Exhibit 4.6
STOCK AND WARRANT PURCHASE AGREEMENT
Insmed Incorporated
Ladies & Gentlemen:
The undersigned, _________________________________(the "Investor"),
hereby confirms its agreement with you as follows:
1. This Stock and Warrant Purchase Agreement is made as of July 11, 2003 between
Insmed Incorporated, a Virginia corporation (the "Company"), and the Investor.
2. The Company has authorized the sale and issuance of up to 6,600,000 shares
(the "Shares") of common stock of the Company, $0.01 par value per share (the
"Common Stock"), and warrants to purchase up to 1,980,000 shares (the "Warrant
Shares") of Common Stock at an exercise price per share of $4.10 (the
"Warrants") to certain investors in a private placement (the "Offering").
3. The Company and the Investor agree that the Investor will purchase from the
Company and the Company will issue and sell to the Investor __________ Shares
and a Warrant to purchase [30% of the Shares] Warrant Shares, for a purchase
price of $2.70 per share, or an aggregate purchase price of $________, pursuant
to the Terms and Conditions for Purchase of Shares attached hereto as Annex I
and incorporated herein by reference as if fully set forth herein (the "Terms
and Conditions"). This Stock and Warrant Purchase Agreement, together with the
Terms and Conditions which are incorporated herein by reference as if fully set
forth herein, may hereinafter be referred to as the "Agreement". Unless
otherwise requested by the Investor, the Warrant and certificates representing
the Shares purchased by the Investor will be registered in the Investor's name
and address as set forth below. The Warrant shall have the rights, preferences,
privileges and restrictions as set forth in the form of Warrant attached hereto
as Exhibit B.
4. The Investor represents that, except as set forth below, (a) it has had no
position, office or other material relationship within the past three years with
the Company or persons known to it to be affiliates of the Company, (b) neither
it, nor any group of which it is a member or to which it is related,
beneficially owns (including the right to acquire or vote) any securities of the
Company and (c) it has no direct or indirect affiliation or association with any
NASD member as of the date hereof. Exceptions:
_______________________________________________________________________________
_______________________________________________________________________________.
(If no exceptions, write "none." If left blank, response will be deemed to be
"none.")
Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose. By executing
this Agreement, the Investor acknowledges that the Company may use the
information in paragraph 4 above and the name and address information below in
preparation of the Registration Statement (as defined in Annex 1).
AGREED AND ACCEPTED:
Insmed Incorporated Investor:_____________________________________
By:___________________________________________
____________________________
By: Print Name:___________________________________
Title:
Title:________________________________________
Address:______________________________________
______________________________________________
Tax ID No.:___________________________________
Contact name:_________________________________
Telephone:____________________________________
Name in which shares should be registered (if
different):
______________________________________________
ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF SHARES AND WARRANTS
1. Authorization and Sale of the Shares. Subject to these Terms and
Conditions, the Company has authorized the sale of up to 6,600,000 Shares and
Warrants to purchase up to 1,980,000 Warrant Shares. The Company reserves the
right to increase or decrease this number.
2. Agreement to Sell and Purchase the Shares; Subscription Date.
2.1 At the Closing (as defined in Section 3), the Company will sell
to the Investor, and the Investor will purchase from the Company, upon the terms
and conditions hereinafter set forth, the number of Shares and a Warrant to
purchase the number of Warrant Shares each as set forth in Section 3 of the
Stock and Warrant Purchase Agreement to which these Terms and Conditions are
attached at the purchase price set forth thereon.
2.2 The Company may enter into the same form of Stock and Warrant
Purchase Agreement, including these Terms and Conditions, with certain other
investors (the "Other Investors") and expects to complete sales of Shares and
Warrants to them. (The Investor and the Other Investors are hereinafter
sometimes collectively referred to as the "Investors," and the Stock and Warrant
Purchase Agreement to which these Terms and Conditions are attached and the
Stock and Warrant Purchase Agreements (including attached Terms and Conditions)
executed by the Other Investors are hereinafter sometimes collectively referred
to as the "Agreements.") The Company may accept executed Agreements from
Investors for the purchase of Shares and Warrants commencing upon the date on
which the Company provides the Investors with the proposed purchase price per
Share plus Warrant exercise price and concluding upon the date (the
"Subscription Date") on which the Company has (i) executed Agreements with
Investors for the purchase of at least 4,444,445 Shares and Warrants to purchase
at least 1,333,334 Warrant Shares, and (ii) notified Xxxxx Fargo Securities,
LLC, in its capacity as placement agent for this transaction, in writing that it
is no longer accepting additional Agreements from Investors for the purchase of
Shares and Warrants. The Company may not enter into any Agreements after the
Subscription Date.
2.3 The obligations of each Investor under any Agreement are several
and not joint with the obligations of any Other Investor, and no Investor shall
be responsible in any way for the performance of the obligations of any other
Investor under any Agreement. Nothing contained herein, and no action taken by
any Investor hereto, shall be deemed to constitute the Investors as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Investors are in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated hereby,
provided that such obligations or the transactions contemplated hereby may be
modified, amended or waived in accordance with Section 9 below. Each Investor
shall be entitled to independently protect and enforce its rights, including
without limitation the rights arising out of this Agreement (provided, that such
rights may be modified, amended or waived in accordance with Section 9 below)
and the Warrant, and it shall not be necessary for any Other Investor to be
joined as an additional party in any proceeding for such purpose.
3. Delivery of the Shares and Warrants at Closing. The completion of the
purchase and sale of the Shares and Warrants (the "Closing") shall occur (the
"Closing Date") on July 11, 2003, at the offices of the Company's counsel. At
the Closing, the Company shall deliver to the Investor a Warrant representing
the number of Warrant Shares and one or more stock certificates representing the
number of Shares, in each case as is set forth in Section 3 of the Stock and
Warrant Purchase Agreement, each such certificate to be registered in the name
of the Investor or, if so indicated on the signature page of the Stock and
Warrant Purchase Agreement, in the name of a nominee designated by the Investor.
The Company's obligation to issue the Shares and the Warrant to the
Investor shall be subject to the following conditions, any one or more of which
may be waived by the Company: (a) receipt by the Company of a certified or
official bank check or wire transfer of funds in the full amount of the purchase
price for the Shares and the Warrant being purchased hereunder as set forth in
Section 3 of the Stock and Warrant Purchase Agreement; (b) completion of the
purchases and sales under the Agreements with the Other Investors; and (c) the
accuracy of the representations and warranties made by the Investors and the
fulfillment of those undertakings of the Investors to be fulfilled prior to the
Closing.
The Investor's obligation to purchase the Shares and the Warrant shall be
subject to the following conditions, any one or more of which may be waived by
the Investor: (a) Investors shall have executed Agreements for the purchase of
at least 4,444,445 Shares and Warrants for the purchase of at least 1,333,334
Warrant Shares, (b) the representations and warranties of the Company
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set forth herein shall be true and correct as of the Closing Date in all
material respects (except for representations and warranties that speak as of a
specific date, which representations and warranties shall be true and correct as
of such date) and (c) the Investor shall have received such documents as such
Investor shall reasonably have requested, including, a standard opinion of the
Company's counsel as to the matters set forth in Section 4.2 and as to exemption
from the registration requirements of the Securities Act of 1933, as amended
(the "Securities Act"), of the sale of the Shares and Warrants.
4. Representations, Warranties and Covenants of the Company. The Company
hereby represents and warrants to, and covenants with, the Investor, as follows:
4.1 Organization. The Company is duly organized and validly existing
in good standing under the laws of the jurisdiction of its organization. Each of
the Company and its Subsidiaries (as defined in Rule 405 under the Securities
Act) has full power and authority to own, operate and occupy its properties and
to conduct its business as presently conducted and as described in the documents
filed by the Company under the Securities Exchange Act of 1934, as amended (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 (the "Exchange Act Documents") and is registered or qualified to do
business and in good standing in each jurisdiction in which the nature of the
business conducted by it or the location of the properties owned or leased by it
requires such qualification and where the failure to be so qualified would have
a material adverse effect upon the condition (financial or otherwise), earnings,
business or business prospects, properties or operations of the Company and its
Subsidiaries, considered as one enterprise (a "Material Adverse Effect"), and no
proceeding has been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification.
4.2 Due Authorization and Valid Issuance. The Company has all
requisite power and authority to execute, deliver and perform its obligations
under the Agreements and the Warrants, and the Agreements and the Warrants have
been duly authorized and validly executed and delivered by the Company and
constitute legal, valid and binding agreements of the Company enforceable
against the Company in accordance with their terms, except as rights to
indemnity and contribution may be limited by state or federal securities laws or
the public policy underlying such laws, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
The Shares and the Warrant being purchased by the Investor hereunder and the
Warrant Shares issuable pursuant to the Warrant will, upon issuance and payment
therefor pursuant to the terms hereof and thereof, be duly authorized, validly
issued, fully-paid and nonassessable.
4.3 Non-Contravention. The execution and delivery of the Agreements
and the Warrants, the issuance and sale of the Shares and the Warrants under the
Agreements and the Warrant Shares under the Warrant, the fulfillment of the
terms of the Agreements and the Warrants and the consummation of the
transactions contemplated thereby will not (A) conflict with or constitute a
violation of, or default (with the passage of time or otherwise) under, (i) any
agreement or other instrument filed or incorporated by reference as an exhibit
to any of the Exchange Act Documents (the "Exchange Act Exhibits"), (ii) the
charter, by-laws or other organizational documents of the Company or any
Subsidiary, or (iii) any law, administrative regulation, ordinance or order of
any court or governmental agency, arbitration panel or authority applicable to
the Company or any Subsidiary or their respective properties, except in the case
of clauses (i) and (iii) for any such conflicts, violations or defaults which
are not reasonably likely to have a Material Adverse Effect or (B) result in the
creation or imposition of any lien, encumbrance, claim, security interest or
restriction whatsoever upon any of the material properties or assets of the
Company or any Subsidiary or an acceleration of indebtedness pursuant to any
obligation, agreement or condition contained in any Exchange Act Exhibit. No
consent, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative agency, or
other governmental body in the United States or any other person is required for
the execution and delivery of the Agreements and the Warrants, and the valid
issuance and sale of the Shares and Warrants to be sold pursuant to the
Agreements, and the valid issuance of the Warrant Shares under the Warrant,
other than such as have been made or obtained, and except for any post-closing
securities filings or notifications required to be made under federal or state
securities laws.
4.4 Capitalization. The capitalization of the Company as of March 31,
2003 is as set forth in the most recent applicable Exchange Act Documents,
increased as set forth in the next sentence. The Company has not issued any
capital stock since that date other than pursuant to (i) employee benefit plans
disclosed in the Exchange Act Documents, (ii) outstanding warrants, options or
other securities disclosed in the Exchange Act Documents or (iii) an agreement
with a third-party service provider under which 65,000 shares of Common Stock
were issued. The Shares and the Warrants to be sold pursuant to the Agreements,
and the Warrant Shares to be issued pursuant to the Warrants, have been duly
authorized, and when issued and paid for in accordance with the terms of the
Agreements and the Warrants, as the case may be, will be duly and validly
issued, fully paid and nonassessable. The outstanding shares of capital stock of
the Company have been duly and validly issued and are fully paid
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and nonassessable, have been issued in compliance with all federal and state
securities laws, and were not issued in violation of any preemptive rights or
similar rights to subscribe for or purchase securities. Except as set forth in
or contemplated by the Exchange Act Documents, there are no outstanding rights
(including, without limitation, preemptive rights), warrants or options to
acquire, or instruments convertible into or exchangeable for, any unissued
shares of capital stock or other equity interest in the Company or any
Subsidiary, or any contract, commitment, agreement, understanding or arrangement
of any kind to which the Company is a party or of which the Company has
knowledge and relating to the issuance or sale of any capital stock of the
Company or any Subsidiary, any such convertible or exchangeable securities or
any such rights, warrants or options (except for an agreement with a third-party
service provider to issue up to 60,000 shares of Common Stock subject to certain
vesting restrictions). Without limiting the foregoing, no preemptive right,
co-sale right, right of first refusal, registration right, or other similar
right exists with respect to the Shares, the Warrants or the Warrant Shares or
the issuance and sale thereof, other than as provided in the Agreements. No
further approval or authorization of any stockholder, the Board of Directors of
the Company or others is required for the issuance and sale of the Shares, the
Warrants and the Warrant Shares. The Company owns the entire equity interest in
each of its Subsidiaries, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest, other than as described in the
Exchange Act Documents. Except as disclosed in the Exchange Act Documents, there
are no stockholders agreements, voting agreements or other similar agreements
with respect to the Common Stock to which the Company is a party or, to the
knowledge of the Company, between or among any of the Company's stockholders.
4.5 Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened to which the
Company or any Subsidiary is or may be a party or of which the business or
property of the Company or any Subsidiary is subject that is not disclosed in
the Exchange Act Documents.
4.6 No Violations. Neither the Company nor any Subsidiary is in
violation of its charter, bylaws, or other organizational document, or in
violation of any law, administrative regulation, ordinance or order of any court
or governmental agency, arbitration panel or authority applicable to the Company
or any Subsidiary, which violation, individually or in the aggregate, would be
reasonably likely to have a Material Adverse Effect, or is in default (and there
exists no condition which, with the passage of time or otherwise, would
constitute a default) in any material respect in the performance of any Exchange
Act Exhibit, which would be reasonably likely to have a Material Adverse Effect.
4.7 Governmental Permits, Etc. With the exception of the matters
which are dealt with separately in Sections 4.1, 4.12, 4.13, and 4.14, each of
the Company and its Subsidiaries has all necessary franchises, licenses,
certificates and other authorizations from any foreign, federal, state or local
government or governmental agency, department, or body that are currently
necessary for the operation of the business of the Company and its Subsidiaries
as currently conducted and as described in the Exchange Act Documents except
where the failure to currently possess could not reasonably be expected to have
a Material Adverse Effect.
4.8 Intellectual Property. Except as specifically disclosed in the
Exchange Act Documents (i) each of the Company and its Subsidiaries owns or
possesses sufficient rights to use all material patents, patent rights,
trademarks, copyrights, licenses, inventions, trade secrets, trade names and
know-how (collectively, "Intellectual Property") described or referred to in the
Exchange Act Documents as owned or possessed by it or that are necessary for the
conduct of its business as now conducted or as proposed to be conducted as
described in the Exchange Act Documents except where the failure to currently
own or possess would not have a Material Adverse Effect, (ii) to the knowledge
of the Company, neither the Company nor any of its Subsidiaries is infringing,
or has received any notice of, or has any knowledge of, any asserted
infringement by the Company or any of its Subsidiaries of, any rights of a third
party with respect to any Intellectual Property that, individually or in the
aggregate, would have a Material Adverse Effect and (iii) neither the Company
nor any of its Subsidiaries has received any notice of, or has any knowledge of,
infringement by a third party with respect to any Intellectual Property rights
of the Company or of any Subsidiary that, individually or in the aggregate,
would have a Material Adverse Effect.
4.9 Financial Statements. The financial statements of the Company and
the related notes contained in the Exchange Act Documents present fairly, in
accordance with generally accepted accounting principles, the financial position
of the Company and its Subsidiaries as of the dates indicated, and the results
of its operations and cash flows for the periods therein specified consistent
with the books and records of the Company and its Subsidiaries except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which are not expected to be material in amount.
Such financial statements (including the related notes) have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods therein specified, except as may be disclosed in
the notes to such financial statements, or in the case of unaudited statements,
as may be permitted by the Securities and Exchange Commission (the "SEC") on
Form 10-Q under the Exchange Act and except as disclosed in the Exchange Act
Documents. The other financial information contained in the Exchange Act
Documents has been prepared on a basis consistent with the financial statements
of the Company.
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4.10 No Material Adverse Change. Except as disclosed in the Exchange
Act Documents, since March 31, 2003, there has not been (i) any material adverse
change in the financial condition or earnings of the Company and its
Subsidiaries considered as one enterprise, (ii) any material adverse event
affecting the Company or its Subsidiaries, (iii) any obligation, direct or
contingent, that is material to the Company and its Subsidiaries considered as
one enterprise, incurred by the Company, except obligations incurred in the
ordinary course of business, (iv) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company or any of its
Subsidiaries, or (v) any loss or damage (whether or not insured) to the physical
property of the Company or any of its Subsidiaries which has been sustained
which has a Material Adverse Effect.
4.11 Disclosure. The representations and warranties of the Company
contained in this Section 4 as of the date hereof and as of the Closing Date, do
not contain any 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. Except
with respect to the material terms and conditions of the transaction
contemplated by the Agreements, which shall be publicly disclosed by the Company
pursuant to Section 16 hereof, the Company confirms that neither it nor any
person acting on its behalf has provided Investor with any information that the
Company believes constitutes material, non-public information. The Company
understands and confirms that Investor will rely on the foregoing
representations in effecting transactions in securities of the Company.
4.12 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. ("NASD") is currently contemplating terminating such registration or
listing.
4.13 Reporting Status. The Company has filed in a timely manner all
documents that the Company was required to file under the Exchange Act during
the 12 months preceding the date of this Agreement. Pursuant to General
Instruction I.B.3 of Form S-3, the Company is eligible to use Form S-3 to
register the Shares and Warrant Shares to be offered for the account of the
Investors. The following documents complied in all material respects with the
SEC's requirements as of their respective filing dates, and the information
contained therein as of the date thereof did 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:
(a) Annual Report on Form 10-K for the year ended December 31,
2002 and Quarterly Report on Form 10-Q for the quarter ended
March 31, 2003, and Proxy Statement on Schedule 14A filed on
April 3, 2003; and
(b) all other documents, if any, filed by the Company with the
SEC during the one-year period preceding the date of this
Agreement pursuant to the reporting requirements of the Exchange
Act.
4.14 Listing. The Company shall comply with all requirements of the
National Association of Securities Dealers, Inc. with respect to the issuance of
the Shares, the Warrant and the Warrant Shares, and the listing of the Shares
and Warrant Shares on the Nasdaq National Market.
4.15 No Manipulation of Stock. The Company has not taken and will not,
in violation of applicable law, take, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Shares or
the Warrant Shares.
4.16 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 and the Warrants 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.
4.17 Foreign Corrupt Practices. Neither the Company, nor to the
knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any corrupt funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
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foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
4.18 Accountants. To the Company's knowledge, Ernst & Young LLP, who
the Company expects will consent to the incorporation by reference of its report
dated January 17, 2003 with respect to the consolidated financial statements of
the Company included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2002 into the Registration Statement (as defined below) and
the prospectus which forms a part thereof, are independent accountants as
required by the Securities Act and the rules and regulations promulgated
thereunder.
4.19 Contracts. The contracts described in the Exchange Act Documents
that are material to the Company are in full force and effect on the date
hereof, and neither the Company nor, to the Company's knowledge, any other party
to such contracts is in breach of or default under any of such contracts which
would have a Material Adverse Effect.
4.20 Taxes. The Company has filed all necessary federal, state and
foreign income and franchise tax returns and has paid or accrued all taxes shown
as due thereon, and the Company has no knowledge of a tax deficiency which has
been or might be asserted or threatened against it which would have a Material
Adverse Effect.
4.21 Transfer Taxes. On the Closing Date, all stock transfer or other
taxes (other than income taxes) which are required to be paid in connection with
the sale and transfer of the Shares and the Warrants to be sold to the Investor
hereunder will be, or will have been, fully paid or provided for by the Company
and all laws imposing such taxes will be or will have been fully complied with.
Upon the issuance of the Warrant Shares pursuant to the Warrant all stock
transfer or other taxes (other than income taxes) which are required to be paid
in connection therewith will be, or will have been, fully paid or provided for
by the Company and all laws imposing such taxes will be or will have been fully
complied with.
4.22 Private Offering. Assuming the correctness of the
representations and warranties of the Investors set forth in Section 5 hereof,
the offer and sale of Shares and the Warrants hereunder is and, upon exercise of
the Warrants, the issuance of the Warrant Shares will be exempt from
registration under the Securities Act. The Company has not distributed and will
not distribute prior to the Closing Date any offering material in connection
with this Offering and sale of the Shares and the Warrants other than the
documents of which this Agreement is a part or the Exchange Act Documents. The
Company has not in the past nor will it hereafter take any action independent of
the placement agent to sell, offer for sale or solicit offers to buy any
securities of the Company which would bring the offer, issuance or sale of the
Shares and the Warrants as contemplated by this Agreement, or the issuance of
the Warrant Shares pursuant to the Warrant, within the provisions of Section 5
of the Securities Act, unless such offer, issuance or sale was or shall be
within the exemptions of Section 3 or Section 4 of the Securities Act.
4.23 Disclosure Controls and Procedures; Internal Controls. At all
times since first required by all applicable Exchange Act rules, the Company's
has established disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the Company and designed such disclosure controls
and procedures to ensure that material information relating to the Company,
including its Subsidiaries, is made known to the certifying officers by others
within those entities, particularly during the period in which the Form 10-K or
Form 10-Q, as the case may be, is being prepared. The Company's certifying
officers have evaluated the effectiveness of the Company's disclosure controls
and procedures as of a date within ninety (90) days prior to the filing date of
each Form 10-K or Form 10-Q for which such evaluation was required by applicable
Exchange Act rules, as the case may be (each such date, the "Evaluation Date").
The Company presented in each such Form 10-K or Form 10-Q, as the case may be,
the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the most recent Evaluation Date, there have been no
significant changes in the Company's internal controls (as such term is used in
Item 307(b) of Regulation S-K under the Exchange Act) or, to the Company's
knowledge, in other factors that could significantly affect the Company's
internal controls.
4.24 Transactions With Affiliates. Except as disclosed in the
Exchange Act Documents, none of the current officers or directors of the Company
is presently a party to any transaction with the Company or any Subsidiary
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer or director or, to the
knowledge of the Company, any entity in which any officer or director has a
substantial interest or is an officer, director, trustee or partner.
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5. Representations, Warranties and Covenants of the Investor.
5.1 The Investor represents and warrants to, and covenants with, the
Company that: (i) the Investor is an "accredited investor" as defined in
Regulation D under the Securities Act and the Investor is also knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions with
respect to investments in shares presenting an investment decision like that
involved in the purchase of the Shares and the Warrant, including investments in
securities issued by the Company and investments in comparable companies, and
has requested, received, reviewed and considered all information it deemed
relevant in making an informed decision to purchase the Shares and the Warrant;
(ii) the Investor is acquiring the Warrant to purchase the number of Warrant
Shares and the number of Shares, each as set forth in Section 3 of the Stock and
Warrant Purchase Agreement, in the ordinary course of its business and for its
own account for investment only and with no present intention of distributing
any of such Shares, Warrant or Warrant Shares or any arrangement or
understanding with any other persons regarding the distribution of such Shares,
Warrant or Warrant Shares; (iii) the Investor 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 Shares,
Warrant or Warrant Shares except in compliance with the Securities Act,
applicable state securities laws and the respective rules and regulations
promulgated thereunder; (iv) the Investor has answered all questions on the
Investor Questionnaire for use in preparation of the Registration Statement and
the answers thereto are true, correct and complete as of the date hereof and,
unless otherwise disclosed to the Company in writing prior to the Closing Date,
will be true, correct and complete as of the Closing Date; (v) the Investor will
notify the Company immediately of any change in any of such information which is
required to be disclosed in the Registration Statement until such time as the
Investor has sold all of its Shares and Warrant Shares or until the Company is
no longer required to keep the Registration Statement effective; and (vi) the
Investor has, in connection with its decision to purchase the number of Shares
and the Warrant to purchase the number of Warrant Shares, each as set forth in
Section 3 of the Stock and Warrant Purchase Agreement, relied only upon the
Exchange Act Documents and the representations and warranties of the Company
contained herein. The Investor understands that its acquisition of the Shares
and the Warrant 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 the Investor's investment intent as expressed herein. Subject to
compliance with the Securities Act, applicable securities laws and the
respective rules and regulations promulgated thereunder, nothing contained
herein shall be deemed a representation or warranty by such Investor to hold the
Shares, Warrant or Warrant Shares for any period of time. The Investor has
completed or caused to be completed and delivered to the Company the Investor
Questionnaire, which questionnaire is true, correct and complete in all material
respects.
5.2 The Investor acknowledges, represents and agrees that no action
has been or will be taken in any jurisdiction outside the United States by the
Company that would permit an offering of the Shares, Warrant or Warrant Shares
or possession or distribution of offering materials in connection with the issue
of the Shares, Warrant or Warrant Shares in any jurisdiction outside the United
States where legal action by the Company for that purpose is required. Each
Investor outside the United States will comply with all applicable laws and
regulations in each foreign jurisdiction in which it purchases, offers, sells or
delivers Shares, the Warrant or Warrant Shares or has in its possession or
distributes any offering material, in all cases at its own expense.
5.3 The Investor hereby covenants with the Company not to make any
sale of the Shares, Warrant or Warrant Shares without complying with the
provisions of this Agreement and without causing the prospectus delivery
requirement under the Securities Act to be satisfied (whether by delivery of the
Prospectus or pursuant to and in compliance with an exemption from such
requirement), and the Investor acknowledges that the certificates evidencing the
Shares and Warrant Shares will be imprinted with a legend that prohibits their
transfer except in accordance therewith. The Investor acknowledges that there
may occasionally be times when the Company determines that it must suspend the
use of the Prospectus forming a part of the Registration Statement, as set forth
in Section 7.2(c).
5.4 The Investor further represents and warrants to, and covenants
with, the Company that (i) the Investor has full right, power, authority and
capacity to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement, and (ii) this Agreement
constitutes a valid and binding obligation of the Investor enforceable against
the Investor in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Investors
herein may be legally unenforceable.
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5.5 Investor will not use any of the Shares or the Warrant acquired
pursuant to this Agreement, or the Warrant Shares acquired pursuant to the
Warrant, to cover any short position in the Common Stock of the Company if doing
so would be in violation of applicable securities laws.
5.6 The Investor understands that nothing in the Exchange Act
Documents, this Agreement or any other materials presented to the Investor in
connection with the purchase and sale of the Shares and the Warrant constitutes
legal, tax or investment advice. The Investor 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 Shares and the Warrant.
5.7 The Company acknowledges and agrees that Investor does not make
or has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Sections 5 and 16(a) of this Agreement, or in the Investor Questionnaire.
6. Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Investor herein shall survive the execution of this Agreement, the delivery
to the Investor of the Shares and the Warrant being purchased and the payment
therefor.
7. Registration of the Shares; Compliance with the Securities Act.
7.1 Registration Procedures and Other Matters. The Company shall:
(a) subject to receipt of necessary information from the
Investors after prompt request from the Company to the Investors to provide such
information, prepare and file with the SEC, within 10 days after the first
business day following the Closing Date, a registration statement on Form S-3
(the "Registration Statement") to enable the resale of the Shares and the
Warrant Shares by the Investors from time to time through the automated
quotation system of the Nasdaq National Market or in privately-negotiated
transactions;
(b) subject to receipt of necessary information from the
Investors after prompt request from the Company to the Investors to provide such
information, use its best efforts to cause the Registration Statement to become
effective within 60 days after the Registration Statement is filed by the
Company such efforts to include, without limiting the generality of the
foregoing, preparing and filing with the SEC in such 60-day period any financial
statements that are required to be filed prior to the effectiveness of such
Registration Statement;
(c) use its best efforts to prepare and file with the SEC such
amendments and supplements to the Registration Statement and the prospectus used
in connection therewith (the "Prospectus") as may be necessary to keep the
Registration Statement current, effective and free from any material
misstatement or omission to state a material fact for a period not exceeding,
with respect to each Investor's Shares purchased hereunder and Warrant Shares
purchased under the Warrant, the earlier of (i) two years after the Closing
Date, (ii) the date on which the Investor may sell all Shares and Warrant Shares
then held by the Investor without restriction by the volume limitations of Rule
144(e) of the Securities Act, or (iii) such time as all Shares purchased by such
Investor in this Offering and Warrant Shares issuable pursuant to the Warrant
have been sold pursuant to a registration statement;
(d) furnish to the Investor with respect to the Shares and
Warrant Shares registered under the Registration Statement such number of copies
of the Registration Statement, Prospectuses and Preliminary Prospectuses in
conformity with the requirements of the Securities Act and such other documents
as the Investor may reasonably request, in order to facilitate the public sale
or other disposition of all or any of the Shares or Warrant Shares by the
Investor; provided, however, that the obligation of the Company to deliver
copies of Prospectuses or Preliminary Prospectuses to the Investor shall be
subject to the receipt by the Company of reasonable assurances from the Investor
that the Investor will comply with the applicable provisions of the Securities
Act and of such other securities or blue sky laws as may be applicable in
connection with any use of such Prospectuses or Preliminary Prospectuses;
(e) file documents required of the Company for normal blue sky
clearance in states specified in writing by the Investor and use its best
efforts to maintain such blue sky qualifications during the period the Company
is required to maintain the effectiveness of the Registration Statement pursuant
to Section 7.1(c); provided, however, that the Company shall not be required to
qualify to do business or consent to service of process in any jurisdiction in
which it is not now so qualified or has not so consented;
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(f) bear all expenses in connection with the procedures in
paragraph (a) through (e) of this Section 7.1 (other than underwriting discounts
or commissions, brokers' fees and similar selling expenses, and any other fees
or expenses incurred by the Investor, including attorneys' fees) and the
registration of the Shares and Warrant Shares pursuant to the Registration
Statement; and
(g) advise the Investor, promptly after it shall receive notice
or obtain knowledge of the issuance of any stop order by the SEC delaying or
suspending the effectiveness of the Registration Statement or of the initiation
or threat of any proceeding for that purpose; and it will promptly use its best
efforts to prevent the issuance of any stop order or to obtain its withdrawal at
the earliest possible moment if such stop order should be issued.
Notwithstanding anything to the contrary herein, the Registration Statement
shall cover only the Shares and the Warrant Shares. In no event at any time
before the Registration Statement becomes effective with respect to the Shares
and the Warrant Shares shall the Company publicly announce or file any other
registration statement, other than registrations on Form S-8, without the prior
written consent of a majority in interest of the Investors. The Investor
acknowledges and agrees that the Company shall not be regarded to have breached
its "best efforts" obligation under Section 7.1(b) if, owing to a review of the
Registration Statement by the SEC staff, the Registration Statement does not
become effective within 60 days after the Registration Statement is filed with
the SEC, provided that following receipt of notice of such review, the Company
shall have used its best efforts to cause the Registration Statement to become
effective at the earliest practicable date.
The Company understands that the Investor disclaims being an underwriter,
but if the SEC deems the Investor to be an underwriter, the Company shall not be
relieved of any obligations it has hereunder; provided, however that if the
Company receives notification from the SEC that the Investor is deemed an
underwriter, then the period by which the Company is obligated to submit an
acceleration request to the SEC shall be extended to the earlier of (i) the 90th
day after such SEC notification, or (ii) 120 days after the initial filing of
the Registration Statement with the SEC.
7.2 Transfer of Shares and Warrant Shares After Registration;
Suspension.
(a) The Investor agrees that it will not effect any disposition
of the Shares or the Warrant Shares or its right to purchase the Shares or the
Warrant Shares that would constitute a sale within the meaning of the Securities
Act except as contemplated in the Registration Statement referred to in Section
7.1 and as described below or as otherwise permitted by law, and that it will
promptly notify the Company of any changes in the information set forth in the
Registration Statement regarding the Investor or its plan of distribution.
(b) Except in the event that paragraph (c) below applies, the
Company shall (i) if deemed necessary by the Company, prepare and file from time
to time with the SEC a post-effective amendment to the Registration Statement or
a supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that such Registration Statement will 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 not misleading, and so that, as
thereafter delivered to purchasers of the Shares and Warrant Shares being sold
thereunder, such Prospectus will 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; (ii) provide the Investor copies of any documents
filed pursuant to Section 7.2(b)(i) as the Investor may reasonably request; and
(iii) inform each Investor that the Company has complied with its obligations in
Section 7.2(b)(i) (or that, if the Company has filed a post-effective amendment
to the Registration Statement which has not yet been declared effective, the
Company will notify the Investor to that effect, will use its best efforts to
secure the effectiveness of such post-effective amendment as promptly as
possible and will promptly notify the Investor pursuant to Section 7.2(b)(i)
hereof when the amendment has become effective).
(c) Subject to paragraph (d) below, in the event (i) of any
request by the SEC or any other federal or state governmental authority during
the period of effectiveness of the Registration Statement for amendments or
supplements to a Registration Statement or related Prospectus or for additional
information; (ii) of the issuance by the SEC or any other federal or
state governmental authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose;
(iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Shares or the Warrant Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; or (iv) of any event or
circumstance which, upon the advice of its counsel, necessitates the making of
any changes in the Registration Statement or Prospectus, or any document
incorporated or deemed to be incorporated therein by reference, so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a
-9-
material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement of a
material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; then the Company shall
deliver a certificate in writing to the Investor (the "Suspension Notice") to
the effect of the foregoing and, upon receipt of such Suspension Notice, the
Investor will refrain from selling any Shares and Warrant Shares pursuant to the
Registration Statement (a "Suspension") until the Investor's receipt of copies
of a supplemented or amended Prospectus prepared and filed by the Company, or
until it is advised in writing by the Company that the current Prospectus may be
used, and has received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in any such Prospectus. In the
event of any Suspension, the Company will use its best efforts to cause the use
of the Prospectus so suspended to be resumed as soon as reasonably practicable
within 20 business days after the delivery of a Suspension Notice to the
Investor. In addition to and without limiting any other remedies (including,
without limitation, at law or at equity) available to the Investor, the Investor
shall be entitled to specific performance in the event that the Company fails to
comply with the provisions of this Section 7.2(c).
(d) Notwithstanding the foregoing paragraphs of this Section
7.2, the Investor shall not be prohibited from selling Shares or Warrant Shares
under the Registration Statement as a result of Suspensions on more than two
occasions of not more than 30 days each in any twelve month period, unless, in
the good faith judgment of the Company's Board of Directors, upon the written
opinion of counsel of the Company, the sale of Shares and Warrant Shares under
the Registration Statement in reliance on this paragraph 7.2(d) would be
reasonably likely to cause a violation of the Securities Act or the Exchange Act
and result in liability to the Company.
(e) Provided that a Suspension is not then in effect, the
Investor may sell Shares and Warrant Shares under the Registration Statement,
provided that it arranges for delivery of a current Prospectus to the transferee
of such Shares or Warrant Shares. Upon receipt of a reasonable request therefor,
the Company has agreed to provide an adequate number of current Prospectuses to
the Investor and to supply copies to any other parties requiring such
Prospectuses.
(f) In the event of a sale of Shares or Warrant Shares by the
Investor pursuant to the Registration Statement, the Investor must also deliver
to the Company's transfer agent, with a copy to the Company, a Certificate of
Subsequent Sale substantially in the form attached hereto as Exhibit A, so that
the Shares and Warrant Shares may be properly transferred.
7.3 Indemnification. For the purpose of this Section 7.3:
(i) the term "Selling Stockholder" means the Investor and any
affiliate of such Investor;
(ii) the term "Registration Statement" shall include the Prospectus
in the form first filed with the SEC pursuant to Rule 424(b) of the Securities
Act or filed as part of the Registration Statement at the time of effectiveness
if no Rule 424(b) filing is required, and any exhibit, supplement or amendment
included in or relating to the Registration Statement referred to in Section
7.1; and
(iii) the term "Untrue Statement" means any untrue statement or
alleged untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(a) The Company agrees to indemnify and hold harmless each
Selling Stockholder from and against any losses, claims, damages or liabilities
to which such Selling Stockholder may become subject (under the Securities Act
or otherwise) insofar as such losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) arise out of, or are based upon (i) any
breach of the representations or warranties of the Company contained herein or
failure to comply with the covenants and agreements of the Company contained
herein, (ii) any Untrue Statement, or (iii) any failure by the Company to
fulfill any undertaking included in the Registration Statement as amended or
supplemented from time to time, and the Company will reimburse such Selling
Stockholder for any reasonable legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim, 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 arises out of, or is based upon, an
Untrue Statement made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Selling Stockholder
specifically for use in preparation of the Registration Statement, as amended or
supplemented from time to time (including, without limitation, information set
forth in the Investor Questionnaire), or the failure of such Selling Stockholder
to comply with its covenants and agreements contained in Section 7.2 hereof
respecting sale of the Shares or Warrant Shares or any statement or omission in
any Prospectus that is corrected in any subsequent Prospectus that was delivered
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to the Selling Stockholder prior to the pertinent sale or sales by the Selling
Stockholder. The Company shall reimburse each Selling Stockholder for the
indemnifiable amounts provided for herein on demand as such expenses are
incurred.
(b) The Investor 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, 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, (i) any failure to comply with the covenants and agreements
contained in Section 7.2 hereof respecting sale of the Shares and Warrant
Shares, or (ii) any Untrue Statement if such Untrue Statement was made in
reliance upon and in conformity with written information furnished by or on
behalf of the Investor specifically for use in preparation of the Registration
Statement, as amended or supplemented from time to time (including, without
limitation, information set forth in the Investor Questionnaire), and the
Investor will reimburse the Company (or such officer, director or controlling
person), as the case may be, for any legal or other expenses reasonably incurred
in investigating, defending or preparing to defend any such action, proceeding
or claim. The Investor shall reimburse the Company or such officer, director or
controlling person, as the case may be, for the indemnifiable amounts provided
for herein on demand as such expenses are incurred. Notwithstanding the
foregoing, the Investor's aggregate obligation to indemnify the Company and such
officers, directors and controlling persons shall be limited to the net amount
received by the Investor from the sale of the Shares and Warrant Shares.
(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 7.3,
such indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action, but the omission to so notify the
indemnifying person will not relieve it from any liability which it may have to
any indemnified person under this Section 7.3 (except to the extent that such
omission materially and adversely affects the indemnifying person's ability to
defend such action) or from any liability otherwise than under this Section 7.3.
Subject to the provisions hereinafter stated, in case any such action shall be
brought against an indemnified person, the indemnifying person shall be entitled
to participate therein, and, to the extent that it shall elect by written notice
delivered to the indemnified person promptly after receiving the aforesaid
notice from such indemnified person, shall be entitled 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 defense thereof, provided, however,
that if there exists or shall exist a conflict of interest that would make it
inappropriate, in the opinion of counsel to 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,
however, that no indemnifying person shall be responsible for the fees and
expenses of more than one separate counsel (together with appropriate local
counsel) for all indemnified parties. In no event shall any indemnifying person
be liable in respect of any amounts paid in settlement of any action unless the
indemnifying person shall have approved the terms of such settlement; provided
that such consent shall not be unreasonably withheld or delayed. No indemnifying
person shall, without the prior written consent of the indemnified person,
effect any settlement of any pending or threatened proceeding in respect of
which any indemnified person is or could have been a party and indemnification
could have been sought hereunder by such indemnified person, unless such
settlement includes an unconditional release of such indemnified person from all
liability on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in this Section 7.3 is
unavailable to or insufficient to hold harmless an indemnified person under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying person shall contribute to the amount paid or payable by
such indemnified person as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and the Investor,
as well as any other Selling Shareholders under such Registration Statement on
the other in connection with the statements or omissions or other matters which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, in the case of an
Untrue Statement, whether the Untrue Statement relates to information supplied
by the Company on the one hand or an Investor or other Selling Shareholder on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such Untrue Statement. The Company and the
Investor agree that it would not be just and equitable if contribution pursuant
to this subsection (d) were determined by pro rata allocation (even if the
Investor and other Selling Shareholders were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified person as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to
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include any legal or other expenses reasonably incurred by such indemnified
person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), the Investor shall not be
required to contribute any amount in excess of the amount by which the net
amount received by the Investor from the sale of the Shares and Warrant Shares
to which such loss relates exceeds the amount of any damages which such Investor
has otherwise been required to pay by reason of such Untrue Statement. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Investor's obligations in
this subsection to contribute shall be in proportion to its Investor sale of
Shares and Warrant Shares to which such loss relates and shall not be joint with
any other Selling Shareholders.
(e) The parties to this Agreement hereby acknowledge that they
are sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 7.3, and are fully informed regarding said
provisions. They further acknowledge that the provisions of this Section 7.3
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in the Registration Statement as required by the Securities Act and the Exchange
Act. The parties are advised that federal or state public policy as interpreted
by the courts in certain jurisdictions may be contrary to certain of the
provisions of this Section 7.3, and the parties hereto hereby expressly waive
and relinquish any right or ability to assert such public policy as a defense to
a claim under this Section 7.3 and further agree not to attempt to assert any
such defense.
7.4 Termination of Conditions and Obligations. The conditions
precedent imposed by Section 5 or this Section 7 upon the transferability of the
Shares and Warrant Shares shall cease and terminate as to any particular number
of the Shares or Warrant Shares when such shares shall have been effectively
registered under the Securities Act and sold or otherwise disposed of in
accordance with the intended method of disposition set forth in the Registration
Statement covering such shares or at such time as an opinion of counsel
reasonably satisfactory to the Company shall have been rendered to the effect
that such conditions are not necessary in order to comply with the Securities
Act.
7.5 Information Available. So long as the Registration Statement is
effective covering the resale of Shares and Warrant Shares owned by the
Investor, the Company will furnish to the Investor:
(a) as soon as practicable after it is available, one copy of
(i) its Annual Report to Stockholders (which Annual Report shall contain
financial statements audited in accordance with generally accepted accounting
principles by a national firm of certified public accountants), (ii) its Annual
Report on Form 10-K and (iii) its Quarterly Reports on Form 10-Q (the foregoing,
in each case, excluding exhibits);
(b) upon the request of the Investor, all exhibits excluded by
the parenthetical to subparagraph (a) of this Section 7.5 as filed with the SEC
and all other information that is made available to shareholders; and
(c) upon the reasonable request of the Investor, an adequate
number of copies of the Prospectuses to supply to any other party requiring such
Prospectuses; and upon the reasonable request of the Investor, the President or
the Principal Financial Officer of the Company (or an appropriate designee
thereof) will meet with the Investor or a representative thereof at the
Company's headquarters to discuss all information relevant for disclosure in the
Registration Statement covering the Shares and Warrant Shares and will otherwise
cooperate with any Investor conducting an investigation for the purpose of
reducing or eliminating such Investor's exposure to liability under the
Securities Act, including the reasonable production of information at the
Company's headquarters; provided, that the Company shall not be required to
disclose any confidential information to or meet at its headquarters with any
Investor until and unless the Investor shall have entered into a confidentiality
agreement in form and substance reasonably satisfactory to the Company with the
Company with respect thereto.
7.6 Legend; Restrictions on Transfer. The certificate or certificates
for the Shares and Warrant Shares (and any securities issued in respect of or
exchange for the Shares or Warrant Shares) shall be subject to a legend or
legends restricting transfer under the Securities Act and referring to
restrictions on transfer herein, such legend to be substantially as follows:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, OR HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER THE ACT OR, IN THE OPINION OF COUNSEL, IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
TRANSFER OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
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7.7 Liquidated Damages. The Company and Investor agree that Investor
will suffer damages if the Company fails to fulfill its obligations pursuant to
Section 7.1 and 7.2 hereof and that it would not be possible to ascertain the
extent of such damages with precision. Accordingly, the Company hereby agrees to
pay liquidated damages ("Liquidated Damages") to Investor under the following
circumstances: (a) if the Registration Statement is not filed by the Company on
or prior to 10 days following the first business day after the Closing Date in
accordance with Section 7.1(a) (such an event, a "Filing Default"); (b) if the
Registration Statement is not declared effective by the SEC on or prior to 90
days after the Closing Date (such an event, an "Effectiveness Default"); or (c)
if the Registration Statement (after its effectiveness date) ceases to be
effective and available to Investor for any continuous period that exceeds 30
days or for one or more period that exceeds in the aggregate 60 days in any
12-month period (such an event, a "Suspension Default" and together with a
Filing Default and an Effectiveness Default, a "Registration Default"). In the
event of a Registration Default, the Company shall as Liquidated Damages pay to
Investor, for each 30-day period of a Registration Default, an amount in cash
equal to 1% of the aggregate purchase price paid by Investor pursuant to this
Agreement; provided that in no event shall the aggregate amount of cash to be
paid as Liquidated Damages pursuant to this Section 7.7 exceed 9% of the
aggregate purchase price paid by Investor. The Company shall pay the Liquidated
Damages as follows: (i) in connection with a Filing Default, on the 31/st/ day
after the Closing Date, and each 30th day thereafter until the Registration
Statement is filed with the SEC; (ii) in connection with an Effectiveness
Default, on the 91/st/ day after the Closing Date, and each 30th day thereafter
until the Registration Statement is declared effective by the SEC; or (iii) in
connection with a Suspension Default, on either (x) the 31/st/ consecutive day
of any Suspension or (y) the 61/st/ day (in the aggregate) of any Suspensions in
any 12-month period, and each 30/th/ day thereafter until the Suspension is
terminated in accordance with Section 7.2. Notwithstanding the foregoing, all
periods shall be tolled during delays directly caused by the action or inaction
of any Investor, and the Company shall have no liability to any Investor in
respect of any such delay. The Liquidated Damages payable herein shall apply on
a pro rata basis for any portion of a 30-day period of a Registration Default.
8. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within the United States
by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile, or (B) if delivered
from outside the United States, by International Federal Express (or other
recognized international express courier) or facsimile, and shall be deemed
given (i) if delivered by first-class registered or certified mail, three
business days after so mailed, (ii) if delivered by nationally recognized
overnight carrier, one business day after so mailed, (iii) if delivered by
International Federal Express (or other recognized international express
courier), two business days after so mailed, (iv) if delivered by facsimile,
upon electronic confirmation of receipt and shall be delivered as addressed as
follows:
(a) if to the Company, to:
Insmed Incorporated
0000 Xxxx Xxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx, CGA
Phone: (000) 000-0000
Fax: (000) 000-0000
(b) with a copy to:
Hunton & Xxxxxxxx LLP
Riverfront Plaza, East Tower
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attn: T. Xxxxxx Xxxxx, III, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
(c) if to the Investor, at its address on the signature page
hereto, or at such other address or addresses as may have
been furnished to the Company in writing.
9. Changes. This Agreement may be modified, amended or waived only
pursuant to a written instrument signed by the Company and (a) Investors holding
a majority of the Shares issued and sold in the Offering, provided that such
modification,
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amendment or waiver is made with respect to all Agreements and does not
adversely affect the Investor without adversely affecting all Investors in a
similar manner; or (b) the Investor.
10. Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.
11. Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
12. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the Commonwealth of Virginia, without
giving effect to the principles of conflicts of law.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
14. Entire Agreement. This Agreement and the Warrants constitute the
entire agreement between the parties hereto and supersedes any prior
understandings or agreements concerning the purchase and sale of the Shares and
the Warrants and the resale registration of the Shares and Warrant Shares.
15. Rule 144. The Company covenants that it will timely file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder (or, if the Company
is not required to file such reports, it will, upon the request of any Investor
holding Shares purchased hereunder or Warrant Shares purchased under the
Warrants made after the first anniversary of the Closing Date, make publicly
available such information as necessary to permit sales pursuant to Rule 144
under the Securities Act), and it will take such further action as any such
Investor may reasonably request, all to the extent required from time to time to
enable such Investor to sell such Shares and Warrant Shares without registration
under the Securities Act within the limitation of the exemptions provided by (a)
Rule 144 under the Securities Act, as such Rule may be amended from time to
time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon
the request of the Investor, the Company will deliver to such holder a written
statement as to whether it has complied with such information and requirements.
16. Confidential Information.
(a) The Investor covenants that it will maintain in confidence
the existence of the transactions contemplated herein until such information (a)
becomes generally publicly available other than through a violation of this
provision by the Investor or its agents or (b) is required to be disclosed in
legal proceedings (such as by deposition, interrogatory, request for documents,
subpoena, civil investigation demand, filing with any governmental authority or
similar process), provided, however, that before making any use or disclosure in
reliance on this subparagraph (b) the Investor shall give the Company at least
fifteen (15) days prior written notice (or such shorter period as required by
law) specifying the circumstances giving rise thereto and will furnish only that
portion of the non-public information which is legally required and will
exercise its best efforts to obtain reliable assurance that confidential
treatment will be accorded any non-public information so furnished.
(b) The Company shall on the Closing Date issue a press release
disclosing the material terms of the transactions contemplated hereby (including
at least the number of Shares and Warrants sold and proceeds therefrom). The
Company shall not publicly disclose the name of Investor, or include the name of
Investor in any filing with the SEC or any regulatory agency or the Nasdaq
(other than the filing of the Agreements with the SEC pursuant to the Exchange
Act), without the prior written consent of Investor, except to the extent such
disclosure is required by law or Nasdaq regulations.
17. No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
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Exhibit A
CERTIFICATE OF SUBSEQUENT SALE
Wachovia Bank, N.A.
0000 Xxxx X. X. Xxxxxx Xxxx.
0X0 Xxxxxxxxx, XX 00000-0000
RE: Sale of Shares of Common Stock of Insmed Incorporated (the
"Company") pursuant to the Company's Prospectus dated
_____________, ____ (the "Prospectus")
Dear Sir/Madam:
The undersigned hereby certifies, in connection with the sale of shares
of Common Stock of the Company included in the table of Selling Shareholders in
the Prospectus, that the undersigned has sold the shares pursuant to the
Prospectus and in a manner described under the caption "Plan of Distribution" in
the Prospectus and that such sale complies with all securities laws applicable
to the undersigned, including, without limitation, the Prospectus delivery
requirements of the Securities Act of 1933, as amended.
Selling Shareholder (the beneficial owner):_____________________________________
Record Holder (e.g., if held in name of nominee):_______________________________
Restricted Stock Certificate No.(s):____________________________________________
Number of Shares Sold:__________________________________________________________
Date of Sale:___________________________________________________________________
In the event that you receive a stock certificate(s) representing more
shares of Common Stock than have been sold by the undersigned, then you should
return to the undersigned a newly issued certificate for such excess shares in
the name of the Record Holder and BEARING A RESTRICTIVE LEGEND. Further, you
should place a stop transfer on your records with regard to such certificate.
Very truly yours,
Dated:________________________________________ By:__________________________
Print Name:__________________
Title:_______________________
cc: Insmed Incorporated
0000 Xxxx Xxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attn: Principal Financial Officer
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