of the
Warrant is being exercised, the portion of the
Warrant being canceled (at the date of such
calculation)
A = the fair market value of one share of the Company's
Common Stock (at the date of such calculation)
B = Exercise Price (as adjusted to the date of such
calculation)
For purposes of the above calculation, the "fair market value" of one
share of Common Stock shall mean (i) the average of the closing sales prices for
the shares of Common Stock on the Nasdaq National Market or other trading market
where such security is listed or traded as reported by Bloomberg Financial
Markets (or a comparable reporting service of national reputation selected by
the Company and reasonably acceptable to the holders if Bloomberg Financial
Markets is not then reporting sales prices of such security) (collectively,
"Bloomberg") for the ten (10) consecutive trading days immediately preceding
such date, or (ii) if the Nasdaq National Market is not the principal trading
market for the shares of Common Stock, the average of the reported sales prices
reported by Bloomberg on the principal trading market for the Common Stock
during the same period, or, if there is no sales price for such period, the last
sales
2.
price reported by Bloomberg for such period, or (iii) if neither of the
foregoing applies, the last sales price of such security in the over-the-counter
market on the pink sheets or bulletin board for such security as reported by
Bloomberg, or if no sales price is so reported for such security, the last bid
price of such security as reported by Bloomberg, or (iv) if fair market value
cannot be calculated as of such date on any of the foregoing bases, the fair
market value shall be as determined by the Board of Directors of the Company in
the exercise of its good faith judgment.
3. COVENANTS OF THE COMPANY.
3.1 COVENANTS AS TO EXERCISE SHARES. The Company covenants and agrees that
all Exercise Shares that may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued and
outstanding, fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issuance thereof. The Company further covenants and
agrees that the Company will at all times during the Exercise Period, have
authorized and reserved, free from preemptive rights, a sufficient number of
shares of its Common Stock to provide for the exercise of the rights represented
by this Warrant. If at any time during the Exercise Period the number of
authorized but unissued shares of Common Stock shall not be sufficient to permit
exercise of this Warrant, the Company will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes.
NO IMPAIRMENT. Except and to the extent as waived or consented to by the
Holder, the Company will not, by amendment of its Articles of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may be necessary or appropriate in order to protect
the exercise rights of the Holder against impairment.
NOTICES OF RECORD DATE. In the event of any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend (other than a cash
dividend which is the same as cash dividends paid in previous quarters) or other
distribution, the Company shall mail to the Holder, at least ten (10) days prior
to the date specified herein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend or distribution.
4. REPRESENTATIONS OF HOLDER.
ACQUISITION OF WARRANT FOR PERSONAL ACCOUNT. The Holder represents and
warrants that it is acquiring the Warrant solely for its account for investment
and not with a view to or for sale or distribution of said Warrant or any part
thereof. The Holder also represents that the entire legal and beneficial
interests of the Warrant and Exercise Shares the Holder is acquiring is being
acquired for, and will be held for, its account only.
SECURITIES ARE NOT REGISTERED.
(a) The Holder understands that the Warrant and the Exercise Shares
have not been registered under the Securities Act of 1933, as amended (the
"Act") on the basis that no
3.
distribution or public offering of the stock of the Company is to be effected.
The Holder realizes that the basis for the exemption may not be present if,
notwithstanding its representations, the Holder has a present intention of
acquiring the securities for a fixed or determinable period in the future,
selling (in connection with a distribution or otherwise), granting any
participation in, or otherwise distributing the securities. The Holder has no
such present intention except as set forth in Article 7 of the Securities
Purchase Agreement dated as of February 10, 2003 by and among the Company and
the purchasers name therein (the "Securities Purchase Agreement").
(b) The Holder recognizes that the Warrant and the Exercise Shares
must be held indefinitely unless they are subsequently registered under the Act
or an exemption from such registration is available. The Holder recognizes that
the Company will register the Exercise Shares pursuant to the provisions of
Section 7 of the Securities Purchase Agreement.
(c) The Holder is aware that neither the Warrant nor the Exercise
Shares may be sold pursuant to Rule 144 adopted under the Act unless certain
conditions are met, including, among other things, the existence of a public
market for the shares, the availability of certain current public information
about the Company, the resale following the required holding period under Rule
144 and the number of shares being sold during any three month period not
exceeding specified limitations.
DISPOSITION OF WARRANT AND EXERCISE SHARES.
(d) The Holder further agrees not to make any disposition of all or
any part of the Warrant or Exercise Shares in any event unless and until:
The Company shall have received a letter secured by the Holder
from the Securities and Exchange Commission stating that no action will be
recommended to the Commission with respect to the proposed disposition; or
There is then in effect a registration statement under the Act
covering such proposed disposition and such disposition is made in accordance
with said registration statement; or
The Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and if reasonably
requested by the Company, the Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, for the Holder to
the effect that such disposition will not require registration of such Warrant
or Exercise Shares under the Act or any applicable state securities laws.
(e) The Holder understands and agrees that all certificates
evidencing the shares to be issued to the Holder may bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
4.
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
5. ADJUSTMENT OF EXERCISE PRICE AND SHARES.
(a) In the event of changes in the outstanding Common Stock of the
Company by reason of stock dividends, split-ups, recapitalizations,
reclassifications, combinations or exchanges of shares, separations,
reorganizations, liquidations, consolidation, acquisition of the Company
(whether through merger or acquisition of substantially all the assets or stock
of the Company), or the like, the number and class of shares available under the
Warrant in the aggregate and the Exercise Price shall be correspondingly
adjusted to give the Holder of the Warrant, on exercise for the same aggregate
Exercise Price, the total number, class, and kind of shares or other property as
the Holder would have owned had the Warrant been exercised prior to the event
and had the Holder continued to hold such shares until the event requiring
adjustment. The form of this Warrant need not be changed because of any
adjustment in the number of Exercise Shares subject to this Warrant.
(b) If at any time or from time to time the holders of Common Stock
of the Company (or any shares of stock or other securities at the time
receivable upon the exercise of this Warrant) shall have received or become
entitled to receive, without payment therefor,
(i) Common Stock or any shares of stock or other securities
which are at any time directly or indirectly convertible into or exchangeable
for Common Stock, or any rights or options to subscribe for, purchase or
otherwise acquire any of the foregoing by way of dividend or other distribution
(other than a dividend or distribution covered in section 5(a) above),
(ii) any cash paid or payable otherwise than as a cash
dividend, or
(iii) Common Stock or additional stock or other securities or
property (including cash) by way of spinoff, split-up, reclassification,
combination of shares or similar corporate rearrangement (other than shares of
Common Stock pursuant to Section 5(a) above),
then and in each such case, the Holder hereof will, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (including cash
in the cases referred to in clauses (ii) and (iii) above) which such Holder
would hold on the date of such exercise had he been the holder of record of such
Common Stock as of the date on which holders of Common Stock received or became
entitled to receive such shares or all other additional stock and other
securities and property.
6. FRACTIONAL SHARES. No fractional shares shall be issued upon the
exercise of this Warrant as a consequence of any adjustment pursuant hereto. All
Exercise Shares (including fractions) issuable upon exercise of this Warrant may
be aggregated for purposes of determining whether the exercise would result in
the issuance of any fractional share. If, after aggregation, the exercise would
result in the issuance of a fractional share, the Company shall, in lieu of
issuance of any fractional share, pay the Holder otherwise entitled to such
fraction a sum in cash
5.
equal to the product resulting from multiplying the then current fair market
value of an Exercise Share by such fraction.
7. NO SHAREHOLDER RIGHTS. This Warrant in and of itself shall not entitle
the Holder to any voting rights or other rights as a shareholder of the Company.
8. TRANSFER OF WARRANT. Subject to applicable laws and the restriction on
transfer set forth on the first page of this Warrant, this Warrant and all
rights hereunder are transferable, by the Holder in person or by duly authorized
attorney, upon delivery of this Warrant and the form of assignment attached
hereto to any transferee designated by Holder. The transferee shall sign an
investment letter in form and substance satisfactory to the Company.
9. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is lost,
stolen, mutilated or destroyed, the Company may, on such terms as to indemnity
or otherwise as it may reasonably impose (which shall, in the case of a
mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant shall be at any time enforceable by anyone.
10. NOTICES, ETC. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the Company
at the address listed on the signature page and to Holder at ___________________
or at such other address as the Company or Holder may designate by ten (10) days
advance written notice to the other parties hereto.
11. ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein.
12. GOVERNING LAW. This Warrant and all rights, obligations and
liabilities hereunder shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer as of ____________, 2003.
ARADIGM CORPORATION
By:
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
Address: 0000 Xxxxx Xxxx Xxx, Xxxxxxx, XX 00000
NOTICE OF EXERCISE
TO: ARADIGM CORPORATION
(1) | | The undersigned hereby elects to purchase ________ shares of the
Common Stock of ARADIGM CORPORATION (the "Company") pursuant to the terms of the
attached Warrant, and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
| | The undersigned hereby elects to purchase ________ shares of
Common Stock of the Company pursuant to the terms of the net exercise provisions
set forth in Section 2.1 of the attached Warrant, and shall tender payment of
all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares of
Common Stock of the Company in the name of the undersigned or in such other name
as is specified below:
------------------------
(Name)
------------------------
------------------------
(Address)
(3) The undersigned represents that (i) the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment and
not with a view to, or for resale in connection with, the distribution thereof
and that the undersigned has no present intention of distributing or reselling
such shares, other than as contemplated by Article 7 of the Securities Purchase
Agreement dated as of February 10, 2003 by and among the Company and the
purchasers named therein (the "Securities Purchase Agreement"); (ii) the
undersigned is aware of the Company's business affairs and financial condition
and has acquired sufficient information about the Company to reach an informed
and knowledgeable decision regarding its investment in the Company; (iii) the
undersigned is experienced in making investments of this type and has such
knowledge and background in financial and business matters that the undersigned
is capable of evaluating the merits and risks of this investment and protecting
the undersigned's own interests; (iv) the undersigned understands that the
shares of Common Stock issuable upon exercise of this Warrant have not been
registered (except to the extent a registration statement pursuant to and as
contemplated by Article 7 of the Securities Purchase Agreement is effective)
under the Securities Act of 1933, as amended (the "Securities Act"), by reason
of a specific exemption from the registration provisions of the Securities Act,
which exemption depends upon, among other things, the bona fide nature of the
investment intent as expressed herein, and, because such securities have not
been registered under the Securities Act, they must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from such
registration is available; (v) the undersigned is aware that the aforesaid
shares of Common Stock may not be sold pursuant to Rule 144 adopted under the
Securities Act unless certain conditions are met and until the undersigned has
held the shares for the number of years prescribed by Rule 144, that among the
conditions for use of the Rule is the availability of current information to the
public about the Company; and (vi) the undersigned agrees not to make any
disposition of all or any part of the aforesaid shares of Common Stock unless
and until
there is then in effect a registration statement under the Securities
Act covering such proposed disposition and such disposition is made in
accordance with said registration statement, or the undersigned has provided the
Company with an opinion of counsel satisfactory to the Company, stating that
such registration is not required.
---------------------------- ---------------------------------------
(Date) (Signature)
---------------------------- ---------------------------------------
(Print name)
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form
and supply required information. Do not use this
form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
Name:
---------------------------------------------------------------------------
(Please Print)
Address:
------------------------------------------------------------------------
(Please Print)
Dated: __________, 20__
Holder's
Signature:
-----------------------------------------------------------
Holder's
Address:
-------------------------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
EXHIBIT C
INSTRUCTION SHEET FOR PURCHASER
(TO BE READ IN CONJUNCTION WITH THE ENTIRE
SECURITIES PURCHASE AGREEMENT)
A. Complete the following items in the Securities Purchase Agreement:
1. Provide the information regarding the Purchaser requested on the
signature page. The Agreement must be executed by an individual
authorized to bind the Purchaser.
2. EXHIBIT C-1 - Stock Certificate Questionnaire:
Provide the information requested by the Stock Certificate
Questionnaire.
3. EXHIBIT C-2 - Registration Statement Questionnaire:
Provide the information requested by the Registration Statement
Questionnaire.
4. EXHIBIT C-3 - Purchaser Certificate:
Provide the information requested by the Certificate for Individual
Purchasers or the Certificate for Corporate, Partnership, Trust,
Foundation and Joint Purchasers, as applicable.
5. Return the signed Securities Purchase Agreement to:
Xxxxx X. Xxxxxx, Esq.
Xxxxxx Godward LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
B. Instructions regarding the transfer of funds for the purchase of
Securities will be telecopied to the Purchaser at a later date.
C. Upon the resale of the Registrable Shares by the Purchaser after the
Registration Statement covering the Registrable Shares is effective, as
described in the Securities Purchase Agreement, the Purchaser:
(i) must deliver a current prospectus, and annual and quarterly reports
of the Company to the buyer (prospectuses, and annual and quarterly
reports may be obtained from the Company at the Purchaser's
request); and
(ii) must send a letter in the form of EXHIBIT F to the Securities
Purchase Agreement to the Company so that the Registrable Shares may
be properly transferred.
C-1.
EXHIBIT C-1
ARADIGM CORPORATION
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 4.3 of the Agreement, please provide us with the following
information:
1. The exact name that the Securities are to be registered
in (this is the name that will appear on the stock
certificate(s)). You may use a nominee name if
appropriate: -----------------
2. The relationship between the Purchaser of the Securities
and the Registered Holder listed in response to item 1
above:
-----------------
3. The mailing address of the Registered Holder listed in
response to item 1 above: -----------------
-----------------
-----------------
-----------------
-----------------
4. The Tax Identification Number of the Registered Holder
listed in response to item 1 above:
-----------------
C-1-1.
EXHIBIT C-2
ARADIGM CORPORATION
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please
provide us with the following information regarding the Purchaser.
A. GENERAL INFORMATION
1. Please state your organization's name exactly as it should appear in
the Registration Statement:_____________________
2. Have you or your organization had any position, office or other
material relationship within the past three years with the Company or its
affiliates other than as disclosed in the Prospectus included in the
Registration Statement?
| | Yes | | No
If yes, please indicate the nature of any such relationships below:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
B. SECURITIES HOLDINGS
Please fill in all blanks in the following questions related to your
BENEFICIAL OWNERSHIP of the Company's capital stock. Generally, the term
"BENEFICIAL OWNERSHIP" refers to any direct or indirect interest in the
securities which entitles you to any of the rights or benefits of ownership,
even though you may not be the holder of record of the securities. For example,
securities held in "street name" over which you exercise voting or investment
power would be considered BENEFICIALLY OWNED by you. Other examples of indirect
ownership include ownership by a partnership in which you are a partner or by an
estate or trust of which you or any member of your IMMEDIATE FAMILY is a
beneficiary. Ownership of securities held in the names of your spouse, minor
children or other relatives who live in the same household may be attributed to
you.
================================================================================
PLEASE NOTE: IF YOU HAVE ANY REASON TO BELIEVE THAT ANY INTEREST IN
SECURITIES OF THE COMPANY WHICH YOU MAY HAVE, HOWEVER REMOTE, IS A BENEFICIAL
INTEREST, PLEASE DESCRIBE SUCH INTEREST. FOR PURPOSES OF RESPONDING TO THIS
QUESTIONNAIRE, IT IS PREFERABLE TO ERR ON THE SIDE OF INCLUSION RATHER THAN
EXCLUSION. WHERE THE SEC'S INTERPRETATION OF BENEFICIAL OWNERSHIP WOULD REQUIRE
DISCLOSURE OF YOUR INTEREST OR POSSIBLE INTEREST IN CERTAIN SECURITIES OF THE
COMPANY, AND YOU BELIEVE THAT YOU DO NOT ACTUALLY POSSESS THE ATTRIBUTES OF
BENEFICIAL OWNERSHIP, AN APPROPRIATE RESPONSE IS TO DISCLOSE THE INTEREST AND AT
THE SAME TIME DISCLAIM BENEFICIAL OWNERSHIP OF THE SECURITIES.
================================================================================
C-2-1.
1. As of FEBRUARY ___, 2003, I owned outright (including shares registered
in my name individually or jointly with others, shares held in the name of a
bank, broker, nominee, depository or in "street name" for my account), the
following number of shares of the Company's capital stock: _________________.
2. In addition to the number of shares I own outright as indicated by my
answer to question B(1), as of FEBRUARY ___, 2003, I had or shared voting power
or investment power, directly or indirectly, through a contract, arrangement,
understanding, relationship or otherwise, over the following number of shares of
the Company's capital stock: _________________.
If the answer to this question B(2) was not "zero," please complete the
following: with whom shared; and the nature of the relationship and any
underlying voting trust agreement, investment arrangement or the like:
SHARED VOTING POWER:
------------------------------------------------------------------------------------------
NUMBER OF SHARES WITH WHOM SHARED NATURE OF RELATIONSHIP
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
SHARED INVESTMENT POWER:
------------------------------------------------------------------------------------------
NUMBER OF SHARES WITH WHOM SHARED NATURE OF RELATIONSHIP
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
As of APRIL ___, 2003, I will have the right to acquire ________ shares of
the Company's capital stock pursuant to outstanding stock options issued under
the Company's stock option plans and ______ shares pursuant to the exercise of
outstanding warrants (none, indicated by "0" above).
------------------------------------------------------------------------------------------
OPTIONS AND WARRANTS
CLASS NUMBER OF SHARES
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
C-2-2.
(4) Please identify the natural person or persons who have voting and/or
investment control over the Company's securities that you own, and state whether
such person(s) disclaims beneficial ownership of the securities. For example, if
you are a general partnership, please identify the general partners in the
partnership.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C-2-3.
C. NASD QUESTIONS
1. Are you (i) a "member"(1) of the National Association of Securities
Dealers, Inc. (the "NASD"), (ii) an "affiliate"(2) of a member of the NASD,
(iii) a "person associated with a member" or an "associated person of a
member"(3) of the NASD or (iv) an immediate family member(4) of any of the
foregoing persons? IF YES, please identify the member and describe such
relationship (whether direct or indirect), and please respond to Question Number
2 below; IF NO, please proceed directly to Question Number 3.
Yes | | No | |
Description:
---------------------
(1) NASD defines a "member" as any broker or dealer admitted to membership
in the NASD, or any officer or partner or branch manager of such a member, or
any person occupying a similar status or performing a similar function for such
a member.
(2) The term "affiliate" means a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is in
common control with, the person specified. Persons who have acted or are acting
on behalf of or for the benefit of a person include, but are not necessarily
limited to, directors, officers, employees, agents, consultants and sales
representatives. The following should apply for purposes of the foregoing:
(i) a person should be presumed to control a Member if the person
beneficially owns 10 percent or more the outstanding voting securities of a
Member which is a corporation, or beneficially owns a partnership interest in 10
percent or more of the distributable profits or losses of a Member which is a
partnership;
(ii) a Member should be presumed to control a person if the Member
and Persons Associated With a Member beneficially own 10 percent or more of the
outstanding voting securities of a person which is a corporation, or
beneficially own a partnership interest in 10 percent or more of the
distributable profits or losses of a person which is a partnership;
(iii) a person should be presumed to be under common control with a
Member if: (1) the same person controls both the Member and another person by
beneficially owning 10 percent or more of the outstanding voting securities of a
Member or person which is a corporation, or by beneficially owning a partnership
interest in 10 percent or more of the distributable profits or losses of a
Member or person which is a partnership; or
(2) a person having the power to direct or cause the direction of the
management or policies of the Member or such person also has the power to direct
or cause the direction of the management or policies of the other entity in
question.
(3) The NASD defines a "person associated with a member" or an "associated
person of a member" as being every sole proprietor, partner, equity owner,
officer, director or branch manager of any member, or any natural person
occupying a similar status or performing similar functions, or any natural
person engaged in the investment banking or securities business who directly or
indirectly controls or is controlled by such member (for example, any employee),
whether or not any such person is registered or exempt from registration with
the NASD.
(4) Immediate family includes parents, mother-in-law, father-in-law,
husband or wife, brother or sister, brother-in-law or sister-in-law, son-in-law
or daughter-in-law, and children, or any other person who is supported, directly
or indirectly, to a material extent, by a person associated with a member of the
NASD or any other broker/dealer.
C-2-4.
2. If you answered "yes" to Question Number 1, please furnish any
information as to whether any such member intends to participate in any capacity
in the public offering, including the details of such participation:
Description:
3. Are you or have you been an "underwriter or related person"(5) or a
person associated with an underwriter or related person, including, without
limitation, with respect to the proposed public offering? If yes, please
identify the underwriter or related person and describe such relationship
(whether direct or indirect).
Yes | | No | |
Description:
4. If known, please describe in detail any underwriting compensations,
arrangements or dealings entered into during the previous twelve months, or
proposed to be consummated in the next twelve months, between (i) any
underwriter or related person, member of the NASD, affiliate of a member of the
NASD, person associated with a member or associated person of a member of the
NASD or any immediate family member thereof, on the one hand, and (ii) the
Company, or any director, officer or shareholder thereof, on the other hand,
which provides for the receipt of any item of value and/or the transfer of any
warrants, options or other securities from the Company to any such person (other
than the information relating to the arrangements with any investment firm or
underwriting organization which may participate in the proposed public
offering).
Description:
5. Have you purchased the securities in the ordinary course of business?
Yes | | No | |
---------------
(5) The term "underwriter or related person" includes underwriters,
underwriters' counsel, financial consultants and advisors, finders, members of
the selling or distribution group, and any and all other persons associated with
or related to any of such persons, including members of the immediate family of
such persons.
C-2-5.
The answers to the foregoing questions are correctly stated to the best of my
information and belief. I shall advise Xxxxx Xxxxxx at (000) 000-0000, the
Company's outside counsel, promptly of any changes in the foregoing information.
---------------------------------------------
(Print name of Selling Security Holder)
---------------------------------------------
(Signature)
By:
------------------------------------------
(Name and title of signatory, if stockholder
is an entity)
---------------------------------------------
(Date)
C-2-6.
EXHIBIT C-3
ARADIGM CORPORATION
CERTIFICATE FOR INDIVIDUAL PURCHASERS
If the investor is an individual Purchaser (or married couple) the
Purchaser must complete, date and sign this Certificate.
CERTIFICATE
I certify that the representations and responses below are true and
accurate:
In order for the Company to offer and sell the Securities in conformance
with state and federal securities laws, the following information must be
obtained regarding your investor status. Please INITIAL EACH CATEGORY applicable
to you as an investor in the Company.
_____ (1) A natural person whose net worth(1), either individually or
jointly with such person's spouse exceeds $1,000,000;
_____ (2) A natural person who had an income(2) in excess of $200,000, or
joint income with the person's spouse in excess of $300,000, in 2001 and 2002,
and reasonably expects to have individual income reaching the same level in
2003;
_____ (3) An executive officer or director of the Company.
Date:
-------------------------------- ----------------------------------------
Name(s) of Purchaser
----------------------------------------
Signature
----------------------------------------
Signature
----------------
(1) For purposes of this Certificate, "net worth" means the excess of
total assets at fair market value over total liabilities, except that the
principal residence owned by a natural person shall be valued either (a) at
cost, including the cost of improvements, net of current encumbrances upon the
property, or (b) at the appraised value of the residence as determined upon a
written appraisal used by an institutional lender making a loan to the
individual secured by the property, including the cost of subsequent
improvements, net of current encumbrances upon the property. As used in the
preceding sentence, "institutional lender" means a bank, savings and loan
company, industrial loan company, credit union or personal property broker or a
company whose principal business is as a lender of loans secured by real
property and which has such loans receivable in the amount of $2,000,000 or
more.
(2) For purposes of this Certificate, "income" means adjusted gross
income, as reported for federal income tax purposes, increased by the following
amounts: (a) the amount of any tax exempt interest income received, (b) the
amount of losses claimed as a limited partner in a limited partnership, (c) any
deduction claimed for depletion, (d) amounts contributed to an XXX or Xxxxx
retirement plan, (e) alimony paid, and (f) any amounts by which income from
long-term capital gains has been reduced in arriving at adjusted gross income
pursuant to the provisions of Section 1202 of the Internal Revenue Code.
C-3-2.
EXHIBIT C-3
ARADIGM CORPORATION
CERTIFICATE FOR CORPORATE, PARTNERSHIP,
TRUST, FOUNDATION, AND JOINT PURCHASERS
If the investor is a corporation, partnership, trust, pension plan,
foundation, joint purchaser (other than a married couple) or other entity, an
authorized officer, partner, or trustee must complete, date and sign this
Certificate.
CERTIFICATE
The undersigned certifies that the representations and responses below are
true and accurate:
(a) The investor has been duly formed and is validly existing and has full
power and authority to invest in the Company. The person signing on behalf of
the undersigned has the authority to execute and deliver the Securities Purchase
Agreement on behalf of the Purchaser and to take other actions with respect
thereto.
(b) Indicate the form of entity of the undersigned:
| | Limited Partnership
| | General Partnership
| | Corporation
| | Revocable Trust (identify each grantor and indicate
under what circumstances the trust is revocable by
the grantor:
-----------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
(Continue on a separate piece of paper, if necessary.)
| | Other Type of Trust (indicate type of trust and, for
trusts other than pension trusts, name the grantors
and beneficiaries:
-----------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
(Continue on a separate piece of paper, if necessary.)
C-3-3.
| | Other form of organization (indicate form of
organization (______________).
(c) Indicate the approximate date the undersigned entity was formed: .
(d) In order for the Company to offer and sell the Securities in
conformance with state and federal securities laws, the following information
must be obtained regarding your investor status. Please INITIAL EACH CATEGORY
applicable to you as an investor in the Company.
_______ (1) A bank as defined in Section 3(a)(2) of the
Securities Act, or any savings and loan association or other institution
as defined in Section 3(a)(5)(A) of the Securities Act whether acting in
its individual or fiduciary capacity;
_______ (2) A broker or dealer registered pursuant to Section
15 of the Securities Exchange Act of 1934;
_______ (3) An insurance company as defined in Section 2(13)
of the Securities Act;
_______ (4) An investment company registered under the
Investment Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of that Act;
_______ (5) A Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958;
_______ (6) A plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan has
total assets in excess of $5,000,000;
_______ (7) An employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of such
act, which is either a bank, savings and loan association, insurance
company, or registered investment adviser, or if the employee benefit plan
has total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors;
_______ (8) A private business development company as defined
in Section 202(a)(22) of the Investment Advisers Act of 1940;
_______ (9) An organization described in Section 501(c)(3) of
the Internal Revenue Code, a corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose of
acquiring the Securities, with total assets in excess of $5,000,000;
_______ (10) A trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the
Securities, whose purchase is directed by a sophisticated person who has
such knowledge and experience in financial and business
C-3-4.
matters that such person is capable of evaluating the merits and risks of
investing in the Company;
_______ (11) An entity in which all of the equity owners
qualify under any of the above subparagraphs. If the undersigned belongs
to this investor category only, list the equity owners of the undersigned,
and the investor category which each such equity owner satisfies:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(Continue on a separate piece of paper, if necessary.)
Dated:
----------------------------------------------
-----------------------------------------------------
Name of investor
-----------------------------------------------------
Signature and title of authorized
officer, partner or trustee
C-3-5.
EXHIBIT D
OPINION OF COMPANY COUNSEL
March ___, 2003
TO THE PURCHASERS LISTED
ON EXHIBIT A HERETO
Ladies and Gentlemen:
We have acted as counsel for Aradigm Corporation, a California corporation
(the "Company"), in connection with the issuance and sale pursuant to the terms
of the Securities Purchase Agreement dated as of February ____, 2003 (the
"Agreement"), by and among the Company and the purchasers named therein (each, a
"Purchaser" and collectively, the "Purchasers"), of an aggregate of ___________
shares of the Company's common stock (the "Common Shares") and warrants to
purchase an aggregate of up to _________ shares of the Company's common stock
(the "Warrants") and the cancellation and reissuance, pursuant to the terms of
the Warrant Repricing Agreement dated as of February ___, 2003 (the "Repricing
Agreement"), by and among the Company and certain Purchasers, of Common Stock
Warrants (as reissued, the "New Common Warrants") held by certain Purchasers and
issued pursuant to the Securities Purchase Agreement (the "Preferred Agreement")
dated December 11, 2001 by and among the Company and certain persons listed on
the Schedule of Purchasers attached to the Preferred Agreement as Exhibit A. We
are rendering this opinion pursuant to Section 5.4 of the Agreement. Except as
otherwise defined herein, capitalized terms used but not defined herein have the
respective meanings given to them in the Agreement.
In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Agreement by the various parties and originals or copies
certified to our satisfaction, of such records, documents, certificates,
opinions, memoranda and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. As to certain
factual matters, we have relied upon certificates of officers of the Company and
have not independently sought to verify such matters. Where we render an opinion
"to the best of our knowledge" or concerning an item "known to us" or our
opinion otherwise refers to our knowledge, it is based solely upon (i) an
inquiry of attorneys within this firm who perform legal services for the
Company, (ii) receipt of a certificate executed by an officer of the Company
covering such matters, and (iii) such other investigation, if any, that we
specifically set forth herein.
In rendering this opinion, we have assumed: the genuineness and
authenticity of all signatures on original documents; the authenticity of all
documents submitted to us as originals; the conformity to originals of all
documents submitted to us as copies; the accuracy, completeness and authenticity
of certificates of public officials; and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by the Company of the Agreement, the Warrants, the Repricing Agreement and the
New Common
Warrants (collectively, the "Transaction Documents")), where authorization,
execution and delivery are prerequisites to the effectiveness of such documents.
We have also assumed: that all individuals executing and delivering documents
had the legal capacity to so execute and deliver; that you have received all
documents you were to receive under the Transaction Documents; that the
Transaction Documents are obligations binding upon the parties thereto other
than the Company; if you or any Purchasers are a corporation or other entity,
that such entities have filed any required California franchise or income tax
returns and have paid any required California franchise or income taxes; and
that there are no extrinsic agreements or understandings among the parties to
the Transaction Documents that would modify or interpret the terms of the
Transaction Documents or the respective rights or obligations of the parties
thereunder.
Our opinion is expressed only with respect to the federal laws of the
United States of America and the laws of the State of California. We express no
opinion as to whether the laws of any particular jurisdiction apply, and no
opinion to the extent that the laws of any jurisdiction other than those
identified above are applicable to the subject matter hereof. We are not
rendering any opinion as to compliance with any antifraud law, rule or
regulation relating to securities, or to the sale or issuance thereof.
With regard to our opinion in paragraph 2 below with respect to the
Company's obligation to qualify to do business in various states, we have relied
solely on a certificate of an officer of the Company regarding the states in
which the Company owns or leases property or has employees or other
representatives with authority to bind it to contracts; we have made no further
investigation.
With regard to our opinion in paragraph 6 below, we express no opinion
with respect to any required consents, approvals, authorizations, orders,
filings, registrations and qualifications under any antitrust laws, rules or
regulations of the United States.
On the basis of the foregoing, in reliance thereon and with the foregoing
qualifications, we are of the opinion that:
1. The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of California.
2. The Company has the requisite corporate power to enter into and perform
its obligations under the Transaction Documents. The Company has the
requisite corporate power to own its properties and assets and to conduct
its business as, to the best of our knowledge, it is currently being
conducted, and, to the best of our knowledge, is not required to qualify
as a foreign corporation to do business in any other jurisdiction in the
United States.
3. The Transaction Documents have been duly and validly authorized, executed
and delivered by the Company and constitute valid and binding agreements
of the Company enforceable against the Company in accordance with their
respective terms, except as rights to indemnity under Section 7.4 of the
Agreement may be limited by applicable laws and except as enforcement may
be limited by applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws affecting
creditors' rights, and subject to general equity principles and to
limitations on availability of equitable relief, including specific
performance.
4. The Common Shares, the Warrants and the New Common Warrants have been duly
authorized, and upon issuance and delivery against payment therefor in
accordance with the terms of the Agreement, the Common Shares, the
Warrants and the New Common Warrants will be duly authorized and validly
issued and the Common Shares will be fully paid and nonassessable. The
shares of Common Stock issuable upon exercise of the Warrants and the New
Common Warrants have been duly authorized and reserved for issuance, and
upon issuance and delivery upon exercise of the Warrants and the New
Common Warrants in accordance with the terms of the Warrants and the New
Common Warrants, respectively, will be validly issued, fully paid and
nonassessable.
5. The execution and delivery of the Transaction Documents by the Company and
the offer, issuance and sale of the Common Shares and the Warrants and the
cancellation and reissuance of the New Common Warrants pursuant to the
Agreement and the Reprising Agreement do not violate or contravene (a) any
governmental statute, rule or regulation applicable to the Company or (b)
any order, writ, judgment, injunction, decree, determination or award
which has been entered against the Company and of which we are aware, the
violation or contravention of which would materially and adversely affect
the Company, its assets, financial condition or operations.
6. All consents, approvals, authorizations or orders of, and filings,
registrations and qualifications with any regulatory authority or
governmental body in the United States required for the issuance of the
Common Shares and the Warrants and the cancellation and reissuance of the
New Common Warrants have been made or obtained, except (a) for the filing
of the "Notification Form: Change in Number of Shares Outstanding" with
the Nasdaq National Market, (b) for the filing of the notice to be filed
under California Corporations Code Section 25102.1(d), (c) for the filing
of a Form D pursuant to Securities and Exchange Commission Regulation D
and (d) other Blue Sky filings.
7. The offer and sale of the Common Shares and the Warrants and the
cancellation and reissuance of the New Common Warrants are exempt from the
registration requirements of the Securities Act of 1933, as amended,
subject to the timely filing of a Form D pursuant to Securities and
Exchange Commission Regulation D..
This opinion is intended solely for your benefit and is not to be made
available to or be relied upon by any other person, firm, or entity without our
prior written consent; except that each Purchaser may rely on this opinion as if
it were addressed and delivered to such Purchaser on the date hereof.
EXHIBIT E
ARADIGM CORPORATION
IMPORTANT - DO NOT REMOVE THIS INSTRUCTION SHEET FROM THE ATTACHED SHARE
CERTIFICATE UNLESS AND UNTIL THE SHARES ARE SOLD AS FOLLOWS:
(1) THE SHARES ARE RESOLD PURSUANT TO THE REGISTRATION STATEMENT ON FORM S-3
(NO. [________________]), AND, IN CONNECTION WITH SUCH RESALE, THE HOLDER HAS
DELIVERED TO THE PURCHASER OF THE SHARES A CURRENT PROSPECTUS AND HAS PROVIDED
TO THE COMPANY OR TO THE TRANSFER AGENT FOR THE COMPANY'S STOCK A PURCHASER'S
CERTIFICATE OF SUBSEQUENT SALE; OR
(2) THE SHARES ARE RESOLD IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, PROVIDED THAT, PRIOR TO
SUCH RESALE, THE HOLDER HAS NOTIFIED THE COMPANY OF SUCH DISPOSITION AND
PROVIDED THE COMPANY WITH WRITTEN ASSURANCES, IN FORM AND SUBSTANCE SATISFACTORY
TO THE COMPANY OF COMPLIANCE WITH THE REQUIREMENTS OF SUCH EXEMPTION.
DO NOT REMOVE THIS INSTRUCTION SHEET FROM
THE ATTACHED SHARE CERTIFICATE
EXCEPT IN ACCORDANCE WITH
THE INSTRUCTIONS SET FORTH ABOVE.
E-1.
EXHIBIT F
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
To: [INSERT TRANSFER AGENT]
ATTENTION: [________________]
The undersigned, the Purchaser or an officer of, or other person duly
authorized by the Purchaser, hereby certifies that____________________________
institution was the [FILL IN NAME OF INSTITUTION]
Purchaser of the shares evidenced by the attached certificate, and as such,
proposes to transfer such shares on or about _________________ either (i) in
accordance with the registration [DATE]
statement, file number [_______________] in which case the Purchaser certifies
that the requirement of delivering a current prospectus has been complied with
or will be complied with in connection with such sale, or (ii) in accordance
with Rule 144 under the Securities Act of 1933 ("RULE 144"), in which case the
Purchaser certifies that it has complied with or will comply with the
requirements of Rule 144.
Print or type:
Name of Purchaser:
--------------------------------------
Name of Individual representing
Purchaser (if an Institution):
--------------------------------------
Title of Individual representing
Purchaser (if an Institution):
--------------------------------------
Signature by:
Purchaser or Individual
representing Purchaser:
--------------------------------------
F-1.
EXHIBIT G
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made and entered into as of
this ______ day of February, 2003, by and among New Enterprise Associates
("NEA") and those certain persons and entities listed on Exhibit A hereto (the
"Shareholders").
WITNESSETH
WHEREAS, NEA and certain other investors are purchasing shares of Common
Stock (the "Common Stock") of Aradigm Corporation (the "Company") and warrants
(the "Warrants") to purchase Common Stock, pursuant to that certain Securities
Purchase Agreement (the "Purchase Agreement") of even date herewith and the
Company is canceling and reissuing certain Common Stock Warrants, previously
issued pursuant to the Securities Purchase Agreement dated December 11, 2001, to
NEA and certain other investors, pursuant to that certain Warrant Repricing
Agreement (the "Warrant Agreement") of even date herewith (collectively, the
"Financing");
WHEREAS, each Shareholder is a holder of record and the "beneficial owner"
(within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934) of
certain shares of capital stock of the Company; and
WHEREAS, in connection with the consummation of the Financing, and in
order to induce NEA to enter into the Purchase Agreement and the Warrant
Agreement, the Shareholders have agreed to provide for the future voting of
their shares of the Company's capital stock as set forth below.
NOW, THEREFORE, in consideration of these premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENT
SECTION 1. Voting.
1.1 SHAREHOLDER SHARES. The Shareholders each agree to hold all shares of
voting capital stock of the Company registered in their respective names or
beneficially owned by them as of the date hereof and any and all other
securities of the Company legally or beneficially acquired by each of the
Shareholders after the date hereof and on or prior to the date of the
Shareholder Meeting (as defined below) (hereinafter collectively referred to as
the "Shareholder Shares") subject to, and to vote the Shareholder Shares in
accordance with, the provisions of this Agreement.
1.2 PURCHASE AGREEMENT AND FINANCING. At any meeting of shareholders of
the Company, however called (the "Shareholder Meeting"), the Shareholders shall
vote all of their respective Shareholder Shares to be voted in favor of the
approval of the Financing, the
1.
execution, delivery and performance by the Company of the Purchase Agreement,
the execution, delivery and performance by the Company of the Warrant Agreement
and the adoption and approval of the terms thereof and in favor of each of the
other actions contemplated by the Purchase Agreement and the Warrant Agreement
and any action required in furtherance thereof. The foregoing notwithstanding,
if the terms of the Financing, the Purchase Agreement or the Warrant Agreement
are materially changed or amended after the date hereof, no Shareholder shall
have any obligations under the provisions of Section 1.1 or this Section 1.2 if
such Shareholder reasonably believes that such change or amendment is adverse to
the rights or interests of the Company or such Shareholder.
1.3 SUCCESSORS. The provisions of this Agreement shall be binding upon the
successors in interest to any of the Shareholder Shares.
1.4 OTHER RIGHTS. Except as provided by this Agreement or any other
agreement entered into in connection with the Financing, each Shareholder shall
exercise the full rights of a holder of capital stock of the Company with
respect to the Shareholder Shares, respectively.
SECTION 2. Termination.
2.1 This Agreement shall continue in full force and effect from the date
hereof through the earliest of the following dates, on which date it shall
terminate in its entirety:
(a) the Closing Date (as defined in the Purchase Agreement);
(b) the date as of which the parties hereto terminate this Agreement
by written consent of (i) NEA and (ii) a majority in interest of the
Shareholders;
(c) the termination of the Purchase Agreement pursuant to Section
9.1 thereof; or
(d) April 30, 2003.
SECTION 3. Miscellaneous.
3.1 OWNERSHIP. Each Shareholder represents and warrants to NEA that (a)
such Shareholder now owns, or will own upon the Shareholder Meeting, the
Shareholder Shares, free and clear of liens or encumbrances, and has not, prior
to or on the date of this Agreement, executed or delivered any proxy or entered
into any other voting agreement or similar arrangement other than one which has
expired or terminated prior to the date hereof, and (b) such Shareholder has
full power and capacity to execute, deliver and perform this Agreement, which
has been duly executed and delivered by, and evidences the valid and binding
obligation of, such Shareholder enforceable in accordance with its terms.
3.2 SPECIFIC PERFORMANCE. The parties hereto hereby declare that it is
impossible to measure in money the damages which will accrue to a party hereto
or to their heirs, personal representatives, or assigns by reason of a failure
to perform any of the obligations under this Agreement and agree that the terms
of this Agreement shall be specifically enforceable. If any party hereto or his
heirs, personal representatives, or assigns institutes any action or proceeding
2.
to specifically enforce the provisions hereof, any person against whom such
action or proceeding is brought hereby waives the claim or defense therein that
such party or such personal representative has an adequate remedy at law, and
such person shall not offer in any such action or proceeding the claim or
defense that such remedy at law exists.
3.3 GOVERNING LAW. This Agreement, and the rights of the parties hereto,
shall be governed by and construed in accordance with the laws of the State of
California as such laws apply to agreements among California residents made and
to be performed entirely within the State of California.
3.4 AMENDMENT OR WAIVER. This Agreement may be amended (or provisions of
this Agreement waived) only by an instrument in writing signed by (i) NEA and
(ii) a majority in the interest of the Shareholders. Any amendment or waiver so
effected shall be binding upon each of the parties hereto and any assignee of
any such party.
3.5 SEVERABILITY. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
3.6 TRANSFERS TO AFFILIATES. In the event a Shareholder transfers any of
its Shareholder Shares to an affiliate of such Shareholder, such Shareholder
shall cause such affiliate to do all things and execute and deliver all
documents, as may be necessary to have such affiliate execute a written
agreement, substantially in the form of this Agreement, pursuant to which such
person becomes a party to this Agreement and agrees to be bound by all the
provisions hereof as if such affiliate were a Shareholder.
3.7 ADDITIONAL SHARES. In the event that subsequent to the date of this
Agreement any shares or other securities are issued on, or in exchange for, any
of the Shareholder Shares by reason of any stock dividend, stock split,
combination of shares, reclassification or the like, such shares or securities
shall be deemed to be Shareholder Shares, as the case may be, for purposes of
this Agreement.
3.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
shall constitute one and the same agreement.
3.9 WAIVER. No waivers of any breach of this Agreement extended by any
party hereto to any other party shall be construed as a waiver of any rights or
remedies of any other party hereto or with respect to any subsequent breach.
3.10 ATTORNEY'S FEES. In the event that any suit or action is instituted
to enforce any provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
3.
3.11 NOTICES. Any notices required in connection with this Agreement shall
be in writing and shall be deemed effectively given: (i) upon personal delivery
to the party to be notified, (ii) when sent by confirmed electronic mail or
facsimile if sent during normal business hours of the recipient; if not, then on
the next business day, (iii) five (5) days after having been sent by registered
or certified mail, return receipt requested, postage prepaid, or (iv) one (1)
day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written notification of receipt. All notices shall be
addressed to the holder appearing on the books of the Company or at such address
as such party may designate by ten (10) days advance written notice to the other
parties hereto.
3.12 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto, along with
the Purchase Agreement and each of the Exhibits thereto, constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof and no party shall be liable or bound to any other
in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein
3.13 MASSACHUSETTS BUSINESS TRUSTS. A copy of the Agreement and
Declaration of Trust of each Purchaser that is a fund or series investment
company (each, a "Fund") organized as a Massachusetts business trust (each, a
"Trust") is on file with the Secretary of the Commonwealth of Massachusetts. NEA
and the other Shareholders acknowledge and agree that this Agreement is not
executed on behalf of or binding upon any of the trustees, officers, directors
or shareholders of a Trust individually, but is binding upon the applicable Fund
and its assets and property. NEA agrees that no trustee, officer, director or
shareholder of a Trust or the applicable Fund may be held personally liable or
responsible for any obligations of a Fund arising out of this Agreement. With
respect to all obligations of the Fund arising out of this Agreement, NEA shall
look for payment or satisfaction of any claim solely to the assets and property
of the Fund. NEA is expressly put on notice that the rights and obligations of
each series of shares of a Trust under its Agreement and Declaration of Trust
are separate and distinct from those of any and all other series.
[THIS SPACE INTENTIONALLY LEFT BLANK]
4.
IN WITNESS WHEREOF, the parties hereto have executed this VOTING AGREEMENT
as of the date first above written.
NEW ENTERPRISE ASSOCIATES:
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
VOTING AGREEMENT
SIGNATURE PAGE
[NAME OF SHAREHOLDER]
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
VOTING AGREEMENT
SIGNATURE PAGE
EXHIBIT A
LIST OF SHAREHOLDERS
A-1.
EXHIBIT H
ARADIGM CORPORATION
WARRANT REPRICING AGREEMENT
THIS WARRANT REPRICING AGREEMENT (this "AGREEMENT") is made as of February
10, 2003, by and among ARADIGM CORPORATION, a California corporation (the
"COMPANY") with its principal office at 0000 Xxxxx Xxxx Xxx, Xxxxxxx, Xxxxxxxxxx
00000, and the persons listed on the Schedule of Holders attached hereto as
EXHIBIT A (the "HOLDERS"). Capitalized terms used but not defined in this
Agreement shall have the meanings given to them in the Purchase Agreement (as
defined below).
RECITALS
WHEREAS, the Company, the Holders and certain other investors listed on
the Schedule of Purchasers attached to the Purchase Agreement as Exhibit A
(together with the Holders, the "INVESTORS") have entered into that certain
Securities Purchase Agreement (the "PURCHASE AGREEMENT"), of even date herewith,
pursuant to which the Company has agreed to sell and issue and the Investors
have agreed to purchase Common Shares and Warrants;
WHEREAS, at the Closing (as defined below), as a material inducement to
the Holders to enter into the Purchase Agreement, the Company desires to issue
and each Holder desires to acquire the New Common Warrants (as defined herein),
in exchange for and upon cancellation of Common Stock Warrants ("COMMON
WARRANTS") held by the Holders and issued pursuant to the Securities Purchase
Agreement (the "PREFERRED AGREEMENT") dated December 11, 2001 by and among the
Company and certain persons listed on the Schedule of Purchasers attached to the
Preferred Agreement as Exhibit A, and the Company desires to assumer certain
other obligations with respect to the Holders, all upon the terms and conditions
stated in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises, representations, warranties and covenants hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
ISSUANCE OF NEW COMMON WARRANTS
1.1 REPRICING OF COMMON WARRANTS. At the Closing, subject to the terms and
conditions of this Agreement, the Company agrees to cancel and reissue the
Common Warrants held by the Holders, such that the exercise price per share of
the Common Warrants shall be $1.12 and Section 2.1 of each Common Warrant,
providing for net issue exercise, shall be amended such that it is available in
certain limited circumstances, in the form attached hereto as EXHIBIT B (the
reissued Common Warrants referred to herein as the "NEW COMMON WARRANTS") and
each Holder agrees to cancel and surrender to the Company its Common Warrants.
The
New Common Warrants and the shares of Common Stock of the Company ("COMMON
STOCK") issuable upon exercise of the New Common Warrants (the "SHARES") are
collectively referred to herein as the "SECURITIES."
ARTICLE 2
CLOSING DATE; DELIVERY
2.1 CLOSING DATE. Subject to the satisfaction (or waiver) of the
conditions thereto set forth in the Purchase Agreement, the issuance of the New
Common Warrants (the "CLOSING") shall occur on the Closing Date as defined in
the Purchase Agreement.
2.2 DELIVERY. At the Closing, the Company will deliver a duly executed New
Common Warrant to each Holder entitled to receive a New Common Warrant pursuant
to Section 1.1 of this Agreement, upon delivery to the Company by such Holder of
the Common Warrant held by such Holder.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Holders:
3.1 CORPORATE POWER; AUTHORIZATION. The Company has all requisite legal
and corporate power and has taken all requisite corporate action to execute and
deliver this Agreement, to issue the New Common Warrants and to carry out and
perform all of its obligations under this Agreement. This Agreement constitutes,
and upon execution and delivery by the Company of the New Common Warrants, the
New Common Warrants will constitute, legal, valid and binding obligations of the
Company, enforceable in accordance with their respective terms, except (a) as
limited by applicable bankruptcy, insolvency, reorganization or similar laws
relating to or affecting the enforcement of creditors' rights generally and (b)
as limited by equitable principles generally. The execution and delivery of this
Agreement does not, and the performance of this Agreement, the compliance with
the provisions hereof and the issuance of the New Common Warrants by the Company
will not materially conflict with, or result in a material breach or violation
of the terms, conditions or provisions of, or constitute a material default
under, or result in the creation or imposition of any material lien pursuant to
the terms of, the Articles of Incorporation (the "ARTICLES") or Bylaws of the
Company or any statute, law, rule or regulation or any state or federal order,
judgment or decree or any indenture, mortgage, lease or other material agreement
or instrument to which the Company or any of its properties is subject.
3.2 ISSUANCE AND DELIVERY OF THE NEW COMMON WARRANTS. Upon exercise of the
New Common Warrants in accordance with the terms thereof, the Shares will be
validly issued, fully paid and nonassessable. The issuance and delivery of the
New Common Warrants is not subject to preemptive or any other similar rights of
the shareholders of the Company or any liens or encumbrances.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE HOLDERS
Each Holder hereby severally represents and warrants to the Company:
4.1 AUTHORIZATION. Holder represents and warrants to the Company that: (a)
Holder has all requisite legal and corporate or other power and capacity and has
taken all requisite corporate or other action to execute and deliver this
Agreement, and to carry out and perform all of its obligations under this
Agreement; and (b) this Agreement constitutes the legal, valid and binding
obligation of such Holder, enforceable in accordance with its terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization, or similar laws
relating to or affecting the enforcement of creditors' rights generally and (ii)
as limited by equitable principles generally.
4.2 INVESTMENT EXPERIENCE. Holder is an "accredited investor" as defined
in Rule 501(a) under the Securities Act. Holder is aware of the Company's
business affairs and financial condition and has had access to and has acquired
sufficient information about the Company to reach an informed and knowledgeable
decision to acquire the New Common Warrants. Holder has such business and
financial experience as is required to give it the capacity to protect its own
interests in connection with the acquisition of the New Common Warrants.
4.3 INVESTMENT INTENT. Holder is acquiring the New Common Warrants for its
own account as principal, for investment purposes only, and not with a present
view to, or for, resale, distribution or fractionalization thereof, in whole or
in part, within the meaning of the Securities Act, other than as contemplated by
Article 7 hereof. Holder understands that its acquisition of the New Common
Warrants has not been registered under the Securities Act or registered or
qualified under any state securities law in reliance on specific exemptions
therefrom, which exemptions may depend upon, among other things, the bona fide
nature of Holder's investment intent as expressed herein. Holder has completed
or caused to be completed the Holder Questionnaire attached to the Purchase
Agreement as Exhibit D for use in preparation of the Registration Statement, and
the responses provided therein shall be true and correct as of the Closing Date
and will be true and correct as of the effective date of the Registration
Statement. Holder has, in connection with its decision to acquire the New Common
Warrants, relied solely upon the SEC Documents and the representations and
warranties of the Company contained herein and in the Purchase Agreement. Holder
will not, directly or indirectly, offer, sell, pledge, transfer or otherwise
dispose of (or solicit any offers to buy, purchase or otherwise acquire or take
a pledge of) any of the Securities except in compliance with the Securities Act,
and the rules and regulations promulgated thereunder.
4.4 REGISTRATION OR EXEMPTION REQUIREMENTS. Holder further acknowledges
and understands that the Securities may not be resold or otherwise transferred
except in a transaction registered under the Securities Act or unless an
exemption from such registration is available.
4.5 DISPOSITIONS. Holder will not, prior to the effectiveness of the
Registration Statement, if then prohibited by law or regulation, sell, offer to
sell, solicit offers to buy, dispose of, loan, pledge or grant any right with
respect to (collectively, a "DISPOSITION") the Securities, nor will such Holder
engage in any hedging or other transaction which is designed or could
reasonably be expected to lead to or result in a Disposition of Securities by
such Holder or any person or entity. In addition, the Holder agrees that for so
long as it owns any Shares, it will not enter into any Short Sales. For such
purposes, a "Short Sale" by the Holder means a short sale of Shares executed at
a time when the Holder has no equivalent offsetting long position in the Common
Stock. For purposes of determining whether the Holder has an equivalent
offsetting long position in the Shares, shares that the Holder is entitled to
receive within sixty (60) days (whether pursuant to contract or upon conversion
or exercise of convertible securities) will be included as if held long by the
Holder.
4.6 NO LEGAL, TAX OR INVESTMENT ADVICE. Holder understands that nothing in
this Agreement or any other materials presented to Holder in connection with the
acquisition of the New Common Warrants constitutes legal, tax or investment
advice. Holder has consulted such legal, tax and investment advisors as it, in
its sole discretion, has deemed necessary or appropriate in connection with its
acquisition of the New Common Warrants.
4.7 CONFIDENTIALITY. Holder will hold in confidence all information
concerning this Agreement and the placement of the Securities hereunder until
the earlier of such time as (a) the Company has made a public announcement
concerning the Agreement and the placement of the Securities hereunder, or (b)
this Agreement is terminated; provided, however, that the foregoing provision of
this Section 4.7 shall not apply if the Company does not issue a press release
concerning the Agreement and the placement of the Securities hereunder within
two (2) days of the Closing.
4.8 RESIDENCY. Holder's principal executive officers are in the
jurisdiction set forth immediately below Holder's name of the signature pages
hereto.
4.9 GOVERNMENTAL REVIEW. Holder 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 New Common Warrants.
4.10 LEGEND. Holder understands that, until such time as the Registration
Statement has been declared effective or the Securities may be sold pursuant to
Rule 144 under the Securities Act without any restriction as to the number of
securities as of a particular date that can then be immediately sold, the
Securities may bear a restrictive legend in substantially the following form
(and a stop transfer order may be placed against transfer of the certificates
for the Shares):
"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 OR IN ANY OTHER
JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED,
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS."
4.11 FOREIGN INVESTORS. If Holder is not a United States person (as
defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as
amended), Holder hereby represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with any invitation to
acquire the New Common Warrants or any use of this Agreement, including (a) the
legal requirements within its jurisdiction for the acquisition of the New Common
Warrants, (b) any foreign exchange restrictions applicable to such acquisition,
(c) any government or other consents that may need to be obtained, and (d) the
income tax and other tax consequences, if any, that may be relevant to the
purchase, holding, redemption, sale or transfer of the Securities. Holder's
acquisition and continued beneficial ownership of the Securities will not
violate any applicable securities or other laws of Holder's jurisdiction.
ARTICLE 5
CONDITIONS TO CLOSING OBLIGATIONS OF HOLDERS
Each Holder's obligation to acquire the New Common Warrants at the Closing
is, at the option of such Holder, subject to the fulfillment or waiver as of the
Closing Date of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations made by the
Company in Article 3 hereof shall be true and correct in all material respects
when made, and shall be true and correct in all material respects on the Closing
Date with the same force and effect as if they had been made on and as of such
date.
5.2 COVENANTS. All covenants contained in this Agreement to be performed
by the Company on or prior to the Closing Date shall have been performed or
complied with in all material respects and the sale and issuance of the Common
Shares and the Warrants pursuant to the Purchase Agreement shall have been
consummated.
ARTICLE 6
CONDITIONS TO CLOSING OBLIGATIONS OF COMPANY
The Company's obligation to sell and issue the New Common Warrants at the
Closing is, at the option of the Company, subject to the fulfillment or waiver
of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES. The representations made by the
Holders in Article 4 hereof shall be true and correct in all material respects
when made, and shall be true and correct in all material respects on the Closing
Date with the same force and effect as if they had been made on and as of such
date.
6.2 COVENANTS. All covenants contained in this Agreement to be performed
by the Holders on or prior to the Closing Date shall have been performed or
complied with in all
material respects and the sale and issuance of the Common Shares and the
Warrants pursuant to the Purchase Agreement shall have been consummated.
ARTICLE 7
COVENANTS
7.1 REGISTRATION RIGHTS OF SHARES. The Company and the Holders shall
comply with the provisions of Article 7 of the Purchase Agreement as if the term
"Registrable Shares" defined in Section 7.1(b) of the Purchase Agreement
includes the Shares.
7.2 REGISTRATION RIGHTS FOR PRIOR ISSUANCES. The Company hereby covenants
and agrees that:
(a) with respect to the Holders, to the extent the obligations of
the Company pursuant to Section 7.2 of that certain Securities Purchase
Agreement, dated August 12, 2001 (the "AUGUST 2001 PURCHASE AGREEMENT"), by and
among the Company and certain persons listed on the Schedule of Purchasers
attached to the August 2001 Purchase Agreement as Exhibit A, would otherwise
cease and terminate due to the operation of part (c) of Section 7.6 of the
August 2001 Purchase Agreement, such obligations shall not cease or terminate
until the earlier to occur of (a) such time as all of the Registrable Shares (as
defined in the August 2001 Purchase Agreement) have been resold, (b) such time
as all of the Registrable Shares (as defined in the August 2001 Purchase
Agreement) may be resold in a three-month period pursuant to Rule 144, or (c)
the third anniversary of the Closing Date (as defined in the Purchase
Agreement);
(b) with respect to the Holders, to the extent the obligations of
the Company pursuant to Section 7.2 of the Preferred Agreement would otherwise
cease and terminate due to the operation of part (c) of Section 7.6 of the
Preferred Agreement, such obligations shall not cease or terminate until the
earlier to occur of (a) such time as all of the Registrable Shares (as defined
in the Preferred Agreement) have been resold, (b) such time as all of the
Registrable Shares (as defined in the Preferred Agreement) may be resold in a
three-month period pursuant to Rule 144, or (c) the third anniversary of the
Closing Date (as defined in the Purchase Agreement); and
(c) to the extent the indemnification obligations of the Company
pursuant to Section 7.4 of the Purchase Agreement are broader in scope than the
indemnification obligations of the Company pursuant to Section 7.4 of the August
2001 Purchase Agreement or pursuant to Section 7.4 of the Preferred Agreement
(the "PRIOR AGREEMENTS"), with respect to the Holders, the indemnification
obligations of the Company pursuant to Section 7.4 of the Purchase Agreement
shall apply to the Prior Agreements.
ARTICLE 8
MISCELLANEOUS
8.1 WAIVERS AND AMENDMENTS. The terms of this Agreement may be waived or
amended with the written consent of the Company and each Holder.
8.2 GOVERNING LAW. This Agreement shall be governed in all respects by and
construed in accordance with the laws of the State of California without any
regard to conflicts of laws principles.
8.3 SUCCESSORS AND ASSIGNS. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties to this Agreement. No Holder shall assign this
Agreement without the prior written consent of the Company.
8.4 ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
thereof.
8.5 SEVERABILITY OF THIS AGREEMENT. If any provision of this Agreement
shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
8.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
8.7 CURRENCY. All references to "dollars" or "$" in this Agreement shall
be deemed to refer to United States dollars.
[REMAINDER OF THIS PAGE INTENTIONALLY BLANK.]
The foregoing agreement is hereby executed as of the date first above
written.
ARADIGM CORPORATION, a California corporation
By: _________________________________________
Name: _______________________________________
Title: ______________________________________
HOLDER:
By: _________________________________________
Name: _______________________________________
Title: ______________________________________
EXHIBIT A
SCHEDULE OF HOLDERS
HOLDER WARRANTS
New Enterprise Associates 10, Limited Partnership 2,685,948
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx Xxxxx
State or Country of Residence: Maryland
Domain Public Equity Partners L.P. 402,890
Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx Xxxxxxx
State or Country of Residence:
New Jersey
Camden Partners Strategic Fund II-A, L.P. 368,160
c/o Camden Partners, Inc.
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx
State or Country of Residence:
Maryland
Camden Partners Strategic Fund II-B, L.P. 21,840
c/o Camden Partners, Inc.
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx
State or Country of Residence:
Maryland
Castle Creek Healthcare Partners LLC 268,593
c/o Castle Creek Healthcare Partners, LLC
000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxx
State or Country of Residence:
Illinois
CC Lifescience, Ltd. 268,593
c/o Castle Creek Healthcare Partners, LLC
000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxx
State or Country of Residence:
Illinois
EXHIBIT B
FORM OF NEW COMMON WARRANT
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
ARADIGM CORPORATION
WARRANT TO PURCHASE COMMON STOCK
_____________, 2003
VOID AFTER DECEMBER 14, 2006
THIS CERTIFIES THAT, for value received, ___________________________, with
its principal office at __________________________, or assigns (the "Holder"),
is entitled to subscribe for and purchase at the Exercise Price (defined below)
from Aradigm Corporation, a California corporation, with its principal office at
0000 Xxxxx Xxxx Xxx, Xxxxxxx, XX 00000 (the "Company") up to
____________________ (_____) shares of the Common Stock of the Company (the
"Common Stock").
1. DEFINITIONS. As used herein, the following terms shall have the
following respective meanings:
(a) "Exercise Period" shall mean the period commencing with the date
of this Warrant and ending on December 14, 2006, unless sooner terminated as
provided below.
(b) "Exercise Price" shall mean $1.12 per share, subject to
adjustment pursuant to Section 5 below.
(c) "Exercise Shares" shall mean the shares of the Company's Common
Stock issuable upon exercise of this Warrant.
2. EXERCISE OF WARRANT. The rights represented by this Warrant may be
exercised in whole or in part at any time during the Exercise Period, by
delivery of the following to the Company at its address set forth above (or at
such other address as it may designate by notice in writing to the Holder):
(a) An executed Notice of Exercise in the form attached hereto;
(b) Payment of the Exercise Price either (i) in cash or by check, or
(ii) by cancellation of indebtedness; and
(c) This Warrant.
Upon the exercise of the rights represented by this Warrant, a certificate
or certificates for the Exercise Shares so purchased, registered in the name of
the Holder or persons affiliated with the Holder, if the Holder so designates,
shall be issued and delivered to the Holder within a reasonable time after the
rights represented by this Warrant shall have been so exercised.
The person in whose name any certificate or certificates for Exercise
Shares are to be issued upon exercise of this Warrant shall be deemed to have
become the holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the date
of delivery of such certificate or certificates, except that, if the date of
such surrender and payment is a date when the stock transfer books of the
Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
2.1 NET EXERCISE. Notwithstanding any provisions herein to the contrary,
after the date on which a Registration Statement (as defined in Section 7.1 of
the Securities Purchase Agreement dated February 10, 2003, by and among the
Company and the persons listed on the Schedule of Purchasers attached thereto as
Exhibit A) has first gone effective, if (i) at any time a Registration Statement
is no longer effective and (ii) the fair market value of one share of the
Company's Common Stock is greater than the Exercise Price (at the date of
calculation as set forth below), in lieu of exercising this Warrant by payment
of cash, the Holder may elect to receive shares equal to the value (as
determined below) of this Warrant (or the portion thereof being canceled) by
surrender of this Warrant at the principal office of the Company together with
the properly endorsed Notice of Exercise in which event the Company shall issue
to the Holder a number of shares of Common Stock computed using the following
formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to
the Holder
Y = the number of shares of Common Stock purchasable under
the Warrant or, if only a portion of the Warrant is
being exercised, the portion of the Warrant being
canceled (at the date of such calculation)
A = the fair market value of one share of the Company's
Common Stock (at the date of such calculation)
B = Exercise Price (as adjusted to the date of such
calculation)
For purposes of the above calculation, the "fair market value" of one
share of Common Stock shall mean (i) the average of the closing sales prices for
the shares of Common Stock on the Nasdaq National Market or other trading market
where such security is listed or traded as reported by Bloomberg Financial
Markets (or a comparable reporting service of national reputation selected by
the Company and reasonably acceptable to the holders if Bloomberg Financial
Markets is not then reporting sales prices of such security) (collectively,
"Bloomberg") for the ten (10) consecutive trading days immediately preceding
such date, or (ii) if the Nasdaq
National Market is not the principal trading market for the shares of Common
Stock, the average of the reported sales prices reported by Bloomberg on the
principal trading market for the Common Stock during the same period, or, if
there is no sales price for such period, the last sales price reported by
Bloomberg for such period, or (iii) if neither of the foregoing applies, the
last sales price of such security in the over-the-counter market on the pink
sheets or bulletin board for such security as reported by Bloomberg, or if no
sales price is so reported for such security, the last bid price of such
security as reported by Bloomberg, or (iv) if fair market value cannot be
calculated as of such date on any of the foregoing bases, the fair market value
shall be as determined by the Board of Directors of the Company in the exercise
of its good faith judgment.
3. COVENANTS OF THE COMPANY.
3.1 COVENANTS AS TO EXERCISE SHARES. The Company covenants and agrees that
all Exercise Shares that may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued and
outstanding, fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issuance thereof. The Company further covenants and
agrees that the Company will at all times during the Exercise Period, have
authorized and reserved, free from preemptive rights, a sufficient number of
shares of its Common Stock to provide for the exercise of the rights represented
by this Warrant. If at any time during the Exercise Period the number of
authorized but unissued shares of Common Stock shall not be sufficient to permit
exercise of this Warrant, the Company will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes.
NO IMPAIRMENT. Except and to the extent as waived or consented to by the
Holder, the Company will not, by amendment of its Articles of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may be necessary or appropriate in order to protect
the exercise rights of the Holder against impairment.
NOTICES OF RECORD DATE. In the event of any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend (other than a cash
dividend which is the same as cash dividends paid in previous quarters) or other
distribution, the Company shall mail to the Holder, at least ten (10) days prior
to the date specified herein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend or distribution.
4. REPRESENTATIONS OF HOLDER.
ACQUISITION OF WARRANT FOR PERSONAL ACCOUNT. The Holder represents and
warrants that it is acquiring the Warrant solely for its account for investment
and not with a view to or for sale or distribution of said Warrant or any part
thereof. The Holder also represents that the entire legal and beneficial
interests of the Warrant and Exercise Shares the Holder is acquiring is being
acquired for, and will be held for, its account only.
SECURITIES ARE NOT REGISTERED.
(a) The Holder understands that the Warrant and the Exercise Shares
have not been registered under the Securities Act of 1933, as amended (the
"Act") on the basis that no distribution or public offering of the stock of the
Company is to be effected. The Holder realizes that the basis for the exemption
may not be present if, notwithstanding its representations, the Holder has a
present intention of acquiring the securities for a fixed or determinable period
in the future, selling (in connection with a distribution or otherwise),
granting any participation in, or otherwise distributing the securities. The
Holder has no such present intention.
(b) The Holder recognizes that the Warrant and the Exercise Shares
must be held indefinitely unless they are subsequently registered under the Act
or an exemption from such registration is available. The Holder recognizes that
the Company will register the Exercise Shares pursuant to the provisions of
Section 7 of that certain Warrant Repricing Agreement dated February ___, 2003.
(c) The Holder is aware that neither the Warrant nor the Exercise
Shares may be sold pursuant to Rule 144 adopted under the Act unless certain
conditions are met, including, among other things, the existence of a public
market for the shares, the availability of certain current public information
about the Company, the resale following the required holding period under Rule
144 and the number of shares being sold during any three month period not
exceeding specified limitations.
DISPOSITION OF WARRANT AND EXERCISE SHARES.
(d) The Holder further agrees not to make any disposition of all or
any part of the Warrant or Exercise Shares in any event unless and until:
The Company shall have received a letter secured by the Holder
from the Securities and Exchange Commission stating that no action will be
recommended to the Commission with respect to the proposed disposition; or
There is then in effect a registration statement under the Act
covering such proposed disposition and such disposition is made in accordance
with said registration statement; or
The Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and if reasonably
requested by the Company, the Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, for the Holder to
the effect that such disposition will not require registration of such Warrant
or Exercise Shares under the Act or any applicable state securities laws.
(e) The Holder understands and agrees that all certificates
evidencing the shares to be issued to the Holder may bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). THEY MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT OR
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED."
5. ADJUSTMENT OF EXERCISE PRICE.
(a) In the event of changes in the outstanding Common Stock of the
Company by reason of stock dividends, split-ups, recapitalizations,
reclassifications, combinations or exchanges of shares, separations,
reorganizations, liquidations, or the like, the number and class of shares
available under the Warrant in the aggregate and the Exercise Price shall be
correspondingly adjusted to give the Holder of the Warrant, on exercise for the
same aggregate Exercise Price, the total number, class, and kind of shares as
the Holder would have owned had the Warrant been exercised prior to the event
and had the Holder continued to hold such shares until after the event requiring
adjustment. The form of this Warrant need not be changed because of any
adjustment in the number of Exercise Shares subject to this Warrant.
(b) If at any time or from time to time the holders of Common Stock
of the Company (or any shares of stock or other securities at the time
receivable upon the exercise of this Warrant) shall have received or become
entitled to receive, without payment therefor,
(i) Common Stock or any shares of stock or other securities
which are at any time directly or indirectly convertible into or exchangeable
for Common Stock, or any rights or options to subscribe for, purchase or
otherwise acquire any of the foregoing by way of dividend or other distribution
(other than a dividend or distribution covered in section 5(a) above),
(ii) any cash paid or payable otherwise than as a cash
dividend, or
(iii) Common Stock or additional stock or other securities or
property (including cash) by way of spinoff, split-up, reclassification,
combination of shares or similar corporate rearrangement (other than shares of
Common Stock pursuant to Section 5(a) above),
then and in each such case, the Holder hereof will, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (including cash
in the cases referred to in clauses (ii) and (iii) above) which such Holder
would hold on the date of such exercise had he been the holder of record of such
Common Stock as of the date on which holders of Common Stock received or became
entitled to receive such shares or all other additional stock and other
securities and property.
6. FRACTIONAL SHARES. No fractional shares shall be issued upon the
exercise of this Warrant as a consequence of any adjustment pursuant hereto. All
Exercise Shares (including fractions) issuable upon exercise of this Warrant may
be aggregated for purposes of determining whether the exercise would result in
the issuance of any fractional share. If, after aggregation, the exercise would
result in the issuance of a fractional share, the Company shall, in lieu of
issuance of any fractional share, pay the Holder otherwise entitled to such
fraction a sum in cash equal to the product resulting from multiplying the then
current fair market value of an Exercise Share by such fraction.
7. NO SHAREHOLDER RIGHTS. This Warrant in and of itself shall not entitle
the Holder to any voting rights or other rights as a shareholder of the Company.
8. TRANSFER OF WARRANT. Subject to applicable laws and the restriction on
transfer set forth on the first page of this Warrant, this Warrant and all
rights hereunder are transferable, by the Holder in person or by duly authorized
attorney, upon delivery of this Warrant and the form of assignment attached
hereto to any transferee designated by Holder. The transferee shall sign an
investment letter in form and substance satisfactory to the Company.
9. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is lost,
stolen, mutilated or destroyed, the Company may, on such terms as to indemnity
or otherwise as it may reasonably impose (which shall, in the case of a
mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant shall be at any time enforceable by anyone.
10. NOTICES, ETC. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the Company
at the address listed on the signature page and to Holder at ___________________
or at such other address as the Company or Holder may designate by ten (10) days
advance written notice to the other parties hereto.
11. ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein.
12. GOVERNING LAW. This Warrant and all rights, obligations and
liabilities hereunder shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer as of _____________, 2003.
ARADIGM CORPORATION, a California corporation
By: _________________________________________
Name: _______________________________________
Title: ______________________________________
NOTICE OF EXERCISE
TO: ARADIGM CORPORATION
(1) | | The undersigned hereby elects to purchase ________ shares of
the Common Stock of ARADIGM CORPORATION (the "Company") pursuant to the terms of
the attached Warrant, and tenders herewith payment of the exercise price in
full, together with all applicable transfer taxes, if any.
| | The undersigned hereby elects to purchase ________ shares of
Common Stock of the Company pursuant to the terms of the net exercise provisions
set forth in Section 2.1 of the attached Warrant, and shall tender payment of
all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares of
Common Stock of the Company in the name of the undersigned or in such other name
as is specified below:
________________________
(Name)
________________________
________________________
(Address)
(3) The undersigned represents that (i) the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment and
not with a view to, or for resale in connection with, the distribution thereof
and that the undersigned has no present intention of distributing or reselling
such shares, other than as contemplated by Article 7 of the Warrant Repricing
Agreement dated as of February ___, 2003 by and among the Company and holders
named therein; (ii) the undersigned is aware of the Company's business affairs
and financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision regarding its investment
in the Company; (iii) the undersigned is experienced in making investments of
this type and has such knowledge and background in financial and business
matters that the undersigned is capable of evaluating the merits and risks of
this investment and protecting the undersigned's own interests; (iv) the
undersigned understands that the shares of Common Stock issuable upon exercise
of this Warrant have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), by reason of a specific exemption from the
registration provisions of the Securities Act, which exemption depends upon,
among other things, the bona fide nature of the investment intent as expressed
herein, and, because such securities have not been registered under the
Securities Act, they must be held indefinitely unless subsequently registered
under the Securities Act or an exemption from such registration is available;
(v) the undersigned is aware that the aforesaid shares of Common Stock may not
be sold pursuant to Rule 144 adopted under the Securities Act unless certain
conditions are met and until the undersigned has held the shares for the number
of years prescribed by Rule 144, that among the conditions for use of the Rule
is the availability of current information to the public about the Company; and
(vi) the undersigned agrees not to make any disposition of all or any part of
the aforesaid shares of Common Stock unless and until there is then in effect a
registration statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with said registration
statement, or the undersigned has provided the Company with an opinion of
counsel satisfactory to the Company, stating that such registration is not
required.
___________________________ __________________________
(Date) (Signature)
__________________________
(Print name)
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
Name: _________________________________________________________________________
(Please Print)
Address: ______________________________________________________________________
(Please Print)
Dated: __________, 20__
Holder's
Signature: ____________________________________________________________
Holder's
Address: ______________________________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
