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COMMON STOCK AND WARRANT PURCHASE AGREEMENT
THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT (the
"Agreement") is entered into by and among MARTEK BIOSCIENCES CORPORATION, a
Delaware corporation ("Martek"), and the purchasers listed on Schedule I hereto
(individually a "Purchaser" and collectively the "Purchasers").
WHEREAS, Martek desires to sell and the Purchasers desire to
purchase shares of common stock, par value $.10 per share, of Martek ("Common
Stock") and warrants to purchase shares of Common Stock, for the consideration
and upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:
1. Sale and Purchase of Common Shares and Warrants.
(a) Initial Sale and Purchase. Subject to the
terms and conditions hereof, Martek hereby agrees to sell, and the Purchasers,
severally and not jointly, hereby agree to purchase, on the applicable Initial
Purchase Closing Date (as defined below) shares of Common Stock (together with
related share purchase rights pursuant to the Rights Agreement (the "Rights
Agreement") between Martek and Registrar and Transfer Company, dated January
24, 1996, the "Common Shares") and stock purchase warrants (the "Initial
Purchase Warrants," and together with the Common Shares, the "Initial Purchase
Units") (all such purchases to be referred to collectively as the "Initial
Purchase") at a price per Initial Purchase Unit (the "Initial Purchase Unit
Price") equal to the average of the closing bid price of the Common Stock on
the Nasdaq Stock Market or the principal securities exchange or quotation
system on which the Common Stock is traded for the thirty (30) trading days
ending on the trading day immediately preceding the applicable Initial Purchase
Closing Date (as defined below). Each Initial Purchase Unit shall consist of
one share of Common Stock and a warrant to purchase three tenths (3/10) of a
share of Common Stock. The Initial Purchase Warrants shall have an exercise
price per one whole share equal to one hundred and twenty percent (120%) of the
applicable Initial Purchase Unit Price. All Initial Purchase Warrants acquired
by a given Purchaser shall initially be represented by a single Common Stock
Purchase Warrant in the form of Exhibit A hereto. The total purchase price to
be paid by each Purchaser in the Initial Purchase is set forth opposite each
Purchaser's name as that Purchaser's "initial purchase commitment" on Schedule
I hereto. The number of Initial Purchase Units to be purchased by a Purchaser
shall be equal to the dollar amount for "initial purchase commitment" set forth
opposite the Purchaser's name on Schedule I hereto divided by the applicable
Initial Purchase Unit Price. The total aggregate purchase price to be paid by
all of the Purchasers in the Initial Purchase (the "Initial Purchase Price")
shall not exceed $10,250,000.00.
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(b) Closing Dates for Initial Purchase. The
parties contemplate that the Initial Purchase will be completed pursuant to
multiple closings (each such date, an "Initial Purchase Closing Date") and this
Agreement will be amended from time to time to add additional Purchasers as
parties hereto, provided that the total Initial Purchase Price from all
Purchasers will not exceed $10,250,000.00 and no closing shall be for less than
$250,000.00 (except the closing on the final Initial Purchase Closing Date).
The final Initial Purchase Closing Date shall occur no later than thirty (30)
days following the First Initial Purchase Closing Date. The applicable Initial
Purchase Closing Date for each Purchaser will be the date set forth beneath
each Purchaser's name on the signature pages hereto. The first Initial
Purchase Closing Date is April 27, 1998 (the "First Initial Purchase Closing
Date").
(c) Initial Closings; Payment of Purchase Price.
On each Initial Purchase Closing Date, the applicable Purchaser will pay and
deliver to Martek that portion of the Initial Purchase Price set forth opposite
such Purchaser's name as that Purchaser's "initial purchase commitment" on
Schedule I hereto by wire transfer of immediately available funds.
(d) Initial Closings; Delivery of Common Shares
and Initial Purchase Warrants. On each Initial Purchase Closing Date, against
delivery by the applicable Purchaser of that portion of the Initial Purchase
Price to be paid by it, Martek will issue and deliver to such Purchaser (i) a
certificate representing that number of the Common Shares to be purchased by
Purchaser on such Initial Closing Date pursuant to Section 1(a), registered in
the name of such Purchaser or the designated nominee(s) of such Purchaser and
(ii) a fully executed Initial Purchase Warrant to purchase that number of
Common Shares as determined pursuant to Section 1(a).
(e) Additional Sales and Purchases. Subject to
the terms and conditions hereof, the Purchasers, severally and not jointly,
hereby further agree to purchase from Martek, at Martek's request, at any time
and from time to time during the period beginning nine (9) months following the
First Initial Purchase Closing Date and ending on the two (2) year anniversary
of the First Initial Purchase Closing Date (each such purchase requested by
Martek, which shall occur on the same date as to all Purchasers, to be referred
to as an "Additional Purchase" and the date of each such purchase to be
referred to as an "Additional Purchase Closing Date"), (i) additional shares of
Common Stock and (ii) additional warrants to purchase shares of Common Stock
(the "Additional Purchase Warrants," and together with the additional shares of
Common Stock, the "Additional Purchase Units"), in each case at a price per
Additional Purchase Unit (the "Additional Purchase Unit Price") equal to the
average of the closing bid price of the Common Stock on the Nasdaq Stock Market
or the principal securities exchange or quotation system on which the Common
Stock is traded for the thirty (30) trading days ending on the trading day
immediately preceding the applicable Additional Purchase Closing Date, provided
that:
(i) The closing bid price of the Common
Stock on the Nasdaq Stock Market or the principal securities exchange
or quotation system on which the Common Stock is traded on the trading
day immediately preceding the Additional
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Purchase Closing Date is within twenty percent (20%) (higher or lower)
of the weighted average of all Initial Purchase Unit Prices.
(ii) each Additional Purchase requested
by Martek shall be for a portion of the Additional Purchase Price (as
defined below) equal to at least fifty percent (50%) of the Initial
Purchase Price, and
(iii) at least fifteen (15) business days
prior notice in writing of the Additional Purchase Closing Date has
been given to the Purchasers by Martek.
The total aggregate additional purchase price for all
Additional Purchases (the "Additional Purchase Price") shall not exceed
$10,250,000.00. The dollar amount of the total investment each Purchaser shall
make for all Additional Purchases shall not exceed the amount set forth as that
Purchaser's "additional purchase commitment" opposite such Purchasers name on
Schedule I hereto. Each Additional Purchase Unit shall consist of one share of
Common Stock and an Additional Purchase Warrant to purchase three tenths (3/10)
of a share of Common Stock. The number of Additional Purchase Units which each
Purchaser is obligated to purchase on an Additional Purchase Closing Date shall
be equal to the dollar amount designated by Martek in its notice to the
Purchaser (which shall be determined as set forth in the next sentence) divided
by the Additional Purchase Unit Price applicable to that Additional Purchase
Closing Date. The dollar amount of the investment each Purchaser shall make on
an Additional Purchase Closing Date shall be in the same proportion to the
total portion of the Additional Purchase Price for that Additional Purchase
Closing Date designated by Martek as the total dollars invested by that
Purchaser in the Initial Purchase bears to the total Initial Purchase Price.
All Additional Purchase Warrants acquired by a given Purchaser shall initially
be represented by a single Common Stock Purchase Warrant in the form of Exhibit
A, which shall expire three years from the Additional Purchase Closing Date,
and shall have an exercise price per one whole share equal to the lesser of (i)
the weighted average exercise prices per one whole share of all of the Initial
Purchase Warrants and (ii) one hundred and twenty percent (120%) of the average
of the closing bid price of the Common Stock on the Nasdaq Stock Market or the
principal securities exchange or quotation system on which the Common Stock is
traded for the thirty (30) trading days ending on the trading day immediately
preceding the applicable Additional Purchase Closing Date.
(f) Additional Closing; Payment of Purchase
Price. On each Additional Purchase Closing Date, the Purchasers will pay and
deliver to Martek that portion of the Additional Purchase Price being paid on
such Additional Purchase Closing Date which is attributable to such Purchaser
by wire transfer of immediately available funds.
(g) Additional Closings; Delivery of Common
Shares and Additional Purchase Warrants. On the Additional Purchase Closing
Date, against delivery by the each Purchaser of that portion of the Additional
Purchase Price to be paid by it as described in Section 1(f), Martek will issue
and deliver to such Purchaser (a) a certificate representing that number of the
Common Shares to be purchased by it, registered in the name of such Purchaser
or the
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designated nominee(s) of such Purchaser and (b) a fully executed Additional
Purchase Warrant to purchase that number of Common Shares attributable to it.
(h) First Anniversary Warrants. On the first
anniversary of the First Initial Closing Date, (A) if there have been no
Additional Purchases, the Purchasers will receive fully executed warrants to
purchase an aggregate of 51,250 Common Shares (subject to adjustment as
provided in the last sentence of this Section 1(h)); (B) if there has been an
Additional Purchase in an amount equal to at least fifty percent (50%) of the
Initial Purchase Price, the Purchasers will receive fully executed warrants to
purchase an aggregate of 25,625 Common Shares (subject to adjustment as
provided in the last sentence of this Section 1(h)) (in the case of either (A)
or (B), the "First Anniversary Warrants"); or (C) if there has been an
Additional Purchase or Additional Purchases in amounts which, in the aggregate,
equal or exceed the Initial Purchase Price, the Purchasers will receive no
warrants pursuant to this Section 1(h). Subject to the last sentence of this
Section 1(h), the number of shares underlying the First Anniversary Warrants
issued to each Purchaser shall be in the same proportion to 51,250 or 25,625
(in each case, subject to adjustment as provided in the last sentence of this
Section 1(h)), as applicable, as the number of Common Shares purchased by that
Purchaser in the Initial Purchase bears to the total number of Common Shares
purchased by all of the Purchasers in the Initial Purchase, adjusted by Martek
in such manner as to avoid fractional shares. All First Anniversary Warrants
acquired by a given Purchaser shall initially be represented by a single Common
Stock Purchase Warrant in the form of Exhibit A hereto, shall expire three
years from the first anniversary of the Initial Closing Date, and shall have an
exercise price per one whole share of the lesser of (i) the weighted average
exercise prices per one whole share of all of the Initial Purchase Warrants, or
(ii) one hundred and twenty percent (120%) of the average of the closing bid
price of the Common Stock on the Nasdaq Stock Market or the principal
securities exchange or quotation system on which the Common Stock is traded for
the thirty (30) trading days ending on the trading day immediately preceding
the first anniversary of the Initial Closing Date. In the event that the
Initial Purchase Price is less than $10,250,000.00, the references in this
Section 1(h) to 51,250 Common Shares and 25,625 Common Shares, respectively,
shall be reduced by multiplying each such figure by a fraction, the numerator
of which is the Initial Purchase Price and the denominator of which is
$10,250,000.00.
(i) Second Anniversary Warrants. On the second
anniversary of the First Initial Closing Date, (A) if there have been no
Additional Purchases, the Purchasers will receive fully executed warrants to
purchase an aggregate of 51,250 Common Shares (subject to adjustment as
provided in the last sentence of this Section 1(i)); (B) if there has been an
Additional Purchase in an amount equal to at least fifty percent (50%) of the
Initial Purchase Price, the Purchasers will receive fully executed warrants to
purchase an aggregate of 25,625 Common Shares (subject to adjustment as
provided in the last sentence of this Section 1(i)) (in the case of either (A)
or (B), the "Second Anniversary Warrants"); or (C) if there has been an
Additional Purchase or Additional Purchases in amounts which, in the aggregate,
equal or exceed the Initial Purchase Price, the Purchasers will receive no
warrants pursuant to this Section 1(i). The number of shares underlying the
Second Anniversary Warrants issued to each Purchaser shall be in the same
proportion to 51,250 or 25,625 (in each case, subject to adjustment as provided
in the last sentence of this Section 1(i)), whichever is applicable, as the
number of
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Common Shares purchased by that Purchaser in the Initial Purchase bears to the
total number of Common Shares purchased by all of the Purchasers in the Initial
Purchase, adjusted by Martek in such manner as to avoid fractional shares. All
Second Anniversary Warrants acquired by a given Purchaser shall initially be
represented by a single Common Stock Purchase Warrant in the form of Exhibit A,
shall expire three years from the second anniversary of the Initial Closing
Date, and shall have an exercise price per one whole share of the lesser of (i)
the weighted average exercise prices per one whole share of all of the Initial
Purchase Warrants, or (ii) one hundred and twenty percent (120%) of the average
of the closing bid price of the Common Stock on the Nasdaq Stock Market or the
principal securities exchange or quotation system on which the Common Stock is
traded for the thirty (30) trading days ending on the trading day immediately
preceding the second anniversary of the Initial Closing Date. In the event
that the Initial Purchase Price is less than $10,250,000.00, the references in
this Section 1(h) to 51,250 Common Shares and 25,625 Common Shares,
respectively, shall be reduced by multiplying each such figure by a fraction,
the numerator of which is the Initial Purchase Price and the denominator of
which is $10,250,000.00.
2. Representations and Warranties of Martek. Martek
hereby represents, warrants and agrees, as follows:
(a) Martek is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has full corporate power and corporate authority to carry on its business
as it is now being conducted, to execute and deliver this Agreement and the
Initial Purchase Warrants, the Additional Purchase Warrants, the First
Anniversary Warrants and the Second Anniversary Warrants (collectively, the
"Warrants") and to consummate the transactions contemplated hereby and thereby.
Martek is qualified as a foreign corporation in the State of Maryland and the
Commonwealth of Kentucky, and in every other jurisdiction in which the failure
to so qualify would have a material adverse effect on its business. Martek has
no subsidiaries.
(b) The authorized capital of Martek consists of
35,000,000 shares of capital stock, (i) of which 30,000,000 shares are
designated Common Stock, of which 13,848,859 shares of Common Stock were
outstanding and were duly authorized, validly issued, fully paid and
nonassessable on April 24, 1998, and (ii) of which 5,000,000 shares are
designated preferred stock, par value $.01 per share, none of which were
outstanding on April 24, 1998 or are outstanding on the date hereof. Martek
has no other classes of stock authorized or outstanding. Martek has reserved
from its authorized and unissued capital stock a sufficient number of shares of
Common Stock to provide for the issuance of the shares underlying the Warrants
upon exercise of the Warrants. As of April 24, 1998, options and warrants to
purchase 1,881,505 and 354,372 shares of Common Stock, respectively, were
outstanding, and when such options and warrants are exercised and the
prescribed exercise price paid, the shares of Common Stock issued with respect
to such options and warrants will be duly authorized, validly issued, fully
paid and nonassessable. Except as set forth above and granted pursuant to the
Rights Agreement, there are no existing options, warrants, calls, commitments
or rights of any character to purchase or otherwise acquire from Martek shares
of capital stock of any class, no outstanding securities of
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Martek that are convertible into shares of capital stock of Martek of any
class, and no options, warrants or rights to purchase from Martek any such
convertible securities. Martek has no outstanding contractual or other
obligation to repurchase, redeem or otherwise acquire any outstanding shares of
its capital stock. The issued and outstanding shares of Common Stock have not
been, and the Common Shares to be issued to Purchasers hereunder and the Common
Shares issuable upon exercise of the Warrants will not be, issued in violation
of any preemptive or other rights of any person, whether arising by statute,
under the Certificate of Incorporation or By-Laws of Martek or in any other
manner known to Martek. No person or entity is entitled to any preemptive or
similar right with respect to the issuance of any capital stock of Martek.
(c) The Board of Directors of Martek has approved
this Agreement and the transactions contemplated hereby in the manner
prescribed by law and authorized the execution, delivery and performance of
this Agreement and the Warrants.
(d) This Agreement constitutes and the Warrants,
when executed and delivered against payment therefor in accordance with the
terms hereof, will constitute, valid and binding obligations of Martek,
enforceable in accordance with their respective terms. Neither the execution
and delivery of this Agreement and the Warrants, nor the consummation of the
transactions contemplated herein and therein, will violate any law, rule,
regulation, judgment, injunction, decree, determination, award or order of any
court or governmental agency or instrumentality, domestic or foreign, or
conflict with or result in any breach of any of the terms of or constitute a
default under, or result in the termination of or the creation or imposition of
any mortgage, lien, security interest or other charge or encumbrance of any
nature under, Martek's Certificate of Incorporation or By-Laws or the terms of
any contract or agreement to which Martek is a party or by which Martek or any
of the assets and properties of Martek is bound. Neither the execution and
delivery by Martek of this Agreement and the Warrants, nor the consummation by
Martek of any of the transactions contemplated herein or therein, requires any
consent, approval, order or authorization of, or registration with, or the
giving of notice to, any governmental or public body or authority or any other
person, except for such notices, consents or approvals which have previously
been obtained or which will be obtained on or before each closing date, as
applicable, and notices and filings that may be required under applicable state
and federal securities laws that will be undertaken after each closing date, as
applicable.
(e) Upon consummation of the transactions
contemplated by this Agreement, the Common Shares will be validly issued, fully
paid and nonassessable, and the Common Shares issuable upon exercise of the
Warrants will, upon exercise and payment of the exercise price therefor, be
validly issued, fully paid and nonassessable.
(f) Since becoming subject to the periodic
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), Martek has made all required filings pursuant to the rules and
regulations promulgated thereunder, and all such filings complied in all
materials respects with the Exchange Act and such rules and regulations as of
the date filed with the Securities and Exchange Commission.
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(g) Martek owns, or possesses adequate rights to
use, all patents, patent rights, inventions, trade secrets, licenses, know-how,
trademarks, service marks, trade names and copyrights which are necessary for
the conduct of Martek's business as presently conducted.
(h) Martek agrees to keep reserved from its
authorized and unissued capital stock a sufficient number of shares of Common
Stock or other securities issuable upon exercise of the Warrants to provide for
the issuance of Common Stock or other securities on the exercise of the
Warrants.
3. Representations and Warranties of the Purchasers.
Each Purchaser for itself, severally and not jointly, hereby represents,
warrants and agrees, as follows:
(a) Such Purchaser is acquiring the Common Shares
and the Warrants subscribed for hereunder for its own account as principal, for
investment purposes and not with a view to any distribution thereof in
violation of the Securities Act of 1933, as amended (the "Securities Act"), or
any other securities laws. Such Purchaser further understands and acknowledges
that the offer and sale of the Common Shares, the Warrants and the shares
underlying the Warrants (collectively, the "Securities") to the Purchasers
pursuant to this Agreement will not be registered under the Securities Act or
any state securities laws on the assumption that the offer and sale of the
Securities to the Purchasers are exempt from registration pursuant to Section
4(2) of the Securities Act and Regulation D thereunder and that Martek's
reliance upon such exemption is predicated upon such Purchaser's
representations set forth in the Agreement and as shall be made by any holder
of the Warrants upon exercise thereof.
(b) Such Purchaser is an "accredited investor"
within the meaning of Rule 501(a) of Regulation D under the Securities Act, and
by virtue of such Purchaser's experience in financial and business matters, is
capable of evaluating the merits and risks of such Purchaser's investment in
the Securities, has the ability to bear the economic risks of such an
investment, including a complete loss of the investment, and has the capacity
to protect the Purchaser's own interests. For purposes of the requirements of
state securities laws, such Purchaser represents that it is solely a resident
of the state set forth opposite its name on Schedule I hereto and that the
offer and purchase of the Securities pursuant hereto has and will occur solely
in such state.
(c) Such Purchaser acknowledges that the Warrants
and the certificates representing the Common Shares and the shares underlying
the Warrants shall bear a legend substantially as set forth below indicating
the restrictions on transfers to which the Securities and the Warrants are
subject, and instructions shall be given to the transfer agent for the Common
Stock that no transfer is to be effected except in compliance with such
transfer restrictions:
The securities represented hereby have not been registered
under the Securities Act of 1933, as amended (the "Act"), or
applicable state securities laws and may not be offered, sold
or transferred in the absence of registration or the
availability of an exemption from
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registration under the Act and regulations promulgated
thereunder and applicable state securities laws.
(d) Because the Securities have not been
registered under the Securities Act or applicable state securities laws, such
Purchaser acknowledges that the economic risk of the investment must be borne
indefinitely by such Purchaser, the Securities cannot be sold by the Purchaser
unless subsequently registered under the Securities Act and such laws or unless
an exemption from such registration is available, and while Martek intends to
file a registration statement covering the Securities for public resale as set
forth in Section 4 below, there is no assurance that the Securities will in
fact be so registered.
(e) Such Purchaser hereby acknowledges that
Martek has made available to such Purchaser such books, records, corporate
documents and other information as Purchaser considers necessary to evaluating
the merits and risks of an investment in the Securities. Such Purchaser and
its representatives have had the opportunity to ask questions of
representatives of Martek and have received satisfactory responses thereto, and
to request and receive all documents concerning Martek and the terms and
conditions of such Purchaser's investment. Such Purchaser acknowledges that it
has not been offered the Securities by any means of general solicitation or
advertisement, and that no commission or sales charge is payable by the
Purchaser to any third party in connection with the purchase of the Securities.
(f) Such Purchaser recognizes that investment in
the Securities involves a high degree of risk. In evaluating the suitability
of an investment in the Securities, such Purchaser has not (A) relied upon any
representations or other information (whether oral or written) other than (i)
the representations and warranties set forth in this Agreement, and (ii) the
documents and answers to questions furnished to such Purchaser by Martek (or
its designated representatives), or (B) relied upon any projections or
predictions as to the future business or financial performance of Martek. Such
Purchaser is aware that no federal or state agency has made any finding or
determination as to the fairness of the Securities for investment, nor any
recommendation or endorsement of the Securities.
4. Registration Rights.
(a) Initial Registration. As soon as
reasonably practicable, but in no event more than thirty-one (31) days
following the First Initial Closing Date (except that if the thirty-first day
falls on a day which is not a business day, on the next business day following
the thirty-first day), Martek shall prepare and file with the Securities and
Exchange Commission (and such state securities commissions as may be necessary
or appropriate to permit the registration of the Securities in all 50 states
and the District of Columbia) a registration statement on Form S-3 (or, if
Martek is ineligible to use Form S-3, such other form as Martek deems
appropriate) (the "Registration Statement") to effect the registration under
the Securities Act and relevant state securities laws of the Securities in
connection with (i) the disposition of the Common Shares and the shares
received upon exercise of the Warrants by the Purchasers, from time to time in
the open market, in one or more transactions (which may involve block
transactions), in negotiated, underwritten, or other transactions or through a
combination of such methods of sale, at market
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prices prevailing at the time of sale, at prices relating to such prevailing
market prices or at negotiated prices, (ii) the disposition of the Warrants by
the Purchasers from time to time in such manner, and (iii) the issuance of the
shares underlying the Warrants upon exercise of the Warrants by persons or
entities that receive the Warrants upon transfer thereof pursuant to the terms
of such Warrants (the "Record Transferees").
All expenses of Martek associated with the
preparation of the Registration Statement and the filing thereof shall be borne
by Martek, including the payment of any applicable listing fees. The
Purchasers, and, as necessary, Record Transferees shall be responsible for fees
and expenses of their own counsel and any commissions or underwriting discounts
payable with respect to any resale of the Common Shares and/or shares
underlying the Warrants. In connection with the Registration Statement, but
subject to the limitations of Section 4(b) hereof, Martek will prepare and file
with the Securities and Exchange Commission and any state securities
commissions such amendments and supplements to the Registration Statement and
the prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective and to comply with the provisions of the
Securities Act and Rule 415 thereunder with respect to the disposition of all
the Securities and issuance of all shares underlying the Warrants to Record
Transferees covered by such Registration Statement. Notwithstanding the
foregoing, Martek will only be required to maintain the effectiveness of the
Registration Statement (i) with respect to the Securities registered thereunder
for resale by the Purchasers, until the earlier of (a) such time as all of such
Securities have been disposed of in accordance with the intended methods of
disposition by the Purchasers set forth in such Registration Statement, (b)
such date on which each of the Purchasers may dispose of all of the Securities
held by it in one transaction in the open market pursuant to Rule 144(k) under
the Securities Act, or (c) with respect to the Common Shares and Warrants, two
years from the effective date of the Registration Statement, and with respect
to the shares underlying the Warrants, two years from the date on which such
shares are issued to a Purchaser upon exercise of the Warrants; and (ii) with
respect to the shares underlying the Warrants which are registered for issuance
to Record Transferees, until the earlier of (a) the expiration of the Warrants
in accordance with their terms or (b) the issuance of all of the shares
underlying the Warrants pursuant to exercise of the Warrants.
Martek shall furnish to each Purchaser such
number of copies of the Registration Statement and of each amendment and
supplement thereto, such number of copies of the prospectus included in such
Registration Statement and such other related documents as such Purchaser may
reasonably request in order to facilitate the disposition of the Securities by
such Purchaser.
(b) Limitations. Notwithstanding the
foregoing, Martek shall notify each Purchaser at any time after effectiveness
of the Registration Statement (when a prospectus relating thereto is required
to be delivered under the Securities Act) of the happening of any event or
other circumstance as the result of which (i) the prospectus included in such
Registration Statement, as then in effect, would include an untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing, or (ii) the continued
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effectiveness of such Registration Statement or a subsequent Registration
Statement, and the use of such prospectus, would otherwise have a material and
adverse affect on any proposed or pending acquisition, merger, business
combination or other material transaction involving Martek, and, upon receipt
of such notice and until Martek makes available to each Purchaser, a
supplemented or amended prospectus, each Purchaser shall not offer or sell any
Securities pursuant to such Registration Statement and shall return all copies
of such prospectus to Martek if requested to do so by it. As promptly as
practicable following any such occurrence, Martek shall prepare and furnish to
each Purchaser a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to
subsequent purchasers of the Common Shares, such prospectus shall meet the
requirements of the Securities Act and relevant state securities laws, provided
that such obligation on the part of Martek shall be suspended for such period
of time as Martek considers reasonably necessary and in its best interest due
to circumstances then existing (but not more than 120 days). Each Purchaser
shall furnish to Martek such information regarding each such Purchaser and its
proposed method of distribution of the Securities as Martek may from time to
time request and as shall be required by law to effect and maintain the
registration of such Securities under the Securities Act and any state
securities laws.
(c) Indemnification.
(i) Martek will indemnify each
Purchaser, each of the officers, directors and partners of, and each person
controlling, such Purchaser with respect to which any registration statement
under the Securities Act has been filed and become effective pursuant to this
Agreement, against all claims, losses, expenses, damages and liabilities (or
actions in respect thereto) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus
contained in any registration statement covering the Securities for resale, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each such Purchaser, each of its officers,
directors and partners, and each person controlling such Purchaser for any
reasonable legal and any other expenses incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability or
action, provided that Martek will not be liable in any such case to the extent
that any such claim, loss, damage or liability arises out of or is based on any
untrue statement or omission based upon written information furnished to Martek
by such Purchaser specifically for use therein.
(ii) Each Purchaser will indemnify
Martek, each of its directors and officers, each person who controls Martek
within the meaning of the Securities Act, and each other such Purchaser, each
of its officers, directors and partners and each person controlling such
Purchaser against all claims, losses, expenses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such prospectus,
or any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse Martek, such Purchaser, and such directors,
officers, partners or controlling persons for any reasonable legal or any other
expenses incurred in connection with investigating, defending or settling any
such claim, loss, damage, liability or action, in each case
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to the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such prospectus
in reliance upon and in conformity with written information furnished to Martek
by such Purchaser specifically for use therein.
(iii) Each party entitled to
indemnification under this Section 4(c) (the "Indemnified Party") shall give
notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such indemnified party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom,
provided that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld), and the Indemnified Party may
participate in such defense at such party's expense, and provided further that
the failure of any Indemnified Party to give notice as provided herein shall
not relieve the Indemnifying Party of its obligations hereunder, unless such
failure resulted in actual detriment to the Indemnifying Party. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(iv) In order to provide for just and
equitable contribution to joint liability under the Securities Act in any case
in which any person or entity entitled to indemnification under Section 4(c)
makes a claim for indemnification pursuant to this Section 4(c) but it is
judicially determined (by entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be enforced in such
case notwithstanding the fact that this Section 4(c) provides for
indemnification in such case; then, and in such case, the party that would
otherwise be required to indemnify under Section 4(c) will contribute to the
aggregate losses, claims, damages or liabilities to which the other parties may
be subject (after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the parties in connection with the
losses suffered, as well as any other relevant equitable considerations.
5. Information Rights. At such time as Martek is not
subject to the reporting requirements of the Exchange Act, and so long as the
aggregate number of Common Shares and shares underlying the Warrants then
beneficially owned (as determined pursuant to Rule 13d-3 under the Exchange
Act) by a Purchaser is not less than 50% of the sum of the initial number of
Common Shares purchased by such Purchaser hereunder and the initial number of
shares issuable upon exercise of the Warrants purchased by such Purchaser
hereunder, Martek shall deliver the following to such Purchaser:
(a) As soon as available, and in any event within
45 days after the end of each of the first three quarters in each fiscal year
of Martek, unaudited consolidated statements of income, cash flows and
stockholders' equity for such quarterly period and for the period from the
beginning of the then current fiscal year to the end of such quarterly period,
and an unaudited consolidated balance sheet of Martek as at the end of such
quarterly period, in each case setting forth in comparative form consolidated
figures for the corresponding periods in the preceding
-11-
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fiscal year, all in reasonable detail, prepared by Martek in accordance with
generally accepted accounting principles consistently followed throughout the
periods involved, subject to normal year-end adjustments, and certified by the
principal financial officer of Martek and accompanied by a written discussion
of operations in summary form with respect to such quarterly period.
(b) As soon as available, and in any event within
90 days after the end of each fiscal year of Martek, consolidated statements of
income, cash flows and stockholders' equity for such fiscal year, and a
consolidated balance sheet of Martek as at the end of such year, in each case
setting forth in comparative form consolidated figures for the preceding fiscal
year, prepared by Martek in accordance with generally accepted accounting
principles consistently followed throughout the periods involved, and certified
by Ernst & Young LLP or another nationally recognized firm of independent
public accountants, and accompanied by a written discussion of operations in
summary form with respect to such fiscal year.
6. Notices. All notices, demands, requests, or other
communications which may be or are required to be given, served, or sent by any
party to any other party pursuant to this Agreement shall be in writing and
shall be mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or transmitted by hand delivery, overnight or
express mail, telegram or telex, addressed as follows:
(i) If to Martek:
Martek Biosciences Corporation
0000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Corporate Secretary
Telefax No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx X. Silver
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
Telefax No.: (000) 000-0000
(ii) If to Purchasers:
The address listed under each Purchaser's
name on Schedule I hereto.
Each party may designate by notice in writing a new address to which any
notice, demand, request or communication may thereafter be so given, served or
sent. Each notice, demand, request, or communication which shall be mailed,
delivered or transmitted in the manner described above shall be deemed
sufficiently given, served, sent and received for all purposes at such time as
it is delivered to the addressee (with the return receipt, the delivery
receipt, the
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affidavit of messenger or (with respect to a telex) the answerback being deemed
conclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
7. Publicity. Martek and the Purchasers shall notify
each other prior to issuing any press releases or otherwise making any news
release or other public announcement with respect to the transactions
contemplated hereby, other than as required in connection with any filings with
any federal or state governmental or regulatory agency with respect thereto,
and in no event will the Purchasers issue any such release or make any such
public announcement without the prior approval of Martek. Notwithstanding the
foregoing, the Purchasers hereby agree that Martek may issue a press release
with regard to the subject matter of this Agreement on or after the First
Initial Purchase Closing Date without providing the Purchasers with the
notification required by this Section 7.
8. Conditions to Closing.
8.1 Initial Purchase; Conditions to Obligations of
Purchasers. Each Purchaser's obligation hereunder to purchase and pay for the
Initial Purchase Units on the applicable Initial Purchase Closing Date is
subject to the satisfaction of the following conditions, any or all of which
conditions may be waived by the Purchaser or Purchasers at any time on or prior
to the applicable Initial Purchase Closing Date:
(a) Each of the representations and warranties of
Martek contained in Section 2 hereof shall be true on and as of each Initial
Purchase Closing Date with the same effect as though made on and as of the such
Initial Purchase Closing Date.
(b) As of and on the applicable Initial Purchase
Closing Date, the issuance and sale of the Initial Purchase Units to such
Purchaser hereunder shall be legally permitted by all laws and regulations to
which such Purchaser is subject.
8.2 Initial Purchase; Conditions to Obligations of
Martek. Martek's obligation hereunder to sell and issue the Initial Purchase
Units on each Initial Purchase Closing Date is subject to the satisfaction of
the following conditions, any or all of which conditions may be waived by
Martek at any time on or prior to the applicable Initial Purchase Closing Date:
(a) Each of the representations and warranties of
each of the Purchasers contained in Section 3 hereof shall be true on and as of
the applicable Initial Purchase Closing Date, with the same effect as though
made on and as of such Initial Purchase Closing Date.
(b) As of and on the applicable Initial Purchase
Closing Date, the purchase of the Initial Purchase Units by the Purchaser
hereunder shall be legally permitted by all laws and regulations to which
Martek is subject.
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(c) The First Initial Purchase Closing Date shall
be on or prior to April 27, 1998.
8.3 Additional Purchases; Conditions to Obligations of
Purchasers. The obligations of the Purchasers to purchase and pay for
Additional Purchase Units pursuant to Section 1(e) are subject to the
fulfillment, at or prior to each Additional Purchase Closing Date, of each of
the following conditions, and the failure to satisfy any such condition shall
excuse and discharge all obligations of the Purchasers to carry out their
obligations pursuant to Section 1(e), unless such failure is agreed to in
writing by the Purchasers:
(a) The closing bid price of the Common Stock on
the Nasdaq Stock Market or the principal securities exchange or quotation
system on which the Common Stock is traded on the trading day immediately
preceding the Additional Purchase Closing Date is within twenty percent (20%)
of the weighted average of all Initial Purchase Unit Prices.
(b) Each Additional Purchase requested by Martek
shall be for a portion of the Additional Purchase Price equal to at least fifty
percent (50%) of the Initial Purchase Price; and
(c) Prior written notice of the Additional
Purchase Closing Date shall have been received by the Purchasers as required by
Section 1(e)(iii).
9. Miscellaneous.
(a) Martek shall pay the reasonable legal fees
and disbursements of Xxxxxxxx & Xxxxx (counsel to the Purchasers) incident to
this Agreement and the transactions contemplated hereunder, up to an aggregate
amount of $10,000.00. The Purchasers agree to pay any other expenses incurred
by them in completing the transactions contemplated by this Agreement.
(b) This Agreement and the Warrants constitute
the entire agreement between the parties hereto with respect to the
transactions contemplated herein, and the Agreement and the Warrants supersede
and terminate all prior oral or written agreements, commitments or
understandings with respect to the matters provided for herein.
(c) No amendment or modification hereof shall be
binding unless set forth in writing and duly executed by the parties hereto.
This Agreement and the rights and obligations of the parties hereunder may not
be assigned without the prior written consent of the other parties hereto.
(d) The representations or warranties of the
Purchasers and Martek contained herein shall survive the execution and delivery
of this Agreement and consummation of the transactions contemplated hereby.
-14-
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(e) Each of the Purchasers and Martek agrees to
take such further actions and to execute and deliver such further instruments
as may reasonably be necessary from time to time in order to fully effectuate
the purposes, terms and conditions of this Agreement.
(f) For purposes of this Agreement, the term
"business day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in the State of Maryland are authorized or obligated
by law or executive order to close. For purposes of this Agreement, the term
"trading day" shall mean any day on which the Nasdaq Stock Market or the
principal securities exchange or quotation system on which the Common Stock is
traded is open for regular trading.
(g) This Agreement shall be enforced, governed
and construed in accordance with the laws of the State of Delaware. The
parties hereby expressly agree that all claims in respect of this Agreement
shall be brought in the state and federal courts of the State of Maryland, the
parties hereby irrevocably submit to the jurisdiction of such courts for
purposes of any such action and the parties hereby expressly waive the right to
a jury trial in connection with any such action. The Purchasers acknowledge
that any breach or threatened breach by a Purchaser of the terms of this
Agreement would cause irreparable harm to Martek which would not be compensable
by money damages alone, and the Purchasers agree that Martek shall have the
right to enforce this Agreement and any such terms by injunction, specific
performance or other equitable relief in order to prevent or restrain any such
breach by a Purchaser.
(h) This Agreement and the rights, power and
duties set forth herein shall be binding upon the Purchasers and Martek, their
successors and assigns, and shall inure to the benefit of Martek and the
Purchasers, respectively. Failure of the Purchasers or Martek to exercise any
right or remedy under this Agreement, or a delay by the Purchasers or Martek in
exercising the same, will not operate as a waiver thereof. No waiver by the
Purchasers or Martek will be effective unless and until it is in writing and
signed by the party whose consent is required by the terms hereof.
(i) It is the explicit intention of the parties
hereto that no person or entity other than the parties hereto is or shall be
entitled to bring any action to enforce any provision of this Agreement against
any of the parties hereto, and that the covenants, undertaking and agreement
set forth in this Agreement shall be solely for the benefit of, and shall be
enforceable only by the parties hereto or their respective successors and
assigns as permitted hereunder.
(j) If any provision or clause of this Agreement
shall for any reason be held to be invalid, illegal or unenforceable, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if such provision
or clause had never been contained in the Agreement, and there shall be deemed
substituted therefor such other provision or clause as will most nearly
accomplish the intent of the parties as expressed in this Agreement to the
fullest extent permitted by law.
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(k) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, or have caused this Agreement to be executed, as of the date written
below.
Date: April 27, 1998
MARTEK BIOSCIENCES CORPORATION
By:
-----------------------------------
Xxxxx X. Xxxx
Chief Financial Officer
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PURCHASERS:
VECTOR LATER STAGE EQUITY FUND II, L.P.
By: Vector Fund Management LLC
its General Partner
By:
--------------------------
Its:
--------------------------
Closing Date: April 27, 1998
XXXXX GLOBAL INVESTMENTS, LTD.
By:
--------------------------------------
Name:
------------------------------------
Title:
-------------------------------------
Closing Date: April 27, 1998
X.X. XXXXXXX, III
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Closing Date: April 27, 0000
XXXXX XXXXX PARTNERS, LLC
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Closing Date: April 27, 1998
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REMINGTON INVESTMENT STRATEGIES, L.P.
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Closing Date: April 27, 1998
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SCHEDULE I
NAME AND ADDRESS OF PURCHASER INITIAL ADDITIONAL
----------------------------- PURCHASE PURCHASE STATE OF RESIDENCE
COMMITMENT COMMITMENT ------------------
---------- ----------
Vector Later-Stage Equity Fund II, $5,000,000.00 $5,000,000.00 Illinois, U.S.A.
L.P.
0000 Xxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
Xxxxx Global Investments, Ltd. $3,690,000.00 $3,690,000.00 Bahamas
0000 0xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
Remington Investment Strategies, L.P. $810,000.00 $810,000.00 Delaware, U.S.A.
0000 0xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
X.X. Xxxxxxx, III $500,000.00 $500,000.00 Illinois, U.S.A.
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 312-782-3688
Buena Vista Partners, LLC $250,000.00 $250,000.00 Illinois, U.S.A.
000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 815-637-7629
TOTAL: $10,250,000.00 $10,250,000.00
20
EXHIBIT A
THIS STOCK PURCHASE WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY
OF AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND REGULATIONS PROMULGATED
THEREUNDER AND APPLICABLE STATE SECURITIES LAWS.
MARTEK BIOSCIENCES CORPORATION
COMMON STOCK PURCHASE WARRANT
EXPIRING [DATE]
Number of Shares: _________________________ Warrant No.______________
Martek Biosciences Corporation, a Delaware corporation (the
"Company"), hereby certifies that, for value received, [NAME OF HOLDER], or its
registered assigns (the "Holder"), is entitled, subject to the terms and
conditions herein set forth, to purchase from the Company at any time before
5:00 p.m. New York City time on [DATE], [NUMBER OF SHARES] of Common Stock of
the Company, par value $.10 per share ("Common Stock"), at a price of $[PRICE
PER SHARE] per share ("Warrant Price"). The Warrant Price and the number of
shares of Common Stock for which this warrant (the "Warrant") may be exercised
are subject to adjustment as provided herein. This Warrant is one of a duly
authorized issue of Warrants of like tenor of the Company to be issued from
time to time pursuant to the terms of, and subject to, that certain Common
Stock and Warrant Purchase Agreement, dated _________________, by and among the
Company and the Purchasers named in Schedule I thereto (the "Purchase
Agreement"). Any transferee of this Warrant, by acceptance hereof, assumes and
agrees to the rights and restrictions set forth herein and in the Purchase
Agreement.
2. Adjustment of Warrant Price and Number of Shares. The number
of shares of Common Stock issuable upon the exercise of this Warrant and the
Warrant Price shall be subject to adjustment from time to time, and the Company
agrees to provide notice upon the happening of certain events as follows:
(a) Stock Splits, Dividends and Stock Combinations. In
case the Company shall at any time subdivide the outstanding shares of Common
Stock into a greater number of shares, or shall issue a stock dividend on such
shares of Common Stock or on any security or right convertible into shares of
Common Stock, the number of shares of Common Stock issuable upon exercise of
this Warrant shall be proportionately increased and the Warrant Price shall be
proportionately decreased, and in case the Company shall at any time combine
the outstanding
21
shares of Common Stock, the number of shares of Common Stock issuable upon
exercise of this Warrant shall be proportionately decreased, and the Warrant
Price proportionately increased, effective at the time of such subdivision,
dividend or combination as the case may be.
(b) Reclassification, Reorganization or Merger. In case
of any reclassification, capital reorganization or other change in the
outstanding shares of Common Stock, or in the case of any consolidation or
merger of the Company with or into another corporation or business entity
(other than a consolidation or merger (a) with a subsidiary in which the
Company is the surviving corporation or (b) which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock), the Company shall cause effective provision to be made so
that the Holder shall have the right thereafter by exercising this Warrant to
purchase such kind and amount of shares of stock and other securities and
property which such Holder would have received had such Holder exercised this
Warrant in full immediately prior to such reclassification, capital
reorganization or other change, consolidation or merger (including, without
limitation, provisions for adjustments of the number of shares of Common Stock
purchasable and receivable upon exercise of this Warrant and adjustments to the
Warrant Price as necessary). The foregoing provisions of this subsection 2(b)
shall similarly apply to successive reclassifications, capital reorganizations
and other changes, consolidations or mergers.
(c) Certificate of Adjustment. Whenever the Warrant
Price or number or type of securities issuable upon exercise of this Warrant is
adjusted, as herein provided, the Company shall promptly deliver to the record
holder of this Warrant a certificate of an officer of the Company setting forth
the nature of such adjustment and a brief statement of the facts requiring such
adjustment.
3. No Stockholder Rights.
(a) Except as set forth in subsection 3(b) below, this
Warrant, by itself as distinguished from the shares purchasable hereunder,
shall not entitle the Holder to any of the rights of a stockholder of the
Company.
(b) If the Company shall effect an offering of shares of
Common Stock or other stock pro rata among it stockholders, the Holder shall be
entitled, at the Holder's option to the extent this Warrant is then
exerciseable and has not been exercised, to elect to participate in each and
every such offering as though this Warrant had been exercised and the Holder
were, at the time of any rights offering, then a holder of that number of
shares of Common Stock to which the Holder is then entitled upon exercise of
this Warrant.
4. Authorization and Reservation of Stock. The Company will
reserve from its authorized and unissued capital stock a sufficient number of
shares of Common Stock or other securities issuable upon exercise hereof to
provide for the issuance of Common Stock or other securities on the exercise of
this Warrant. Issuance of this Warrant shall constitute full authority to the
Company's officers who are charged with the duty of executing stock
certificates to
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execute and issue the necessary certificates for shares of Common Stock or
other securities upon the exercise of this Warrant.
5. Exercise of Warrant.
(a) Exercise Procedures. This Warrant may be exercised
in whole or in part by the surrender of this Warrant, together with the Notice
of Exercise attached hereto as Exhibit A and, if the exercise is by the initial
Holder hereof or any subsequent Holder during any period when the Warrant
Shares are not registered for issuance pursuant hereto under the Securities Act
of 1933 (the "Securities Act"), the Investment Representation Statement in the
form attached hereto as Exhibit B, duly completed and executed, at the
principal office of the Company prior to 5:00 p.m. on [DATE], accompanied by
payment in full of the Warrant Price in cash or by check with respect to the
shares of Common Stock or other securities being purchased. Notwithstanding
the foregoing, this Warrant may not be exercised by Holders, other than the
initial Holder hereof (or their affiliates), during the period (the
"Registration Period") commencing on the date of the transfer to such Holder
and ending on the effective date of a registration statement under the
Securities Act covering the issuance of the Warrant Shares to such subsequent
Holders (or, if such registration statement is withdrawn prior to its
effectiveness, for a period ending six months from the date of withdrawal).
This Warrant shall be deemed to have been exercised immediately prior to the
close of business on the date of its surrender for exercise as provided above,
and the person entitled to receive the shares of Common Stock or other
securities issuable upon such exercise shall be treated for all purposes as the
holder of such shares of record as of the close of business on such date. As
promptly as practicable after such date, the Company shall issue and deliver to
the person or persons entitled to receive the same a certificate or
certificates for the number of full shares of Common Stock or other securities
issuable upon such exercise. Upon any partial exercise of this Warrant, the
Company will issue to the Holder a new Warrant for the number of shares of
Common Stock or other securities as to which this Warrant was not exercised.
(b) Fractional Shares. The Company shall not be required
upon any exercise of this Warrant to issue a certificate representing any
fraction of a share of Common Stock. Instead of any fractional share of Common
Stock which would otherwise be issuable upon exercise of this Warrant, the
Company shall pay a cash adjustment in respect of such fractional interest in
an amount equal to the fair market value of such fractional interest. For
purposes hereof "fair market value" of a share of Common Stock shall be
determined as follows: if on the date the determination is made the Common
Stock is listed on an established national or regional stock exchange, is
admitted to quotation on the National Association of Securities Dealers
Automated Quotation System, or is publicly traded on an established securities
market, the fair market value of the Common Stock shall be the closing price of
the Stock on such exchange or in such market (the highest such closing price if
there is more than one such exchange or market) on the trading day immediately
preceding the date on which such determination is being made (or, if there is
no such reported closing price, the fair market value shall be the mean between
the highest bid and lowest asked prices or between the high and low sale prices
on such trading day), or, if no sale of the Common Stock is reported for such
trading day, on the next preceding day on which any sale shall have been
reported. If the Common Stock is not listed on such an exchange,
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quoted on such system or traded on such a market, fair market value shall be
determined by the Company's board of directors in good faith (whose good faith
determination shall be conclusive).
(c) Legends. Except in the case of exercises by holders
other than the initial Holder after the expiration of the Registration Period,
each certificate for Warrant Shares initially issued upon exercise of this
Warrant shall bear the following legend:
This securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or applicable state securities laws and may not be
offered, sold or transferred in the absence of registration or
the availability of an exemption from registration under the
Act and regulations promulgated thereunder and applicable
state securities laws.
Any certificate issued at any time in exchange or
substitution for any certificate bearing such legend shall also bear the above
legend unless, in the opinion of counsel to the Company, the securities
represented thereby need no longer be subject to the restriction on
transferability. The provisions of this Section 5 shall be binding upon all
holders of this Warrant.
6. Transfer of Warrant. This Warrant may be transferred or
assigned by the Holder hereof in whole or in part provided that the
transferring Holder executes and delivers to the Company an instrument of
assignment in the form of Exhibit C hereto and, if transferred prior to
effectiveness of a registration statement covering dispositions of the Warrants
under the Securities Act, an opinion of counsel to the effect that such
transfer may occur without such registration.
7. Period of Exercise. This Warrant will terminate and shall no
longer be exerciseable at 5:00 p.m., New York City time, on [DATE].
8. Loss, Destruction, etc. of Warrant. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any such loss, theft or destruction, upon
delivery of a bond of indemnity in such form and amounts as shall be reasonably
satisfactory to the Company, or in the event of such mutilation, upon surrender
and cancellation of the Warrant, the Company will make and deliver a new
Warrant, of like tenor, in lieu of such lost, stolen, destroyed or mutilated
Warrant. Any Warrant issued under the provision of this Section 8 in lieu of
any Warrant alleged to be lost, destroyed or stolen, or in lieu of any
mutilated Warrant, shall constitute an original contractual obligation on the
part of the Company.
9. Miscellaneous. This Warrant shall be governed by the internal
laws of the State of Delaware. The headings in this Warrant are for purposes
of convenience and reference only, and shall not be deemed to constitute a part
hereof. Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the Company and the Holder hereof. If any provision or clause of this Warrant
shall for any reason be held to be invalid, illegal or unenforceable, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Warrant, but this Warrant shall be construed as if such provision or
clause had never been contained in the Warrant, and there shall
-4-
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be deemed substituted therefor such other provision or clause as will most
nearly accomplish the intent of the Company and the initial holder of this
Warrant as expressed in this Warrant to the fullest extent permitted by law.
All notices, demands, requests, or other communications which may be or are
required to be given, served, or sent by the Company of a holder hereof
pursuant to this Warrant shall be in writing and shall be mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid, or transmitted by hand delivery, overnight or express mail, telegram
or telex, addressed as follows:
(i) If to the Company:
Martek Biosciences Corporation
0000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Corporate Secretary
Telefax No.: (000) 000-0000
(ii) If to a Holder, to the last address shown on
the books of the Company or at any more recent address of which any holder
hereof shall have notified the Company in writing pursuant to the terms hereof.
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The Company or a Holder hereof may designate by notice in writing a new address
to which any notice, demand, request or communication may thereafter be so
given, served or sent. Each notice, demand, request, or communication which
shall be mailed, delivered or transmitted in the manner described above shall
be deemed sufficiently given, served, sent and received for all purposes at
such time as it is delivered to the addressee (with the return receipt, the
delivery receipt, the affidavit of messenger or (with respect to a telex) the
answerback being deemed conclusive evidence of such delivery) or at such time
as delivery is refused by the addressee upon presentation.
ISSUED this ____th day of __________, _____.
MARTEK BIOSCIENCES CORPORATION
By:
------------------------------
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EXHIBIT A
TO COMMON STOCK PURCHASE WARRANT, DATED [DATE]
NOTICE OF EXERCISE
TO: MARTEK BIOSCIENCES CORPORATION
1. The undersigned hereby elects to purchase ________ shares of
Common Stock of Martek Biosciences Corporation pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price in full,
together with all applicable transfer taxes, if any.
2. Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other names as
is specified below and issue to the undersigned a new Warrant representing the
balance of the attached Warrant to the extent not exercised in full:
----------------------------------------
(Name)
----------------------------------------
(Address)
--------------------- -----------------------------------------
(Date) (Name of Warrant Holder)
By:
--------------------------------------
Title:
-----------------------------------
(name of purchaser, and title and signature
of authorized person)
27
EXHIBIT B
TO COMMON STOCK PURCHASE WARRANT, DATED [DATE]
INVESTMENT REPRESENTATION STATEMENT
Date:_____________________, 199__
________ Shares of
Common Stock of
Martek Biosciences Corporation
In connection with the purchase of the above-listed securities
pursuant to exercise of the warrant referred to herein, the undersigned (the
"Holder") hereby represents to Martek Biosciences Corporation (the "Company")
as follows:
1. Receipt of Information. The Holder has received all the
information it considers necessary or appropriate to determine whether to
purchase the shares of Common Stock (the "Warrant Shares") issuable upon
exercise of the Warrant dated [DATE] (the "Warrant") originally issued by the
Company pursuant to the terms of that certain Common Stock and Warrant Purchase
Agreement, dated [DATE], by and among the Company and the Purchasers named in
Schedule I thereto (the "Purchase Agreement").
2. Investment Representations.
(a) The Holder is acquiring the Warrant Shares to
be received upon exercise of this Warrant for its own account as principal, for
investment purposes and not with a view to any distribution thereof in
violation of the Securities Act of 1933, as amended (the "Securities Act"), or
any other securities laws, and further understands and acknowledges that the
offer and sale of the Warrant Shares to the Holder pursuant to this Warrant
will not be registered under the Securities Act or any state securities laws on
the assumption that the offer and sale of the Warrant Shares are exempt from
registration pursuant to Section 4(2) of the Securities Act and Regulation D
thereunder and that Company's reliance upon such exemption is predicated upon
such Holder's representations set forth herein.
(b) The Holder is an "accredited investor" within
the meaning of Rule 501(a) of Regulation D under the Securities Act, and by
virtue of such Holder's experience in financial and business matters, is
capable of evaluating the merits and risks of such Holder's investment in the
Warrant Shares, has the ability to bear the economic risks of such an
investment, including a complete loss of the investment, and has the capacity
to protect the Holder's own interests. For purposes of the requirements of
state securities laws, such Holder represents that it is solely a resident of
the state of ____________________ and that the offer and purchase of the
Warrant Shares pursuant hereto will occur solely in such state.
28
(c) The Holder acknowledges that the certificates
representing the Warrant Shares shall bear a legend substantially as set forth
below indicating the restrictions on transfers to which the Warrants Shares are
subject, and instructions shall be given to the transfer agent for the Common
Stock that no transfer is to be effected except in compliance with such
transfer restrictions:
The securities represented hereby have not been registered
under the Securities Act of 1933, as amended (the "Act"), or
applicable state securities laws and may not be offered, sold
or transferred in the absence of registration or the
availability of an exemption from registration under the Act
and regulations promulgated thereunder and applicable state
securities laws.
(d) Because the Warrant Shares have not been
registered under the Securities Act or applicable state securities laws, the
Holder acknowledges that the economic risk of the investment must be borne
indefinitely by such Holder, the Warrant Shares cannot be sold by the Holder
unless subsequently registered under the Securities Act and such laws or unless
an exemption from such registration is available, and there is no assurance
that the Warrant Shares will ever be so registered in the future.
(e) The Holder hereby acknowledges that the
Company has made available to such Holder such books, records, corporate
documents and other information as such Holder considers necessary to
evaluating the merits and risks of an investment in the Warrant Shares. Such
Holder and its representatives have had the opportunity to ask questions of
representatives of the Company and has received satisfactory responses thereto,
and to request and receive all documents concerning the Company and the terms
and conditions of such Holder's investment in the Warrant Shares. The Holder
acknowledges that it has not been offered the Warrant Shares by any means of
general solicitation or advertisement, and that no commission or sales charges
is payable to any third party in connection with the exercise of the Warrant.
-2-
29
(f) The Holder recognizes that investment in the
Warrant Shares involves a high degree of risk. Such Holder is aware that no
federal or state agency has made any finding or determination as to the
fairness of the Warrant Shares for investment, nor any recommendation or
endorsement of the Warrant Shares.
Dated: __________, 199__ HOLDER:
------------------------------
(Signature)
------------------------------
(Typed or Printed Name)
------------------------------
(Title)
-3-
30
EXHIBIT C
TO COMMON STOCK PURCHASE WARRANT, DATED [DATE]
ASSIGNMENT
TO BE EXECUTED BY THE REGISTERED HOLDER IF HE, SHE OR IT
DESIRES TO TRANSFER THE WITHIN WARRANT OF
MARTEK BIOSCIENCES CORPORATION
FOR VALUE RECEIVED _____________________________________ hereby
sells, assigns and transfers unto ______________________ with an address at
__________________________, the right to purchase _________________ shares of
Common Stock of Martek Biosciences Corporation (the "Company") covered by the
within Warrant, and does hereby irrevocably constitute and appoint
__________________________ Attorney to transfer the said Warrant on the books
of the Company, with full power of substitution.
Name of Holder:
------------------------------------
Signature
-----------------------------------------
Print Name:
---------------------------------------
Title:
---------------------------------------
Address:
---------------------------------------
Dated: __________________________, 199___
In the presence of
------------------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of the within Warrant in every particular, without
alteration or enlargement or change whatsoever.
