EXECUTION COPY
PURCHASE AGREEMENT
THIS AGREEMENT is made as of the ___ day of August, 2001, by and among
Pharmaceutical Resources, Inc., a corporation organized under the laws of the
State of New Jersey (the "Company"), with its principal offices at ▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, the stockholders of the Company that are
listed on Exhibit A-1 hereto (the "Selling Stockholders") and the purchaser
whose name and address is set forth on the signature page hereof (the
"Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company, the Selling Stockholders and the Purchaser agree as follows:
SECTION 1. Authorization of Sale of the Shares. Subject to the terms and
conditions of this Agreement, the Selling Stockholders have authorized the sale
of an aggregate of 13,634,012 shares (the shares sold hereunder being referred
to as the "Shares") of the Company's common stock, par value $0.01 per share
(the "Common Stock"), owned by the Selling Stockholders.
SECTION 2. Agreement to Sell and Purchase the Shares. At the Closing (as
defined in Section 3), the Selling Stockholders will sell to the Purchaser, and
the Purchaser will buy from the Selling Stockholders, upon the terms and
conditions hereinafter set forth, the number of Shares (at the purchase price)
shown below:
Price Per
Number to Be Share In Aggregate
Purchased Dollars Price
------------------------ ---------------------- --------------------
$ $
The Company and the Selling Stockholders propose to enter into this same
form of purchase agreement with certain other investors (the "Other Purchasers")
and expect to complete sales of the Shares to them. The Purchaser and the Other
Purchasers are hereinafter sometimes collectively referred to as the
"Purchasers," and this Agreement and the agreements executed by the Other
Purchasers are hereinafter sometimes collectively referred to as the
"Agreements." The term "Placement Agent" shall mean Bear, ▇▇▇▇▇▇▇ & Co. Inc. and
any other co-placement agent designated by Bear, ▇▇▇▇▇▇▇ & Co. Inc.
SECTION 3. Delivery of the Shares at the Closing. The completion of the
purchase and sale of the Shares (the "Closing") shall occur at the offices of
Stroock & Stroock & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ as soon
as practicable and as agreed by the parties hereto following notification by the
Securities and Exchange Commission (the "Commission") to the Company of the
Commission's willingness to declare effective the registration statement to be
filed by the Company pursuant to Section 8.1 hereof (the "Registration
Statement") at a place and time (the "Closing Date") to be agreed upon by the
Company, the Selling Stockholder and the Placement Agent and of which the
Purchasers will be notified by facsimile transmission or otherwise.
At the Closing, the Selling Stockholders shall deliver to the Purchaser one
or more stock certificates registered in the name of the Purchaser, or, if so
indicated on the Stock Certificate Questionnaire attached hereto as Appendix I,
in such nominee name(s) as designated by the Purchaser in writing, representing
the number of Shares set forth in Section 2 above and bearing an appropriate
legend referring to the fact that the Shares were resold in reliance upon the
exemption from registration under the Securities Act of 1933, as amended (the
"Securities Act"), provided by Section 4(2) thereof. Subject to Section 6(h)
hereof, the Company will promptly substitute one or more replacement
certificates without the legend at such time as the Registration Statement is
effective. The name(s) in which the stock certificates are to be registered are
set forth in the Stock Certificate Questionnaire attached hereto as part of
Appendix I. The Selling Stockholders' obligation to complete the purchase and
sale of the Shares and deliver such stock certificate(s) to the Purchaser at the
Closing shall be subject only to the following conditions, any one or more of
which may be waived by the Selling Stockholders: (a) receipt by the Selling
Stockholders of same-day funds in the full amount of the purchase price for the
Shares being purchased hereunder; (b) completion of the purchases and sales
under the Agreements with the Other Purchasers; and (c) the accuracy of the
representations and warranties made by the Purchasers and the fulfillment of
those undertakings of the Purchasers to be fulfilled prior to the Closing. The
Purchaser's obligation to accept delivery of such stock certificate(s) and to
pay for the Shares evidenced thereby shall be subject only to the following
conditions: (a) the Commission has notified the Company of the Commission's
willingness to declare the Registration Statement effective on or prior to the
60th day after the date such Registration Statement was filed by the Company;
(b) that the representations and warranties made by the Company and the Selling
Stockholders herein were accurate in all material respects as of the date of
this Agreement; and (c) that the Company and the Selling Stockholders have
fulfilled, in all material respects, all undertakings to be fulfilled prior to
Closing. The Purchaser's obligations hereunder are expressly not conditioned on
the purchase by any or all of the Other Purchasers of the Shares that they have
agreed to purchase from the Selling Stockholders. If the Closing Date has not
occurred, the Selling Stockholders' obligations to sell and the Purchaser's
obligation to purchase the Shares will expire on November 14, 2001.
SECTION 4. Representations, Warranties and Covenants of the Company. The
Company hereby represents and warrants to, and covenants with, the Selling
Stockholders and the Purchaser as follows:
4.1 Organization and Qualification. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of New Jersey and the Company is qualified to do business as a foreign
corporation in each jurisdiction in which qualification is required, except
where failure to so qualify would not reasonably be expected to have a material
adverse effect upon the business, financial condition, properties or operations
of the Company and its Subsidiary (as defined below) taken as a whole (a
"Material Adverse Effect"). The Company has one principal operating subsidiary,
Par Pharmaceutical, Inc. (the "Subsidiary"). The Subsidiary is a direct
wholly-owned subsidiary of the Company. The Subsidiary is duly incorporated,
validly existing and in good standing under the laws of its
-2-
jurisdiction of incorporation and is qualified to do business as a foreign
corporation in each jurisdiction in which qualification is required, except
where failure to so qualify would not have a Material Adverse Effect.
4.2 Authorized Capital Stock. Except as disclosed in or contemplated by the
Confidential Private Placement Memorandum dated August 13, 2001 prepared by the
Company, including all exhibits, supplements and amendments thereto (the
"Private Placement Memorandum"), the Company had authorized and outstanding
capital stock as set forth under the heading "Capitalization" in the Private
Placement Memorandum as of the date set forth therein; the issued and
outstanding shares of the Company's Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable, have been issued in material
compliance with all federal and state securities laws, were not issued in
violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities. Except as disclosed in or contemplated by the
Private Placement Memorandum, the Company does not have outstanding any options
to purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any such options,
rights, convertible securities or obligations. With respect to the Subsidiary,
(i) all the issued and outstanding shares of the Subsidiary's capital stock have
been duly authorized and validly issued, are fully paid and nonassessable, have
been issued in compliance with applicable federal and state securities laws,
were not issued in violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities, and (ii) there are no
outstanding options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of the Subsidiary's
capital stock or any such options, rights, convertible securities or
obligations.
4.3 No Other Registration Rights. Except as set forth on Schedule 4.3
hereto, no holder of any security of the Company has any right (which has not
been waived or has not expired by reason of lapse of time following notification
of the Company's intent to file the Registration Statement) to require the
Company to register the sale of any security owned by such holder under the
Securities Act in the Registration Statement.
4.4 Authority. The Company and its Subsidiary have all the requisite power
and authority and have all necessary approvals, licenses, permits and
authorizations to own, operate, or lease their properties and to carry on their
business as now conducted, except where the failure to have any such approval,
license, permit or authorization would not reasonably be expected to have
Material Adverse Effect.
4.5 Due Execution, Delivery and Performance of this Agreement. The Company
has corporate power and authority to enter into this Agreement and perform the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by the Company. The execution, delivery and performance
of this Agreement by the Company and the consummation of the transactions herein
contemplated will not violate any provision of the organizational documents of
the Company or the Subsidiary and will not result in the creation of any lien,
charge, security interest or encumbrance upon any assets of the Company or the
Subsidiary pursuant to the terms or provisions of, or will not (i) conflict
with,
-3-
result in the breach or violation of, or constitute, either by itself or upon
notice or the passage of time or both, a default under (A) any agreement,
mortgage, deed of trust, lease, franchise, license, indenture, permit or other
instrument to which the Company or the Subsidiary is a party or by which the
Company or the Subsidiary or any of their respective properties may be bound or
affected and in each case which would have a Material Adverse Effect, or (B) any
statute or any judgment, decree, order, rule or regulation of any court or any
regulatory body, administrative agency or other governmental body applicable to
the Company or the Subsidiary or any of their respective properties where such
conflict, breach, violation or default is likely to, result in a Material
Adverse Effect. No consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body is required
for the execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement, except for any compliance with the
Blue Sky laws and federal securities laws applicable to the offering of the
Shares. Upon the execution and delivery of this Agreement, and assuming the
valid execution thereof by the Selling Stockholders and the Purchaser, this
Agreement will constitute a valid and binding obligation of the Company,
enforceable 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 Company in
Section 8.3 hereof may be held violative of public policy and therefore legally
unenforceable.
4.6 Accountants. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who has expressed its opinion with
respect to the consolidated financial statements included in the Company's Form
10-K for the fiscal year ended December 31, 2000 and incorporated by reference
in the Registration Statement and the Prospectus which forms a part thereof, are
independent accountants as required by the Securities Act and the rules and
regulations promulgated thereunder (the "Rules and Regulations").
4.7 No Defaults. Except as disclosed in the Private Placement Memorandum,
and except as to defaults, violations and breaches which individually or in the
aggregate would not have a Material Adverse Effect, neither the Company nor the
Subsidiary is in violation or default of any provision of its certificate of
incorporation or bylaws, or in breach of or default with respect to any
provision of any agreement, judgment, decree, order, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument to which it is
a party or by which it or any of its properties are bound; and there does not
exist any state of fact known to it which, with notice or lapse of time or both,
would constitute an event of default on the part of the Company or the
Subsidiary as defined in such documents, except such defaults which individually
or in the aggregate would not have a Material Adverse Effect.
4.8 No Actions. Except as disclosed in the Private Placement Memorandum,
there are no legal or governmental actions, suits or proceedings pending or
threatened in writing to which the Company or the Subsidiary is or may be a
party or of which property owned or leased by the Company or the Subsidiary is
or may be the subject, or related to environmental or discrimination matters,
which actions, suits or proceedings, individually or in the aggregate, prevent
or could reasonably be expected to materially and adversely affect the
transactions
-4-
contemplated by this Agreement or result in a Material Adverse Effect; no labor
disturbance by the employees of the Company exists or is imminent which might
reasonably be expected to have a Material Adverse Effect; and neither the
Company nor the Subsidiary is party to or subject to the provisions of any
material injunction, judgment, decree or order of any court, regulatory body
administrative agency or other governmental body.
4.9 No Material Change. Since June 30, 2001 and except as described in or
specifically contemplated by the Private Placement Memorandum, (i) the Company
and the Subsidiary have not incurred any known material liabilities or
obligations, indirect, or contingent, or entered into any material verbal or
written agreement or other transaction which was not in the ordinary course of
business or which could reasonably be expected to have a Material Adverse Effect
on the earnings of the Company in the reasonably foreseeable future; (ii) the
Company and the Subsidiary have not sustained any material loss or interference
with its businesses or properties from fire, flood, windstorm, accident or other
calamity not covered by insurance; (iii) the Company and the Subsidiary have not
paid or declared any dividends or other distributions with respect to its
capital stock and neither the Company nor the Subsidiary is in default in the
payment of principal or interest on any material outstanding debt obligations;
(iv) except as set forth on Schedule 4.9 hereto, there has not been any change
in the capital stock of the Company or the Subsidiary or increase in
indebtedness material to the Company; (v) the Company and the Subsidiary have
not incurred or sustained any other event or change that would have a Material
Adverse Effect; and (vi) the Company has conducted its business only in the
ordinary course of business in accordance with past practice.
4.10 Intellectual Property.
(a) The Company has ownership or license or legal right to use all
material patent, copyright, trade secret and trademark rights known by it
to be necessary to the conduct of the business of the Company as now
conducted (collectively, "Intellectual Property") other than Intellectual
Property generally available on commercial terms from other sources.
(b) All material licenses or other material agreements under which (i)
the Company is granted rights in Intellectual Property, other than
Intellectual Property generally available on commercial terms from other
sources, and (ii) the Company has granted rights to others in Intellectual
Property owned or licensed by the Company, are in full force and effect and
there is no material default by the Company or any other party thereto.
(c) The Company has taken all steps believed by it to be required in
accordance with sound business practice and business judgment to establish
and preserve its ownership of all material copyright, trade secret and
other proprietary rights with respect to its products and technology.
(d) The present business, activities and products of the Company do not
infringe any intellectual property of any other person, except where such
infringement would not, individually or in the aggregate, have a Material
Adverse Effect on the
-5-
Company. The Company is not, to its knowledge, making unauthorized use of
any confidential information or trade secrets of any person. The activities
of the Company or, to its knowledge, any of its employees on behalf of the
Company do not violate any material agreements or arrangements known to the
Company which any such employees have with other persons, if any.
4.11 Compliance. Neither the Company nor the Subsidiary has been advised,
nor has reason to believe, that it is not conducting its business in compliance
with all applicable laws, rules and regulations of the jurisdictions in which it
is conducting its business, including, without limitation, all applicable local,
state and federal environmental laws and regulations; except where failure to be
so in compliance would not have a Material Adverse Effect.
4.12 Offering Materials. The Company has not distributed and will not
distribute prior to the Closing Date any offering material in connection with
the offering and sale of the Shares other than the Private Placement Memorandum
or any amendment or supplement thereto. 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, as contemplated by this
Agreement, 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 4 of
the Securities Act.
4.13 Contributions. The Company has not at any time since its
incorporation, directly or indirectly, (i) made any unlawful contribution to any
candidate for public office, or failed to disclose fully any contribution in
violation of law, or (ii) made any payment to any federal or state governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof.
4.14 Additional Information. The information contained in the following
documents, which the Placement Agent has furnished to the Purchaser, or will
furnish prior to the Closing, does not include any 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, in the light of the circumstances
in which they were made, not misleading, as of their respective final dates, or
if amended, as so amended:
(a) the Company's Annual Report on Form 10-K for the year ended
December 31, 2000;
(b) the Company's Quarterly Report on Form 10-Q for the three months
ended March 31, 2001;
(c) the Company's Quarterly Report on Form 10-Q for the three months
ended June 30, 2001;
(d) Notice of Annual Meeting of Shareholders and Proxy Statement for
the Company's Annual Meeting held on July 12, 2001;
-6-
(e) the Private Placement Memorandum, including all addenda and
exhibits thereto except Exhibit E; and
(f) all other documents, if any, filed by the Company with the
Commission since June 30, 2001 pursuant to the reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
4.15 Legal Opinion. At the Closing, ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel to
the Company, will deliver its legal opinion to the Placement Agent in a form
reasonably acceptable to the Placement Agent's counsel. Such opinion shall also
state that each of the Purchasers may rely thereon as though it was addressed
directly to such Purchaser.
4.16 Intellectual Property Opinion. At the Closing, special counsel to the
Company on intellectual property matters will deliver a legal opinion to the
Placement Agent in a form reasonably acceptable to the Placement Agent's
counsel. Such opinion shall also state that each of the Purchasers may rely
thereon as though it was addressed directly to such Purchaser.
4.17 Certificate. At the Closing, the Company will deliver to the Purchaser
a certificate executed by the Chairman of the Board or President and the chief
financial or accounting officer of the Company (solely in their capacities as
such), dated the Closing Date, in form and substance reasonably satisfactory to
the Purchaser, to the effect that the representations and warranties of the
Company set forth in this Section 4 were true and correct in all material
respects as of the date of this Agreement, and the Company has complied in all
material respects with all the agreements and satisfied all the conditions
herein on its part to be performed or satisfied on or prior to such Closing
Date.
4.18 Reliance by Placement Agent. The Company hereby acknowledges that the
Placement Agent may rely on the representations, warranties and covenants set
forth in this Section 4 as if such representations, warranties and covenants
were made to the Placement Agent directly.
4.19 No Material Nonpublic Information. At the time of the announcement of
the transaction contemplated by the Agreements, the Private Placement
Memorandum, as supplemented, will include no material nonpublic information with
respect to the Company.
SECTION 5. Representations, Warranties and Covenants of the Selling
Stockholders. Each of the Selling Stockholders, jointly and severally,
represent, warrant and covenant to the Company and to the Purchaser that:
5.1 Due Execution and Delivery. Such Selling Stockholder has full power and
authority to enter into this Agreement and to carry out all the terms and
provisions hereof and thereof to be carried out by it. All authorizations and
consents necessary for the execution, delivery and performance by such Selling
Stockholder of this Agreement have been given. This Agreement has been duly
authorized, executed and delivered by or on behalf of such Selling Stockholder
and this Agreement will constitute a legal, valid and binding obligation of such
Selling Stockholder, enforceable in accordance with its terms, except as
enforceability may be
-7-
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' 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).
5.2 Good Title. Such Selling Stockholder now has, and at the time of
delivery thereof hereunder will have, (i) good and marketable title to the
Shares to be sold by such Selling Stockholder hereunder, free and clear of all
encumbrances, and (ii) full legal right and power, and all authorizations and
approvals required by law, to sell, transfer and deliver the Shares to the
Purchasers hereunder and to make the representations, warranties and agreements
made by such Selling Stockholder herein.
5.3 No Defaults. None of the execution, delivery or performance of this
Agreement, and the consummation of the transactions contemplated herein or
therein by such Selling Stockholder conflicts or will conflict with or results
or will result in any breach or violation of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition of any
encumbrance upon, any property or assets of such Selling Stockholder pursuant to
(i) the terms of any contract or other agreement to which such Selling
Stockholder is a party or by which it is bound or to which any of its properties
is subject, which conflict, breach, violation or default would adversely affect
such Selling Stockholder's ability to perform its obligations hereunder; (ii)
any statute, rule or regulation of any governmental body having jurisdiction
over such Selling Stockholder or any of its activities or properties; or (iii)
the terms of any judgment, decree or order of any arbitration or governmental
body having such jurisdiction.
5.4 Consents. No pre-emptive right, co-sale right, right of first refusal,
registration right, or similar rights exist with respect to the Selling
Stockholders' shares, other than any such rights which have been duly and
validly waived. No consent, approval, authorization or order of, or any filing
or declaration with, any governmental body is required for the consummation by
such Selling Stockholder of the transactions on its part contemplated herein,
except such as have been obtained under the state securities or Blue Sky laws.
5.5 Material Adverse Information. The sale of the Shares proposed to be
sold by such Selling Stockholder is not prompted by such Selling Stockholder's
knowledge of any material adverse information concerning the Company or its
Subsidiary which is not set forth or described in the Private Placement
Memorandum.
5.6 Material Information. On the date of the Private Placement Memorandum,
the information with respect to such Selling Stockholder included therein did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading.
5.7 Company Representations and Warranties. Such Selling Stockholder has no
reason to believe that the representations and warranties of the Company
contained in Section 4 are not true and correct in all material respects.
-8-
5.8 Reliance by Placement Agent. Such Selling Stockholder hereby
acknowledges that the Placement Agent may rely on the representations,
warranties and covenants set forth in this Section 5 as if such representations,
warranties and covenants were made to the Placement Agent directly.
5.9 Expenses. The Selling Stockholders shall bear all expenses in
connection with the negotiation, execution and delivery of this Agreement and
with the procedures in paragraphs (a) through (f) of Section 8.1 hereof and the
registration of the Shares pursuant to the Registration Statement, other than
fees and expenses of counsel or other advisors to the Purchaser or the Other
Purchasers or underwriting discounts, brokerage fees and commissions incurred by
the Purchaser or the Other Purchasers.
5.10 Selling Stockholder Notices. For a period of 12 months from the
Closing Date, the Selling Stockholders shall promptly notify the Company in
writing of any events or circumstances of which any member(s) of senior
management of any of the Selling Stockholders becomes aware, after their
conducting reasonable due inquiry (other than matters publicly known or actually
known by the Company), that (i) materially adversely affects or limits the legal
or other ability of any of the Selling Stockholders to perform any of its
material obligations under any written agreements between any of the Selling
Stockholders and the Company and (ii) the failure of which to be included in the
Private Placement Memorandum and/or the Registration Statement, as such shall
have been supplemented or amended, would result in an untrue statement of
material fact or the omission to state a material fact required to be stated
therein or necessary to make the statements contained therein not misleading in
light of the circumstances under which they were made.
SECTION 6. Representations, Warranties and Covenants of the Purchaser.
(a) The Purchaser represents and warrants to, and covenants with, the
Company and the Selling Stockholders that: (i) the Purchaser is
knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in shares representing an
investment decision like that involved in the purchase of the Shares,
including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems
relevant in making an informed decision to purchase the Shares; (ii) the
Purchaser is acquiring the number of Shares set forth in Section 2 above 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 or
any arrangement or understanding with any other persons regarding the
distribution of such Shares (this representation and warranty not limiting
the Purchaser's right to sell pursuant to the Registration Statement or,
other than with respect to any claims arising out of a breach of this
representation and warranty, the Purchaser's right to indemnification under
Section 8.3); (iii) the Purchaser will not, directly or indirectly, offer,
sell, pledge, sell short, transfer or otherwise dispose of (or solicit any
offers to buy, purchase or otherwise acquire or take a pledge of) any of
the Shares except in compliance with the Securities Act, the Exchange Act
and the Rules and Regulations; (iv) the Purchaser has completed or caused
to be completed the Registration Statement Questionnaire attached hereto as
part of Appendix I, for use in preparation of the
-9-
Registration Statement, and the answers thereto are true and correct as of
the date hereof and will be true and correct as of the effective date of
the Registration Statement and the Purchaser will notify the Company
immediately of any material change in any such information provided in the
Registration Statement Questionnaire occurring prior to the sale by it of
all of the Shares; (v) the Purchaser has, in connection with its decision
to purchase the number of Shares set forth in Section 2 above, relied
solely upon the Private Placement Memorandum and the documents included
therein or incorporated by reference and the representations and warranties
of the Company and the Selling Stockholder contained herein; and (vi) the
Purchaser is an "accredited investor" within the meaning of Rule 501(a) of
Regulation D promulgated under the Securities Act.
(b) The Purchaser understands that the Shares are being offered and
sold to it in reliance upon specific exemptions from the registration
requirements of Securities Act, the Rules and Regulations and state
securities laws and that the Company and the Selling Stockholders are
relying upon the truth and accuracy of, and the Purchaser's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of the Purchaser to
acquire the Shares.
(c) Until the filing of the Registration Statement, the Purchaser
agrees with the Placement Agent and the Company to keep confidential all
information concerning this private placement. The Purchaser understands
that the information contained in the Private Placement Memorandum is
strictly confidential and proprietary to the Company and has been prepared
from the Company's publicly available documents and other information and
is being submitted to the Purchaser solely for such Purchaser's
confidential use. The Purchaser agrees to use the information contained in
the Private Placement Memorandum for the sole purpose of evaluating a
possible investment in the Shares and the Purchaser hereby acknowledges
that it is prohibited from reproducing and distributing the Private
Placement Memorandum to third parties, this Purchase Agreement, or any
other offering materials or other information provided by the Company in
connection with the Purchaser's consideration of its investment in the
Company, in whole or in part, or divulging or discussing any of their
contents to third parties. Further, the Purchaser understands that the
existence and nature of all conversations and presentations, if any,
regarding the Company and this offering must be kept strictly confidential.
The Purchaser understands that the federal securities laws may impose
restrictions on trading based on information regarding this offering. In
addition, the Purchaser hereby acknowledges that unauthorized disclosure of
information regarding this offering may cause the Company to violate
Regulation FD and agrees not to engage in any such unauthorized disclosure.
The restrictions in this paragraph shall cease upon the filing of the
Registration Statement.
(d) The Purchaser understands that its investment in the Shares
involves a significant degree of risk and that the market price of the
Common Stock has been volatile and that no representation is being made as
to the future value or trading volume of the Common Stock. The Purchaser
has the knowledge and experience in
-10-
financial and business matters as to be capable of evaluating the merits
and risks of an investment in the Shares and has the ability to bear the
economic risks of an investment in the Shares.
(e) The Purchaser understands that no United States federal or state
agency or any other government or governmental agency has passed upon or
made any recommendation or endorsement of the Shares.
(f) The Purchaser understands that, until such time as the Registration
Statement has been declared effective or the Shares may be sold pursuant to
Rule 144 under the Securities Act without any restriction as to the number
of securities as of a particular date that can then be immediately sold,
the Shares shall bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of the
certificates for the Shares):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION
OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER
SAID ACT."
(g) The Purchaser's principal executive offices are in the jurisdiction
set forth immediately below the Purchaser's name on the signature pages
hereto.
(h) The Purchaser hereby covenants with the Company not to make any
sale of the Shares without complying in all material respects with the
provisions of this Agreement, and, if applicable, without effectively
causing the prospectus delivery requirement under the Securities Act to be
satisfied, and the Purchaser acknowledges and agrees that such Shares are
not transferable on the books of the Company unless the certificate
submitted to the transfer agent evidencing the Shares is accompanied by a
separate Purchaser's Certificate of Subsequent Sale: (i) in the form of
Appendix II hereto, (ii) executed by an officer of, or other authorized
person expressly designated by, the Purchaser, and (iii) to the effect that
(A) the Shares have been sold in accordance with the Registration
Statement, the Securities Act and any applicable state securities or blue
sky laws and (B), if applicable, the requirement of delivering a current
prospectus has been satisfied. The Purchaser acknowledges that there may
occasionally be times when the Company must suspend the use of the
prospectus forming a part of the Registration Statement (a "Suspension")
until such time as an amendment to the Registration Statement has been
filed by the Company and declared effective by the Commission, or until
such time as the Company has filed an appropriate report with the
Commission pursuant to the Exchange Act or supplemented the prospectus
forming a part of the Registration Statement. The Purchaser hereby
covenants that it will not sell any Shares
-11-
pursuant to said prospectus during the period commencing at the time at
which the Company gives the Purchaser written notice of the Suspension of
the use of said prospectus and ending at the time the Company gives the
Purchaser written notice that the Purchaser may thereafter effect sales
pursuant to said prospectus, except as permitted in the second paragraph of
Section 8.2 of this Agreement; provided, however, that the Purchaser shall
be in compliance with the provisions contained in the first paragraph of
Section 8.2, and provided further that the Company will use its best
efforts to cause the prospectus so suspended to be promptly resumed.
(i) The Purchaser further represents and warrants to, and covenants
with, the Company and the Selling Stockholders that (i) the Purchaser 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) upon the execution and delivery of this Agreement,
this Agreement shall constitute a legal, valid and binding obligation of
the Purchaser, enforceable 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 Purchaser in Section 8.3
hereof may be held violative of public policy and legally unenforceable.
(j) The Purchaser hereby acknowledges that the Placement Agent may rely
on the representations, warranties and covenants set forth in this Section
6 as if such representations, warranties and covenants were made to the
Placement Agent directly.
SECTION 7. Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement or by the
Placement Agent, all covenants, agreements, representations and warranties made
by the Company, the Selling Stockholders and the Purchaser herein and in the
certificates for the Shares delivered pursuant hereto shall survive the Closing,
the delivery to the Purchaser of the Shares being purchased and the payment
therefor; provided, however, that the representations and warranties of the
Company contained in Section 4 hereof (other than Section 4.12) shall survive
for one (1) year following the Closing.
SECTION 8. Registration of the Shares; Compliance with the Securities Act.
8.1 Registration Procedures and Expenses. The Company shall:
(a) subject to receipt of necessary information from the Purchasers, as
promptly as practicable, but in no event later than 10 days after the date
that the Agreements are executed, file with the Commission the Registration
Statement on Form S-3 relating to the resale of the Shares by the Purchaser
and the Other Purchasers from time to time on The New York Stock Exchange
or the facilities of any national securities
-12-
exchange on which the Common Stock is then traded or in
privately-negotiated transactions;
(b) use its reasonable efforts, subject to receipt of necessary
information from the Purchasers, to cause the Commission to notify the
Company of the Commission's willingness to declare the Registration
Statement effective within 60 days after the Registration Statement is
filed by the Company;
(c) promptly prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in
connection therewith as may be necessary to keep the Registration Statement
effective and in compliance with applicable securities laws until the
earliest of (i) two years after the effective date of the Registration
Statement; (ii) the date on which the Shares may be resold by the
Purchasers without registration by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect; or (iii) such time as
all Shares purchased by such Purchaser under this Agreement have been sold.
(d) furnish to the Purchaser with respect to the Shares registered
under the Registration Statement (and to each underwriter, if any, of such
Shares) such number of copies of prospectuses and such other documents as
the Purchaser may reasonably request, in order to facilitate the public
sale or other disposition of all or any of the Shares by the Purchaser;
provided, however, that the obligation of the Company to deliver copies of
prospectuses to the Purchaser shall be subject to the receipt by the
Company of reasonable assurances from the Purchaser that the Purchaser 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, and the resale of the Shares;
(e) file documents required of the Company for normal blue sky
clearance in states specified in writing by the Purchaser and keep such
qualification or registration in effect for so long as the Registrant
Statement is in effect; 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;
and
(f) advise the Purchaser, 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 of any proceeding for that purpose; and it will promptly use its
reasonable efforts to prevent the issuance of any stop order or to obtain
its withdrawal at the earliest practicable moment if such stop order should
be issued.
The Company understands that the Purchaser disclaims being an underwriter,
but the Purchaser being deemed an underwriter shall not, subject to the
Purchaser's compliance with applicable law and this Agreement, relieve the
Company of any obligations it has hereunder. A draft of the proposed form of the
Registration Statement is included in the Private Placement
-13-
Memorandum and a questionnaire related thereto to be completed by the Purchaser
is attached hereto as Appendix I.
8.2 Transfer of Shares After Registration. The Purchaser agrees that it
will not effect any disposition of the Shares or its right to purchase the
Shares that would constitute a sale within the meaning of the Securities Act,
except as contemplated in the Registration Statement referred to in Section 8.1,
and that it will promptly notify in writing the Company of any changes or
additions to the information set forth in the Registration Statement regarding
the Purchaser or its plan of distribution or any disposition. The obligations
shall cease when the Purchaser shall have disposed of all of its Shares.
Notwithstanding any other provisions of this Agreement, the Purchaser shall
not be prohibited from selling 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 advice of counsel, the sale of Shares under the
Registration Statement in reliance on this paragraph could be reasonably likely
to cause a violation of the Securities Act or the Exchange Act and result in
potential liability to the Company.
8.3 Indemnification. For the purpose of this Section 8.3:
(i) the term "Purchaser/Affiliate" shall mean any affiliate of the
Purchaser and any person who controls the Purchaser or any
affiliate of the Purchaser within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act; and
(ii) the term "Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in or
relating to, and any document incorporated by reference in, the
Registration Statement referred to in Section 8.1.
(a) The Company agrees to indemnify and hold harmless each of the
Purchasers and each Purchaser/Affiliate, against any losses, claims,
damages, liabilities or expenses, joint or several, to which such
Purchasers or such Purchaser/Affiliates may become subject, under the
Securities Act, the Exchange Act, or any other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement
of any claims or litigation, if such settlement is effected with the
written consent of the Company), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated
below) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, including the prospectus, financial statements and schedules,
and all other documents filed as a part thereof, as amended at the time of
effectiveness of the Registration Statement, including any information
deemed to be a part thereof as of the time of effectiveness pursuant to
paragraph (b) of Rule 430A, or pursuant to Rule 434, of the Rules and
Regulations, or the prospectus, in the form first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations, or filed as part of
the Registration
-14-
Statement at the time of effectiveness if no Rule 424(b) filing is required
(the "Prospectus"), or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state in any of them
a material fact required to be stated therein or necessary to make the
statements in the Registration Statement or any amendment or supplement
thereto not misleading or in the Prospectus or any amendment or supplement
thereto not misleading in the light of the circumstances under which they
were made, or (if the Closing occurs) arise out of or are based in whole or
in part on any inaccuracy in the representations and warranties of the
Company contained in this Agreement, or any failure of the Company to
perform its obligations hereunder or under law, and will reimburse each
Purchaser and each such Purchaser/Affiliate for any legal and other
expenses as such expenses are reasonably incurred by such Purchaser or such
Purchaser/Affiliate in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the Company will not be liable in any such
-------- -------
case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration
Statement, the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Purchaser expressly for use therein, or (ii)
the failure of such Purchaser to comply with the covenants and agreements
contained herein, including Sections 6(h) or 8.2 hereof respecting the sale
of the Shares or to perform its obligations under law, or (iii) in whole or
in part the inaccuracy of any representations or warranties made by such
Purchaser herein or (iv) any statement or omission in any Prospectus or any
amendment or supplement thereto that is corrected in any subsequent
Prospectus or any amendment or supplement thereto that was delivered to the
Purchaser prior to the pertinent sale or sales by the Purchaser.
(b) Each Purchaser will severally, but not jointly, indemnify and hold
harmless the Company and the Selling Stockholders, each of the Company's
directors, each of the Company's officers who signed the Registration
Statement and each person, if any, who controls the Company or the Selling
Stockholders within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any losses, claims, damages,
liabilities or expenses to which the Company, each of its directors, each
of its officers who signed the Registration Statement, the Selling
Stockholders or any of their respective controlling persons may become
subject, under the Securities Act, the Exchange Act, or any other federal
or state statutory law or regulation, or at common law or otherwise
(including in settlement of any claim or litigation, if such settlement is
effected with the written consent of such Purchaser) insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon (i) any
failure to comply with the covenants and agreements contained herein,
including Sections 6(h) or 8.2 hereof respecting the sale of the Shares or
to perform its obligations under law, or (ii) in whole or in part the
inaccuracy of any representation or warranty made by such Purchaser herein
or (iii) any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, or any amendment
or supplement thereto, or arise out of or are based upon
-15-
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements in the
Registration Statement or any amendment or supplement thereto not
misleading or in the Prospectus or any amendment or supplement thereto not
misleading in the light of the circumstances under which they were made, in
each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in the
Registration Statement, the Prospectus, or any amendment or supplement
thereto, in reliance upon and in conformity with written information
furnished to the Company by the Purchaser expressly for use therein, and
will reimburse the Company and the Selling Stockholders, each of the
Company's directors, each of its officers who signed the Registration
Statement or controlling person for the Company or a Selling Stockholder
for any legal and other expense reasonably incurred by the Company and the
Selling Stockholders, each of the Company's directors, each of its officers
who signed the Registration Statement or controlling person in connection
with investigating, defending, settling, compromising or paying any such
loss, claim, damage, liability, expense or action. Notwithstanding any
other provisions of this Section 8.3(b), no Purchaser shall be required to
indemnify any party in excess of the gross proceeds paid by such Purchaser
for Shares purchased pursuant to its respective Agreement or if the
Purchaser shall sell Shares pursuant to the Registration Statement, if
greater, the gross proceeds received by the Purchaser from those sales.
(c) Each of the Selling Stockholders will, jointly and severally,
indemnify and hold harmless each Purchaser, each Purchaser/Affiliate, the
Company, each of its directors and each of its officers who signed the
Registration Statement and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any losses, claims, damages, liabilities or expenses
to which the Company, each of its directors, each of its officers who
signed the Registration Statement or controlling person may become subject,
under the Securities Act, the Exchange Act, or any other federal or state
statutory law or regulation, or at common law or otherwise (including the
settlement of any claim or litigation, if such settlement is effected with
the written consent of such Selling Stockholder) insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of, or are based upon (i) any failure to
comply with the covenants and agreements of such Selling Stockholder
contained in the Agreements or to perform its obligations under law or (ii)
in whole or in part the inaccuracy of any representation or warranty made
by such Selling Stockholder in this Agreement or (iii) any untrue or
alleged untrue statement of any material fact contained in the Registration
Statement, the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements in the Registration Statement or any amendment or supplement
thereto not misleading or in the Prospectus or any amendment or supplement
thereto not misleading in the light of the circumstances under which they
were made, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, in
-16-
reliance upon and in conformity with written information furnished to the
Company by the Selling Stockholders expressly for use therein; provided,
however, that the Selling Stockholder will not be liable in any such case
to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon (i) in whole or in part the inaccuracy of
any representations or warranties made by such Purchaser herein or (ii) any
statement or omission in any Prospectus or any amendment or supplement
thereto that is corrected in any subsequent Prospectus or any amendment or
supplement thereto that was delivered to the Purchaser prior to the
pertinent sale or sales by the Purchaser.
(d) If and to the extent that the Company shall have sustained any
indemnification liability under Section 8.3(a) hereof or otherwise under
law and such liability shall have resulted from the failure of any of the
Selling Stockholders to promptly notify the Company in writing, until the
earlier of (i) two years from the effective date of the Registration
Statement or (ii) the sale of all of the Shares, of any events or
circumstances of which any member(s) of senior management of any of the
Selling Stockholders becomes aware, after their conducting reasonable due
inquiry (other than matters publicly known or actually known by the
Company), that (x) materially adversely affects or limits the legal or
other ability of any of the Selling Stockholders to perform any of its
material obligations under any written agreements between any of the
Selling Stockholders and the Company and (y) the failure of which to be
included in the Private Placement Memorandum and/or the Registration
Statement, as such shall have been supplemented or amended, would result in
an untrue statement of material fact or the omission to state a material
fact required to be stated therein or necessary to make the statements
contained therein not misleading in light of the circumstances under which
they were made, the Selling Stockholders shall, jointly and severally,
indemnify and hold harmless the Company from such liability and pay or
reimburse the Company for any related costs.
(e) Promptly after receipt by an indemnified party under this Section
8.3 of notice of the threat or commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 8.3, promptly notify the indemnifying
party in writing thereof; however, the failure to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party for contribution or otherwise than under the indemnity
agreement contained in this Section 8.3 to the extent the indemnifying
party is not prejudiced as a result of such failure. In case any such
action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in, and, to the extent
that it may wish, jointly with all other indemnifying parties similarly
notified, to assume, the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the
-------- -------
defendants in any such action include both the indemnified party and the
indemnifying party and, based upon the advice of such indemnified party's
counsel, the indemnified party shall have reasonably concluded that there
may be a conflict of interest between the positions of the indemnifying
party and the indemnified party in conducting the defense of any such
action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the
-17-
indemnifying party, the indemnified party or parties shall have the right
to select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to
such indemnified party of its election so to assume the defense of such
action and reasonable approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 8.3 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the
preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate
counsel, representing the indemnified parties who are parties to such
action, plus local counsel, if appropriate) or (ii) the indemnifying party
shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after
notice of commencement of action, in each of which cases the reasonable
fees and expenses of counsel shall be at the expense of the indemnifying
party.
(f) If the indemnification provided for in this Section 8.3 is required
by its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a),
(b) or (c) of this Section 8.3 in respect to any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of any losses, claims, damages, liabilities
or expenses referred to herein (i) in such proportion as is appropriate to
reflect the relative economic benefits received by the Company, the Selling
Stockholders and the Purchaser from the placement of the Common Stock
contemplated by this Agreement or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but the relative fault of the Company, the Selling Stockholders
and the Purchaser in connection with the statements or omissions or
inaccuracies in the representations and warranties in this Agreement that
resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative benefits
received by the Selling Stockholders on the one hand and each Purchaser on
the other shall be deemed to be in the same proportion as the amount paid
by such Purchaser to the Selling Stockholders pursuant to this Agreement
for the Shares purchased by such Purchaser that were sold pursuant to the
Registration Statement bears to the difference (the "Difference") between
the amount such Purchaser paid for the Shares that were sold pursuant to
the Registration Statement and the amount received by such Purchaser from
such sale. The relative fault of the Company and the Selling Stockholders,
respectively, on the one hand and each Purchaser on the other shall be
determined by reference to, among other things, whether the untrue or
alleged statement of a material fact or the omission or alleged omission to
state a material fact or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by the
Company, by any Selling Stockholder or by such Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission and/or its
-18-
distribution. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall
be deemed to include, subject to the limitations set forth in paragraph (e)
of this Section 8.3, any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any
action or claim. The provisions set forth in paragraph (e) of this Section
8.3 with respect to the notice of the threat or commencement of any action
shall apply if a claim for contribution is to be made under this paragraph
(f); provided, however, that no additional notice shall be required with
-------- -------
respect to any threat or action for which notice has been given under
paragraph (e) for purposes of indemnification. The Company, the Selling
Stockholders and each Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 8.3 were determined
solely by pro rata allocation (even if the Purchaser were treated as one
entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in this
paragraph. Notwithstanding the provisions of this Section 8.3, no Purchaser
shall be required to contribute any amount in excess of the amount by which
the Difference exceeds the amount of any damages that such Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. Notwithstanding the provisions
of this Section 8.3, the Selling Stockholders shall not be required to
contribute any amount in excess of the gross proceeds received by the
Selling Stockholders for the sales of Shares under the Agreements. 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
Purchasers' obligations to contribute pursuant to this Section 8.3 are
several and not joint.
8.4 Termination of Conditions and Obligations. The conditions precedent
imposed by Section 6 or this Section 8 upon the transferability of the Shares
shall cease and terminate as to any particular number of the Shares upon the
passage of two years from the effective date of the Registration Statement
covering such Shares or at such time as an opinion of counsel satisfactory in
form and substance to the Company shall have been rendered to the effect that
such conditions are not necessary in order to comply with the Securities Act.
8.5 Information Available. So long as the Registration Statement is
effective covering the resale of Shares owned by the Purchaser, the Company will
furnish to the Purchaser:
(a) as soon as practicable after 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) if not
included in substance in the Annual Report to Stockholders, upon the
request of the Purchaser, its Annual Report on Form 10-K, (iii) upon the
request of the Purchaser, its Quarterly Reports on Form 10-Q, (iv) upon the
request of the Purchaser, its Current Reports on Form 8-K, and (v) a full
copy of the particular Registration Statement covering the Shares (the
foregoing, in each case, excluding exhibits);
-19-
(b) upon the request of the Purchaser, all exhibits excluded by the
parenthetical to subparagraph (a)(v) of this Section 8.5; and
(c) upon the request of the Purchaser, a reasonable number of copies of
the prospectuses to supply to any other party requiring such prospectuses;
and the Company, upon the reasonable request of the Purchaser, will meet with
the Purchaser or a representative thereof at the Company's headquarters to
discuss information relevant for disclosure in the Registration Statement
covering the Shares and will otherwise reasonably cooperate with any Purchaser
conducting an investigation for the purpose of reducing such Purchaser's
exposure to liability under the Securities Act, including the reasonable
production of information at the Company's headquarters, subject to appropriate
confidentiality limitations.
SECTION 9. Broker's Fee. The Purchaser acknowledges that the Selling
Stockholders intend to pay to the Placement Agent a fee in respect of the sale
of the Shares to the Purchaser. Each of the parties hereto hereby represents
that, on the basis of any actions and agreements by it, there are no other
brokers or finders entitled to compensation in connection with the sale of the
Shares to the Purchaser.
SECTION 10. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, confirmed facsimile or nationally recognized
overnight express courier postage prepaid, and shall be deemed given when so
mailed and shall be delivered as addressed as follows:
(a) if to the Company, to:
Pharmaceutical Resources, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
1251 Avenue of the ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person at such other place as the Company shall
designate to the Purchaser in writing; and
(b) if to the Purchaser, at its address as set forth at the end of this
Agreement, or at such other address or addresses as may have been furnished
to the Company in writing.
-20-
(c) if to the Selling Stockholders, at the addresses set forth in
Exhibit A-1 hereto.
SECTION 11. Changes. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company, the Selling
Stockholders and the Purchaser.
SECTION 12. 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.
SECTION 13. 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.
SECTION 14. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York and, to
the extent applicable, the federal law of the United States of America.
SECTION 15. 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. Facsimile signatures shall be deemed original
signatures.
SECTION 16. Entire Agreement. This Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters.
SECTION 17. Third Party Beneficiaries. Subject to Section 8.3 hereof, this
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person. Notwithstanding the
foregoing, the Placement Agent may rely on the representations, warranties and
covenants made in Sections 4, 5 and 6 as if such representations, warranties and
covenants were made to the Placement Agent directly.
SECTION 18. Confidential Disclosure Agreement. Notwithstanding any
provision of this Agreement to the contrary, any confidential disclosure
agreement previously executed by the Company and the Purchaser in connection
with the transactions contemplated by this Agreement shall remain in full force
and effect in accordance with its terms following the execution of this
Agreement and the consummation of the transactions contemplated hereby.
SECTION 19. Assignment. This Agreement and rights of the Purchaser
hereunder may be assigned by the Purchaser with the prior written consent of the
Company and
-21-
the Selling Stockholders except such consent shall not be required in cases of
assignments (x) by operation of the law; (y) by the Purchaser to its
wholly-owned subsidiary; or (z) by an investment adviser to a fund for which it
is the adviser or by or among funds that are under common control, provided
that, in any such case, such assignee agrees to be bound by the terms of this
Agreement.
SECTION 20. Publicity. Neither the Company nor the Selling Stockholders
will issue any public statement, press release or any other public disclosure,
that includes the Purchaser's name, without the Purchaser's prior written
consent. If the Company is required by an applicable law, resolution, or
Securities Exchange Rule to disclose the Purchaser's name, the Company will give
the Purchaser reasonable notice of the required disclosure.
-22-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
PHARMACEUTICAL RESOURCES, INC.
By:
-----------------------------------
Name:
Title:
SELLING STOCKHOLDERS
EMD, INC.
By:
-----------------------------------
Name:
Title:
GENPHARM, INC.
By:
-----------------------------------
Name:
Title:
MERCK KGaA
By:
-----------------------------------
Name:
Title:
-23-
Print or Type: Name of Purchaser
(Individual or Institution):
-----------------------------------------------
Name of Individual representing
Purchaser (if an Institution):
-----------------------------------------------
Title of Individual representing
Purchaser (if an Institution):
-----------------------------------------------
Signature by: Individual Purchaser or Individual
representing Purchaser:
-----------------------------------------------
Address:
-----------------------------------
Telephone:
-----------------------------------
Facsimile:
-----------------------------------
-24-
SUMMARY INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire
Purchase Agreement which follows)
A. Complete the following items on BOTH Purchase Agreements:
1. Page 24 - Signature:
(i) Name of Purchaser (Individual or Institution)
(ii) Name of Individual representing Purchaser (if an Institution)
(iii) Title of Individual representing Purchaser (if an Institution)
(iv) Signature of Individual Purchaser or Individual representing
Purchaser
2. Appendix I - Stock Certificate Questionnaire/Registration Statement
Questionnaire:
Provide the information requested by the Stock Certificate
Questionnaire and the Registration Statement Questionnaire.
3. Return BOTH properly completed and signed Purchase Agreements
including the properly completed Appendix I to:
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Private Equity Group,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
B. Instructions regarding the transfer of funds for the purchase of Shares
will be sent by facsimile to the Purchaser by the Placement Agent at a
later date.
C. Upon the resale of the Shares by the Purchasers after the Registration
Statement covering the Shares is effective, as described in the Purchase
Agreement, the Purchaser:
(i) must deliver a current prospectus of the Company to the buyer
(prospectuses may be obtained from the Company at the
Purchaser's request); and
(ii) must send a letter in the form of Appendix II to the Company
so that the Shares may be properly transferred.
Appendix I
(one of two)
PHARMACEUTICAL RESOURCES, INC.
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares are to
be registered in (this is the name that
will appear on your stock certificate(s)).
You may use a nominee name if appropriate:
----------------------------
2. The relationship between the Purchaser of
the Shares and the Registered Holder
listed in response to item 1 above:
----------------------------
3. The mailing address of the Registered
Holder listed in response to item 1 above:
----------------------------
----------------------------
----------------------------
4. The Social Security Number or Tax
Identification Number of the Registered
Holder listed in response to item 1 above:
----------------------------
Appendix I
(two of two)
PHARMACEUTICAL RESOURCES, INC.
REGISTRATION STATEMENT QUESTIONNAIRE
------------------------------------
In connection with the preparation of the Registration Statement, please
provide us with the following information:
1. Pursuant to the "Selling Stockholders" section of the Registration
Statement, please state your or your organization's name exactly as it
should appear in the Registration Statement:
2. Please provide the number of shares that you or your organization will own
immediately after Closing, including those Shares purchased by you or your
organization pursuant to this Purchase Agreement and those shares purchased
by you or your organization through other transactions:
3. Have you or your organization had any position, office or other direct or
indirect material relationship within the past three years with the Company
or its affiliates?
_____ Yes _____ No
If yes, please indicate the nature of any such relationships below:
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
4. Are you (i) an NASD Member (see definition), (ii) a Controlling (see
definition) shareholder of an NASD Member, (iii) a Person Associated with a
Member of the NASD (see definition), or (iv) an Underwriter or a Related
Person (see definition) with respect to the proposed offering; or (b) do
you own any shares or other securities of any NASD Member not purchased in
the open market; or (c) have you made any outstanding subordinated loans to
any NASD Member?
Answer: [ ] Yes [ ] No If "yes," please describe below
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
NASD Member. The term "NASD member" means either any broker or dealer
admitted to membership in the National Association of Securities Dealers, Inc.
("NASD"). (NASD Manual, By-laws Article I, Definitions)
Control. The term "control" (including the terms "controlling," "controlled
by" and "under common control with") means the possession, direct or indirect,
of the power, either individually or with others, to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise. (Rule 405 under the
Securities Act of 1933, as amended)
Person Associated with a member of the NASD. The term "person associated
with a member of the NASD" means every sole proprietor, partner, officer,
director, branch manager or executive representative of any NASD Member, or any
natural person occupying a similar status or performing similar functions, or
any natural person engaged in the investment banking or securities business who
is directly or indirectly controlling or controlled by a NASD Member, whether or
not such person is registered or exempt from registration with the NASD pursuant
to its bylaws. (NASD Manual, By-laws Article I, Definitions)
Underwriter or a Related Person. The term "underwriter or a related person"
means, with respect to a proposed offering, underwriters, underwriters' counsel,
financial consultants and advisors, finders, members of the selling or
distribution group, and any and all other persons associated with or related to
any of such persons. (NASD Interpretation)
APPENDIX II
Attention:
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
------------------------------------------
The undersigned, [an officer of, or other person duly authorized by]
___________________________________________________ hereby certifies that he/she
[fill in official name of individual or institution]
[said institution] is the Purchaser of the shares evidenced by the attached
certificate, and as such, sold such shares on _______________ in accordance with
[date]
Registration Statement number ____________________________________ and the
[fill in the number of or otherwise
identify Registration Statement]
requirement of delivering a current prospectus by the Company has been complied
with in connection with such sale. Print or Type:
Name of Purchaser
(Individual or
Institution):
---------------------------
Name of Individual
representing
Purchaser (if an
Institution)
---------------------------
Title of Individual
representing
Purchaser (if an
Institution):
---------------------------
Signature by:
Individual Purchaser
or Individual repre-
senting Purchaser:
---------------------------
Exhibit A-1
-----------
SELLING STOCKHOLDERS
Name Address for Notices Number of Shares to be Sold
---- ------------------- ---------------------------
EMD, Inc., c/o Merck KGaA 12,213,272
a substantially wholly-owned ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
subsidiary of Merck ▇▇▇▇, ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Kommanditgesellschaft auf Aktien
organized under the laws of Germany
Genpharm, Inc., a subsidiary of Merck ▇/▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇,▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Merck ▇▇▇▇ ▇/▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇,▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Total: 13,634,012
